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The Types of Medical School Loans

The cost of attending medical school is often the elephant in the room for many pre-med and medical students thinking about their medical education. Since medical school is such a serious time commitment, this often means that medical school students are full-time students without part-time jobs on the side. So affording the cost of med school and living expenses for four years can be a challenge.

Since paying for medical school, at least partially, with loans is so common, let’s go into the different types of loans available to students. 

Types of Med School Loans

Federal Student Loans (Direct Unsubsidized Loans and Direct PLUS Loans)

For the majority of students, these are the best option since they have fixed interest rates and more flexible loan repayment plans available—this includes possible postponement options throughout residency or if you decide to complete a fellowship. Another benefit is that these federal loans are potentially eligible for certain student loan forgiveness programs.

Private Loans

You can use private loans, but they aren’t primarily intended for medical students. So these may only work for student borrowers in certain situations, may be based on financial need, and are generally regarded as less ideal for the majority of medical students. These private loans may have fixed or variable interest rates, and they may require repayment before you are finished with school, residency, or fellowship.

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In addition to the type of loan you are taking out, there is another factor to consider—interest rates. Interest rates are the percentages of the total amount of the original loan added as an additional charge. 

  1. 1. Federal loans have fixed interest rates once the loan is given. They are recalculated each academic year on July 1 and do not change during the remainder of that year.
  2. 2. Private loans may have fixed or variable interest rates. For example, the interest rate may begin rather low but rise quickly after a short amount of time. 

Repayment Plans

A key question to ask when deciding on the amount of federal or private loans you’ll be taking out is “When and how quickly will I need to pay this amount of money back?”

Again, federal loans offer student borrowers a greater timeline and degree of flexibility when paying back their loans because they do not require repayment until after graduation from medical school or even after residency in some cases.

Private loans set their own repayment schedules, which may not work well with medical students’ timelines. For example, most medical students will not be able to work or earn much money when busy with medical school and perhaps will not earn enough during residency or fellowship to aggressively repay medical school debt. However, there are certain situations that may allow for private loans to be the best option—for example, students who have a large amount of money or income secured and could pay off the entire loan right when it is due, which could be during medical school or residency. 

Federal Loan Repayment Plans

Student borrowers are able to choose between three types of traditional repayment plans and many forms of income-driven repayment plans. 

The traditional repayment plan is the default form assigned to most students. The traditional repayment plan begins 30 to 60 days after graduation and is a 10-year plan with fixed monthly payments with what is usually the lowest interest cost. 

Navigating medical school, including financing options, can be tricky. We always recommend first looking at med school scholarships, which don’t have to be repaid, before looking at loans.

And if you want some free MCAT resources, don’t forget to check out our customizable study planner and practice test with analytics to see your strengths and weaknesses. (We also offer financial aid on our MCAT courses for students who qualify for AAMC fee waivers.)

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