Medical school is full of pressures. You need to learn how to save lives and stitch people up. You also have to figure out how to pay for medical school. It’s no joke with the rising costs of medical school leaving students well past the six-figure mark for student loan debt.
The school you choose makes a difference but so does your research on ways to pay for medical school. You need to enter medical school with an order of operations for how you’re going to pay for it. Knowing how to get money for medical school starts by getting the type of financial aid you don’t have to pay back.
How to pay for medical school without loans
Before you even consider student loans, max out all of ways to pay for medical school that you don’t need to repay. Aside from looking into your income and savings, research and apply for scholarships, fellowships, and grants.
Some of these are awarded to you after filing your Free Application for Federal Student Aid (FAFSA). Others you’ll need to hunt down. You can talk to the human resources officer at your local hospital to see what’s offered in your area or search online.
One of your most valuable resources is the National Health Service Corps Scholarship Program (NHSC SP). You’ll have to agree to exchange no more than four years of service for this scholarship. But you could get four years of medical school paid for in exchange for your time.
Paying for medical school with scholarships and grants is always step one in your order of operations.
It’s still medical school, though, so you’ll most likely also need student loans. You can be strategic, however, about which ones you take out to minimize the cost as much as possible.
A strategic way to pay for med school: Health professional loans
It’s generally good advice to take out federal Direct Loans before private student loans. Except you have one more option for how to pay for medical school. As a med student, you can apply for health professional student loans.
Health professions student loans are administered by the Health Resources and Services Administration (HRSA). HRSA student loans are school-based, and the HRSA funds schools to distribute them. There are five student loan options under this program:
- Scholarships for Disadvantaged Students (SDS Program)
- Loans for Disadvantaged Students (LDS Program)
- Health Professions Student Loans (HPSL)
- Nursing Student Loans (NSL)
- Primary Care Loans (PCL)
The HRSA encourages the students who get these loan funds to “deliver health care in communities where people lack access to basic health care needs.” You can find out if your school offers HRSA loans by checking in with the financial aid office.
These loans come with some unique benefits. They have no origination fee and don’t collect interest while in school. In addition to this, they have long grace periods of up to one year and the option for deferment. PCL does require a service obligation of providing primary care during residency or fellowship. But PCL loans are interest-free for four years of residency and up to two years of fellowship.
Each loan has its own requirements and advantages. Travis Hornsby, founder of Student Loan Planner, recommends taking out HPSL and LDS loans before taking out federal Direct Loans. Not only do they come with 0% interest while in medical school, but these loans can be consolidated under the federal student loan consolidation program once you enter repayment.
Being able to consolidate your health professional loans means you’re eligible for Public Service Loan Forgiveness (PSLF). Since your loans won’t collecting interest during medical school, you’ll save thousands compared to taking out Direct Loans. You can start making qualifying PSLF payments as soon as you enter training.
One word of caution: You need to know where your health professional loans are so you can strategize. They aren’t housed with the National Student Loan Data System. You’ll have to contact HRSA to find out who your servicer is so you can consolidate after school.
It’s not the end of the world if you don’t get to take advantage of HRSA loans to pay for medical school. If you plan on PSLF, you can keep it simple and go straight to federal student loans.
How to pay for medical school and utilize loan forgiveness
PSLF can be a godsend for medical professionals and can be taken advantage of with federal student loans. Federal Direct student loans, including Grad PLUS student loans, are eligible for PSLF.
Your financial aid award letter from the school will list the federal loans you’re eligible for. You can choose to accept some or all of these loans. If you decide to take out a Grad PLUS Loan, you’ll have to apply for it separately.
You can apply for PSLF as early as residency, as long as it’s at a nonprofit employer. All PSLF candidates must work full time at a nonprofit or government employer. While working, you must make on-time, qualifying payments each month.
To finally receive total loan forgiveness, you’ll need to make 120 of these payments. Payments don’t need to be made consecutively, but if you do make consecutive payments, it will take 10 years. You can use the PSLF Help Tool to assess your eligibility for this program.
This strategy for paying off medical school is solid. There’s a limit to how much you can take out in Direct Unsubsidized and Subsidized student loans. You may opt for Grad PLUS Loans to fill the gap if you’re going to pursue PSLF.
You may intend to work in the private sector or not want to bank on PSLF. If you’re not going to pursue PSLF, then look into private student loans that specifically help medical school students.
How to pay for medical school with private medical loans
The order of operations puts private student loans last as a way to pay for medical school. That said, you shouldn’t just go for any private student loan. There are private student loan programs that offer medical school student loans.
These loans are tailored for your current education pathway and should be investigated first.
CommonBond offers a way to pay for medical school. Its fixed interest rates on these loans start at 5.56%*, and its variable rates start at 5.40% — both of which are lower than the Grad PLUS federal loan rates. All CommonBond private student loans are eligible for a 0.25% interest rate deduction if you sign up for automatic payments.
Commonbond offers flexible repayment plans that account for things like residency, fellowships, and research. It also has forbearance options and doesn’t require a cosigner. To truly top its competitors, it also has a social mission and covers the cost of a child’s education in the developing world if you take a loan out with CommonBond.
Sallie Mae also offers private medical student loans. Fixed interest rates start at 5.49%*, and variable interest rates start at 4.37%*. Sallie Mae student loans offer what most private student loans don’t — a grace period. Its grace period lasts for 36 months after graduating. It also offers long loan terms of 20 years, with no penalty for paying the loan off early.
These lenders offer some flexibility in repayment. But not all private medical student loans are like this. You’ll want to investigate the private medical loans and get a rate check before moving forward.
* Rates current as of Aug. 22, 2019
Don’t forget to look at repayment options for med school loans
You don’t want to be in six figures of student loan debt long term. No one does. Here’s the general order of how to pay for medical school that helps you take advantage of programs you’re eligible for:
- Scholarships, grants, and money you don’t have to pay back
- Health professional student loans, unless you don’t have the option or want to keep it simple. Then opt for federal student loans, including Grad PLUS Loans if needed
- Private student loans specifically for medical school students
Once you’ve figured out how to pay for medical school, you need to also have a repayment plan in the back of your mind. There are ways to save money when you start to repay your medical student loans.