Need a Medical Student Loan?
Getting your medical degree can be a costly venture. Luckily, there are many private student loans available to medical students given their earning potential. Equally importantly, the fact that few students leave medical school before getting their MD.
Borrowing limits vary by lender, but most offer up to a full expense less aid, and a full expense can sometimes define rather liberally. Individual lenders set the interest rates but rates often track within a couple of points of the prime rate, and depend on the duration and terms of the medical student loan.
In addition, there are unsubsidized Stafford Loans (Federal Student Loans) available to medical students. This is particularly important since HEAL student loans (Health Education Assistance Loans) are no longer available, having been phased out starting in 1998. Other medical student loans are also available.
Debt from Medical School Loans
Medical student loan debt, especially high interest rate debt, is a growing problem. It was recently reported that over the past two decades, the cost of private medical schools has risen 165% and the cost of public medical schools has gone up 312%. A similar study has found that medical school costs have been increasing at a faster pace than inflation. On average, medical students graduate with about $100,000 in debt.
Compound this with slow physician salary growth, young physicians are faced with increasing difficulty in paying their college student loans and medical student loans.
All medical schools are recognizing this problem. The LCME asks every medical school how they intend to reduce medical debt during their regular re-accreditation process. These medical schools feel pressure to either reduce costs or find creative ways to help students finance their debt.
Trends for college student loans
Nearly 50% of recent college graduates took out college or medical student loans with an average borrowed around $10,000. Until recently, college student loan interest rates ran between 6-8%.
Like any debt, college student loans can influence your credit and your future decisions. Students who borrowed a substantial amount for college (more than $5000) are less likely to pursue higher education. Two ways to reduce the debt burden are:
1) Reduce your monthly payment. Since debt burden is measured by comparing your loan payment to your income, reducing your payment helps your credit evaluation. One of the simplest ways of doing this is through college student loan consolidation.
2) Reduce or eliminate the principal balance. Specific types of loans can sometimes be forgiven by service or other higher education - look into the specific college student loan program you have.
The easiest way to reduce your college student and school loan debt is to consolidate student loans. College school loan consolidation results in lowered debt and payments if the average interest after consolidation is lower than it was before. This is really just refinancing one or a group of federal or private student loans at a lower interest rate. Much like refinancing a mortgage loan at a lower interest rate would reduce monthly payments and the total amount paid.
There are two basic kinds of school loans - private and federal. Federal school loans are almost always at a much lower interest rate than you could get for an unsecured private school loan. Because of the nature of the federal student loans, you should never consolidate both private and federal loans into a single private loan. Only federal loans carry government backing and they can be refinanced at a much lower interest rate than can privately financed school loans. Therefore, when you come to consolidate school loans, do the federal loans together then look at consolidating your private student loans.
