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I am entering my senior year of college, and finishing up med school applications. I started off at a prestigious top-ranked university, but transferred midway through the first semester of my sophomore year. I spent most of my freshman year partying and it took a small toll on my gpa and a major toll on my mental health / good studying habits etc. I have never had any mental health issues, however, during the beginning of my sophomore year, I suffered a MAJOR drug-induced (marijuana) psychotic break. I spent two weeks in a hospital, and my family took a medical leave of absence for me for the entire semester. During that time, I decided to transfer to a local state university. When I was out of the hospital, I started seeing an amazing psychiatrist who had me completely rehabilitated and off all medications within about 3 months. He told me that as long as I don't mess around with any kinds of recreational drugs (which I never plan to again) that I should be perfectly fine. After transferring, my gpa has been great and I really should have no problems getting interviews at the schools I am applying too, but I have an entire semester on my transcript listed as Wx's (withdrawals). How should I possibly go about explaining this in an interview? Clearly med school admission committees are going to be wondering if there's a possibility this could happen again, and at least making harsh judgements that it happened in the first place. How extensive of an explanation will I need to have? Obviously they won't just let me say I took a medical leave of absence and leave it at that, will they?
How you want to address this is going to be a choice you make in your application cycle.
By law, if you call it a medical leave of absence, employers (and presumably admission committees) are not legally allowed to ask anything more about it. You simply state that it was a medical issue, and that it's been completely resolved.
Here's the problem: Let's say that your gallbladder exploded and you were in the hospital for 6 weeks, and hence had all those W's. This wouldn't be a question, then, would it? You'd simply tell them that your gallbladder exploded, everyone would have an "Aww, that's too bad..." moment, and we'd all move on. So, the fact that you don't disclose why you had an LOA is, in some ways, suggesting that there was a problem. Add to that the fact that you "stepped down" to a less prestigious univerisity and people may wonder.
So, what to do? Well, you can either disclose the history, or not. If you do, there's some chance that adcom's will hold it against you, worry about relapse, etc. But, more realistically, they'll see it as a growth event for you, and see your 3+ years of improvement, and realize that you've moved past it. If you don't disclose, then some schools may see this as you're trying to hide something (perhaps worse than what actually happened), and others may not care.
I should mention that if any of this led to any legal issues, you basically have to disclose since it will show up on a background check.