Medical School Loans

medical school loansMedical students face a specific set of challenges that can make their educational experience far from affordable. Their classes are intense and challenging, for example, and they’re required to spend hours in internships and residencies for little to no pay. These demands make it hard for students to hold down part-time jobs to supplement their income and pay their tuition fees.

Additionally, medical schools can be expensive, with the Association of American Medical Colleges (AAMC) reporting that tuition and fees for first-year medical students in public schools topped $40,000 for residents and $70,000 for non-residents in 2011 and 2012. Private schools are even more expensive. Even applying for medical school can be expensive, the AAMC reports, as applications for school come with a $160 fee, with $35 tacked on for each additional school the student selects. Taking the entrance exam can cost $270, and there are additional fees associated with late registration.

Since medical students need money in order to meet their educational goals, and they’re unlikely to have the time to work, they’ll often need the help of medical student loans. These products can help students to stay focused on their goals, so they can obtain their degrees and begin practicing without much financial concern over unmanageable debt.

When it comes to medical student loans, most experts encourage students to explore their federal options first. Federal student loans are almost always the best first option, as they have generally more favorable borrower terms, including the following:

Also, federal student loans don’t require a student to have a stellar credit history.  While some private lenders offer choice loans that have a bounty of excellent benefits, the best plans are often reserved for those students who have perfect credit, and that might not be the case for everyone in medical school.

There are a variety of federal options open for students in medical school, including direct unsubsidized loans and direct PLUS loans. Each of these loans works a little bit differently, and they’re designed to help in a slightly different way. They also have different interest rates. Some students choose direct unsubsidized loans for graduate school, but students who used these loans in order to fund their undergraduate studies may bump up against the time limits imposed by the government for this type of loan. These students might need to move directly to a PLUS loan, but they might be limited in the amount they can apply for, because they’ve borrowed from the government in the past.

It can be confusing, and sometimes, it’s best for medical students to visit the Financial Aid Office of the school in which they’re enrolled, and discuss their options in detail with a trained professional. This person can parse the details of the loans the student has used in the past, along with the needs of the student at that moment. Then, armed with this information, the student can begin to fill out the appropriate paperwork and enroll in the right kind of plan to meet that student’s needs.

Since federal loans come with limitations, some students in the late stages of their careers are ineligible for additional loans. They may have been in school for too long, or the amount of money they’ve borrowed in the past puts them above the limit for borrowing set by the federal government. These students might still need money, but they might not be able to get it from the government.

Additionally, there are some medical students who have excellent credit scores and the promise of a lucrative job just waiting for them on the other side of their educational experience. These students might be capable of landing a very favorable private loan with generous terms that the federal programs might never approach. For them, signing up for a federal program could mean obtaining a loan that’s much more expensive than it should be.

Students like this might benefit from medical student loans that come from private lenders. These loans come directly from a bank to a student, so there’s no financial aid office to deal with and no tricky federal paperwork to fill out. Instead, the student simply applies for a loan, just as someone might apply for a loan in order to buy a house or a car, and that person begins to receive checks from the bank that can be applied for the fees associated with attending medical school.

AAMC reports that 86 percent of medical school graduates have some form of education debt, and it’s likely that at least some of that debt comes from private sources. There’s no shame in heading to the bank to ask for help with a loan, when it could help a student to complete an education and begin helping others. It does pay to shop around for loans, however, so students can ensure that they’re getting the best deal. Private loans aren’t controlled by any kind of oversight committee, so they can vary by:

Since the financial aid office isn’t involved, there is also no person available to explain how the loans tend to work and whom they’re for. The person who is offering the loan might have a vested interest in selling that product, and the information given might be slightly skewed as a result.

Using Reason

Lower your monthly payment by refinancingGetting a loan for medical school is relatively easy, but it makes sense for medical students to use caution. For example, Health Affairs suggests that primary care physicians in the United States make about $186,582 per year on average. New doctors may make much less, as they don’t have the experience and tenure of their elder counterparts. Taking in loans that have payments that just don’t mesh with the amount of money a doctor stands to make isn’t wise. It’s best for students to be realistic about what they can pay back, and look for loans that have payment plans they can afford. Heading off problems now could mean less stress down the line.

It also pays, as mentioned, to look over the details of the loan carefully, particularly the sections that deal with default. While no student expects to walk away from a loan, knowing what might happen if financial difficulties enter a student’s life could help that student to plan ahead and make smart financial choices. If the loan documents seem confusing, even if they come from federal sources, it’s best to ask questions until you totally understand the loan terms. It’s a product and a purchase, and the buyer must really understand the terms and conditions.

Similarly, those students who do take out medical student loans might have a significant amount of responsibilities in place at the same time, with hard classes to take, anatomical terms to memorize and maybe even a family to attend to. Dealing with a loan can seem unimportant in the face of all of this work, and payments can sometimes slip and slide. It’s understandable, but unfortunately, student loans can sometimes come with acceleration clauses when payments are missed, and those clauses can be hard to reverse.

It’s best for medical students to give their loan payments top priority, ensuring that they make payments on time each time, no matter what else might happen. If those payments can’t be met, talking to the lender before the default is absolutely vital. Some loans can be deferred for a time, while others can be consolidated. There are always options, but those options tend to disappear as soon as the loan is considered delinquent. Students must keep in touch with their lenders so they can head off potential problems before they turn into gigantic messes that are impossible to handle.

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