Medical Student Loans

If you're wanting to be a medical student, you most likely are aware of the rising costs associated with your planned education. The average first year tuition for a private medical school costs around $25,000 and that doesn't include books, student fees, housing or food. If you're planning to go to a Public Medical school, you're average tuition is about $10,000 for the first year if you're in-state; out-of-state tuition is about $22,000. But, don't worry, the Government provides higher Federal limits for your education. And, with all of the costs your need for * MEDLOANS SM is probably fairly real.

*MEDLOANS is a registered service mark of the Association of American Medical Colleges.

Medical Stafford Loans

In your search for loan information, you'll discover that a Stafford loan is the first step of MEDLOANS SM. There are some conditions though and you must meet the following criteria in order to qualify:

Federal Stafford Loans have money saving benefits and there are no payments while you're in school (minimum half-time student status) or during your grace period.

  • The annual Stafford subsidized loan limit is $8,500
  • The annual Stafford unsubsidized loan limit is $29,500
  • The lifetime Stafford loan limit is $189,125
  • Originating fees range from 0% - 2%
  • Deferment an forbearance options are available during residency

The above limits vary from school to school so be sure and check with the Financial Aid Officer to get your annual limit. The above limits apply only to students enrolled in an allopathic or osteopathic school of medicine.

Medical Grad-PLUS Loans

Medical students are eligible to borrow under the PLUS Loan program up to the full cost of their education minus all other financial assistance. So, if you're education costs run $60,000 per year, you're eligible to borrow the full amount through government programs. The amount you can borrow through Grad-Plus is $21,500 (Education minus subsidized and unsubsidized Stafford loans) or $60,000 - ($3,800 + $29,500) = $21,500).

In order to qualify for a Grad-PLUS loan, you must meet the following requirements.

  • Be enrolled in at least half-time in a graduate or professional program
  • Meet all general eligibility requirements for the Federal Student Aid
    (See Stafford Loan Eligibility for reference)
  • Have good credit history
  • Complete a Free Application for Federal Student Aid and sign a Master Promissory Note for a Grad-PLUS loan. More about FAFSA

Your first payment for a Grad-PLUS loan will be due 60 days after the the loan is fully disbursed which is generally while you're still in school. And, there is no grace period on a Grad-PLUS loan. You can though apply for an in-school deferment that will let you postpone your loan payments until after you graduate or drop below half-time status.

If you're unable to make loan payments after you leave school or drop below half-time status, you can request a forbearance that will allow you to postpone payments temporarily. You will need to explain why you're not able to make your payments.

Some of the benefits of having a Grad-PLUS loan include:

  • Interest rate reductions that start while you're in school. A 0.25% interest rate reduction that starts at first disbursement and never exceed 8.25%
  • A 0.75% interest rate reduction that starts when you begin repayment
  • If you make loan payments through automatic debit, your interest rate will be reduced by 0.50$.

Medical Alternative Loans

Once you have exhausted your Federal Stafford loans, there are alternative loan programs available to offset any additional education-related expenses. These loans are available to students who are in need of additional financial aid. Although the terms and conditions will vary from lender to lender, the below is a general guide.

  • Interest is variable, often with no cap or a very high cap. Rate can change quarterly.
  • Interest is not subsidized and begins accruing upon disbursement. You can pay the interest during enrollment or let it accrue.
  • Unpaid interest will be capitalized by the lender and added to the principal of the loan.
  • Loan amounts are the cost of education minus all other loan amounts.
  • Alternative Loans are not need-based.
  • Student borrows directly from a private lender.
  • Loan fees are usually deducted from the loan proceeds before the money is disbursed. Loan fees range from 3% — 8%
  • Generally allow deferment during residency (up to 5 years)
  • Depending on the amount borrowed, repayment can extend up to 25 years.
  • Borrowers must be creditworthy.

Applying For A Medical Student Loan

Before you apply for a medical student or parent education loan, obtain a free credit score from all 3 bureaus. The link provided allows access to your credit reports from all three reporting agencies: TransUnion, Equifax, and Experian. Knowing your credit score and being aware of any credit issues is important when applying for student and parent college loans. Your interest rate depends upon your credit score if you wish to use alternative methods to finance your education.

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