Paying for medical school is easy right? Wrong.
Paying for medical school has become increasingly challenging for students and families. Higher education is expensive, and is getting more expensive each year. Keeping up with the rising cost of tuition, living expenses, books, and supplies is difficult for every student. If you are an incoming medical student you know how expensive it is to become a doctor.
As reported by the Association of American Medical Colleges, the median four-year cost of medical school (including expenses and books) was $278,455 for private schools, and $207,866 for public schools in 2013. As tuition bills hit mailboxes nationwide, you may be wondering how you can possibly afford to go to medical school. In this article we like to highlight a few paths to consider if you are looking for ways to fund your education.
Federal Financial Aid
The Department of Education realizes that paying for an education is difficult. Luckily, there are a number of federal programs available to help you pay your bill. If you haven’t already submitted the Free Application for Federal Student Aid (FAFSA) get on it. You must submit the FAFSA if you would like to be considered for federal financial aid such as grants or loans. Filing the FAFSA is easy and can be done online in less than 30 minutes.
In short, the FAFSA will determine the amount of financial aid you are eligible to receive. The Department of Education offers both need-based and non-need-based aid. Even if you don’t think you qualify, take 30 minutes and file the FAFSA. Your medical school may even require it as part of the application process.
All incoming medical students will qualify for some form of financial aid. The Department of Education offers graduate and professional students up to $20,500 in Unsubsidized Federal Stafford Loans. These loans have fixed interest rates set at 5.84% for the 2015-2016 period. You can use Federal Stafford Loans to pay for tuition, room and board, textbooks, and other costs related to your cost of attendance. Please note, if you’ve already used federal student loans for your undergraduate studies you can borrow no more than $138,500 in aggregate.
Lastly, you should know that Unsubsidized Federal Student Loans will accrue interest while you are in medical school. It is recommended that you payoff your accrued interest to protect against capitalization.
Private Student Loans
If you aren’t able to meet your cost of attendance even after federal financial aid, you may be considering using a private student loan. Private student loans get a bad rap at times. For most students, private student loans will have higher interest rates in comparison to federal student loans. Private student loan rates range from 2% to 13%. Unlike the Department of Education’s loans, private student loans are issued based off creditworthiness. The rate you are offered will be determined by your creditworthiness and the options selected.
About 9 out of 10 private student loan borrowers need the help of a cosigner to get approved for a private student loan. In general, you or your cosigner will need good credit (+700), a low debt-to-income ratio (below 40%), and gross income over $35,000. Private student loans come in many shapes and sizes. You can select from variable rates, fixed rates, and even choose the term length of your loan. There are plenty of private student loan lenders on the market. Each lender has different options, rates, and approval criteria. We recommend shopping around between lenders before signing that promissory note.
It is always recommended that you maximize your federal financial aid options before using private student loans. For more detailed information about private student loans, please check out this guide.
You’ve likely already started looking at scholarships. But I want to mention it just in case. Unlike student loans, scholarship awards do not need to be repaid. Scholarships are free money.
Scholarships come in many forms. Merit scholarships are the most popular form of scholarship aid. That being said, there are plenty of scholarships available for incoming and current medical students. I would suggest avoiding the first page of Google search results when looking for scholarships. Don’t waste your time applying for scholarship lotteries or “No application! Takes only 2 minutes!” scholarships. Get creative. Look for local scholarships and niche awards. Don’t be afraid to apply for smaller awards too. The smaller the award, the less competition.
Lastly, make sure you avoid scholarship scams. Don’t ever pay to apply for a scholarship. Don’t ever provide your social security number. And if it seems too good to be true, it probably is. Online scholarship marketing is a huge business. Be careful with your information.
Medical school is expensive. But paying for medical school isn’t impossible if you know where to look. Start with federal financial aid and scholarships. Then if need be, consider private student loans.
By Matt Lenhard, Co-Founder at LendEDU. LendEDU is a marketplace for student loans and student loan refinance. LendEDU works to create transparency in the student loan market. For more information about financial aid or student loans check out LendEDU’s website!