Medical school is a pathway to a rewarding and impactful career in healthcare, but it often comes with a significant financial burden. Aspiring medical professionals may need to rely on medical school loans to cover the costs of tuition, living expenses, and other essential aspects of their education. In this article, we will delve into some of the best medical school loan options available to help students make informed decisions about financing their medical education.
Understanding the Importance of Medical School Loans
Medical school loans are a crucial lifeline for students pursuing careers in medicine. These loans provide the necessary funds to cover tuition, textbooks, living expenses, and more, allowing students to focus on their studies and training without the constant worry of financial constraints.
Top Medical School Loan Options
- Federal Direct Unsubsidized Loans: These loans are available to graduate and professional students, including medical school students. While interest accrues during school, they offer competitive interest rates and flexible repayment options. Federal loans also come with benefits such as deferment during residency and income-driven repayment plans.
- Medical School-Specific Loans: Many lenders offer specialized loan programs tailored to medical students. These loans often come with unique features, such as deferred repayment options during residency and lower interest rates. Some medical schools even have their own loan programs to support their students financially.
- Health Professions Student Loans (HPSL) and Primary Care Loans (PCL): These federal loans are designed for students pursuing healthcare professions, including medicine. They offer low-interest rates and come with the possibility of loan forgiveness for those who choose careers in underserved areas or primary care.
- Private Student Loans: While federal loans are typically recommended due to their borrower-friendly terms, private loans can be considered if additional funding is required. Private lenders may offer competitive rates, but borrowers should be cautious and compare options thoroughly.
- Medical School Scholarships and Grants: While not loans, scholarships and grants are valuable sources of funding that don’t require repayment. Many medical schools, organizations, and foundations offer financial aid to outstanding students.
Check Low Student Loan Rates
Factors to Consider When Choosing Medical School Loans
- Interest Rates: Compare interest rates among different lenders to find the most competitive option.
- Repayment Terms: Look for loans that offer flexibility during residency, as well as post-residency repayment plans that align with your expected income.
- Loan Forgiveness Programs: Investigate available loan forgiveness programs, especially if you plan to pursue primary care or work in underserved areas.
- Credit History and Cosigners: Some private loans require good credit or a cosigner. Assess your credit situation and consider involving a cosigner if needed.
- Loan Limits: Ensure the loans you’re considering cover your educational expenses, but avoid excessive borrowing.
Best Medical School Loans of 2023
- Best Overall: Earnest
- Student Loan Marketplace: Credible
- Best for Interest Rate Negotiation: Juno
- Best for Low Interest Rates: ISL Lending
- Best for Flexible Loan Terms: College Ave
- Best for Full Expense Coverage: Discover
Earnest
- APR Range: 4.42%–16.42%23
- Loan Amounts: $1,000–$250,000
- Loan Terms: 5–15 years4
Pros & Cons
- No loan fees
- $100 rate match guarantee
- Many loan repayment options
- Not available in Nevada
- Doesn’t offer co-signer release
- Skip-a-payment “reward” limits forbearance options
Why We Chose It
We like Earnest because it offers some of the most flexible payment options out there, an especially important point to consider for people taking out a large amount of student loans. Depending on how things shake out post-graduation, you may be able to refinance your loans for a lower rate, stretch your loan term out even longer, or get temporary reductions in your payment amount or interest rate.
You may be able to qualify based on your own financial situation, or you can choose to apply with a co-signer. One important thing to keep in mind is that, unlike other lenders, Earnest doesn’t offer a co-signer release. The only way to remove a co-signer from your loan is to pay it off or refinance it in your own name.
Earnest lets you skip one payment every year as a reward for paying on time. However, interest will accrue in the meantime, you’ll have to make up that payment later on, and it’ll shorten your forbearance availability by one month (you have 12 months total).
Repayment Options
- In-school interest-only payment: Cover the interest while you’re in school if you want to keep your loan balance from growing. This option is only available if you have a co-signer.
- In-school $25 payment: Choose this option to pay something toward your loans, but if you’re not sure you can afford to cover the full interest portion.
- Deferment: You can choose to postpone payment in certain cases, such as while you’re in medical school, a residency or internship, or doing military service.
- Standard payment: After you finish your training and go through a long nine-month grace period, you’ll start paying your loans according to your agreement
- Reduced rate payment: Earnest may lower your interest rate for a short period of time if you’re having trouble making your payments.
- Extended term payment: Another option for more permanent financial problems, Earnest may allow you to stretch your loan term out. This makes your payment smaller, but you’ll be in debt for longer and pay more interest.7
- Forbearance: If you run into temporary financial problems, Earnest may allow you to skip payments for up to 12 months total while you pay off your loan.
Read: Student Loan Calculator
Eligibility Requirements
- No bankruptcies or accounts currently in collections on credit reports
- Minimum credit score of 650 and at least three years’ worth of credit history
- Available to U.S. citizens or permanent residents in all states except for Nevada
Credible
STUDENT LOAN MARKETPLACE
- APR Range: 4.42%–16.99%11
- Loan Amounts: $1,000 minimum; no maximum
- Loan Terms: 5–20 years
Pros & Cons
- Best rate guarantee
- Lender network is disclosed
- Speeds up medical school loan shopping
Cons
- Loan options may vary by lender
- Only works with eight partner lenders
- Shortens rate shopping; doesn’t eliminate it
A lot of people use private student loan marketplaces, and for good reason. Credible is one of the best and it allows you to shop for rates with up to eight lenders at once. It’s relatively open about which lenders are in its network so you can see which you qualify with and which you don’t, which can speed up your own loan shopping timeline.
However, don’t be lulled into a false sense of security and forget to shop with other lenders not in Credible’s network. Even if you are matched with one or more lenders through Credible, there’s no guarantee that what you’re offered will actually work for you, so you’ll still need to do your due diligence in researching loan options. However, if you do find a cheaper rate elsewhere, Credible offers a $200 gift card as a reward
Repayment Options
Repayment options vary by lender, but you may be able to choose from the following:
- Fixed payments
- Interest-only payments
- Deferred payments
- Immediate repayment
Eligibility Requirements
- Minimum credit score of 640
- Specific requirements may vary by lender
- Available to U.S. citizens and residents or permanent residents in all states
BEST FOR INTEREST RATE NEGOTIATION
Juno
- APR Range: 3.83%–13.03%
- Loan Amounts: Varies by lender
- Loan Terms: 5–15 years
Pros & Cons
- Free to join
- Potential for low rates
- Rate Match Guarantee
Cons
- Only one choice of lender
- Confusing loan negotiation process
- Limited timeline for securing funding
Why We Chose It
Juno is different from any other student loan company in that it goes out and negotiates lower rates for you (and over 100,000 other members, too). You’ll enter basic information about yourself including your estimated credit score (Juno itself doesn’t do any verification), and Juno will go out every spring and solicit bids for the lowest-cost loans based on the people who’ve signed up. It selects one winning lender, and then presents you with the negotiated rate discount.
This has upsides and downsides. On one hand, you may be able to get cheaper rates than you could otherwise get, even with the same lender. (In fact, Juno offers a 1% cash-back rate guarantee if you can get a lower rate elsewhere.) But on the other hand, only one lender will be chosen, and you may or may not qualify. Even if you do, there’s no guarantee that its terms will fit what you’re looking for. Even so, there’s no harm in joining, so we still recommend it.
Repayment Options
Repayment options vary based on the lender issuing the loan, and may include:
- Fixed payments
- Interest-only payments
- Deferred payments
- Immediate repayment
Check Low Student Loan Rates
Eligibility Requirements
- Minimum credit score of 650
- Specific requirements may vary by lender
- Available to U.S. citizens, permanent residents, international students, and DACA recipients
BEST FOR LOW-INTEREST RATES
ISL Lending
- APR Range: 3.85%–8.98%15
- Loan Amounts: $2,001–$200,000
- Loan Terms: 10–15 years
Pros & Cons
- Very low rates
- Nonprofit lender
- Offers death and disability loan discharge
Cons
- Potentially confusing loan options
- Not available in Maine or Oregon
- Some loans only available in Iowa
Why We Chose It
If you prefer working with nonprofits—and especially if you’re going to school in Iowa—you should consider Iowa Student Loan Liquidity Corporation, commonly known as ISL Education Lending. For medical students, ISL offers two different student loan options with redundant-sounding names:
- Partnership Loans, which are available anywhere in the U.S. aside from two states
- Partnership Non-Co-Signed Loans, which are only available for people attending college in Iowa. (Interestingly, the nationwide Partnership Loans can also be non-co-signed, if you wish.)
ISL offers extremely good rates on medical school loans along with another important perk that you don’t see very often with private student loan lenders: a loan discharge clause in case you become permanently disabled or die. By contrast, many other private student loan lenders don’t have this clause, which means they can come after your estate if you die or force you to continue paying even if you’re unable to ever work again.
Repayment Options
- In-school full payment: If your income can support it, you can opt to start paying your loans immediately to get a head start on repayment.
- In-school interest-only payment: Make interest-only payments to keep your loan balance from getting larger while you study.
- Deferment: You can put your payments off until after you’ve finished your education, but you will accrue the most interest this way.
- Full repayment: Make full interest and principal payments after you graduate.18
Eligibility Requirements
- Minimum credit score of 660
- Available to U.S. citizens and permanent residents except for Maine and Oregon residents
- Maximum debt-to-income ratio of 40%, including rent or mortgage payments (not a requirement for Partnership Non-Co-Signed loans)
- No bankruptcies or defaulted student loans, and no more than two 30-day late payments on your credit reports
BEST FOR FLEXIBLE LOAN TERMS
College Ave
- APR Range: 4.42%–14.47%
- Loan Amounts: $1,000–$150,000
- Loan Terms: 5–20 years21
Pros & Cons
- 36-month grace period
- Many payment options
- Wide range of term lengths
- Late payments are costly
- Credit score requirements not disclosed
- Tougher requirements for co-signer release
Why We Chose It
If flexibility is what you’re looking for, it’s hard to beat College Ave. You can choose from a very wide range of medical school loan terms with this lender, and you also have the longest runway before you have to start making payments. You can defer loans while you’re in a residency or fellowship, and after that ends, you’ll have a 36-month grace period before loan repayment starts.
On the flipside, College Ave isn’t very open about what kind of credit you’ll need to qualify for a loan without a co-signer. And if you do end up needing a co-signer, it’s one of the more difficult arrangements to get out of. Your co-signer won’t be eligible for release until you’ve made it through half of your loan repayment term, your income is twice your loan balance, and you meet credit and residency qualifications on your own. In addition, late payments are relatively expensive, at 5% or $25 of your loan payment, whichever is smaller.
Repayment Options
- In-school full payment: Start repaying your loans in full while you’re still in school if you have the ability to do so. This will save you the most amount of interest.
- In-school interest-only payment: Cover just the interest portion of your loans if you prefer, which will keep interest from accruing on your loan.
- In-school fixed payment: This option lets you pay just $25 per month, which may not be enough to cover the full interest that accrues. It helps nip it in the bud, though.
- Deferment: You can also choose, like most students, to postpone payments while you’re in school. This is the most expensive option, since interest will still accrue.
- Forbearance: You can take a temporary pause in payments if you run into problems while you’re repaying the loan. Typically there are limits for how many months of forbearance you can have, but College Ave doesn’t disclose this information.
Eligibility Requirements
- Must meet satisfactory academic progress at an eligible school
- Available to U.S. citizens and permanent residents in all states and Washington, D.C
BEST FOR FULL EXPENSE COVERAGE
Discover
- APR Range: 4.99%–12.12%
- Loan Amounts: $1,000 minimum; maximum not disclosed23
- Loan Terms: 20 years
Pros & Cons
- Good grades reward
- Can borrow up to total cost of attendance
- Reduced maximum rates for med students
If you or your co-signer’s credit isn’t the greatest and you need to take out a large loan, Discover might be a good choice. It offers a narrower range of rates for medical school loans than for its normal graduate loans, meaning if your credit isn’t the best, you may still qualify for cheaper rates than other grad students.
Discover is one of the few lenders that doesn’t put a hard dollar cap on the amount you can borrow. As long as you can prove that the loan amount you apply for doesn’t exceed your school-certified cost of attendance, Discover may allow it. That can be especially helpful for medical students who need to borrow a lot.
If you earn good grades (defined as a 3.0 GPA or above), you can also earn a reward of 1% of your loan balance. However, you’ll only get one choice of loan term (20 years), which may or may not work for you. You’ll also need to submit to a full credit check just to see your rates, even if you’re not sure you want to go with Discover yet. Finally, if you have a co-signer on your loan, make sure they’re committed because Discover doesn’t offer any co-signer release options.
Repayment Options
- In-school interest-only payment: You can opt to cover the cost of interest while you’re in school to prevent it from accruing. This will require you to have some income, however.
- In-school fixed payment: Alternatively, you can choose to make $25 payments while you’re in school to keep at least some interest from accruing.
- Deferment: Deferment allows you to make $0 payments while you’re in school. Your loan repayment would then start nine months after you leave school.
- Reduced payment: If you need help after you graduate, Discover may allow you to lower your payment to cover just the interest or $50, whichever is less, for at least six months.
- Hardship payment: Similar to the reduced payment option, this lowers your loan rate for six months so that your payment is more manageable.
- Forbearance: Take a break of up to a year from paying your student loans if you run into problems where you absolutely cannot afford to make any payment.
Eligibility Requirements
- Must make satisfactory academic progress at an eligible school
- Available to U.S. citizens, permanent residents, and DACA recipients in all states
- International students may require a co-signer who does meet eligibility requirements
How to Choose the Best Medical School Loans
How to Apply for a Medical School Loan
Applying for a medical school loan isn’t really different than applying for any other type of graduate study loan. After you’ve exhausted all of your options for federal student loans and financial aid, here’s how you can apply for a private medical school loan:
- Consider a co-signer: Unless you have great credit, there’s a good chance you’ll need a creditworthy co-signer to get approved for a medical school loan. Even if you don’t need a co-signer to get approved, you may qualify for better rates if you do have one.
- Gather your documents: Most lenders will want to see the same documents for you and your co-signer, including recent pay stubs or income statements, past tax returns, recent bank account statements, copies of your ID, etc. If you prepare these in advance it’ll speed up your loan application.
- Pre-qualify with lender: Visit as many lenders that offer medical school loans as you can and get pre-qualified with them. This will tell you your approval odds and what your loan options might look like.
- Choose a lender: Pick the best lender and submit a full loan application. If you’re approved, it’ll coordinate with your school about where and when to send the funds. Your school will send any leftover money to you to pay for living expenses.
Factors to Consider When Applying for a Medical School Loan
Paying back medical school loans is different than for many other graduate students. You’ll generally be taking out a far higher amount, and you’ll also have to think about how to handle your student loans later while you’re in a residency or fellowship program.
A few key things can help you pick the best medical school loans:
- Annual percentage rate: The first thing to consider, this is a big factor in how much your loans will cost you and how affordable they’ll be when you start repaying them.
- Loan term: A lender that offers longer-term loans can help make your monthly payments more affordable, but you will pay more in interest overall.
- Grace period: Having a longer amount of time before your repayment starts can help ease the pressure of finding a job before you start repayment.
- Residency and fellowship deferment: A lender that allows you to defer payments during your fellowship or residency can help, since you won’t be earning your full income yet.
- Loan assistance options: Some lenders offer more robust programs to help borrowers who’ve run into problems paying back their loans. Look for lenders offering long forbearance periods and reduced payment plan options for qualifying borrowers.
Federal vs. Private Medical Student Loans
Medical school loans come in two flavors: federal student loans, owned by the U.S. government, and private student loans, owned by individual companies or nonprofit organizations.
Federal student loans are always the best choice because they have more built-in loan protections, including automatic COVID-19 forbearance, options for income-driven repayment plans, and even student loan forgiveness. These may come in handy if you end up practicing for certain employers later, like a tribe or a nonprofit group. They’re also easier to get as a student, especially if you don’t have a co-signer.
Private student loans are best kept as a last-ditch option if you still don’t have enough to pay for school. Private student loans can be tougher to get and may be more expensive. Each lender sets its own terms and they’re not always in your favor, especially compared to federal student loans.
Frequently Asked Questions
- Are Medical School Loans Tax Deductible?
Medical school loans themselves aren’t tax-deductible. However, the interest you pay on them is—up to $2,500 each year, if you meet the IRS’s requirements.
Read Best Student Loans
- Do Medical School Loans Cover Living Expenses?
Yes, you can use medical school loans to cover living expenses. This may be limited depending on the type of loan you have so it’s always best to check with your lender first, whether for federal student loans or private medical school loans. For example, you can’t use federal student loans to buy a car, although you can use them for other transportation expenses.
- Do Medical School Loans Have a Grace Period?
Medical school loans generally do have grace periods, although the length of the grace period varies by lender. Federal student loans have a six-month grace period, while private medical school loans may vary from 6 to 36 months.
- Can Medical School Debt Be Refinanced?
Yes, you can refinance medical school debt if you meet a lender’s approval requirements. Generally, this means you’ll need a good credit score (defined as 670 or higher by FICO), a strong income, and manageable debt levels. See our picks for the best student loan refinance companies to compare your options.
Conclusion
The path to becoming a medical professional is demanding, both academically and financially. Selecting the best medical school loans is a critical decision that can shape your financial journey for years to come. Research your options thoroughly, consult with financial aid experts, and carefully consider the terms and benefits of each loan. By making informed choices, you can alleviate financial stress and focus on what truly matters: your education, training, and future contribution to the field of medicine.
