HomeSkool's Guide to Financing Your Medical Education

This forum made possible through the generous support of SDN members, donors, and sponsors. Thank you.
I'd say the average across all my secondaries was probably closer to 70 than 100.

the majority of the schools on my list were around 100-110 (maybe I just need to apply to cheaper schools haha). I checked each of them on the msar.

Members don't see this ad.
 
geez, where are you guys applying, to NY-tuoro a few times?
 
Is there anything negative about applying for FAP? I checked the guidelines and I'd actually be eligible. I remember considering it for the mcat but heard it was a huge hassle and barely anyone gets it and since I was self studying anyways my only costs were the test itself and the 200 or so I spent on study materials. Looking at applications though with considering interviews it's looking like a 10x higher scale.
 
Members don't see this ad :)
  • Like
Reactions: 3 users
Actually, it is much worse. How debt is capitalized for medical school is
1) each year is a separate loan
2) it is simple interest on each year
3) all that is typically rolled over into a single loan after graduation.

Therefore, if you were to borrow all of COA for each year at say 7% interest (I do not know what current loan rates are), after 4 years you would have
$58K a year = $272K total; $91K a year = $427K , or $155K difference (see below)
View attachment 227802

+pity+ Omg..

All of which capitalizes at graduation and begins accruing 7% annual interest. Assuming annual compounding and a 3-year residency during which you don't pay the interest, that becomes $190K. 4-year residency, $203K. And remember: that's just the difference between the two schools.

:wow::wow::wow:

I'd click "like" on your comments, but UGH I do not like them, lol.
But thank you for slapping me with the reality stick. I have some serious thinking to do.
 
I'm just here munching on my international popcorn because none of these applies. :(
22m7v7.jpg
 
  • Like
Reactions: 14 users
Does not applying for aid of any kind affect an admission decision? The reason I ask is that I've consistently heard people say schools (undergrad, med, grad, what have you) need to take some "full payers" to essentially balance the books. One person paying with no aid lets them give more to people in need. Obviously, this wouldn't result in an admission decision on its own but would it move the needle at all? Is it common for adcoms to look at aid information when they make decisions?
 
  • Like
Reactions: 1 user
Does not applying for aid of any kind affect an admission decision? The reason I ask is that I've consistently heard people say schools (undergrad, med, grad, what have you) need to take some "full payers" to essentially balance the books. One person paying with no aid lets them give more to people in need. Obviously, this wouldn't result in an admission decision on its own but would it move the needle at all? Is it common for adcoms to look at aid information when they make decisions?

Most schools I've been checking out tend to have a non-discrimination statement and financial situation is included under it. So I feel like they wouldn't look at that in their decisions. They do have an option for checking financially disadvantaged though so maybe that statement isn't completely true.
 
  • Like
Reactions: 2 users
Not sure if this is the thread for this, but what are some peoples thoughts on cashing out a sizable 401k savings to pay for some of med school (25-50% total of expected loans)? It can be done relatively penalty free by moving to a Roth and then paying the taxes when your income is low. In theory it could avoid a year of interest at 6/7%. I am looking into it but wanted to hear any other opinions.
 
@HomeSkool

First, thank you very much for compiling this (also, thanks to your wife for the contributions and FAFSA comments :laugh:)

Questions about consolidating multiple loans, and apologies if you already addressed it:
-If the loan interests capitalize at different intervals, what happens with consolidation? Does it depend on the bank you consolidate with?
-If consolidating involves averaging interests and rounding up, do people generally consolidate because it's easier to pay off one larger loan, or because it's financially advantageous?
 
@HomeSkool

First, thank you very much for compiling this (also, thanks to your wife for the contributions and FAFSA comments :laugh:)
You're welcome!

Questions about consolidating multiple loans, and apologies if you already addressed it:
-If consolidating involves averaging interests and rounding up, do people generally consolidate because it's easier to pay off one larger loan, or because it's financially advantageous?
(I changed the order of your questions to make my explanation simpler.)

Consolidation is useful for simplifying your finances, since it's easier to track and pay a single loan. Consolidating through the government's program could actually end up costing you a little extra money: since you round up the weighted average interest rate to the nearest 0.125%, you may end up paying a little more interest in the long run.

The financial advantages come when you refinance. With refinancing, a new lender pays off some or all of your loans, then issues you a new loan with its own terms. Generally, they'll present you with several repayment term/interest rate combinations from which to choose. Remember what I said about longer terms equaling higher interest rates (because with a longer term, you're tying up the lender's money for a longer period). You can select a more aggressive repayment term, which will lower your interest rate and the total amount of interest you pay over the life of the loan, but does so at the expense of higher monthly payments. Or you can choose a longer term and a lower monthly payment, understanding that the higher interest rate means you'll actually pay a bit more in the long run. You don't get somethin' for nothin'.

The government's program only allows you to consolidate, and you can only combine federal loans. Private lenders will allow you to consolidate and refinance, and they'll allow you to combine federal and private loans.

-If the loan interests capitalize at different intervals, what happens with consolidation? Does it depend on the bank you consolidate with?
When you consolidate through the government's program, you're combining direct federal loans, which all compound at the same interval. If you consolidate/refinance with a private lender, generally you'll be in repayment with monthly compounding right from the start.
 
Ok so FAFSA question: I had 1 II which I will hear back about next week but 19 schools to hear from. I heard that you can only add 10 schools to FAFSA. Should I wait and see if I hear anything or should I go ahead and add the 10 schools that Im most likely to hear from (some of them are really reaches and others reject at the end of the cycle so I woldnt hear from them until after the FAFSA deadline).
 
Members don't see this ad :)
Ok so FAFSA question: I had 1 II which I will hear back about next week but 19 schools to hear from. I heard that you can only add 10 schools to FAFSA. Should I wait and see if I hear anything or should I go ahead and add the 10 schools that Im most likely to hear from (some of them are really reaches and others reject at the end of the cycle so I woldnt hear from them until after the FAFSA deadline).

You can go back and edit the school list later.
 
You're welcome!


(I changed the order of your questions to make my explanation simpler.)

Consolidation is useful for simplifying your finances, since it's easier to track and pay a single loan. Consolidating through the government's program could actually end up costing you a little extra money: since you round up the weighted average interest rate to the nearest 0.125%, you may end up paying a little more interest in the long run.

The financial advantages come when you refinance. With refinancing, a new lender pays off some or all of your loans, then issues you a new loan with its own terms. Generally, they'll present you with several repayment term/interest rate combinations from which to choose. Remember what I said about longer terms equaling higher interest rates (because with a longer term, you're tying up the lender's money for a longer period). You can select a more aggressive repayment term, which will lower your interest rate and the total amount of interest you pay over the life of the loan, but does so at the expense of higher monthly payments. Or you can choose a longer term and a lower monthly payment, understanding that the higher interest rate means you'll actually pay a bit more in the long run. You don't get somethin' for nothin'.

The government's program only allows you to consolidate, and you can only combine federal loans. Private lenders will allow you to consolidate and refinance, and they'll allow you to combine federal and private loans.


When you consolidate through the government's program, you're combining direct federal loans, which all compound at the same interval. If you consolidate/refinance with a private lender, generally you'll be in repayment with monthly compounding right from the start.
Thank you!

So, in theory, it would generally be to your advantage to consolidate and refinance with a private lender with whom you can get reasonable rates? Is this something you would do after medical school or after residency?
 
Thank you!

So, in theory, it would generally be to your advantage to consolidate and refinance with a private lender with whom you can get reasonable rates? Is this something you would do after medical school or after residency?

It depends very much on the terms of your loans. You should go with whoever is willing to offer you the terms you want. If you can refinance to a lower interest rate without blowing your monthly budget, that's virtually always the most fiscally prudent thing to do. If all you're looking for is to simplify your finances but keep the same terms on your federal loans, the Direct Loan consolidation program is probably your best bet. As for when, I really don't know enough about it. I consolidated/refinanced after residency plus several years of Army active duty during which I was able to have my loans in forbearance.

Example: when I refinanced last year, I had some Staffords at 2.67% variable, some private loans at 5.25% variable, and some Staffords at 6.75% fixed. I consolidated and refinanced all but the low-interest loans into a single seven-year loan at 4.25% fixed, with an additional 0.25% reduction for enrolling in autopay. Doing this cost me a couple hundred extra bucks each month but will save me thousands when all is said and done. That's thousands of dollars to spend on BLING for Mrs. HomeSkool!
 
  • Like
Reactions: 4 users
personally I don't consider private loans a better option.

If you have both private and federal loans that Need consolidation I would consolidate private ones separately and federal ones separatey.
Can I pick your brain on why you're not a fan of private loans?
 
That's thousands of dollars to spend on BLING for Mrs. HomeSkool!
Or, my personal financial goal as a future physician, thousands of dollars to spend on cute puppies
 
  • Like
Reactions: 1 users
It depends very much on the terms of your loans. You should go with whoever is willing to offer you the terms you want. If you can refinance to a lower interest rate without blowing your monthly budget, that's virtually always the most fiscally prudent thing to do. If all you're looking for is to simplify your finances but keep the same terms on your federal loans, the Direct Loan consolidation program is probably your best bet. As for when, I really don't know enough about it. I consolidated/refinanced after residency plus several years of Army active duty during which I was able to have my loans in forbearance.

Example: when I refinanced last year, I had some Staffords at 2.67% variable, some private loans at 5.25% variable, and some Staffords at 6.75% fixed. I consolidated and refinanced all but the low-interest loans into a single seven-year loan at 4.25% fixed, with an additional 0.25% reduction for enrolling in autopay. Doing this cost me a couple hundred extra bucks each month but will save me thousands when all is said and done. That's thousands of dollars to spend on BLING for Mrs. HomeSkool!

What are your thoughts on paying off high-interest debt as quickly as possible instead of refinancing or consolidating? So you'd pay the minimum on the lower interest loans and pay as much as possible on the highest each month. Then once that is paid off, you go to the next one. Would the difference in how much you save depend on the terms of refinancing? I also wonder if that is a better option if you think you might be making less in the future (say, you're planning to change jobs in one year and you'd like to have that highest interest loan paid off as well as minimize your required monthly payments).
 
What are your thoughts on paying off high-interest debt as quickly as possible instead of refinancing or consolidating? So you'd pay the minimum on the lower interest loans and pay as much as possible on the highest each month. Then once that is paid off, you go to the next one. Would the difference in how much you save depend on the terms of refinancing? I also wonder if that is a better option if you think you might be making less in the future (say, you're planning to change jobs in one year and you'd like to have that highest interest loan paid off as well as minimize your required monthly payments).
That's a complicated question without an easy answer.

Refinancing allows you to alter your monthly payments and interest rate to meet your financial goals. Those goals may be short-term ("have lots of liquidity next year") or long-term ("have a huge pile of money at retirement").

Short-term: Suppose you want to save as much money as possible because you think you'll need liquidity next year. The best way to do that is to decrease your monthly payments. That may involve leaving your loans alone and just making the minimum payments. Alternatively, you may be able to refinance some or all of your loans and obtain either a lower interest rate or a longer repayment term (or rarely both). Either of those options would decrease your monthly payments. Keep in mind, though, that you may pay for a longer term with a higher interest rate -- you'll spend less every month, but over the life of the loan you'll pay more.

Long-term: The best thing to do with your loans to amass retirement wealth is refinance them into the lowest interest rates and shortest repayment terms possible, then drop as much of your paycheck into extra principal payment as you can afford. You may choose to refinance some of your loans while leaving others alone -- that's what I did, since I had some loans with lower interest rates than the refinancing offered. The idea, though, is to pay the loans as quickly and with as low an interest rate as possible.

Depending on your paycheck, retirement goals, near-term financial goals, and minimum monthly payments, it would probably make sense to at least feel out some lenders after residency to see what kind of refinancing terms you can get. If you don't like the offers, you can simply walk away. My paycheck and credit history allowed me to refinance with a low interest rate and aggressive repayment schedule while still maintaining the lifestyle I want and investing for retirement. That may or may not be your case when the time comes. You'll just have to evaluate your goals and determine how best to achieve them with your financial means.
 
Last edited:
  • Like
Reactions: 2 users
Random question but schools I have interviewed at a few schools that say "please fill out the FAFSA ASAP before you know if you are accepted." Based on my parents income I will absolutely not qualify for aid and I do not plan on taking out loans. Do I need to fill out a FAFSA anyways, or no?
 
Random question but schools I have interviewed at a few schools that say "please fill out the FAFSA ASAP before you know if you are accepted." Based on my parents income I will absolutely not qualify for aid and I do not plan on taking out loans. Do I need to fill out a FAFSA anyways, or no?
It's not going to hurt, and it could save you if your circumstances or plans change. I recommend doing it.

Sent from my Pixel 2 using SDN mobile
 
  • Like
Reactions: 1 users
Random question but schools I have interviewed at a few schools that say "please fill out the FAFSA ASAP before you know if you are accepted." Based on my parents income I will absolutely not qualify for aid and I do not plan on taking out loans. Do I need to fill out a FAFSA anyways, or no?

One school told me that you would be surprised who qualifies for need based aid. Many students have parents with high income and they didn’t grant aid by an absolute income line. It can change by class and I was told that one year everyone or most of need based aid applicants received aid.

In other words, it’s definitely worth the small effort.
 
  • Like
Reactions: 1 users
Is there anything negative about applying for FAP? I checked the guidelines and I'd actually be eligible. I remember considering it for the mcat but heard it was a huge hassle and barely anyone gets it and since I was self studying anyways my only costs were the test itself and the 200 or so I spent on study materials. Looking at applications though with considering interviews it's looking like a 10x higher scale.

It was not difficult to apply and the benefits are well worth the effort.
 
  • Like
Reactions: 1 user
It was not difficult to apply and the benefits are well worth the effort.

Thanks, I've been looking into applying for it, just waiting on my parents to file their taxes already so I can put that information in. It asks for 2017 info and all I have as of now is from 2016 so I'll have to wait a little longer to fill it out.
 
Thanks, I've been looking into applying for it, just waiting on my parents to file their taxes already so I can put that information in. It asks for 2017 info and all I have as of now is from 2016 so I'll have to wait a little longer to fill it out.
It's asking for 2017 info now? When I filled mine out in October, it was asking for 2016 info.

So, the FAFSA changes tax years it evaluates for aid based on the calendar year you fill it in, not based on the calendar year you need financial aid for? This is confusing. Would have made a major difference for me, as the parents were living entirely off of Social Security by the middle of 2017 but one still had some retirement income for all of 2016. I got married at the end of October so I filed early to file as single, but it honestly may have been more beneficial to wait until my parents' income more than cut in half to file, even taking into account spouse income. Maybe?

I sort of feel like there needs to be a FAFSA guide somewhere. I paid for undergrad without loans (still have the balances on some 0% interest credit cards to prove it) so I've never had to do this before; it is very confusing.
 
It's asking for 2017 info now? When I filled mine out in October, it was asking for 2016 info.

So, the FAFSA changes tax years it evaluates for aid based on the calendar year you fill it in, not based on the calendar year you need financial aid for? This is confusing. Would have made a major difference for me, as the parents were living entirely off of Social Security by the middle of 2017 but one still had some retirement income for all of 2016. I got married at the end of October so I filed early to file as single, but it honestly may have been more beneficial to wait until my parents' income more than cut in half to file, even taking into account spouse income. Maybe?

I sort of feel like there needs to be a FAFSA guide somewhere. I paid for undergrad without loans (still have the balances on some 0% interest credit cards to prove it) so I've never had to do this before; it is very confusing.
Aren't you in the middle of your application cycle though? I'm applying next cycle so maybe they updated it recently for the next cycle?
 
Aren't you in the middle of your application cycle though? I'm applying next cycle so maybe they updated it recently for the next cycle?
I am indeed. Maybe they did change things for next year; that possibility makes me feel a little better about filing when I did.
 
  • Like
Reactions: 1 user
I am indeed. Maybe they did change things for next year; that possibility makes me feel a little better about filing when I did.

That sounds about right. If I end up getting it life will be a lot easier for this summer :p

I've already planned for a full time job but if this works out I can just work part time and continue doing other things like research and volunteering. Ideally I'll get funded for research and not have to worry about a job regardless but labs been running a little low on funds so I'm not going to be holding out hope for that (there's no work study in the summer unfortunately).
 
For many reasons that Homeskool listed in the initial post. Generally, private loans have less favorable terms especially when people are still in school. I have been in school for a long time and I was not required to pay a dime since I am enrolled. Also, the biggest reason for me is that private loans are not cancelled by death. Spouse and family will have to repay private loans. Of course nobody plans to die early, but I think it is still a good security. I don' want my family to be responsible for 200-300K.

Anothr point about private loans. I have taken several ones and I know how it works to some extent. It's true that potentially one can use private loans to consolidate other loans with higher interest, but tell me please how many people will actually qualify for 4.5%. Most students before med school and after have poor credit history and won't be able to get anything lower than 7%.
Consolidating with private loans may only be beneficial if you get lower interest rate on all or most of your loans and you plan to pay it out quickly Like Homeskool said, if you plan to have higher monthly payment to pay it faster and save a ton of money in the long run. That might work for aone people.

In general, I think it's best to stick with federal student loans if possible. Even paying 100, 200 or 300 more on your loans will save you lots of money. That' what I do on my mortgage.
Some private loans do the same thing. The wells fargo MEDCAP loan has it erased if you were to die. And you dont have to make full payments for 36 months after graduating medical school, so it seems like its similar to federal loans. You do miss out on pslf though
 
  • Like
Reactions: 1 user
Some private loans do the same thing. The wells fargo MEDCAP loan has it erased if you were to die. And you dont have to make full payments for 36 months after graduating medical school, so it seems like its similar to federal loans. You do miss out on pslf though
that's nice.
 
  • Like
Reactions: 1 user
It's asking for 2017 info now? When I filled mine out in October, it was asking for 2016 info.

So, the FAFSA changes tax years it evaluates for aid based on the calendar year you fill it in, not based on the calendar year you need financial aid for? This is confusing. Would have made a major difference for me, as the parents were living entirely off of Social Security by the middle of 2017 but one still had some retirement income for all of 2016. I got married at the end of October so I filed early to file as single, but it honestly may have been more beneficial to wait until my parents' income more than cut in half to file, even taking into account spouse income. Maybe?

I sort of feel like there needs to be a FAFSA guide somewhere. I paid for undergrad without loans (still have the balances on some 0% interest credit cards to prove it) so I've never had to do this before; it is very confusing.
Here you go!
Federal Student Aid
anything you can think of asking is on here. FAFSA for graduate school is based on your info, not your parents.
also, see this from AAMC The Financial Aid Application Process
 
Last edited:
  • Like
Reactions: 1 users
It's asking for 2017 info now? When I filled mine out in October, it was asking for 2016 info.

So, the FAFSA changes tax years it evaluates for aid based on the calendar year you fill it in, not based on the calendar year you need financial aid for? This is confusing. Would have made a major difference for me, as the parents were living entirely off of Social Security by the middle of 2017 but one still had some retirement income for all of 2016. I got married at the end of October so I filed early to file as single, but it honestly may have been more beneficial to wait until my parents' income more than cut in half to file, even taking into account spouse income. Maybe?

I sort of feel like there needs to be a FAFSA guide somewhere. I paid for undergrad without loans (still have the balances on some 0% interest credit cards to prove it) so I've never had to do this before; it is very confusing.

@freedoctor17 was replying to my comment about the AAMC Fee Assistance Program (FAP) which provides assistance with the costs of MCAT testing and applying to medical school through AMCAS to those who qualify for the program. It has nothing to do with FAFSA which is used to determine federal aid to assist with the cost of attending medical school. The 2018-2019 FAFSA requires tax data from 2016 regardless of submitting at the end of 2017 or early 2018. Hope this clears it up for you.
 
  • Like
Reactions: 1 user
@freedoctor17 was replying to my comment about the AAMC Fee Assistance Program (FAP) which provides assistance with the costs of MCAT testing and applying to medical school through AMCAS to those who qualify for the program. It has nothing to do with FAFSA which is used to determine federal aid to assist with the cost of attending medical school. The 2018-2019 FAFSA requires tax data from 2016 regardless of submitting at the end of 2017 or early 2018. Hope this clears it up for you.

Woops I didn't notice they confused FAP with FAFSA.
 
Question:

I have some savings, but not enough to cover 4 years of medical school.

If each loan is packaged yearly and capitalizes after that year, does it make the most sense to put down my liquid assets over the first one or two years? It seems like taking loans for the latter years would reduce the time to repayment, thus decreasing money spent on accrued interest.

Is this thinking correct?
 
  • Like
Reactions: 1 user
Question:

I have some savings, but not enough to cover 4 years of medical school.

If each loan is packaged yearly and capitalizes after that year, does it make the most sense to put down my liquid assets over the first one or two years? It seems like taking loans for the latter years would reduce the time to repayment, thus decreasing money spent on accrued interest.

Is this thinking correct?
Yes. Paying cash early and taking loans late will decrease the amount of time they have to accrue interest before entering repayment, so your overall cost will be lower. However, you have to balance that against the loss of liquidity associated with paying from your savings. You ought to keep enough in savings to give you a bit of cushion in case of emergency.
 
  • Like
Reactions: 3 users
Yes. Paying cash early and taking loans late will decrease the amount of time they have to accrue interest before entering repayment, so your overall cost will be lower. However, you have to balance that against the loss of liquidity associated with paying from your savings. You ought to keep enough in savings to give you a bit of cushion in case of emergency.

What is a reasonable amount for emergencies? I’ve always kept 6 months of living expenses, is that enough?

And as long as I made it until the next year, couldn’t I increase lending aid to help in the case of an emergency?
 
  • Like
Reactions: 1 user
What is a reasonable amount for emergencies? I’ve always kept 6 months of living expenses, is that enough?
That's perfect, and it puts you waaaaay ahead of most people's game. The general wisdom is that you should have 3-6 months of living expenses in your emergency fund.

And as long as I made it until the next year, couldn’t I increase lending aid to help in the case of an emergency?
That's iffy. Your federal loan money is capped by your school when it sets the Total Cost of Attendance, so you'd have to make up any difference with private loan money. You may find lenders willing to help out there, but you may not get good loan terms if you're overborrowing.
 
  • Like
Reactions: 1 user
I see, thanks!

I’m curious about another thing:
If I were to have enough cash to pay out of pocket for school, would I be wise to hang onto to a little bit of debt for negotiating purposes?

Say I become a pediatrician, and there’s a rural contract that includes debt repayment. If I took that contract with no debt, do I lose bargaining power?
 
  • Like
Reactions: 1 user
I see, thanks!

I’m curious about another thing:
If I were to have enough cash to pay out of pocket for school, would I be wise to hang onto to a little bit of debt for negotiating purposes?

Say I become a pediatrician, and there’s a rural contract that includes debt repayment. If I took that contract with no debt, do I lose bargaining power?

I've looked into this a bit. Most job postings of this sort that I saw (rural primary care... especially family med, psych) will say +/-$150K in student loan repayment OR sign on bonus, with repayment terms if you leave before +/-5 years.
 
  • Like
Reactions: 2 users
I've looked into this a bit. Most job postings of this sort that I saw (rural primary care... especially family med, psych) will say +/-$150K in student loan repayment OR sign on bonus, with repayment terms if you leave before +/-5 years.

Ahhh that makes sense!
 
How Stupid would it be to depend of PSLF for my loans?

I know that they're planning on removing it, but I believe the current proposed legislature states that any students who file for FAFSA before May 2019 are eligible for PSLF for the entirety of their school careers.

I would only be planning on taking out loans for my full tuition ($54,000) and then covering everything else with my own savings and help from my family (I'm guessing that's around 20-25k per year, but I'm not entirely sure)

What is your opinion on using PSLF @HomeSkool?
 
My rule of thumb that at $100,000 difference in debt, it becomes a significant factor. That has to do with how the debt is capitalized and payback as a percentage of future income

If I could drag this up because I'm debating a financial question, does your rule of thumb apply before or after repayment?
 
How do you qualify for a perkins loan, since it is more favorable?
 
BTW remember the equation A=P(1+r/t)^nt
 
Top