All About Loans

The FIRST (Financial Information, Resources, Services, and Tools) program can help you make a smooth, successful, and informed transition to medical school. This is probably one of the biggest financial and personal investments of your life. Utilize the resources available to make wise and knowledgeable decisions about your future.

Managing your debt effectively and repaying your medical school loans wisely is easier when you keep good records. It is important to know how much you owe, the terms and conditions of each loan type, and what agencies are servicing your loans. You need to know what documents to save, where to find them when you need them, and who you may need to contact if you have a question or concern.

Both federal and private loans are viable options for financing an education, but it is important for the funding source to be one that best complements the student’s expected career path and financial goals. Medical students face a unique situation with long enrollment periods followed by additional years of post-graduation training. Therefore, careful consideration should be given when choosing financing options.

Direct Loans are federal education loans with fixed interest rates and flexible repayment terms. Borrowers should consider maximizing Direct Loan options before borrowing other loans with higher interest rates and/or possibly more stringent terms and conditions.

Direct PLUS Loans are loans for graduate students who have additional financial need beyond what the Direct Unsubsidized Loan covers. In most cases, borrowers are encouraged to use federal loans before turning to private loans

Occasionally unforeseen emergencies occur that can affect your finances, and your eligibility for financial aid. Under certain circumstances, financial aid administrators have the authority to adjust your financial aid eligibility.

Some college graduates consider a postbaccalaureate premedical program or coursework to be a stronger, more qualified medical school applicant. When researching these programs, make sure to consider any financial implications that may impact your present and future situation.

Though the costs associated with applying for a residency position will be a minor portion of the total cost of your medical education, they can still add up.  Because application fees are not always covered by student loans, it is important to develop a plan early on for how you will manage these expenses.

If you have federal student loan debt, the good news is that you get to choose how to pay it back, and it takes only two simple steps to pick the best plan for you. 

Borrowers can temporarily postpone loan payments through grace, deferment, or forbearance. During residency, when money may be tight, a temporary reprieve from required monthly payments (with a Mandatory Residency Forbearance) may be the “budget-saver” you need. 

Fourth-year medical students may encounter expenses not included in the standard student budget and may find it necessary to borrow additional funds through a residency and relocation loan. If you are considering a residency and relocation loan to cover some of your additional expenses associated with the residency match (traveling for interviews, related meals, lodging) or relocation costs, it’s important to understand how these private loans differ from federal loans.

Managing federal student loan payments during residency can be difficult, but missing payments can lead to greater financial problems.  Know your rights and responsibilities so that you can prepare yourself for repayment. 

After graduation, you will likely have a grace period before beginning loan repayment. After your grace period is over, if you want to continue postponing payments, you can request a forbearance (or in some cases, a deferment). These options may help you get through residency without making monthly loan payments.

Do you know how much you owe in federal student loans?  Do you know who your loan servicer is and where to send your loan payments?  Do you know the status of your loan(s)? Do you know when your first payment is due?  Where can you find the answers to all of these questions? Login to your Federal Student Aid account.

The biggest cost of the residency process will likely be the cost of interviewing. While these may be a minor part of the total cost of a medical education, it is still important to develop a strategy for managing these costs – before they are incurred.

Managing federal student loan payments during residency can be challenging, but income-driven repayment plans may offer more manageable payment amounts that could also count towards Public Service Loan Forgiveness (PSLF). 

This is one of several income-driven repayment (IDR) plans for federal student loans. It may be an option for borrowers who want to manage their loans under a repayment plan that bases their monthly payment on their income and household size; however, borrowers should evaluate all IDR plans before deciding on the best plan.

With medical school behind you, you’re certainly due for congratulations. But that’s not all that’s due – loan repayment is just around the corner – either beginning now or after residency. Fortunately, when it’s time to repay, you have flexibility in structuring your repayment schedule by choosing the plan that works best for you. 

The MedLoans® Organizer and Calculator was developed to assist medical students and residents with managing their education debt. The MLOC provides a secure location to organize and track student loans while also displaying possible repayment plans and costs based on the borrower’s student loan debt.  

REPAYE, like PAYE, offers one of the lowest possible monthly payments, which can make repaying your federal student loans more manageable during residency. Review the features of REPAYE to determine if it’s the right repayment plan for you. 

For those who qualify, this income-driven repayment plan allows for one of the lowest monthly payments – offering an affordable repayment solution to graduates with student loan debt. 

Borrowers can combine multiple federal student loans into a single Direct Consolidation Loan, possibly making the debt easier to manage. Simpler, though, is not always better, so the decision to consolidate should be made carefully.

Answer these questions to reveal if refinancing would benefit your debt situation.

If you have good credit, you may be able to refinance your existing federal student loans into a private loan. Before doing that, it’s important to understand the full impact of making this permanent change to your loans. 

Credit—buying something now and paying for it later—carries with it many rewards when handled responsibly. Learn what credit is, the benefits you may enjoy by having access to credit, and how to manage your creditworthiness.