Higher education is expensive enough as it is, but its cost can rocket to even more extreme levels should one want to attend medical school. Some fortunate students will receive scholarships or will have parents who saved substantially enough to put a dent in the total cost of medical school. But others will need to use medical school loans to close the gap between their funds on hand and the price of their education. In 2016 the average medical school debt was $190,000, with it expected to have increased in 2017.
We’ve put together a guide to break down the loan options available to those who hope to make their way through medical school. We also cover repayment plans available to those who complete their education and are ready to start paying their loans down. We hope that, by covering these loans and the paths toward repayment in more detail, we can demystify the process and make it less intimidating for those who need to borrow to reach the career of their dreams.
Unsubsidized Direct Stafford Loans
These loans are the same ones available to undergraduate and graduate students whose need surpasses what is made available by subsidized loans. With Unsubsidized Direct Stafford Loans, repayments are postponed while you’re still in school, and you’re granted a grace period post-graduation to look for and obtain a job. You can only borrow up to $40,500 in these loans annually, with a total cap of $224,000 total, and you’ll pay a 5.84% interest rate on your outstanding loan balance until it’s paid off. You must complete the FAFSA (Free Application for Federal Student Aid) in order to qualify for Unsubsidized Direct Stafford Loans.
If you’re in graduate school or professional school — which medical school qualifies as — you can take out a GradPLUS loan. This loan takes on a higher interest rate at 7%, but there are benefits in the amount you can borrow is only limited by the cost of attendance at your medical school of choice. You also do not have to demonstrate financial need to obtain a GradPLUS loan, but you do have to have decent credit in order to be approved. Just like the Stafford loans, this loan requires you to complete the FAFSA in order to qualify.
In order to take out a Perkins Loan, you’ll need to be able to demonstrate “exceptional” financial need. If you’re able to qualify, however, you’ll find the Perkins Loan is one of the more friendly medical school loans in existence. The interest rate is capped at 5%, and borrowing limits sit at $8,000 annually and $60,000 total for professional students. This loan also requires the FAFSA as part of the qualification process.
HRSA Primary Care Loans
If your plan is to train in and work in primary care following graduation, you’ll find the HRSA’s Primary Care Loan program extremely helpful. The PCL program provides loan amounts up to the cost of attendance at a 5% interest rate, with the stipulation that you work in a primary care setting for up to 10 years, or until the loan is paid off. Should you fail to meet the required service period in a primary care setting, your loan interest rate will change to 7%.
Private Medical School Loans
You can obtain private loans for your medical schooling through lenders like Sallie Mae, Wells Fargo, and Discover. What you won’t find, however, is consistency across the board. Interest rates vary depending on who you borrow from, and you could either wind up with a variable interest rate loan or a fixed interest rate loan. Private loans often have better interest rates than federal student loans, but you miss out of federal forgiveness programs such as public service loan forgiveness, and income-driven repayment plans. Here are three top lenders for private student loans:
Compare the Best Student Loan Refinance Rates
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Student Debt Relief Loan Refinancing Advertiser Disclosure
College Ave: College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
College Ave Refi Education loans are not currently available to residents of Maine.
1 – The 0.25% auto-pay interest rate reduction applies as long as the borrower or cosigner, if applicable, enrolls in auto-pay and authorizes our loan servicer to automatically deduct your monthly payments from a valid bank account via Automated Clearing House (“ACH”). The rate reduction applies for as long as the monthly payment amount is successfully deducted from the designated bank account and is suspended during periods of forbearance and certain deferments. Variable rates may increase after consummation.
2 – $5,000 is the minimum requirement to refinance. The maximum loan amount is $300,000 for those with medical, dental, pharmacy or veterinary doctorate degrees, and $150,000 for all other undergraduate or graduate degrees. Information advertised valid as of 04/26/2019. Variable interest rates may increase after consummation.
3 – This informational repayment example uses typical loan terms for a refi borrower with a Full Principal & Interest Repayment and a 10-year repayment term, has a $40,000 loan and a 5.5% Annual Percentage Rate (“APR”): 120 monthly payments of $434.11 while in the repayment period, for a total amount of payments of $52,092.61. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.
ELFI: Subject to credit approval. Terms and conditions apply. To qualify for refinancing or student loans consolidation through ELFI, you must have at least $15,000 in student loan debt and must have earned a bachelor’s degree or higher from an approved post-secondary institution.
LendKey: Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
CommonBond: Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate.
Splash Financial: Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval.com
Earnest: To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest’s fixed-rate loan rates range from 3.89% APR (with autopay) to 7.89% APR (with autopay). Variable rate loan rates range from 2.50% APR (with autopay) to 7.27% APR (with autopay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms of 10 years or less. For loan terms of 10 to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 0.26% and 5.03% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of April 23, 2019 and are subject to change based on market conditions and borrower eligibility.
Auto Pay Discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 04/23/19. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice.
Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 303 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, e-mail us at email@example.com, or call 888-601-2801 for more information on our student loan refinance product.
Repayment Options For Federal Loans
Making your way through and out of medical school is a feat you should be proud of. But as far as your financial obligations are concerned, there’s still more to do. Depending on how much you needed to borrow in medical school loans, you could be staring down a hefty amount of debt by the time you graduate. And chances are, you won’t be making six figures right out of the gate. This is why examining your income-driven loan repayment options is the best thing you can do.
In order to get the full benefit of an IBR plan, you will need to be a new borrower as of July 1, 2014. The IBR plan then limits the amount you need to pay toward your medical student loans to 10% of your discretionary income per month and holds you to a 20-year repayment plan. If you borrowed your loans before that date, loan repayment amounts are capped at 15% of your discretionary income per month, but fortunately, you won’t ever pay more than you would under the standard 10-year repayment plan. The repayment period for borrowers in the latter category is 25 years.
Monthly repayment amounts under the ICR plan are limited to whichever is less: 20% of discretionary income, or what your monthly payment would be if you repaid your outstanding loan balance over a 12-year period. The repayment period for this plan is 25 years, and eligible loans you’ve taken out under the federal student loan program qualify.
The PAYE program is not all that dissimilar to the IBR program: your repayment amount is limited to 10% of your discretionary income per month, and can never surpass what you’d pay per month under a standard 10-year repayment plan. You also receive a repayment period of 25 years. However, there are additional boxes you must check off to qualify for PAYE. You cannot have borrowed your loans before October 1, 2007, and you must have received a Direct Loan disbursement on or after October 1, 2011.
REPAYE is a revised version of the PAYE program, modified in 2015 to help more borrowers qualify for an income-based repayment option. Under REPAYE, you’ll pay 10% of your discretionary income per month toward your outstanding loan balance, with eligible federal student loans qualifying for the program. The repayment period for REPAYE, unlike PAYE, is 20 years.
We hope this guide proves beneficial in helping you grasp the different options you have for your medical school loans, as well as the repayment options you’ll have available to you once you graduate and begin your career. Good luck!