It's complicated to pay for medical school. Medical school student loans play a large part for most doctors.
Medical school is expensive. There no way around that. However, doctors (in general) also earn significant salaries after graduation to potentially justify the high costs.
The average student loan debt of graduating doctors is $202,000. And then you still have years of residency (where you're only going to earn about $60,000 per year) before you get to really earning significant income.
As such, you need to know the options for how to pay for medical school and your medical degree in the most effective way possible. It can sound daunting to take out $200,000 in student loans, have years before you can start repayment, only for the hope of earning more in the future.
But you're going to be a doctor! You're going to save lives! Let's talk about how to keep your money in order and how to find the best loans to pay for medical school!
How To Pay For Medical School (Order Of Operations)
There is a smart order of operations to pay for medical school. We'll talk about each a little more in-depth below, but in general, you should follow this order if you can.
Honestly, this order of operations applies for paying for college in general as well.
- Your Own Savings
- Scholarships And Grants
- Direct Student Loans
- Grad PLUS Student Loans
- Private Student Loans
Of course, there are always variations on a theme, but in general, this is the order you should follow when paying for medical school and getting student loans for your medical degree.
Your Own Savings
The first place to start is your own savings. I know this won't get you far, but if you've worked in high school or during undergrad, you might have a nice bit of money saved up that can help offset the costs of medical school.
It's important to note that you shouldn't be depleting your savings to pay for school. It's important that you keep an emergency fund to cover your expenses should something happen. I've seen too many issues where a car accident or some other unexpected event puts you out of commission for months. That's why having an emergency fund is so important - even for students.
Scholarships And Grants
Sadly, there are not a lot of scholarships and grants to pay for medical school. But there are some.
After your own savings, you should see if you can qualify for any scholarships and grants. There are a number of scholarships that are directed towards medical students, but don't ignore other scholarship and grant opportunities as well.
Using grants to pay for college is a great (and underutilized) opportunity to save money on the cost of going to school.
And there are other scholarships that you might qualify for. We have our Side Hustlin' Student Scholarship that is geared towards entrepreneurial college students.
The bottom line is that you should look outside the box when applying for scholarships.
Direct Student Loans
After you've exhausted your own money (between savings, working, and scholarships), it's time to consider student loans.
When looking at student loans, you should always start with Federal loans. The best Federal student loans are Direct Loans. You can get these student loans by filling out the FAFSA.
Direct Unsubsidized Loans are available to graduate and professional students, and are distributed to individuals regardless of financial need. Direct Loans have a strict borrowing limit for graduate students of just $20,500 per academic year.
That's likely going to be only about half of what you need each year. But these are the best loans because they offer income-driven repayment plans, hardship and deferment options, and are potentially eligible for student loan forgiveness for doctors.
Grad PLUS Student Loans
After you've taken advantage of the Direct Loans up to their maximum, it's time to look at Grad PLUS Student Loans.
These loans can be take out to cover the maximum cost of attendance (according to your schools' financial aid office), minus any other financial aid received. For most medical students taking out student loans, Direct PLUS Loans can make up the difference of what's needed to pay for college.
A Direct PLUS Loan does require a credit check, so if you have a poor credit history, you may need a cosigner to help you with the student loan.
Direct PLUS Loans have some of the highest interest rates for Federal loans, so it's important to consider that when borrowing. If you have excellent credit, you might want to consider other options now or later.
But these loans are great partners to Direct Loans. They also offer income-driven repayment plans, hardship options, and are potentially eligible for loan forgiveness programs like Public Service Loan Forgiveness.
HRSA Primary Care Loan
We didn't include this loan in our chart for how to pay for medical school, but it's important to note it's existence for the right borrowers. The Health Resources and Services Administration (HRSA) provides low cost loans to medical students who meet certain criteria.
This program provide long-term, low-interest rate loans to full-time, needy students to pursue a degree in allopathic or osteopathic medicine.
Students who receive loans must agree to enter and complete residency training in primary care within four years after graduation, and practice primary care for ten years or until the loan is paid in full, whichever occurs first.
As such, it might not be the right choice for everyone, but it's definitely an option for some. You can learn more about the HRSA Loan Program here.
Private Medical School Student Loans
Some medical students cannot solely rely on Federal loans to pay for medical school.
Either they exhaust Federal loan limits due to their school’s cost, they need more funds to cover living expenses while attending school, or they need more time to complete their education (which increases cost).
Others may find more value in taking on private loans given their excellent credit and ability to repay. In this case, private student loans may be a cheaper alternative due to low interest rates and excellent borrower programs.
There are two great private medical student loan providers we recommend:
Sallie Mae
Sallie Mae is probably one of the most well-known lenders on this list. They are the nation's largest private student loan lender by loan volume. As a result, they also offer some of the most competitive private student loans out there.
You can take out Sallie Mae student loans starting at just $1,000 (which is one of the lowest) and can borrow up to the total cost of education². Sallie Mae has a variety of repayment plans to select from, they offer residency or internship deferments in 12-month increments, limited to a total of 48 months of deferment⁴, and 12-months of interest-only payments after your grace period⁵.
Read our full Sallie Mae review here.
Sallie Mae Medical School Student Loans Details | |
|---|---|
Product Name | Sallie Mae Medical School Loan |
Min Loan Amount | $1,000 |
Max Loan Amount | Up to 100% of the school-certified expenses² |
Variable APR | 5.37% -14.96% APR¹ |
Fixed APR | 3.69% - 14.46% APR¹ |
Loan Terms | 10 to 15 Years |
Promotions | None |
Ascent Student Loans
Ascent Student Loans is a solid choice as a private lender - as they great graduate student loans for medical school. They also offer a solid loan amount range from $2,001 - $400,000*, competitive rates, and easy repayment terms.
They offer loans starting at just $2,001* minimum, and they offer 48 month loan deferment while in school, and a grade period to postpone full principal and interest payments up to 36-months after graduation, up to 9-months after leaving the program, or otherwise dropping to less-than-half-time enrollment.
Read our full Ascent Student Loans review here.
Ascent Medical School Student Loans Details | |
|---|---|
Product Name | Ascent Medical School Loan |
Min Loan Amount | $2,001 |
Max Loan Amount | $400,000 |
Variable APR | 7.86% -15.72% APR |
Fixed APR | 4.69% - 14.71% APR |
Loan Terms | 5, 7, 10, 12 15, or 20 years |
Promotions | None |
Medical School Loans For International Students
International students cannot get US Federal Student Loans. As a result, international medical students who need assistance have to look at private medical school loans. But again, this can be a real challenge as most traditional lenders require borrowers to be a US citizen.
However, there are two options for international student loans. Prodigy allows international medical students to borrow up to $220,000. They also don't require a US cosigner, and have various repayment options. Check out Prodigy here >>
Another option is MPower. They have a lower lifetime limit of $100,000, but also may be a good choice for international students.
Shop And Compare
There used to be more medical school-specific lenders, but the student loan marketplace is changing. Beyond these lenders, you might have luck comparing your options on platforms like Credible or Splash.
Between Credible and Splash, you can compare many lenders in the market.
Medical Residency Loans
After you finish medical school, you must do your residency in order to become a doctor. However, traditional student loans don't cover residency, and your small salary may not be enough for you depending on what your needs are (and those of your family). You might also have to relocate for your residency, and have other fees as well.
That's where medical residency and relocation loans come in. They can help you cover the costs of moving and relocating for residency, as well as help pay for any exam fees and more.
For example, the Sallie Mae Medical Residency and Relocation Loan will provide up to $30,000 to cover board examination fees, travel, and moving expenses for your medical residency. Check out this Salle Mae option here >>
We have a full guide on this here: Where to Find Medical Residency and Relocation Loans >>
Medical School Student Loans After Graduation
If you're finding this article after you've already taken out loans for medical school, you might consider student loan refinancing.
But first, you might want to speak with a financial planner that understands medicine.
If you have private loans or high-interest Federal Loans (like the Direct PLUS Loans mentioned above), refinancing might allow you to lower your payment or save on interest on your medical school loans. Through refinancing, you take out a new student loan from a private lender and use it pay off your other loans. With the new student loan, you may qualify for a lower interest rate, better repayment term, or lower monthly payment.
If you have Federal student loans, refinancing will cost you the ability to apply for an income-driven repayment plan or forbearance. That's why, for many borrowers, we don't think you should refinance your Federal student loan for a private student loan.
However, doctors are the exception to the rule. Doctors will make a significant amount of money once they start in practice. For many, this means they would benefit more from getting a student loan with a low interest rate, versus keeping a Federal student loan.
For example, Direct PLUS Graduate loans currently have an interest rate of 8.048%. But you can refinance with Credible and potentially get a lower interest rate!
See if Credible makes sense to refinance. You can shop loans in 2 minutes. As a bonus to College Investor readers, you'll get up to a $1,000 gift card bonus when you refinance with Credible. See terms. Check out Credible today.
Final Thoughts
While the thought of borrowing so much money to pay for school can be exhausting, remember the prize at the end of the tunnel. You'll be earning a significant amount of money after graduation, and you'll be able to afford your student loan payments.
The math on student loans for medical students is relative. While a teacher may borrow $40,000, they will only expect to earn $40,000 per year after graduation. A doctor, on the other hand, will earn anywhere from $138,000 to $200,000 in their first year after residency. That makes the student loan amount relative.
A good tip I always like to share with doctors as well - live like a resident for your first few years of practice. You've delayed gratification for years, just add a couple more. You can use those first few years of high income to eliminate your student loan debt, and you'll set yourself up for a bright financial future.
Frequently Asked Questions About Paying For Medical School
How do people usually pay for medical school?
Most people pay for medical school using student loans. 71% of doctors graduate with student loans.
How does anyone afford medical school?
Medical school is affordable using student loans since you can borrow up to the cost of attendance using Grad PLUS Loans. Furthermore, since medicine is a high-paying career, many private lenders are also willing to lend for medical school.
Can you survive financially in medical school?
It can be challenging, but student loans allows you to borrow up to the total cost of attendance - which includes room and board. That doesn't sound pleasant to have to borrow money to survive, but since the earnings of a doctor are very high after graduation, and there are a lot of options for student loan forgiveness, it can allow you to survive financially while doing med school.
What is the best student loan for medical school?
All medical school students should borrow Federal student loans first. Start with Direct Loans, then Grad PLUS loans. Only then should you consider private loans.
Ascent Student Loans
Ascent’s undergraduate and graduate student loans are funded by Bank of Lake Mills or DR Bank, each Member FDIC. Loan products may not be available in certain jurisdictions. Certain restrictions, limitations, terms and conditions may apply for Ascent's Terms and Conditions please visit: AscentFunding.com/Ts&Cs. Rates displayed above are effective as of 9/1/2024 and reflect an Automatic Payment Discount of 0.25% for credit-based college student loans and 1.00% discount on outcomes-based loans when you enroll in automatic payments. The Full P&I (Immediate) Repayment option is only available for college loans (except for outcomes-based loans) originated on or after June 3, 2024. For more information, see repayment examples or review the Ascent Student Loans Terms and Conditions. The final amount approved depends on the borrower’s credit history, verifiable cost of attendance as certified by an eligible school, and is subject to credit approval and verification of application information. Lowest interest rates require full principal and interest (Immediate) payments, the shortest loan term, a cosigner, and are only available for our most creditworthy applicants and cosigners with the highest average credit scores. Actual APR offered may be higher or lower than the examples above, based on the amount of time you spend in school and any grace period you have before repayment begins. 1% Cash Back Graduation Reward subject to terms and conditions. For details on Ascent borrower benefits, visit AscentFunding.com/BorrowerBenefits. The AscentUP platform is only available to eligible Ascent borrowers and subject to terms and conditions.
*The minimum amount is $2,001 except for the state of Massachusetts. Minimum loan amount for borrowers with a Massachusetts permanent address is $6,001.
Sallie Mae
¹Rates displayed are for medical school student loans:
Lowest rates shown include the auto debit discount: Additional information regarding the auto debit discount: Advertised APRs for undergraduate students assume a $10,000 loan to a student who attends school for 4 years and has no prior Sallie Mae-serviced loans. Interest rates for variable rate loans may increase or decrease over the life of the loan based on changes to the 30-day Average Secured Overnight Financing Rate (SOFR) rounded up to the nearest one-eighth of one percent. Advertised variable rates are the starting range of rates and may vary outside of that range over the life of the loan. Interest is charged starting when funds are sent to the school. With the Fixed and Deferred Repayment Options, the interest rate is higher than with the Interest Repayment Option and Unpaid Interest is added to the loan’s Current Principal at the end of the grace/separation period. To receive a 0.25 percentage point interest rate discount, the borrower or cosigner must enroll in auto debit through Sallie Mae. The discount applies only during active repayment for as long as the Current Amount Due or Designated Amount is successfully withdrawn from the authorized bank account each month. It may be suspended during forbearance or deferment. *These rates will be effective 08/19/2024.
Terms:
Example of a typical transaction for a $10,000 Medical School Loan with the most common fixed rate, Fixed Repayment Option, and two disbursements. For borrowers with a 81-month in-school and separation period, it works out to 10.71% fixed APR, 81 payments of $25.00, 238 payments of $175.31 and one payment of $89.74, for a total loan cost of $43,838.52. Loans that are subject to a $50 minimum principal and interest payment amount may receive a loan term that is less than 20 years. A variable APR may increase over the life of the loan. A fixed APR will not.
² For applications submitted directly to Sallie Mae, loan amount cannot exceed the cost of attendance less financial aid received, as certified by the school. Applications submitted to Sallie Mae through a partner website may be subjected to a lower maximum loan request amount. Miscellaneous personal expenses (such as a laptop) may be included in the cost of attendance for students enrolled at least half-time.
⁴ To apply for this deferment, customers and an official from the internship, clerkship, fellowship, or residency program must complete and submit a deferment form to us for consideration. If approved, deferment periods are issued in up to 12-month increments. Customers can apply for and receive a maximum of four 12-month deferment periods. Interest is charged during the deferment period and Unpaid Interest may be added to the Current Principal at the end of each deferment period, which will increase the Total Loan Cost.
⁵ GRP allows interest-only payments for the initial 12-month period of repayment when the loan would normally begin requiring full principal and interest payments or during the 12-month period after GRP request is granted, whichever is later. At the time of GRP request, the loan must be current. The borrower may request GRP only during the six billing periods immediately preceding and the twelve billing periods immediately after the loan would normally begin requiring full principal and interest payments. GRP does not extend the loan term. If approved for GRP, the Current Amount Due that is required to be paid each month after the GRP ends will be higher than it otherwise would have been without GRP, and the total loan cost will increase.
Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him on the About Page or on his personal site RobertFarrington.com.
He regularly writes about investing, student loan debt, and general personal finance topics geared toward anyone wanting to earn more, get out of debt, and start building wealth for the future.
He has been quoted in major publications, including the New York Times, Wall Street Journal, Washington Post, ABC, NBC, Today, and more. He is also a regular contributor to Forbes.
Editor: Clint Proctor Reviewed by: Ashley Barnett
