How to Pay for Medical School: Expert Tips on Loans, Scholarships
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How to Pay for Medical School: Your Guide to Financial Aid Options

August 1, 2023

You’ve made the decision to become a doctor and now you are wondering how you will afford four years of medical school. While the cost of a medical school education may seem daunting, there are resources available to help prospective doctors achieve their goals.

A pile of $100 bills with a stethoscope
PCOM offers extensive resources to help osteopathic medicine students figure out how to pay for their medical school education.

Brad Schutts, MBA, associate director of student services, communications and marketing with PCOM’s Office of Financial Aid, has years of experience in helping students determine how to pay for medical school.

“Things do change with medical school and that can be scary,” he said. “But I remind them that they already know it’s possible to pay for school. They hypothetically did this for four years in undergrad. Sure, things on the periphery may change—for example, covering the gap in funding with the student taking a Grad PLUS Loan instead of a parent taking a Parent PLUS Loan—but in the grand scheme, there are many well-traveled avenues to get applicants what they need.”

How do you get loans or scholarships for medical school?

Financial aid for medical school is a much more straightforward process than that of undergraduate education, Schutts said.

“There are only three federal funds available—Direct Unsubsidized Loan, Direct Graduate PLUS Loan and Work-Study,” he explained. “A student can complete all of the paperwork necessary to cover their needs in an hour or two if truly necessary.”

Key Points
  • Medical students have access to federal loans, scholarships and work-study opportunities to cover their education costs.
  • Applying for financial aid involves completing the FAFSA as a first step.
  • Medical students can choose between federal and private loans, with federal loans being more accessible and private loans potentially offering better rates.
  • Medical students face unique financial burdens including rotations, exams, and application costs.
  • A frugal approach during school can reduce debt.

The first step in the process is completing the FAFSA (Free Application for Federal Student Aid) which will be available in December prior to the start of the academic year for which the student is applying for aid.

“I usually recommend students that are particularly energetic to focus it toward applying for third-party scholarships,” Schutts said. “The federal funds are always available if eligible. Further institutional scholarships commonly are endowed, so schools many times match the scholarship with the student without much of an application process.”

At PCOM, the Office of Financial Aid provides a self-service option which routinely notifies students of any outstanding requirements.

For scholarships, Schutts said, the Office of Admissions identifies students who match the criteria of endowed scholarships. For those, no application or inquiry is needed because the process is automatic.

Loans are a bit more complicated.

“Most students do go the federal route,” Schutts said. “The FAFSA will find if they are eligible for federal funds and will allow the Direct Unsubsidized Loan to be available. A Direct Graduate PLUS Loan is a separate application to help bridge the gap between what a student has in aid to what they need to be a student.”

These loans do require a credit check, but are generally more attainable than a private loan and most of the time, students will not need a cosigner.

Completing a MPN (Master Promissory Note) for both loans as well as entrance counseling is required.

“Submitting five items would complete the whole process for the year and resubmitting the FAFSA and the Grad PLUS App each year would complete the process for the whole program,” Schutts added.

For private loans, Schutts advises students to look at more than the interest rate. Private loans may offer a better interest rate since the rate is not tied to treasury bills, but the applicant may need a cosigner and/or a secure support system for when they graduate as a more aggressive repayment plan is common.

Work-Study, according to Schutts, can be a source of supplemental income but the majority of funding will be through loans or scholarships.

“Usually, that means that a student sets [loans and scholarships] up to cover their needs and work-study can be for ‘walking around money’,” Schutts explained. “That way, if there is a particularly hard exam looming, a student won’t have the additional worry about working enough hours to cover necessities. Your job first and foremost is to be a student.”

What unique financial challenges do medical students face?

Medical students have a great deal of additional financial challenges that other graduate students do not.

“The second half of their program will be traveling for rotations each month. So that could mean maintaining your apartment at school, a plane ticket, a rental car, and an AirBnB (or similar) all at the same time,” Schutts said. “As well, students have to pay for Electronic Residency Application Service® (ERAS®) applications (which could be numerous), COMLEX (Comprehensive Osteopathic Medical Licensing Examination of the United States) exams, but also the USMLE (United States Medical Licensing Examination®) if they choose to take it.”

According to Schutts, PCOM has structures in place to help students cope with these challenges.

How do I reduce my student loan debt?

Medical school—and the living expenses surrounding it—can get expensive, especially with free federal funds like Pell Grant no longer available, Schutts cautioned.

“So with much of financial aid being in the form of loans, mitigating costs is what I recommend most,” he advised.

If a penny saved is a penny earned, then choosing an apartment that is $100 a month less than the alternative equates to a savings of $1,200 because the student would need to borrow that additional amount otherwise.

“This can’t always be done but having that mindset will pay off in the end,” Schutts said.

His other advice: Act like you are a student, not like a doctor.

“I say this in meetings with students all the time and it is meant to be very light,” he said. “There will be a time when you will have the funds to get the upgraded car or the extra square footage in your home, but it is not while you are a student and borrowing the money to fund that lifestyle.”

How long does it take to pay off medical school debt?

According to Schutts, paying off loans likely will take 10-20 years. With Federal Loans, students seeking Public Service Loan Forgiveness or who wish to aggressively repay their loans can be done with their payments after 10 years with a qualified income-based repayment plan or standard repayment, respectively.

“However, that is more the exception rather than the rule,” Schutts said.

Students also have the option of participating in the Department of Education’s newly implemented SAVE Repayment Plan. Under this plan, students who make payments for 20 years may have the remainder of their loan forgiven.

“There are a number of benefits to this plan specifically for graduate and professional students including eliminating 100% of remaining interest for both subsidized and unsubsidized loans after a scheduled payment is made,” Schutts explained. “So if your SAVE monthly payment is $30 a month but interest accrues $50 a month, the remaining $20 will not be charged.”

Ultimately, Schutts added, it’s all about the student’s goals.

“We encourage recent graduates to contact a financial planner to be strategic with their money and their goals,” he said. “If the graduate values homeownership, there are special programs like physician loans for a mortgage that are available. If retirement is important, they may recommend saving in a Roth IRA during their residency because contributions are post-tax; all qualified withdrawals do not have to be taxed which will help in their later, higher-earning years. If debt mitigation is important, then a more aggressive payment plan may be desirable.”

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