Did you declare you’d be a doctor someday back when you were just a little kid?
Perhaps your parents bought you one of those toy medical bags, with a plastic stethoscope and tiny bottles for candy pills. Or maybe you got your interest from a medical drama on TV, or while dissecting a frog in a sixth-grade science class.
Little did you know way back then what it would take to make that dream come true. Hard work. Great grades. Years of school and training. And lots and lots of money.
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What is the average cost of medical school per year?
According to the Association of American Medical Colleges (AAMC) Summary Statistics, the average first-year medical student at a public medical school paid $31,905 for tuition alone during the 2018-19 academic year.
The average first-year med student at a private school paid $53,901 for tuition. Add in fees and health insurance costs, and the numbers increase to $36,755 and $59,076, respectively.
And that’s for students who had resident status. Non-resident first-year students paid an average of $55,291 in tuition ($60,802 with health insurance and fees) to attend a public medical school. The average cost was $55,310 for tuition ($60,474 with health insurance and fees) for a non-resident student at a private school.
That means the average cost of four years of medical school could range from a low of $147,020 up to $243,208. (And that’s if tuition doesn’t increase each year. Which it typically does, according to the AAMC summary.)
Remember, these are averages.
The maximum first-year cost (tuition, health insurance, and fees) reported to the AAMC was $99,014 for a non-resident student at a public medical school.
And those numbers don’t include the costs involved with applying to medical school (test fees, test prep, application fees and college visits), or the expenses a student may have to cover once they get in and are living away from home.
The basic costs of living — housing, transportation, food, etc.— can vary widely depending on the location of the medical school. Finding a reasonable place to rent in New York City vs. Salt Lake City could mean a big difference to a student on a budget.
But no matter where a med student lands, he or she will likely have to pony up plenty for books and supplies; a cell phone; cable, Wi-Fi, and other utilities; health care and prescriptions; and, if there’s time, entertainment.
Because the class and study hours are so intense, it may be tough to squeeze a job into the mix.
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Cutting debt by being proactive
The AAMC reports that the median medical education debt balance for graduating students (public and private) in 2018 was $194,000. And it estimates students come in carrying a median pre-med education balance of about $25,000. That makes the total median student loan balance for a new doctor about $219,000.
It’s a lot to worry about for anyone — even with the potential of a big payday after graduation and residency.
Which is why it can be important to be proactive about how you’ll pay for medical school, starting with making a financial plan that could include the following components.
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Scholarships aren’t always easy to get at the graduate level. The competition can be tough for some programs, and to be eligible, a student may need a nominating letter or to meet specific qualifications (such as belonging to a particular minority or having a plan to go into a certain type of medical practice, for example).
Students can look online for various scholarship awards or ask for help from advisors at their current school. Sources such as CollegeScholarships.org and The American Academy of Family Physicians (AAFP) could be good starting points.
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Some medical professionals choose to obtain their medical degree by participating in a military or loan repayment program. The qualifications and commitment for each program vary, and the separate branches of the military, including the Army National Guard and Coast Guard, have different options.
The U.S. Department of Veterans Affairs lists some scholarships and programs on it’s website. Some students also may qualify for financial aid based on a family member’s military service.
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The first step in getting federal student loans is to complete the Free Application for Student Aid (FAFSA). Students can check with the medical school they plan to attend to get filing date requirements and information on institutional financial aid (aid given by the school).
There are three types of federal student aid:
• Grants: This is financial aid that doesn’t have to be paid back (unless the student withdraws from school and owes a refund). Grants are often need-based.
• Work-Study: Federal work-study jobs are need-based and help students earn money to pay for school through part-time employment. A bonus for medical students is that the work often is tied to community service or may be related to the student’s course of study, so this type of job may be more interesting and manageable than some others.
• Loans: A student who borrowed money as an undergraduate, and demonstrated financial need, may have been awarded a Federal Direct Subsidized Loan to help cover school costs. Those loans are not available to students in graduate and professional school programs. However, those students are eligible for other types of federal loans. They may receive a Direct Unsubsidized Loan, which is not based on financial need, or a Direct PLUS Loan, which, unlike other federal loans, will require a credit check.
What’s the difference between a subsidized and unsubsidized loan? With a Direct Subsidized Loan, the U.S. Department of Education pays the interest on the loan while the student is in school. With a Direct Unsubsidized Loan, the student isn’t required to make payments while in school, but the interest will continue to accumulate during that time and during the grace period and after leaving school. Graduate and professional students can borrow up to $20,500 each year in Direct Unsubsidized Loans, and Direct PLUS Loans can be used for college costs not covered by other financial aid.
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Private student loans
Federal student loans offer certain benefits and protections that aren’t available through private student loans — including forgiveness and flexible, income-driven repayment plans — so borrowers typically look into those options first. But students may find there are also advantages of borrowing a private student loan.
Some students simply need more money than they can borrow based on federal loan limits, and certain private student loan lenders allow borrowing up to 100% of the Cost of Attendance (COA).
Borrowers also sometimes prefer the variable interest rates that private lenders may offer, because they can start off with a lower monthly payment (although variable interest rates can increase over time).
But to get a private loan with a competitive interest rate, a borrower generally needs to have a strong credit report (among other financial health-related factors), while Federal Direct Subsidized Loans don’t require a credit check. So there are trade-offs.
There also can be big differences in what one private lender to the next has to offer, and not just when it comes to interest rates. It’s important to ask about fees, repayment options,and other benefits.
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A budget plan
Finding the right resources to pay for medical school is important, but learning to live within a budget also can keep down the inevitable debt. Students who start with a spending plan as undergraduates may have it easier; they can probably modify what they’ve already been doing to work in medical school. But it’s never too late to start budgeting.
Once a student determines how much will be coming in from various sources (family, loans, scholarships, etc.), the next step is to list what will be going out for tuition and fees, housing, food, transportation and other costs.
And then the cost-cutting options can kick in: Is there inexpensive public transportation available? Will there be roommates to split some bills? Can any of those roommates cook? Once classes start, a debt tracking app may help with staying on top of those expenses, and the budget tweaking can begin.
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Light at the end of the tunnel
It’s no secret that physicians have the potential to earn a higher-than-average salary once they finish their residency and start practicing.
Big money isn’t the goal for every med student, of course — that kid with the toy medical kit wasn’t thinking about dollars when the decision to be a doctor was first made. Still, that future income may feel like the light at the end of a long, dark tunnel if student debt is piling up.
Exactly how much money doctors make can vary depending on several factors, including experience, location and the specifics of the job — including what specialty they choose and if they practice in their own office, in a hospital, outpatient care center, or elsewhere.
According to Bureau of Labor Statistics numbers from 2018, for example, anesthesiologists earned a mean annual wage of $267,020; surgeons earned $255,110; obstetricians and gynecologists earned $238,320; and family and general practitioners earned $211,780.
The Profiles Physician Database reports even higher salary numbers based on a physician salary and compensation report compiled by Medscape in 2019.
It may take a while to get there, though. Residents and fellows earn far less than those amounts. So do doctors who choose lower-paying specialties or who may work in community medicine.
But there are ways to get to work on that medical school debt without waiting for a big payday.
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Loan forgiveness and repayment through service
There are several forgiveness programs for physicians with student debt. Some are government-sponsored (federal and state), and some are private programs.
Benefits vary, but generally, participants provide service for two to four years (depending on the number of years they receive support) in exchange for repayment of student loans and possibly a stipend for living expenses.
One of the best-known of these programs is the federal Public Service Loan Forgiveness (PSLF) program, which was designed to encourage students to enter full-time public service jobs.
While the program isn’t specifically aimed at medical students, it could help those who choose to forgo the promise of a big salary in exchange for the reward of working for a government or not-for-profit organization.
Eligible borrowers could receive forgiveness of the remaining balance for their federal direct loans after making 120 qualifying payments while employed by certain public service employers.
Other programs include the National Health Service Corps (NHSC) Students to Service Loan Repayment Program, which provides loan repayment assistance in return for at least three years of service at an NHSC-approved site in a designated Health Professional Shortage Area. Students who are in their last year of medical or dental school may be eligible.
The NHSC also may provide up to $50,000 to repay a health profession student loan in exchange for a two-year commitment to work at an NHSC site. After completing the initial service commitment, a health-care professional can apply to extend his or her service to receive additional repayment assistance.
The AAMC provides a searchable database of state and federal loan repayment, loan, scholarship and other programs on its website. Your medical school or financial aid advisor may have additional information.
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Federal repayment programs
There are several repayment plans for federal student loan borrowers. Some are based on graduated payments that start low and increase over time, and they are designed to ensure the loans will be repaid after a designated period. Others are based on a percentage of discretionary income or are completely income-driven.
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Federal loan consolidation
A Direct Consolidation Loan allows borrowers to combine multiple federal education loans into one loan with a single monthly payment.
Consolidation also can give borrowers access to additional loan repayment plans and forgiveness programs. But there is a downside: The interest rate on the new loan will be a weighted average of prior loan rates (rounded up to the nearest eighth of a percent), not necessarily a new lower rate.
If the monthly payment is lower, it’s probably because the loan term is longer, which means the borrower is paying more interest over time. And federal loan consolidation is only for federal loans — the borrower can’t include private student loans.
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Private student loan refinancing
With student loan refinancing, all student loans are combined into one new loan with one new payment, with a new and possibly lower interest rate.
Some private lenders will consolidate and refinance both federal and private student loans. But borrowers should be sure they are prepared to give up the benefits offered by their federal loans — like access to income-driven repayment and loan forgiveness.
Refinancing generally works best for borrowers who have improved their financial situation after graduation with a good job and solid credit.
Again, those who are taking advantage of federal programs such as income-driven repayment or public service loan forgiveness may find refinancing isn’t in their best interest. Still, it’s likely worth checking out all the options.
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Making a dream come true
Few people dream of starting their careers with a mountain of debt to worry about. But with proactive planning on the front end, a realistic repayment plan on the back end and multiple resources available for assistance, many med students are making it work as they pursue their calling.
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