Understanding Medical School Debt

[GottaGetThatMD]

I will likely have to take out some unsubsidized Stafford loans in the next four years. I am fortunate enough not to have any undergraduate debt, but this leaves me clueless about educational debt repayment. I understand that interest starts accumulating right after I take out my first loan during M1. Does this mean that I am expected to pay the interest during med school and start paying off the actual debt amount after graduation? Is there a tool out there that will help me understand how much I will end up paying in the long run?

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[gapyearguppy]

I should probably know this or be thinking about this but for some reason, when it comes to debt, my brain is just like, "Well it's gonna be there and it's gonna be a lot."

 

[FalconSlice]

I will likely have to take out some unsubsidized Stafford loans in the next four years. I am fortunate enough not to have any undergraduate debt, but this leaves me clueless about educational debt repayment. I understand that interest starts accumulating right after I take out my first loan during M1. Does this mean that I am expected to pay the interest during med school and start paying off the actual debt amount after graduation? Is there a tool out there that will help me understand how much I will end up paying in the long run?

Your medical school should have people to help you out with this, no? Money is a horrible subject, especially as a student, that is a huge weight on anyone. Usually, there are at least several people you can sit and talk with directly (i.e. face-to-face) about this whether it be med school personnel or help-seminars.

 

[NonTradJp]

Hi GGTMD,

I hardly know much about debt too but I found a resource that should help you. I also have some answers based on what I know for myself. Unsub loans have fees that add a little to the debt from the get go. On top of that you start accumulating interest immediately. I think it's calculated monthly. While you are in accredited higher education that offers fin aid for at least half time (med school def qual) you are not required to make payments. You get a grace period after ending education too that depends on the loan contract and is generally 6 months.

Here is the general info and links to tools: https://www.aamc.org/services/first/

 

[GottaGetThatMD]

Thank you!

 

[pre med 2014]

No you don't have to pay interest as it grows. However you have something like 4 months after each disbursement to pay without any interest.

So say you take out a max loan of $80K, you get 40K each semester. If you have 40 grand you can pay that within 3 or 4 months and that 40K is paid off without interest even though technically you should have 4 months of interest having had grown on it.

 

[pre med 2014]

You can also work to pay interest as it grows but it gets harder each year. 1st year I had ~5grand in interest but 2nd year it's 10 grand (another 5grand again from 1st year loans and a new 5grand accumulated for 2nd year loans)

 

[deleted390966]

Is there a tool out there that will help me understand how much I will end up paying in the long run?

https://studentloans.gov/myDirectLoan/mobile/repayment/repaymentEstimator.action

 

[PL198]

just look up loan amortization, it's basic math

 

[Mass Effect]

You do not have to pay anything (including interest) until you graduate. If you have the money to, you SHOULD pay interest, but you're not required to. Once you're in residency, there are a few repayment plans you can choose to help you pay it back. It would be impossible for anyone to give you specifics for your case because it's likely to change in 4 years. As of right now, we have programs like income-based repayment and pay-as-you-earn (which means what you pay every month is based on your salary, rather than the amount you owe). By the time you're a resident, plans will likely change so for now, just focus on the present and try to take out as little as possible in loans. Also, part of your med school orientation should be a financial aid lecture. I suggest you take notes.

 

[Stagg737]

You'll get entrance counseling and exit counseling from your medical school about how to manage your money while in school as well as how to pay it back when you leave. If whatever residency you do cares about it's employees finances at all they'll probably have a session to help you figure out what you're doing as well. For now, just focus on getting accepted. If you are, just try to minimize how much in loans you need to take out, especially in the first year or two as those years will accrue the most interest.

 

[bwmd]

You'll begin repayment six months after you graduate for federal loans, and there will be options available to make your payments affordable as resident. Most students don't touch their loans in terms of partial payments until they enter repayment as residents.

 

[daffy duck]

On a related note, is every student guaranteed a loan equal to the cost of tuition and fees plus the cost of living? Are there students who receive loans for less than is amount and must "fill in the holes" with private loans?

Additionally, when I submit FAFSA, does this qualify me for financial aid in the sense that I will receive "college grants" that reduce the cost of attendance or does financial aid simply refer to the bundle of loans I will receive (for example, someone more in need of financial aid will receive more subsidized loans and someone of less need will receive more unsubsidized loans)

 

[xffan624]

On a related note, is every student guaranteed a loan equal to the cost of tuition and fees plus the cost of living? Are there students who receive loans for less than is amount and must "fill in the holes" with private loans?

Additionally, when I submit FAFSA, does this qualify me for financial aid in the sense that I will receive "college grants" that reduce the cost of attendance or does financial aid simply refer to the bundle of loans I will receive (for example, someone more in need of financial aid will receive more subsidized loans and someone of less need will receive more unsubsidized loans)

Availability and distribution of scholarships (i.e. "grants") is very school dependent. In general, they are not something to be expected or relied on. There are no unsubsidized loans available for graduate students. Someone correct me if I'm wrong, but I believe the max federal loans are 42.4K and after that they are "private loans".

 

[breakintheroof]

On a related note, is every student guaranteed a loan equal to the cost of tuition and fees plus the cost of living? Are there students who receive loans for less than is amount and must "fill in the holes" with private loans?

I believe that because of Grad PLUS, you will be able to get loans up to the full cost of attendance, albeit at a rather unfavorable rate.

The maximum loan amount is the student’s cost of attendance (determined by the school) minus any other financial aid received.

On another topic, @daffy**** how . . . is that your username?

 

[PreMedBeauty]

Unsubsidized loans do require you to pay interest while you are in school. You definitely should speak to a financial aid counselor about your loans.

 

[xBODOMx]

Unsubsidized loans do require you to pay interest while you are in school. You definitely should speak to a financial aid counselor about your loans.

It means they accure interest, not that you need to pay them WHILE in school.

 

[PreMedBeauty]

OK well I just got the impression that you should be paying it because interest stresses me out. You're right it doesn't look like you need to pay it while in school. At least the interest isn't too high compared to years before.

https://studentaid.ed.gov/types/loans/subsidized-unsubsidized#subsidized-vs-unsubsidized

 

[bweild]

Paying the interest on your loans while you're in school will prevent the interest from capitalizing at the end of the grace period (6 mo after you graduate), so you'll save money in the long run if you pay it off as you go. But this begs the question, if you have the money to pay off the interest on your loans, then should you have taken out so much in loans to begin with? Put another way, are you better off paying off the interest on your loans or simply not taking out the money to begin with that you ended up using to pay off the interest? Turns out it's almost the same. So the question becomes, if you you take out more than you need in loans with the intention of using any extra to pay down your interest, will you? Most people will not have the discipline. People tend to spend as much money as they have (and then some). IMO, the best bet is simply to take out the bare minimum you need to make it through. Borrowed money is expensive money.

 

[pd1112]

Availability and distribution of scholarships (i.e. "grants") is very school dependent. In general, they are not something to be expected or relied on. There are no unsubsidized loans available for graduate students. Someone correct me if I'm wrong, but I believe the max federal loans are 42.4K and after that they are "private loans".

Pretty sure that is incorrect. Grad Plus can be up to the total COA, which can be $80k+ per year, depending on the school.

 

[xffan624]

Pretty sure that is incorrect. Grad Plus can be up to the total COA, which can be $80k+ per year, depending on the school.

Bad phrasing on my part. I was referring to the GradPlus loans. They are through private companies, but I guess they're not really "private loans" in the strictest sense.

 

[wiggitywack12]

On a related note, is every student guaranteed a loan equal to the cost of tuition and fees plus the cost of living? Are there students who receive loans for less than is amount and must "fill in the holes" with private loans?

Additionally, when I submit FAFSA, does this qualify me for financial aid in the sense that I will receive "college grants" that reduce the cost of attendance or does financial aid simply refer to the bundle of loans I will receive (for example, someone more in need of financial aid will receive more subsidized loans and someone of less need will receive more unsubsidized loans)

At your med interviews, there will usually be an hour long (at least) presentation on how they do financial aid at that school. Most are similar, you take out loans for up to the cost of attendance (you're not forced to borrow the full amount if you have other sources of support). You submit a FAFSA that gives the school a picture of you and your families ability to contribute to your education, this usually determines how much need based aid or need based scholarships you can qualify for. There are also merit scholarships given for being a highly competitive applicant that a school wants to retain, but these are usually given to a few classmates only. If you're going into primary care there are also plenty of PCP scholarships + PLSF programs to minimize and forgive your debt. These usually require a 2-4 year commitment of serving in an underserved area after you finish training.

 

[pd1112]

Bad phrasing on my part. I was referring to the GradPlus loans. They are through private companies, but I guess they're not really "private loans" in the strictest sense.

Not sure what you mean. They are federal student loans and essentially all of the same concepts are conserved - fixed interest, USDoE-guaranteed, can be consolidated, same deferment/forbearance rules, multiple payment plans.

 

[xffan624]

Not sure what you mean. They are federal student loans and essentially all of the same concepts are conserved - fixed interest, USDoE-guaranteed, can be consolidated, same deferment/forbearance rules, multiple payment plans.

Ok. Guess there is really no difference, just one comes before the other. Are the interest rates the same?

 

[MetalloBetalactamase]

The advantages of attending medical school as a student over forty. My loan strategy is obvious - it's called dying. I hope that helps OP.

 

[pd1112]

Ok. Guess there is really no difference, just one comes before the other. Are the interest rates the same?

Unsubsidized Stafford are 6.8%, GradPlus are 7.9%, both fixed.

 

[cs24]

You do not have to pay anything (including interest) until you graduate. If you have the money to, you SHOULD pay interest, but you're not required to.

I see this posted here a lot. What I don't understand is where the money is coming from to pay off this interest. In my case, it would be from..more loans. Doesn't that defeat the purpose of paying back interest? Seems like it would be better to not start that cycle and just take out fewer loans.

Do you agree or am I missing something here? I freely admit I am a bit financially challenged. My current debt management plan involves spending as little money as I reasonably can and a hearty dose of suppression.

edit- bweild beat me to it.

 

[GottaGetThatMD]

The advantages of attending medical school as a student over forty. My loan strategy is obvious - it's called dying. I hope that helps OP.

Haha. wishing you a long life my friend

 

[Low Flow]

You also have to consider the ability of your future self to pay those loans back. Yes they will accrue interest while you're in school. It sucks, but that's just the reality of it. You will be a professional at the end of it though, and likely making >200k/yr. If you live responsibly you will be able to pay the loans back before 40, assuming you're a traditional student.

 

[Mass Effect]

I see this posted here a lot. What I don't understand is where the money is coming from to pay off this interest. In my case, it would be from..more loans. Doesn't that defeat the purpose of paying back interest? Seems like it would be better to not start that cycle and just take out fewer loans

You mean paying off the interest during med school? Don't ever take out more loans to pay off the interest during med school. That doesn't make any sense. Some students choose to pay down interest during med school because they can afford to, either because their parents give them the money or they have a spouse who makes good money and can afford to pay it down. Also, a lot of med students come from doctor families who are living comfortably enough that they have a trust fund or money given to them just for the purpose med school tuition.

 

[ModyzMalak]

You also have to consider the ability of your future self to pay those loans back. Yes they will accrue interest while you're in school. It sucks, but that's just the reality of it. You will be a professional at the end of it though, and likely making >200k/yr. If you live responsibly you will be able to pay the loans back before 40, assuming you're a traditional student.

I always hear this sentiment a lot as a way to justify the large debt required but there's so much that could happen between you signing for those loans and finishing residency. I hate to be Debbie downer but do ppl consider personal/family emergencies? Getting really sick for an extended period of time? Accidents? Not passing a step? Not matching? Getting to residency and not being able to finish? I mean any and everything we all have to worry about but that would effect a poor medical trainee the hardest.

I know the statistics may be slim but they really aren't that slim because stuff happens everyday and we can't prepare for everything. I guess the outcome depends on how willing your institution is to work with you/how incapacitated you are. Anyway that's a thought I have a lot that I never hear anyone address when paying back loans. folks make it seem like you will get to the end to afford them in the first place.

 

[Low Flow]

I always hear this sentiment a lot as a way to justify the large debt required but there's so much that could happen between you signing for those loans and finishing residency. I hate to be Debbie downer but do ppl consider personal/family emergencies? Getting really sick for an extended period of time? Accidents? Not passing a step? Not matching? Getting to residency and not being able to finish? I mean any and everything we all have to worry about but that would effect a poor medical trainee the hardest.

I know the statistics may be slim but they really aren't that slim because stuff happens everyday and we can't prepare for everything. I guess the outcome depends on how willing your institution is to work with you/how incapacitated you are. Anyway that's a thought I have a lot that I never hear anyone address when paying back loans. folks make it seem like you will get to the end to afford them in the first place.

Your points are all valid. But with a match rate well in excess of 90% for US graduates, it does well to discuss the situation that will suit the large majority of individuals. We can't pretend the extremes don't exist, but if you make fail out of school or don't make it through residency, will it really matter if you've taken out 250k vs. 220k in loans?

 

[Mass Effect]

Anyway that's a thought I have a lot that I never hear anyone address when paying back loans.

?? This is talked about all the time on this site. Every time someone says they're not positive they want to be a doctor, they're advised not to start med school and take out loans until they are. Every time someone posts that they want to quit med school, people tell them the earlier the better because of the loans. Every time someone posts they don't want to residency, everyone tells them to do the residency so that they can at least get licensed and pay back their loans. It's addressed a lot here. Not sure why you've never heard it.

 

[ModyzMalak]

?? This is talked about all the time on this site. Every time someone says they're not positive they want to be a doctor, they're advised not to start med school and take out loans until they are. Every time someone posts that they want to quit med school, people tell them the earlier the better because of the loans. Every time someone posts they don't want to residency, everyone tells them to do the residency so that they can at least get licensed and pay back their loans. It's addressed a lot here. Not sure why you've never heard it.

Hm I wasnt referring to voluntarily jumping ship because of x y z but more along the lines of something happening where you physically cannot make it into work for an extended period of time that would cause you to fall behind. I've read that it's hard to get fired from residencies but at the same time some programs aren't so lenient about life happening. Med schools I suppose you can always remediate.

And as far as things being extreme maybe it is or maybe people have things happen all the time but they don't bring it to programs attention to not be considered a liability or seem as weak, since the medical culture can be unforgiving at times. Anyway I guess the moral of the story is finish no matter what. Didn't mean to derail.

 

[PL198]

Hm I wasnt referring to voluntarily jumping ship because of x y z but more along the lines of something happening where you physically cannot make it into work for an extended period of time that would cause you to fall behind. I've read that it's hard to get fired from residencies but at the same time some programs aren't so lenient about life happening. Med schools I suppose you can always remediate.

And as far as things being extreme maybe it is or maybe people have things happen all the time but they don't bring it to programs attention to not be considered a liability or seem as weak, since the medical culture can be unforgiving at times. Anyway I guess the moral of the story is finish no matter what. Didn't mean to derail.

stuff happens. you deal with it and move on

 

[Mass Effect]

Hm I wasnt referring to voluntarily jumping ship because of x y z but more along the lines of something happening where you physically cannot make it into work for an extended period of time that would cause you to fall behind.

That can be said about anything. Hell, undergraduate loans could be problematic if you get out into the workforce and something happens. What's the solution? Don't take out loans? I think everyone will say take out as little as you have to, but the bottom line is that for the majority of med school students, they need loans. No one can guarantee that they'll all make it through med school and residency, but if it's their dream, I don't think they should give up on it because of the what-ifs when what-ifs happen in every facet of life.

 

[ASD2019]

You mean paying off the interest during med school? Don't ever take out more loans to pay off the interest during med school. That doesn't make any sense. Some students choose to pay down interest during med school because they can afford to, either because their parents give them the money or they have a spouse who makes good money and can afford to pay it down. Also, a lot of med students come from doctor families who are living comfortably enough that they have a trust fund or money given to them just for the purpose med school tuition.

So why not just use the money from your parents to lower the amount you initially borrow? I guess I'm not understanding the benefit to borrowing a higher amount of money and then using money you already had to pay off the interest?

 

[PL198]

not everyone has parents paying for their school.

 

[Leslie_Knope]

So why not just use the money from your parents to lower the amount you initially borrow? I guess I'm not understanding the benefit to borrowing a higher amount of money and then using money you already had to pay off the interest?

I think it is more like this.

You have $0 and tuition is due so you take out loans to cover COA.

Two months later, you get some cash.

Use that cash to pay down your interest.

Then take out loans again if you need to. It is better to do that then to "save" the money because interest keeps accruing.

At least I think so?

 

[Mass Effect]

So why not just use the money from your parents to lower the amount you initially borrow? I guess I'm not understanding the benefit to borrowing a higher amount of money and then using money you already had to pay off the interest?

You can do that. I'm just saying since the question asked why/how some pay off interest.

 

[Jabbed]

I always hear this sentiment a lot as a way to justify the large debt required but there's so much that could happen between you signing for those loans and finishing residency. I hate to be Debbie downer but do ppl consider personal/family emergencies? Getting really sick for an extended period of time? Accidents? Not passing a step? Not matching? Getting to residency and not being able to finish? I mean any and everything we all have to worry about but that would effect a poor medical trainee the hardest.

I know the statistics may be slim but they really aren't that slim because stuff happens everyday and we can't prepare for everything. I guess the outcome depends on how willing your institution is to work with you/how incapacitated you are. Anyway that's a thought I have a lot that I never hear anyone address when paying back loans. folks make it seem like you will get to the end to afford them in the first place.

Getting sick/accidents are covered by a mandatory insurance coverage that you will pay for before your loans are disbursed. Anything related to academics/career moves is on you.