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College Students and Recent Grads

The Ultimate Guide to Paying off Medical School Debt

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Part I: Is Medical School Worth It?

Getting accepted to medical school is a major accomplishment, but graduating from medical school can be life-changing for your finances. According to The College Payoff, a collaborative study conducted by the Georgetown University Center on Education and the Workforce, individuals with a doctoral-level degree enjoyed median lifetime earnings of $3,252,000 in 2009 dollars. This figure compares favorably to degrees that require a smaller commitment of time and resources, showing that pursuing a medical degree can pay off.

Now on to the bad news. While earning more money over a lifetime is advantageous, there’s a notable downside to going to medical school. While doctoral-level degrees can pay off with a lifetime of higher wages, the costs of pursuing this degree can be astronomical.

As the Association of American Medical Colleges notes, the average indebted 2017 medical school graduate left college with a median medical school debt of $192,000. No matter how you cut it, that’s a lot of money to borrow and spend.

Are you currently suffering from high-interest rates on your medical school loans? Jump down to our top picks for refinancing med school debt in 2018.

Medical school debt in the U.S.

The Association of American Medical Colleges shares statistics on average medical school debt. As of 2017, indebted medical school graduates left school with a median debt loan of $192,000. At public schools, the median debt load worked out to $180,000. Private medical schools, on the other hand, reported a slightly higher level of debt with a median debt load of $202,000.

The high levels of debt many medical school graduates endure are caused by myriad factors, including the rising costs of tuition. While average medical school tuition hasn’t been tracked since 2009, the price tag of a medical education was $29,890 that year.

In addition to the price of tuition, medical students need to pay for countless other expenses, some of which only apply to those in the medical field:

  • Room and board
  • Rent and utilities
  • Food
  • Travel and transportation
  • Health care
  • Instruments and supplies
  • Textbooks
  • Lab fees
  • Test fees
  • Relocation for residency

Lifetime earnings for a doctor

While the costs of medical school are high, doctors’ higher salaries can take the sting out of the long-term costs. In 2016, for example, family and general practitioners earned an annual mean wage of $200,810, while physicians and surgeons earned $210,170, on average. Several medical specialties earned even more.

The following table highlights profitable medical careers alongside careers that require only a bachelor’s degree:

Careers & Degree Requirements

Annual Mean Wage in 2016 (National)

Medical Careers:

Family and general practitioners

$200,810

Physicians and surgeons

$210,170

Anesthesiologists

$269,600

Surgeons

$252,910

Bachelor’s Degree Careers:

Petroleum engineers

$147,030

Biomedical engineers

$89,970

Registered nurses

$72,180

Market research analysts

$70,620

Elementary school teachers

$59,020

Is medical school worth the cost?

If you’re trying to decide between degree programs with varying costs and educational outcomes, it’s important to consider the ROI, or return on investment, for your education. While there’s no hard and fast rule to help you decide, figuring out your post-education monthly payment for medical school debt and comparing it to your potential salary can help.

As an example, the average medical school graduate with $192,000 in debt with a 6% interest rate would need to pay $2,131.59 per month toward their loans if they chose standard, 10-year repayment. According to the Bureau of Labor Statistics, however, the median weekly earnings for someone with a doctoral degree worked out to $1,664 in 2016.

During a month with four weeks of paydays, a doctoral graduate would bring in $6,656 before taxes and $4,659.20 after taxes, considering a 30% tax rate. While a $2,131.59 payment represents nearly half of this person’s income, it’s only for 10 years. Further, the percentage of income will only decrease as their income grows. And if they choose a higher paying medical specialty, the difference could be even greater.

Also keep in mind that doctors don’t have to choose 10-year, standard repayment as there are plenty of other options available, including repayment plans that span up to 25 years. If the graduate with the same level of debt as above chose to repay their loan over 25 years at the same interest rate, for example, they would pay only $1,237.06 per month.

Part II: Paying for Medical School

Federal student loans are usually the first source of funding medical students turn to as they seek to finance their education. Several different types of federal student loans are available, and each has their own benefits, drawbacks and practical limitations. Federal student loans tend to be a good option for medical students since they offer relatively low, fixed interest rates and help students qualify for federal perks like income-driven repayment, student loan forgiveness programs, deferment and forbearance.

Pros of federal student loans:

  • Fixed interest rates that can be competitive
  • Access to federal loan repayment and student loan forgiveness programs
  • Qualifying for subsidized loans means the government may pay the interest on your loans during school
  • Access to student loan forbearance and deferment (if you qualify)
  • No credit check

Cons of federal student loans:

  • Caps on how much you can borrow
  • You may need to take out private loans once you exhaust federal loans
 

Interest Rates

Maximum Annual
Borrowing Amount

Perkins Loans

5%

Up to $5,500 per year for
undergraduate students, depending
on financial need and other aid
received; up to $8,000 per year
for graduate students

Direct Subsidized Loans

4.45% for undergraduate
loans first disbursed on or
after July 1, 2017,
and before July 1, 2018

$3,500 to $5,500 per year for
undergraduate only

Direct Unsubsidized Loans

4.45% for undergraduate
loans first disbursed on or
after July 1, 2017, and before
July 1, 2018; 6% for graduate
loans

$5,500 to $12,500 per year for
undergraduate students;
up to $20,500 per year for
graduate students

Direct PLUS Loans

For Direct PLUS Loans first
disbursed on or after July 1, 2017,
and before July 1, 2018,
the interest rate is 7%

Maximum loan amounts
are limited to the cost of
attendance in school minus
financial aid received

Direct Consolidation Loans

Weighted average of the
loans being consolidated

No minimum or maximum
loan limits

Private student loan debt for medical school

Private student loans are commonly used once medical students max out the amount of federal money they can borrow for school. These loans are offered through private lenders, which means their rates and repayment terms are not fixed by the government. As a result, they can vary greatly but may be lower than rates offered through government programs.

Pros of private student loans:

  • Interest rates may be lower than federal student loans
  • Loan limits can be high enough to cover the entire cost of medical school
  • Loan disbursement may be faster
  • You can shop around among lenders to find the best deal

Cons of private student loans:

  • You need good or excellent credit to qualify on your own
  • Without good credit, you may need a co-signer
  • Interest rates can be fixed or variable
  • Private loans do not offer federal student loan forgiveness, income-driven repayment, or federally sponsored deferment or forbearance
  • You may need to make payments or pay interest while still in school

When to consider private student loans:

  • You’ve maxed out on federal student loan amounts
  • Private loans offer a better interest rate
  • You don’t plan to take advantage of government programs when it comes to repaying your loans

Private student loan lenders to consider

 

Interest Rates*


Borrowing Limits


Credit Requirement


Discover
Student Loans

Variable rates from 4.62%
to 8.62% APR; fixed rates
from 6.49% to 9.99% APR

Limited to 100% of the
cost of attendance minus
other aid

You may need a co-signer
to qualify if you don’t
have excellent credit


Sallie Mae
Student Loans

Variable rates available
from 3.62% to 8.36% APR;
fixed rates from
5.74% to 8.36% APR

Borrow up to 100% of
the cost of attendance

You need good or
excellent credit to qualify
without a co-signer


Wells Fargo
Student Loans

Variable rates available
from 4.59% to 9.10% APR;
fixed rates available from
6.66% to 10.18% APR

The lifetime limit for this
loan and all other
education-related debt,
including federal loans,
is $250,000 for allopathic
(M.D.) or osteopathic
(D.O.) medicine; $120,000
for all other disciplines

You have a better
chance to qualify if you
have a co-signer;
excellent credit required


Citizens Bank
Student Loans

Variable rates available
from 3.53% to 9.69% APR;
fixed rates available from
5.26% to 10.24% APR

Lifetime limit is $225,000
for medical school loans

Good or excellent credit
required without a
co-signer


College Avenue
Student Loans

Variable rates available
from 4.07% to 9.60% APR;
fixed rates available from
6.22% to 10.66% APR

Borrow up to 100% of the
cost of attendance

Good or excellent credit
required without a
co-signer

Grants for medical students

Grants for medical school students are offered through the government, research facilities, corporations and institutions of higher education. Students can seek out information on available grants by asking their school’s financial aid office, searching the internet, or checking government resources that cover the medical field.

Here are some popular grants available to medical students:

This Medical Scientist Training Program grant was created to assist students pursuing degrees in clinical and biomedical research. This program is offered at over 47 universities that help facilitate the grant.

  • Award amount: Amounts vary
  • Qualifications: Available to qualified M.D.-Ph.D. dual-degree students with a GPA of 3.0 or higher
  • Deadline to apply in 2018: Depends on the participating institution

The Ford Foundation Fellowship Program seeks to increase diversity and offers grants to medical students pursuing a Ph.D. with the goal of participating in medical research or teaching. Other Ph.D. students are considered as well.

  • Award amount: $20,000 to $45,000, depending on the specific program
  • Qualifications: Medical students in pursuit of a Ph.D. can apply
  • Deadline to apply in 2018: Applications closed January 9, 2018 at 5 PM EST

This American Medical Women’s Association grant awards four AWMA student members every year. This two-year fellowship focuses on global health and includes a trip to Uganda.

  • Award amount: $1,000 to fund local project planning and subsidize experiential education in Uganda
  • Qualifications: Must be AWMA member pursuing a medical education
  • Deadline to apply in 2018: The next application cycle is Aug. 1, 2018, to Oct. 30, 2018

This grant, which is offered through the Radiological Society of North America, was created for medical students considering academic radiology.

  • Award amount: $3,000 to be matched by a sponsoring department for a total of $6,000
  • Qualifications: Must be a full-time medical student and RSNA member
  • Deadline to apply: Feb. 1, 2018

This program, which is offered through the American Medical Women’s Association, is available to medical students and residents working in clinics around the world.

  • Award amount: Up to $1,000 in transportation assistance costs
  • Qualifications: Students must work in an off-campus clinic where the medically neglected will benefit, be an AMWA member in at least their second year of school, and must spend four weeks to one year serving the medically underserved
  • Deadline to apply in 2018: The next application deadline available is July 5, 2018

Scholarships for medical students

Scholarships are available to medical students from all walks of life and all backgrounds, although requirements vary based on the program. Medical students can seek out merit-based scholarships, institution-based scholarships and various other scholarships offered through research facilities and corporations.

Here are a handful of popular scholarship options for medical students:

This grant, offered through the American Medical Association, doles out scholarships to medical students who meet certain criteria. The goal of this program is to reduce the debt burden on medical school students across the country.

  • Award amount: $10,000
  • Qualifications: Must be a medical student who is nominated by their school dean and approaching their last year of medical school
  • Deadline to apply in 2018: Nomination applications are available every fall

The Herbert W. Nickens Award is available to third-year medical students who have shown proven leadership in the area of medical equality for all.

  • Award amount: $10,000
  • Qualifications: Must be a medical student who is nominated for excellence in leadership; checklist is available here
  • Deadline to apply in 2018: Applications due in April each year

This scholarship is open to all students pursuing a service career in health care, including medical students considering any medical field.

  • Award amount: $5,000 to $10,000
  • Qualifications: Must be a medical student with at least one year of medical school remaining
  • Deadline to apply in 2018: Application opens at the beginning of May each year and closes at the end of June

This scholarship is available to all medical students with financial need regardless of their gender, race or ethnicity. Applicants are judged on financial need, achievements, essays and community service records.

  • Award amount: $2,000 to $5,000
  • Qualifications: Must be a medical student who can demonstrate financial need and complete the application process
  • Deadline to apply in 2018: Applications are due by April 1, 2018

The Harvey Fellows Program was created for Christian students pursuing higher education in important fields such as medicine.

  • Award amount: $16,000
  • Qualifications: Must be a student who identifies as Christian and attends service regularly
  • Deadline to apply in 2018: Application deadline is Nov. 1 of each year

Part III: Medical School Loan Repayment Programs

Income-driven repayment (for federal student loan debt)

Income-driven repayment programs allow medical students to pay only a percentage of their income toward their federal student loans for 20 to 25 years no matter how much they owe. These programs can be advantageous since they let medical students with large debt loads pay a smaller percentage of their income every month than they would with standard, 10-year repayment. Several different income-driven repayment programs are available, each with their own rules and benefits. The following table highlights each program and how it works:

 

Payment Amount

Repayment Period

Eligibility

Pay As You Earn
Repayment Plan
(PAYE Plan)

10% of your
discretionary income,
but never more than your
payment on 10-year
Standard Repayment

20 years

Your payment must be
less than what you would
pay under standard,
10-year repayment

Revised Pay As You
Earn Repayment
Plan (REPAYE Plan)

10% of your
discretionary income

20 years for
undergraduate loans
and 25 years “if any
loans you’re repaying
under the plan were
received for graduate
or professional study”

Any borrower with
eligible federal student loans
can qualify

Income-Based
Repayment Plan
(IBR Plan)

10% of your
discretionary income
if your loan originated
after July 1, 2014,
but never more than
the 10-year Standard
Repayment Plan;
generally 15% of your
discretionary income
if you’re not a new
borrower on or after
July 1, 2014; either way,
you’ll never pay more
than the payment on a
standard, 10-year
repayment plan

20 years if you’re a
borrower on or after
July 1, 2014; 25 years
otherwise

To qualify, your
payment under this plan
must be less than what you
would pay under standard,
10-year repayment

Income-Contingent
Repayment Plan
(ICR Plan)

20% of your
discretionary income or
what you would pay over
the course of a fixed
12-year repayment plan

25 years

Any borrower with
eligible federal student loans
can qualify for the ICR Plan

Pros of income-driven repayment:

  • Pay a smaller amount of your income for up to 25 years
  • Have your student loan balance forgiven once you complete the program
  • Pay off your debts slowly and at your own pace

Cons of income-driven repayment:

  • You may have to pay income taxes on forgiven loan amounts
  • You may not qualify if you earn too much

Who is eligible?

These programs are available to graduates who have federal student loans and meet income requirements.

How to apply

You can apply for income-driven repayment programs using the U.S. Department of Education website.

Medical school loan forgiveness for doctors

There are numerous loan forgiveness programs available to doctors, each with their own criteria for applicants. Commonly, these programs offer loan forgiveness in exchange for service in a specific field or for a certain type of employer.

Some examples include:

Who is eligible?

Since loan forgiveness programs vary in their details and requirements, you’ll need to read terms and conditions of applicable programs to determine if you qualify.

Is this option right for you?

If you are willing to relocate or know that a loan forgiveness program is already available in your area, then loan forgiveness programs offer a great way to earn a living while having part of your debt forgiven. For this option to be right for you, however, you have to be willing to meet special program requirements such as working in an urban, rural or underserved community.

National Health Service Corps Loan Repayment Program

This program offers loan repayment assistance for individuals entering qualified healthcare careers in medical or dental fields. Licensed health care providers may earn up to $50,000 of tax-free loan forgiveness for a two-year commitment to NHSC-approved employment in a high-need area.

Who is eligible?

Medical graduates who agree to work in an NHSC-approved career for at least two years may qualify for this assistance.

How to apply

Contact the National Health Service Corps or visit the NHSC website for tips on the application process.

Is this option right for you?

If you’re willing to work in an area of high need after you graduate, this program may work well at the beginning of your medical career.

U.S. military loan repayment programs

United States Army

Army Student Loan Assistance offers up to $45,000 per year in loan assistance, along with a monthly stipend of up to $2,000. This assistance is available to U.S. residents working to complete an accredited residency.

The U.S. Army also offers up to $120,000 to pay down medical school debt in exchange for three years of service.

Lastly, the U.S. Army offers a Health Care Professionals Loan Repayment Program that provides up to $250,000 for repayment of “education loans for physicians in certain specialties who are serving in an Army Reserve Troop Program Units, AMEDD Professional Management Command, or the Individual Mobilization Program.”

How to apply

For additional information, contact your local Army recruiter, call 1-800-USA-Army, or visit Healthcare.GoArmy.com.

United States Navy

The Navy Student Loan Repayment Program offers up to $65,000 in repayment assistance, depending on your loan amount and year in school. Eligible applicants serve in the U.S. Navy and have federal student loans.

You may also qualify for the U.S. Navy’s loan forgiveness and repayment program, which offers up to $40,000 per year in loan assistance before taxes. You must be a final year medical student ready to join the U.S. Navy.

Lastly, the Navy Financial Assistance Program offers up to $275,000 in loan repayment assistance plus a monthly stipend to medical residents who agree to serve in the U.S. Navy. Physician sign-up bonuses may also be available.

How to apply

Contact your local Navy recruiter or visit the Navy Recruiting Command website.

United States Air Force

The Air Force Health Professions Scholarship Program offers up to $45,000 per year plus a monthly stipend up to $2,000 for medical students who join the U.S. Air Force and serve their country as a medical professional. Once you complete your residency, you’ll have a one-year obligation for each year you participate in the program plus one extra year.

How to apply

Contact a U.S. Air Force recruiter for more information, or visit the U.S. Air Force application page to apply.

State-level loan repayment programs for doctors

 

Program

Eligibility

Alaska


The SHARP Program offers new doctors
up to $35,000 in loan repayment
assistance per year.

Doctors must agree to work at least two
years in a high-need shortage area.

Arizona


The Arizona State Loan Repayment
Program
offers up to $65,000 per year in
repayment assistance for doctors for two
years, with lower repayment amounts
offered in subsequent years. You must
work in outpatient care to qualify.

The doctor must be a U.S. citizen who
agrees to work in a state-approved high
need position.

Arkansas


The Arkansas Department of Health
offers up to $50,000 in loan forgiveness
in exchange for a two-year contract.

You must agree to work in an
underserved area approved by the state.

California


The California State Loan Repayment
Program
offers doctors up to $50,000 in
loan forgiveness.

Applicants must be medical school
graduates and agree to at least a
two-year commitment in an eligible,
state-approved position.

Colorado


The Colorado Health Service Corps
offers up to $90,000 for doctors who
qualify.

Doctors must practice in a
state-approved shortage area that
accepts public insurance and offers
discounted services to the poor for three
years.

Delaware


The Delaware State Loan Repayment
Program
offers between $70,000 and
$100,000 in loan forgiveness for doctors
who qualify.

Doctors must agree to work in an area
with a substantial yet underserved
medical need for two years.

Georgia


The Georgia Physician Loan Repayment
Program
offers up to $25,000 per year
for two years.

Physicians must practice in a shortage
area and in one of the following medical
fields: family medicine, internal medicine,
pediatrics, OB/GYN, geriatrics or
psychiatry.

Hawaii


The Hawaii State Loan Repayment
Program
is a federal grant you can use
to pay off educational loans. Amounts
vary.

Applicants must agree to a two-year
commitment in a state-designated
shortage area.

Idaho


The Idaho State Loan Repayment
Program
offers doctors $2,000 to $25,000
per year in loan repayment assistance.

Doctors must agree to work in a health
care shortage area designed by the
state of Idaho.

Illinois


The Illinois National Health Service Corps
State Loan Repayment Program
offers up
to $50,000 in loan repayment assistance
for doctors who qualify.

Doctors must agree to a two-year
commitment in a health care shortage
area.

Iowa


Iowa’s Primary Care Recruitment and
Retention Endeavor
offers up to $50,000
for full-time doctors and up to $25,000 in
assistance for those who agree to work
part time.

Doctors must agree to work in a shortage
area approved by the state.

Kansas


The Kansas State Loan Repayment
Program
offers doctors up to $25,000 in
assistance per year.

Applicants must agree to a two-year
commitment in an eligible position.

Kentucky


The Kentucky State Loan Repayment
Program
awards up to $300,000 in loan
repayment assistance to up to 13
applicants who work in primary care.

You must agree to work in a designated
health care shortage area.

Louisiana


The Louisiana State Loan Repayment
Program
offers up to $30,000 annually for
up to a three-year commitment.

Applicants need to work in a traditionally
underserved health care shortage area.

Maryland


The Maryland Loan Repayment Assistance
Program
for Physicians offers up to
$50,000 per year for a two-year
commitment.

Applicants must be medical graduates
who are current on their student loans
and willing to work in a health care
shortage area.

Massachusetts


The Massachusetts Loan Repayment
Program
for Health Professionals offers
up to $50,000 for a two-year contract.

You must work in an area experiencing
exceptional medical need.

Michigan


Through the Michigan State Loan
Repayment Program
, doctors can receive
up to $200,000 in loan repayment
assistance.

Doctors must agree to a two-year,
full-time commitment in a health care
shortage area.

Minnesota


The Minnesota State Loan Repayment
Program
offers up to $20,000 in loan
assistance per year. Programs for rural
doctors
and urban physicians in
Minnesota also offer up to $25,000 per
year in assistance.

Dentists must agree to work in a
shortage area for at least two years to
qualify.

Missouri


The Missouri Health Professional State
Loan Repayment Program
offers up to
$50,000 in loan repayment assistance.

Doctors must agree to a two-year
commitment in a health care shortage
area.

Montana


The Montana Rural Physician Incentive
Program
offers up to $20,000 per year in
assistance for up to five years.

You must agree to work in a designated
rural or underserved community.

Nebraska


The Nebraska Loan Repayment Program
offers up to $60,000 per year in loan
repayment assistance.

Physicians must agree to work in
designated shortage areas for at least
three years.

Nevada


The Nevada Health Service Corps offers
varying amounts of loan repayment
assistance based on the term of service.

Doctors must agree to work in assigned
areas of need.

New Hampshire


This state program offers doctors up to
$75,000 in loan repayment for a full-time
commitment.

Applicants must agree to work in a
health care shortage area for at least
three years.

New Jersey


The Primary Care Practitioner Loan
Redemption Program
of New Jersey
helps doctors earn up to $120,000 in loan
repayment assistance.

Doctors must agree to a two- to
four-year commitment.

New Mexico


The Health Professional Loan Repayment
Program
of New Mexico offers up to
$25,000 in assistance per year.

Applicants must agree to a two-year
service agreement in a state-approved
position.

New York


Through Doctors Across New York, you
may qualify for up to $150,000 in
assistance over five years.

You need to work in a health care
shortage area for at least two years.

North Carolina


The state of North Carolina doles out
$100,000 in loan repayment assistance
for doctors who qualify.

Physicians must agree to work at least
four years in a health care shortage area.

North Dakota


North Dakota’s Federal State Loan
Repayment Program
offers up to $50,000
per year for up to two years.

Doctors must agree to work in a health
care shortage area for the duration of
the program.

Ohio


The Ohio Physician Loan Repayment
Program
offers $25,000 per year in
assistance for two years of service
followed by up to $35,000 per year for
third and fourth years.

You must agree to work in a health care
shortage area to qualify.

Oklahoma


The Oklahoma Medical Loan Repayment
Program
offers up to $160,000 for a
four-year commitment.

To qualify, physicians must work in a
rural or underserved area.

Oregon


The Oregon Partnership State Loan
Repayment program
offers tiered levels
of assistance based on a variety of
factors.

Applicants must agree to work in a
shortage area for at least two years.

Pennsylvania


The Pennsylvania Primary Health Care
Loan Repayment Program
offers up to
$100,000 in loan repayment assistance in
exchange for a full-time commitment.

Doctors need to agree to work in a
qualified position for at least two years.

Rhode Island


The Rhode Island Health Professionals
Loan Repayment Program
offers financial
assistance for doctors who qualify.

Doctors must agree to work in a shortage
area for at least two years.

South Carolina


South Carolina’s Rural Physician
Incentive Grant Program
offers $60,000
to $100,000 for a four-year contract.

Physicians must work in a rural or
underserved area of the state.

South Dakota


The South Dakota Recruitment Assistance
Program
offers up to $208,754 in
repayment assistance for doctors. The
benefit of the program changes annually.

Doctors must practice full time in a
health care shortage area for at least
three years.

Tennessee


The Tennessee State Loan Repayment
Program
offers up to $50,000 in
assistance for a two-year commitment.

Doctors must work in a designated
shortage area.

Texas


The state’s Physician Education Loan
Repayment Program
offers up to
$160,000 for a four-year commitment.

You must work in a designated
shortage area to qualify.

Utah


Utah’s Rural Physician Loan Repayment
Program
offers up to $15,000 per year in
assistance for doctors who qualify.

Doctors must work in a qualified rural
hospital.

Vermont


The Educational Loan Repayment for
Health Care Professionals program
of
Vermont gives out up to $20,000 in loan
repayment assistance per year.

Doctors in Vermont must work in
medically underserved communities for
at least 12 to 24 months.

Virginia


The Virginia Department of Health offers
loan repayment for doctors of up to
$140,000 for a four-year commitment or
up to $100,000 for a two-year
commitment.

Doctors must work in a state-approved
shortage area.

Washington


Washington’s Health Professional Loan
Repayment Program
offers a maximum
award of $75,000.

A commitment in a health care shortage
area is required.

Wisconsin


Wisconsin’s Health Professions Loan
Assistance Program
offers a maximum
award of $50,000 for doctors who qualify.

This program requires a three-year
commitment in a health care shortage
area.

Part IV: Paying Down Your Medical School Debt

While the very idea of medical school debt could have you feeling overwhelmed, it’s important to understand the many options available when it comes to paying off your loans sooner rather than later. In addition to paying off your loans faster, some strategies can help you save money on interest or secure a more manageable monthly payment.

Here are some tips that can help as you pay down medical school debt:

#1: Refinance your student loans to a lower rate.

Refinancing your student loans to a new loan product with a lower interest rate and better terms can help you save money and possibly even lower your monthly payment. With a lower interest rate, you’ll save money on interest each month, which could help you save money and pay off your loans faster, provided you keep making the same monthly payment.

Keep in mind, however, that there are notable disadvantages that come with refinancing federal loans with a private lender. When you refinance federal loans with a private lender, you lose out on special protections afforded to federal loan borrowers like deferment and forbearance. You also disqualify yourself from federally sponsored income-driven repayment and loan forgiveness programs.

Recommended lenders for refinancing your medical school loans

LenderTransparency ScoreMax TermFixed APRVariable APRMax Loan Amount 
SoFiA+

20


Years

3.49% - 8.07%


Fixed Rate*

2.43% - 6.59%


Variable Rate*

No Max


Undergrad/Grad
Max Loan
Learn more Secured

on SoFi’s secure website

EarnestA+

20


Years

3.50% - 7.82%


Fixed Rate

2.43% - 7.21%


Variable Rate

No Max


Undergrad/Grad
Max Loan
Learn more Secured

on Earnest’s secure website

CommonBondA+

20


Years

3.69% - 8.07%


Fixed Rate

2.46% - 7.08%


Variable Rate

No Max


Undergrad/Grad
Max Loan
Learn more Secured

on CommonBond’s secure website

LendKeyA+

20


Years

3.64% - 7.50%


Fixed Rate

2.44% - 6.87%


Variable Rate

$125k / $175k


Undergrad/Grad
Max Loan
Learn more Secured

on LendKey’s secure website

Laurel Road BankA+

20


Years

3.50% - 7.02%


Fixed Rate

2.43% - 6.65%


Variable Rate

No Max


Undergrad/Grad
Max Loan
Learn more Secured

on Laurel Road Bank’s secure website

Citizens BankA+

20


Years

3.89% - 9.99%


Fixed Rate

2.93% - 9.67%


Variable Rate

$90k / $350k


Undergraduate /
Graduate
Learn more Secured

on Citizens Bank (RI)’s secure website

Discover Student LoansA+

20


Years

5.74% - 8.49%


Fixed Rate

4.74% - 7.74%


Variable Rate

$150k


Undergraduate /
Graduate
Learn more Secured

on Discover Bank’s secure website

#2: Find ways to save on monthly expenses.

While graduating from medical school can be a momentous occasion, you can put yourself in a better financial position by living a modest “student” lifestyle as long as you can. Ways to save money include, but aren’t limited to, finding a roommate to share living expenses, skipping pricey dinners out, living without cable television, driving your older car as long as you can, and preventing lifestyle inflation as you start earning more.

#3: Pay all of your monthly payments on time.

Federal Direct Loans and some private lenders offer interest rate discounts after you complete a specific number of on-time monthly payments. Check with your lender to see if they offer this option. If not, you should still make on-time monthly payments to avoid late fees and keep your loans in good standing.

#4: Pay extra toward the principal of your loans.

If you don’t want to go through the trouble of refinancing, you can still pay off your loans faster by paying more than the minimum payment on your student loans each month. Throwing extra money at the principal of your loans reduces the amount of interest you owe with each passing month, helping you save money while paying off your loans faster.

#5: Pay interest while in school.

Some medical student loans let interest accrue while you’re still in school. If you have the financial means to make interest-only payments while you’re still in school, doing so can help you prevent your student loan balance from ballooning before you graduate.

Frequently Asked Questions

Tuition at medical schools is not fixed, meaning it can pay to shop around before you choose an institution. Private schools tend to be more expensive than public schools as well, meaning you can usually save money if you decide on a public education for your medical degree.

The amount you can save depends on your current interest rate and your new loan rate and its terms. To find out how much you could potentially save by refinancing, enter your old loan and new loan information in a student loan calculator.

You can lower the payment on your student loans in a few different ways. First, you can refinance your student loans into a new loan product with a lower interest rate or longer repayment timeline. Second, you can choose an extended repayment plan or even income-driven repayment.

Federal student loans come with important federal benefits and protections such as deferment and forbearance. They also leave you eligible for income-driven repayment plans and federal loan forgiveness.

As you shop for student loans for medical school, remember that the terms of your loan can make a big difference in how much you’ll pay over time. Compare loans based on the interest rate, any applicable fees, and the monthly payment amount you’ll need to make. You can also check student loan providers’ profiles with the Better Business Bureau and read student loan reviews for even more insight.

According to the Association of American Medical Colleges, some of most popular pre-med majors include biological sciences, physical sciences, social sciences and humanities.

According to Swarthmore College, medical schools are interested in students with excellent academic ability, strong interpersonal skills, leadership skills, and demonstrated compassion and care for others.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Holly Johnson
Holly Johnson |

Holly Johnson is a writer at MagnifyMoney. You can email Holly here

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College Students and Recent Grads

College Ave Private Student Loans Review: Accessible Eligibility Criteria, Flexible Repayment

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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If you’re concerned about eligibility for a private student loan, consider that College Ave Student Loans stands out for its accessibility.

You could be an international student without a GED seeking an associate degree on a part-time basis, for example, and still qualify for College Ave private student loans.

Founded by former Sallie Mae executives in 2014, the online-only company offers competitive interest rates to students in college as well as career or graduate schools, as well as their creditworthy parents.

To ensure it’s the right lender for you, consider our review.

College Ave Student Loans review: The basics

While you could qualify for College Ave private student loans with several different educational backgrounds and ambitions, you still need to be creditworthy. Having a credit score of at least 660 is a good start.

The lender doesn’t disclose its specific credit criteria, but you could gauge your (or your cosigner’s) eligibility using the lender’s pre-qualification tool. Passing that test would unlock these loan features:

  • Loans for part- or full-time undergraduates, graduate students, career school students and parents
  • Prequalify with a three-minute application (and without affecting your credit)
  • No fees to apply
  • Fixed and variable interest rates

  • Borrow between $1,000 and your school’s full cost of attendance
  • Choose from four in-school repayment options, including full deferment
  • Select one of four repayment term options: five, eight, 10 or 15 years
  • Receive your loan in as little as 10 days after applying
  • Cosigners are accepted — and encouraged (note that they are required for international students who have a Social Security number)
  • Release your cosigner after more than half your repayment term has elapsed
  • Enjoy a federal loan-like six-month grace period after leaving school
  • Net a 0.25% interest rate reduction for enrolling in autopay
  • No penalty for paying off your loan early
  • Forbearance — the ability to temporarily suspend payments — is awarded on a case-by-case basis
  • Student loan forgiveness in the case of the borrower’s permanent disability or death

While the majority of the loan characteristics above are true no matter your status in school, there are some notable differences for graduate students, career school students and parents.

Graduate students

Whether you’re seeking a postgraduate, master’s, doctoral or professional degree, you can count College Ave private student loans as an option. Note that the ceiling on College Ave’s interest rate ranges as of early June 2019 was significantly lower for graduate students compared to undergrads.

In summer 2019, College Ave also added unique perks for postgraduate students seeking an MBA or other professional degree. The loans include longer grace periods, for example, with 12 months for dental students and 36 months for medical students.

There are also deferments available for students who enter a residency program — or, in the case of law school students, a clerkship — after receiving their degree. Additionally, students seeking these advanced credentials might be able to select a longer loan term (20 years) than their peers.

Career school students

If you’re pursuing an associate, bachelor’s or graduate degree in a career-focused program, including at some community colleges, keep this bonus in mind: College Ave offers borrowers of this loan type a $150 statement credit for completing their program.

Parents

College Ave gives parents even more repayment term flexibility. The lender said on its website that it would assist creditworthy parents in choosing one of 11 possible repayment terms, spanning between five and 15 years.

Another plus of borrowing from College Ave: The lender allows Mom or Dad to directly receive up to $2,500 of the loan funds to cover smaller, secondary expenses including books and supplies. (The balance would be sent directly to the student’s school.)

On the downside, however, the floor on College Ave’s interest rate ranges as of early June 2019 was noticeably higher for parents than for undergraduate students. Plus, parent borrowers only have three in-school repayment choices, not including full deferment. Making interest-only payments is the cheapest option available.

What we like about College Ave Student Loans

It’s rare to find a lender that’s so accessible. In College Ave’s eyes, you don’t need a high school diploma or GED, don’t need to be pursuing a four-year degree, don’t need to be enrolled full time — you don’t even need to be an American student (as long as you have a Social Security number).

Aside from flexibility on qualifying, below are a few more features of College Ave private student loans that benefit from additional context.

A bevy of in-school repayment options

Many private lenders offer fewer repayment options than College Ave. But College Ave provides four payment methods, including:

  • Deferred: Postpone payments until six months after leaving school, allowing interest to pile up on your balance.
  • Flat: Submit monthly dues of $25 to eat into the accruing interest on your loan.
  • Interest-only: Pay only enough each month to cover accruing interest to ensure you face the same balance you borrowed upon leaving school.
  • Full: Enter repayment immediately by making interest-and-principal payments, so you’ll owe less than what you borrowed once you step off campus.

For cash-strapped students, making (significant) in-school payments isn’t always possible. For other students with income or parental support, entering repayment sooner could pave the way for a faster route out of debt. That’s why it’s so nice to have options.

According to the lender, about 6 in 10 College Ave borrowers elect to submit in-school payments to whittle down interest before the reality of repayment hits upon graduation.

Pick your repayment term

Some lenders, including Sallie Mae, assign you a loan repayment term based on your creditworthiness.

One benefit of borrowing College Ave private student loans, however, is that you (and your cosigner) could independently choose your term. You might select five, eight, 10 or 15 years, depending on your budget and future income. (Unlike with federal loans, however, private lenders like College Ave don’t allow you to change terms later, extending or shortening your repayment term as you wish.)
College Ave said on its website that 84% of borrowers choose a term of 10 years or less.

Receive strong customer service

Nearly 400 College Ave borrowers had awarded a 4.8-out-of-5 rating of their lender — at least according to the lender website.

For a more objective accounting, Trustpilot lists a four-star rating for College Ave, and the Better Business Bureau gives the lender an “A+” grade.

What to keep in mind about College Ave Student Loans

If you like what you’ve learned about College Ave private student loans, keep in mind that no lender is perfect for every borrower.

Decide for yourself whether the following facts should point you in the direction of a competitor.

A long trek to cosigner release

By College Ave’s math, 96% of undergraduates have a cosigner on their loan. After all, teens and 20-somethings can make up for their thin credit files by piggybacking on a creditworthy cosigner, usually Mom or Dad.

The majority of top-rated lenders allow you to release that cosigner (from their legal obligation to repay your debt, if you can’t) after 12 to 48 months of successful payment history.

With College Ave private student loans, however, it’s a long haul. To remove your cosigner from your loan agreement, you must:

  • Reach the halfway mark of your loan term
  • Make 24 consecutive on-time payments
  • Show twice as much income as your loan balance
  • Pass a credit check

If you want to reward your cosigner by sending them on their way, you might avoid a 15-year loan term. Under that scenario, you wouldn’t be able to release them until you’ve been in repayment for seven-and-a-half years.

To make matters worse for some borrowers, international students can’t achieve cosigner release at all.

If cosigner release essential to you and your guarantor, you might consider borrowing from Sallie Mae, which offers a 12-month route to release.

A limited form of forbearance

Forbearance is a vital component of any student loan, as it allows you to press pause on your repayment in the face of hardships such as unemployment.

Unfortunately, College Ave is cagey about its forbearance policy, leaving details off its otherwise resource-heavy website.

It turns out, the lender evaluates forbearance applications on a case-by-case basis. In other words, if you find yourself out of work or under another sort of financial duress during repayment, there’s no guarantee College Ave will grant you a reprieve.

If you think you might need a more clear-cut safeguard built into your loan, you might opt to borrow from Discover, as the bank offers a variety of protections, from payment extensions to as many as 12 months of forbearance.

Third-party loan servicing

If you’re attracted to College Ave, in part, because of its modern, easy-to-use platform and strong customer service record, you might be disappointed to learn that the company outsources the servicing of its loans.

Repayment of College Ave private student loans even takes place on a different website. University Accounting Service (UAS) handles statements and payments and fields customer concerns.

When deciding whether College Ave is right for you, factor UAS into the equation, too. You might be wise to contact the latter company to get a sneak peek of its effectiveness in answering your loan management questions.

If you’re left wanting more, you might be better off walking into your local bank or credit union, where your loan will be funded and managed under the same roof.

Are College Ave Student Loans right for you?

If you’re an atypical college student — maybe you’re attending part time or seeking an associate degree — College Ave private student loans are more accessible than education financing found elsewhere.

Even if you’re attending a traditional four-year school, you could be drawn to the online lender’s assortment of in-school and postgraduate repayment options. They give you the power to customize a loan that works best for your borrowing situation. Plus, if you (or your cosigner) are especially creditworthy, you could unlock some of the lowest interest rates offered by banks, credit unions and online competitors.

College Ave won’t be as appealing, however, if you’re counting on a fast pathway to cosigner release or federal loan-like safeguards such as mandatory forbearance. To pit College Ave against the competition, find out where the lender ranked among our top-rated student loan companies.

MagnifyMoney has independently collected the above information related to this review, which is current as of June 3, 2019, unless otherwise noted. College Ave. neither provided or reviewed the information shared in this article.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Andrew Pentis
Andrew Pentis |

Andrew Pentis is a writer at MagnifyMoney. You can email Andrew here

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Building Credit, College Students and Recent Grads, Credit Cards, Earning Cashback

How You Can Have a Good FICO Score Just One Year After Opening a Credit Card

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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When I moved to the U.S. from my hometown of Hangzhou, in China, to pursue my undergraduate degree, the thought of establishing a credit history wasn’t even on my radar. I was, after all, an international student from China, where day-to-day credit card use had only recently caught on.

It wasn’t until I returned to the U.S. a few years later to pursue my master’s degree in Chicago that I realized I’d need to establish credit if I planned to launch my career in the States.

Just one year after I opened the card, I already had a solid FICO score – 720, to be exact. This score landed me safely in the “good” credit range, meaning I probably would not have trouble getting approved for new credit. I still had work to do if I wanted to get into the “very good” credit category, which starts at 740. But as a credit card newbie, I was not disappointed in my progress. 

Here’s how I did it.

I selected the right card for my needs

I wish I could say I diligently researched credit cards to choose the best offer and best terms, but honestly, I just got lucky.

Shortly before graduate school started, I visited friends in Iowa. When we were about to split the bill after dinner at a Japanese restaurant, I noticed that all my friends had a Discover card with a shimmering pink or blue cover. The Discover it® Student Cash Back was known for its high approval rate for student applicants, and had been popular among international students.

I thought, “Oh, maybe I should get this one, too.”

One of the friends sent me a referral link that very night. I applied and got approved quickly. We both received a $50 cash-back bonus after I made my first purchase — an iPhone — using the card through Discover’s special rewards program. I even received 5% cash back from the purchase.

Besides imposing no annual fee, the card had other perks, such as rewarding me with a $20 statement credit when I reported a good GPA (up to five consecutive years), letting me earn 5% cash back on purchases in rotating categories and matching the cashback bonus I earned over the first 12 months with my account. For me, it was a great starter card, but there are plenty of other options out there.

Check out our guide on the best credit cards for students.

I also could have explored other options of establishing credit, like opening a secured card, for example, which would have been a smart option if I hadn’t been able to qualify for the Discover it student card.

I never missed a payment

Despite my very limited financial literacy at the time, I attribute my strong credit score to the old, deeply ingrained Chinese mentality about saving and not owing.

I never missed payments, and I always paid off my balance in full each month, instead of just making the minimum payment. I didn’t want to pay a penny of interest.

Credit cards carry high interest rates across the board, but student credit cards generally have some of the highest APRs. This is because lenders see students like me — consumers without much credit history — to be risky borrowers, and they charge a higher interest rate to offset that risk.

Best Student Credit Cards June 2019

It wasn’t until much later that I learned payment history is critical to good credit. In fact, it is the biggest factor there is, accounting for 35% of my FICO score.

A Guide to Getting Your Free Credit Score

I was careful not to use too much of my available credit

My friends with more experience advised me to use as little of my available credit as possible. They warned me that overuse had hurt their credit scores in the past. This didn’t much sense to me, but I followed their advice, for the most part diligently.

I later learned this is almost as important as paying bills on time each month. Your utilization rate is another major factor in your FICO score. Credit experts urge cardholders to keep their credit utilization ratio below 30%. The lower, the better.

That means if you have three credit cards with a total available limit of $10,000, you should try to never carry a total balance exceeding $3,000, and you really should aim for much lower than that.

A Guide to Build and Maintain Healthy Credit

I beefed up my score with on-time rent payments

Keeping in mind the importance of not maxing out my credit card, I never considered paying my rent with the card. In fact, some landlords charge credit card fees for tenants who try to pay with plastic.

But I did find a way to establish credit by paying rent using my checking account.

I paid rent to my Chicago landlord through RentPayment, an online service. RentPayment gave me the option of having my payments reported to TransUnion, one of the three major credit-reporting agencies (the other two are Experian and Equifax). Because I knew I’d always pay bills on time, I signed up for the program.

This likely helped me improve my credit mix, another key factor influencing a credit score. The more types of accounts you show on your report, the better your score can be — if you make all your payments on time.

Yes, I made mistakes. This was my biggest one

My first foray into the world of credit wasn’t completely blip-free.

The only thing that hurt my credit, besides my short credit history, was that I had tried signing up for a Chase credit card, along with other ways to finance my iPhone, just a few days before I applied for my Discover card.

None of the other banks approved my applications, and my score went down at the very beginning, due to the number of “hard inquiries” against my credit report. Hard inquiries occur when lenders check your credit report before they make decisions regarding your application. Having too many inquiries in a short period of time can result in a ding to your credit score.

I’ve learned my lesson, though, and I’ll be cautious in the future when it comes to applying for a lot of credit in a short time period. Overall, it should be noted that you should not be afraid to apply for new credit — even when hard inquiries do hurt your score in the short term, it typically isn’t disastrous, and your score should recover fairly quickly as long as you are a responsible user of credit. Having more available credit can also help your utilization rate — as long as you don’t increase your charges, of course.

You can also check to see if you have prequalifed for any credit cards without triggering a hard inquiry.

If you’re new to the world of credit cards, consider taking the steps I outlined above, and you, too, may have a healthy credit score before you know it.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Shen Lu
Shen Lu |

Shen Lu is a writer at MagnifyMoney. You can email Shen Lu at [email protected]

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