So you’ve decided to pursue a career in medicine. In terms of schooling, once you finish your undergraduate degree, four years of medical school and at least three years of residency await.
How do you fund such an intensive education?
Even though your long-term financial outlook is great, medical school can be very costly and most physicians leave school with a variety of outstanding loans. Planning to fund your tuition is a complex effort and often requires a combination of sources.
Private student loans may prove to be a great way to supplement the cost of medical school.
How much is the average medical school tuition?
With medical school costs varying widely from program to program, the average medical school tuition (including fees and health insurance) for the 2019-2020 academic year was $37,556 for in-state and $62,194 for out-of-state. The most expensive of which topped out at just under $100,000 per year.
Needless to say, an education this expensive will likely require a variety of alternative resources.
Consider these options when planning to pay for medical school:
- Personal Savings — Money from savings and part-time work can be a nice offset to the costs for medical school. Remember to keep some earmarked for emergency savings, just in case.
- Scholarships and Grants — There are a tremendous number of public and private scholarships and grants available for medical school (both need based and achievement based).
- Direct Student Loans — Unsubsidized federal loans administered by the U.S. Department of Education with interest rates set by Congress are available for graduate education. Subsidized loans (for students demonstrating need) are only available to undergraduate students.
- Direct PLUS Graduate Student Loans — Once you have maxed out on direct student loans, Direct PLUS Graduate loans can cover a significant portion of the needed funds. Direct PLUS loans do require a credit check so may not be a great option if you have bad marks on your credit unless you have a creditworthy cosigner.
- Private Student Loans — With excellent credit history or a qualified cosigner, private student loans may make sense with lower interest rates and more appealing repayment terms.
What is a private student loan?
By definition, a private student loan is a loan obtained through a private lender (like a bank, credit union, or other financial institution) and may be the perfect solution when bridging the gap between the total amount needed and what can be obtained from scholarships, grants, and federal loans.
Private student loans are similar to federal loans except you are borrowing from a private bank or lender. As such, with good credit history, you may well find funding with lower interest rates and more adaptable repayment terms.
The downside is there are certain benefits to federal loan programs like student loan forgiveness, income-based repayment plans, and generous forbearance and deferment options that are not available with private student loans. However, if those benefits are not important to you, then private student loans may be an effective funding solution.
Private student loans vs federal graduate school loans for medical school
For medical school loans in the academic year 2020-2021, the federal loan rates have been set at 4.3% for graduate or professional borrowers through the Direct Unsubsidized Loan Program and 5.3% for Direct PLUS Graduate Loans.
As for private student loans, rates are at all-time lows. If you have excellent credit or a strong cosigner, you may benefit by lower interest rates saving you money over the long term.
Additionally, private loans come with higher borrowing caps than federal loan programs. This may be beneficial when looking at the expense of medical school and the potential need for large sums of tuition money.
Should you apply for private medical school loans?
Once you go through the exercise of securing scholarships and grants, as well as adding in family and personal savings, you will see the remaining amount needed to cover tuition for medical school. Most likely, a mix of federal and private student loans will be required to meet the costs of this advanced education.
Private medical school loans are an excellent option for many to help fund their medical school education – but it’s crucial to shop around for the best rates, lenders, and terms before deciding to apply.
Compare private student loan rates and apply
Once you have determined your funding needs for medical school, it’s time to find out what kind of rates you are eligible for by using Purefy’s free and easy rate comparison tool.
With just a few pieces of information, our tool is able to provide you with a side-by-side comparison of rate and term offers from reputable lenders – without impacting your credit score.