Understanding Your Offer
While some schools may be able to offer scholarship and/or grant money (“free money”) not all schools have this type of aid to offer, or they may not be able to offer enough to cover all your education expenses. Many medical students turn to loans to finance their medical education.
This guide primarily applies to federal student loans. Federal student loans come with many borrower benefits including the ability to postpone payment while enrolled at least half-time and during residency, manageable repayment plans after graduation, and the possibility of loan forgiveness. If you want to learn more about the differences between federal and private student loans, read this article.
Types of Aid
If eligible for federal student aid, medical students will be eligible for unsubsidized loans – Direct Unsubsidized Loans and Direct PLUS Loans (sometimes called Direct Grad PLUS Loans). The borrower is responsible for the interest that accrues on these loans from the time of disbursement until the loan is paid in full.
The interest rates for Direct Unsubsidized and Direct PLUS Loans are set each academic year. Once the loan is disbursed, the interest rate is fixed for the life of the loan. In addition to accruing interest, Direct Unsubsidized and Direct PLUS Loans also have origination fees, or fees charged to borrow the loan. Origination fees are deducted from the loan principal before the money is disbursed to the school. To see historical interest rate and origination fee information, visit the Federal Student Aid (FSA) website.
Eligible schools may award Health Resources and Services Administration (HRSA) loans, which include Loans for Disadvantaged Students (LDS) and Primary Care Loans (PCL) for 3rd and 4th year medical students. Check with the financial aid staff at your school to see if these loans may be an option. If eligible, these loans will not be displayed in your FSA account.
Institutional loans, or loans awarded by the school, may be an option at some schools. The financial aid staff at your school will be able to tell you if this type of aid is available. You can also check the school’s financial aid webpages for this information. When accepting loans, be sure you understand the terms, conditions, and repayment terms associated with the loan. Many times, institutional loans offer favorable borrower benefits, such as lower interest rates, subsidies, and deferred or flexible repayment options during residency.
Students who do not qualify for federal loans will want to consult with the financial aid staff at their school to discuss other financing options.