Medical school is one of the most expensive professional training programs in the country, and because of this, many medical students apply for scholarships, grants, and loans to supplement their education costs. Medical school loans are offered to students who have been accepted to medical, nursing, dental, veterinary, and a host of other health-related schools and plan to complete a degree program. Students who want or need to take out medical school loans have an assortment of federal and private loans available to them. Federal medical school loans and private medical school loans offer a variety of interest rates and repayment options to those who qualify.
The type of medical school loan a student is granted is based on a set of criteria. For Subsidized and Unsubsidized Direct Loans, students must be accepted into a medical school, enrolled as at least a half-time student, and have filled out the Free Application for Federal Student AID (FAFSA) to determine how much assistance they qualify for. Subsidized Loan interest is paid for by the U.S. Department of Education, and unsubsidized loans are loans that accrue interest over time, and students are responsible for covering the interest.
Most everyone qualifies for federal loans. To qualify for private loans, students are expected to reveal their income bracket and undergo a credit history check, among a varied list of other items. A student’s qualification for a private loan is heavily based on their credit score, so if you have poor credit or no credit at all, you’ll probably need a cosigner to qualify for private medical school loans.
Repaying a Medical School Loan
After graduating from medical school, students are granted a grace period before they are required to start paying their medical student loans. Grace periods vary from loan to loan, but as a general rule of thumb, students usually begin repaying their loans 3 to 12 months after graduation. Many students use this grace period to obtain careers and begin building the funds necessary to pay back their loans.
There are several options for paying back medical school loans, such as pay as you earn repayment, postponing loan repayment during residency, income-based repayment, and more. Students may also qualify for loan forgiveness or loan assistance programs, but it’s up to the student to verify whether or not their school qualifies them for such programs. If you find yourself struggling to pay back your loan, it’s important to seek assistance of those who can help. For more information on federal loan deferment, visit the U.S. Department of Education’s Federal Student Aid website.
Types of Medical School Loans
- Direct Stafford Loans: Direct Stafford Loans are fixed-interest federal loans that are offered to students who are enrolled at least half-time. Medical school and graduate students are only eligible for Unsubsidized Loans, which carry a fixed interest rate of 6.8% with a 1% loan fee. Subsidized Loans are only available to undergraduate students.
- Primary Care Loan: This loan is offered by the U.S. Department of Health and Human Services and awarded to full-time, need-based students who study either allopathic or osteopathic medicine. The interest rate on this loan is 5% and begins to accrue one year after a student has completed their degree program. Students who accept this loan are required to complete training in primary care facilities for four years after graduation and work in primary care for the duration of their loan status.
- MedCAP Loan Program: The MedCAP Loan is a private loan offered through Wells Fargo that allows students to borrow as much as they need with no annual maximum. To qualify for this loan, students are expected to have a positive credit history and hold U.S. citizenship. This loan also allows students to choose from fixed or variable interest rates, whichever one best suits their needs.
- Medical Residency & Relocation Loan: This private option is offered through Sallie Mae and grants students a three-year grace period before they must start repaying their loan. The assistance offered ranges from $1,000 to $20,000, and interest rates vary anywhere from 3.21% APR to 11.56% APR. That amount can by adjusted by .25% if a student holds an account at Sallie Mae.