When you decide to attend medical school, you know you’re going to end up paying a lot for your education. In fact, there’s a good chance you’ll need to borrow money to cover the costs. The hope is that you’ll be able to make enough money to offset the cost of medical school loans—and that you’ll have a fulfilling career improving and saving lives.
As you consider your options for paying for medical school, here’s what you need to know.
How Much Can You Borrow for Medical School?
According to the Association of American Medical Colleges (AAMC), 73% of medical school graduates had educational debt in 2020. The average amount of medical school loans when finishing was $207,003.
Depending on where you attend school, you might need to consider the source of the loans.
Federal Direct Unsubsidized Graduate Loans
You can borrow up to $20,500 per year in graduate loans from the federal government without worrying about credit or income requirements. However, the total amount you can borrow—including your undergraduate debt—is $138,500.
When attending medical school, however, you might be eligible for higher direct unsubsidized loan amounts. You need to go through your school’s financial aid office to see if you can get up to $40,500 per year for tuition.
The more you can get through direct unsubsidized loans, the better off you’ll be, especially if you’re concerned about preserving protections such as income-driven repayment.
Federal Grad PLUS Loan
If you’ve reached your limit for the federal direct medical school loans, you can turn to the federal grad PLUS loan program. As long as you don’t have adverse credit information, you should be able to qualify for these loans. You can get up to the cost of attendance at your medical school, minus the amount of other financial help you receive.
Private Medical School Loans
It’s also possible to get private loans to pay for medical school. With private medical school loans, you’re subject to income and credit requirements and might need to get a co-signer to qualify. However, depending on the situation, you might be able to get a lower interest rate on a private loan than you would with a federal grad PLUS loan. Carefully compare your options before making the decision.
What to Consider When Choosing Medical Loans
When deciding where to turn for medical school loans, it’s important to first consider your goals, as well as the protections you hope to receive. Here are some things to keep in mind:
- Cost of attendance: Naturally, you first have to consider the cost of attendance. Will it cost you more than $20,500 per year to attend? If so, you can still get federal unsubsidized loans, but you’ll need other funding sources to bridge the gap. Find out from your school if you’re eligible to get a higher amount in federal loans before moving forward.
- Interest rate: Interest rates for all federal loans are set each year using a formula approved by Congress. In general, it’s a good idea to max out your direct unsubsidized federal loans before getting private student loans. However, grad PLUS loans have higher interest rates than direct unsubsidized loans. In some cases, especially if you have good credit or a well-qualified co-signer, you might get a lower interest rate with private medical school loans.
- PSLF: In some cases, a lower interest rate might not matter as much if you’re working toward public service loan forgiveness (PSLF) or a state-level health care professions loan forgiveness program. Forty-five percent of grads plan to enter some type of loan forgiveness or repayment program, and most private loans aren’t eligible. Direct unsubsidized and grad PLUS loans, though, are eligible for PSLF. If you’re going to try for PSLF, avoid private medical school loans.
- Deferred repayment options: All of the federal loans have deferred repayment, allowing you to get through medical school without making payments. While some private lenders offer deferred repayment, it’s important to double-check the loan terms if you don’t want to start repaying your loans while in school.
- Income-driven repayment options: Additionally, you need to consider whether you’ll have access to income-driven repayment with your medical school loans. While some private lenders offer hardship plans, they aren’t the same as the income-driven options available to federal loan borrowers. If you think you’ll be working at a low-income job as you meet requirements for PSLF or other forgiveness programs, being able to get onto income-driven repayment might be a consideration.
Compare your options to figure out what combination of federal and private medical school loans might work best for your situation.
Repaying Your Medical School Loans
Deciding how to repay your medical school loans can be tricky. When deciding where to get your loans, it’s important to consider your repayment plan. If you expect to immediately go into a high-paying job in the private sector, you might not need to worry about the income-driven protections that come with federal loans—or whether you get some of your debt forgiven. Low-rate private loans might make more sense in this situation.
On the other hand, if you plan to start your own practice, you might need a few years of income-driven repayment until you get established and start earning more.
Additionally, if you know you want to take advantage of state and federal forgiveness programs, you’ll need to plan for more federal debt to increase the chances that your loans will qualify.
The Bottom Line
Attending medical school is expensive, but with the right combination of loans for your situation, there’s a good chance you’ll be able to pay for it. When possible, use your own savings and apply for fellowships, grants, and scholarships before borrowing for your education. Once those resources are exhausted, turning to medical school loans can make sense.
Frequently Asked Questions (FAQs)
How long does it take to pay off medical school loans?
Federal student loans have set payment terms. For example, the standard repayment term is 10 years, but this timeline can be affected by income after graduation. Private loans come in more varieties, so there is less consistency in their timelines. You can use a loan calculator to estimate the timeline for your private loans.
What is the interest rate on medical school loans?
Federal student loans come with fixed rates that never change. The rates for new loans change, but once you take out your loan, your rate is set. You can check the latest rates on the Department of Education's website.
You can expect private loans to come with higher interest rate costs. They may or may not be fixed. As with any loan, the exact rate you get from lenders will depend on details such as your riskiness as a borrower.