Medical School Financial Aid Guide

Medical School Financial Aid Guide

The average debt reported among medical school graduates in 2018 was $241,600. [1] It has become increasingly important for medical students to be financially literate in light of rising tuition costs and costs of living. With many medical students coming from wealthier families, this number is likely to be even higher for those independently financing their medical education. [2] In light of this, applicants to medical schools must be proactive about understanding how to pay for medical school.

In this blog post, we discuss:

Do medical schools offer financial aid?

The majority of medical schools in the United States do offer financial aid. Medical school financial assistance ranges from federal loans, school loans, school grants, and scholarships. Most medical school students who qualify for financial aid will receive a combination of loans, grants, and scholarships. Ideally, you want more scholarships and grants to reduce your total debt burden!

Federal loans (Direct Unsubsidized Loans, Grad PLUS Loans)

    Loans are money given to you by the government, through the school, that you must eventually pay back with interest. The best loans to take out are federal loans, as these often have lower interest rates, more payment options, and additional protections. Federal loans are available from the majority of accredited, not-for-profit schools of medicine. Direct unsubsidized loans have lower interest rates than Grad PLUS Loans but are limited at $224,000 in your lifetime, which is not usually enough to cover the full cost of attendance.

The origination fee is the amount when you pay upon initially accepting the loans. This is often ~1% – so if you take out a loan of $10,000 you would pay $100 and receive $9,900.

The interest rate is how much the amount that you need to re-pay grows. Interest is calculated by multiplying your principal (the amount you took out) by the interest rate. Direct unsubsidized loans often have an interest rate of 6-7% – so for a loan of $10,000, you would incur $600-700 per year, or $50-$58 per month, or $1.64-$1.92 daily. The interest that you accumulate is “capitalized,” or added to your principal, after you graduate. So if you accumulated $2,600 of interest, your new loan principle used to calculate interest after medical school is $10,000 + $2,600 = $12,600.

Private loans

    These are loans given to you by private lenders. Like federal loans, they must be repaid with interest. Students are advised to avoid relying on private loans for medical school.

Need-based scholarships and grants

    Grants and scholarships are synonymous terms referring to money given to you by the school which does NOT need to be repaid. Need-based grants and scholarships consider you and your family’s income/wealth in determining eligibility as well as amount granted.

Merit-based scholarships and grants

  1. Merit-based grants and scholarships are typically awarded on the basis of merit, whether academic, extracurricular, or otherwise.