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How to Pay for and Finance Medical School

Medical school is expensive, and the costs seem to grow by the day. It can feel overwhelming when you see the total cost of attendance, but we at MedSchoolCoach are here to point you in the right direction about how to strategize and do the best you can to be mindful of the financial burdens you may be undertaking. You’ve taken the challenge to get into medical school, but now what?

Broadly speaking, there are two main ways to finance a medical education if you are doing it either partially or fully on your own:

  1. Scholarships, Grants, and other sources of revenue that do not acquire debt
  2. Loans, which acquire debt

Additionally, there are many ways to pay back loans after you have accrued debt. We will cover these in section three.

Let’s break down each.

Scholarships, Grants, and Other Sources for Tuition

  1. Money from the medical school itself (try our Chance Predictor for choosing which medical schools to apply to )

Medical schools may offer scholarships/grants based upon your financial need (see below) or based upon merit. (Bankrate, 2022). This is typically determined by academic and/or extracurricular achievements.

Undergraduate institutions frequently make their merit awards and application process publicly available on their website. By contrast, medical schools typically do not. Nevertheless, many clients at MedSchoolCoach have earned institutional scholarships, ranging from a few thousand dollars to full tuition and beyond. But there may not be a process to apply, and as a result, it’s not possible to predict who will get one and who won’t.

A handful of medical schools now offer a robust scholarship/grant covering tuition, and depending on the institution, additional expenses (room and board). As of this writing, these include (Student Loan Hero, 2022):

    • NYU
    • Columbia
    • Cornell
    • Washington University
    • Cleveland Clinic
    • Kaiser Permanente
    • UCLA
    • Uniformed Services University of the Health Sciences (USUHS)

Note that USUHS is a federally funded medical school and requires military service upon completion. Columbia and Cornell’s scholarships are contingent on financial need. UCLA offers its scholarships to about 25% of the incoming class. Kaiser’s scholarships are available through 2024.

Other schools do offer substantial scholarships, not just the ones listed above, but they may go to a smaller number of students. Again, there is typically no separate application process for these awards. Many new medical schools offer discounted or free tuition to the first-year class, but not all do so.

2. Money from outside sources

There are several programs of which to be aware:

3. National Health Service Corps (NHSC)

The NHSC was created by the federal government in the 1970s to address the growing need for primary care. It is operated by the Department of Health and Human Services. There are a few program requirements:

∙         You typically must specialize in residency one of the following:

    • Family Medicine
      • OK to do fellowship in Geriatrics or Ob-Gyn
    • General Internal Medicine
      • OK to do fellowship in Geriatrics
    • General Pediatrics
    • Obstetrics-Gynecology
    • General Psychiatry
      • OK to do fellowship in Child & Adolescent
    • Internal Medicine/Family Medicine
    • Internal Medicine/Pediatrics
    • Family Medicine/Psychiatry
    • Internal Medicine/Psychiatry
    • Military residencies are generally not approved.
      • You must commit to working in a designated Health Professions Shortage Area (HSPA)

o   HSPA’s are areas, population groups, or facilities in which there is a shortage of primary care providers

o   There are Primary Care, Dental Care, and Mental Health Care HSPAs

o   Sites must typically apply for the designation, and there are requirements

o   Inpatient hospitals/facilities and county/local jails typically do NOT qualify

o   HSPAs are scored on a scale of 0 to 26 based on priority of need; the higher the score the greater the need, and they may change annually

o   The NHSC award may have a cutoff score; you would not receive the award if you are employed at a place with a score below the threshold

Currently, there are three paths to access the NHSC awards. Two will be covered later on, as they are loan repayment programs:

1)      NHSC Health Professions Scholarship: you apply before or during medical school. You receive funding for tuition, required expenses, educational costs, and a monthly stipend (the latter is taxed). In turn, you commit to one year of working in an HSPA—after residency—for each year you earn the scholarship, up to four years. The advantage of this path is that you incur less debt by taking out fewer loans. The disadvantage is that you are committing to a primary care path before hospital rotations; changing your mind about specialties will mean that you break the contract and incur penalties.

iii. Health Professions Scholarship Program (HPSP)

This is a scholarship for those intending to serve in the military. It is a different route than the USUHS in that you can attend any accredited medical school in the United States or Puerto Rico. The scholarship covers tuition/fees and provides an annual stipend. Applicants must be US citizens and apply before entering or during their first year of medical school. A minimum of three years of service is required post residency training. (USAF, 2022)

Outside Sources

Though many organizations offer scholarship funding to support medical education, they are fewer in number than are available to support undergraduate education. You may qualify for the Soros Fellowships for New Americans or scholarships offered by the American Medical Association. Google searching will reveal more opportunities, but keep in mind that these tend to be very selective and rarely cover the full cost of attendance.

Medical School Loans

OK, so you must take out loans for medical school. If you did so for previous schooling, perhaps you are familiar with the process.

Either way, this section is intentionally brief, as there are several very good sources available in which you can learn more about student loans. Consider AAMC’s materials, available at https://students-residents.aamc.org/financial-aid/all-about-loans. MedSchoolCoach has also partnered with Sofi to better explain the loan and loan payment process.

The majority of loans needed for medical school are issued or backed by the federal government through the Direct Loan Program. You can borrow up to the total cost of attendance (COA).

You may need more money than is allocated by the COA for a variety of reasons; you have a family, you live in an expensive area, you have bills/obligations that are not encompassed by the COA. Additional funding, if needed, can come through Direct PLUS loans, loans issued through the medical school itself, or through private sources. Direct PLUS loans typically carry higher interest rates than Direct Loans.

Loans backed by the federal government have advantages and disadvantages over private loans (typically issued by commercial banks). They are explained here: https://students-residents.aamc.org/financial-aid-resources/federal-vs-private-education-loans.

Loans are contracts in which you agree to pay back the money loaned to you, typically with interest. They are to be taken seriously, though as you can see below, there are options to pay them off.

Post-Loan Payment Options

While you could start paying back loans in medical school, this is not a recommended strategy. You should focus on excelling in medical school. Nevertheless, there are substantial options to help you pay off loans, many of which do not require you to dip into your own pocket. We will review some options below:

A) Public Service Loan Forgiveness (PSLF)

Created in 2007 by an Act of Congress, PSLF allows people who have borrowed Direct Loans to have the remainder of their student loan balance forgiven after making 120 qualifying monthly payments. These payments do not have to be consecutive.

PSLF is an entitlement; in other words, if you meet the requirements, you should get the award—as opposed to NHSC or merit aid offered by medical schools, which are selective scholarships. PSLF does not restrict by medical specialty; non-primary care specialties are acceptable. You must make monthly payments on your loans while working full-time at a non-profit, academic, or government run institution. Frequently, residency and fellowship work counts.

Nonetheless, there is a lot of confusing information about PSLF, in terms of what loans qualify, what employers qualify, how full-time work is calculated, and what payments qualify. A series of Presidential executive orders over the years has also changed these rules.

As a result, we at MedSchoolCoach are not able to provide more specific information about the program. It is best to get updates about the status of PSLF from trusted sources, including the US Department of Education.

B) National Health Service Corps (NHSC) offers two loan repayment options

    • NHSC Students 2 Service Loan Repayment Program: you apply as a 4th year medical student. Starting intern year, you receive up to $120,000 towards your student loans for three years full-time or six years half-time commitment to work in an HSPA after completing residency. This is a middle ground path between the scholarship and the loan repayment program below. You will have already picked a specialty and committed to primary care. By starting to pay loans off immediately, you will accrue less interest-related debt. The disadvantage is that you are committing to working at an HSPA before having done residency, and perhaps your desires will change by the end.
    • NHSC Loan Repayment Program: you apply after residency, with a job offer in hand at an HSPA. You receive up to $50,000 over two years for two years of full time or $25,000 for two years of half-time service. This option offers the most flexibility to find the job you want. However, more interest related debt will have accrued on your loans, and historically this has been a competitive program.

C) Work for a Private Employer

Many private employers offer their own loan repayment programs. Typically, like the ones above, they are tied to years of service. The terms can vary, and these loan repayment offers may be tied into other recruitment benefits, like a relocation package. Taxes may be assessed, and so it is recommended to consult a tax professional when making a decision.

D) Work for the VA

Employment in the Department of Veterans Affairs may make you eligible for the Education Debt Reduction Program (EDRP), which offers $40,000 a year in student loan repayments over a maximum of five years.

E) Work for the Military

Similarly, employment as an active duty or reservist physician offers student loan repayments, typically on the order of $40,000 a year.

F) Have the State Help

States offer their own loan repayment programs. Typically they require you to work in an area of high need (high HSPA score), though they may have different requirements/flexibilities that would allow you to be eligible for a state-funded loan repayment program and, for example, not the NHSC. For example, working in an inpatient setting may be permissible for a state loan repayment program but not NHSC. Searching “loan repayment program” with a particular state in mind will give you specifics.

In other words, there are many, many ways to pay back your loans after completing medical school. The most important thing is to be savvy about the financial decisions you make now and invest the appropriate time and energy you need to excel in medical school.

Sahil Mehta

Sahil Mehta M.D. is an attending physician in the Department of Radiology at Beth Israel Deaconess Medical Center and the Founder of MedSchoolCoach. Dr Mehta is one of the world’s experts on medical school admissions having founded MedSchoolCoach in 2007. MedSchoolCoach provides admissions consulting to premedical students in the form of interview preparation, essay editing and general advising. In the past 10 years, he has had a hand in over a thousand acceptances to medical school.

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