ASK THE EXPERTS
Applying to Medical School in a Challenging Economy
What you wanted to know about applying to and paying for medical school in today's economy:
Financial aid is so confusing. Where should I start to learn about how I can pay for medical school?
Julie Fresne
There are a number of resources available to help you navigate the complexities of financing your medical education. A great place to start is on the AAMC Web site Financing Your Medical Education. You’ll find information on the cost of applying to, and attending medical school as well as information on how to finance your medical education. Also, check the Web sites of the medical school(s) you’re interested in attending. Each school will have specific information on the availability of financial aid and the application process.
Joetta Bradica
A good place to start is the Association of American Medical Colleges’ Financial Information, Resources, Services, and Tools (FIRST) Web site, which has specific information for medical school applicants. There are many Web sites that offer information about financial aid, but keep in mind that applying for financial aid in medical school can differ in some ways from applying in undergraduate. Another Web site with information specific to medical school is FinAid.org. The financial aid section for many medical school Web sites have information and/or checklists about how to pay for medical school. Also, the AspiringDocs.org Frequently Asked Questions Web site provides helpful information.
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Even in a bad economy, will I be able to pay for medical school?
Julie Fresne
Despite the state of today’s economy, federal student loans are still available to help you cover the cost of attending medical school. Most students are able to borrow up to the cost of attendance through the Federal Stafford loan and Federal Graduate PLUS loan programs.
Joetta Bradica
The Federal Stafford and Federal Graduate PLUS loans are the most common loans that medical students use to pay for medical school and both are guaranteed by the federal government. The Federal Graduate PLUS loan does require a credit check so keeping a clean credit record is a must. Information about these loans can also be found at FIRST.
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I’m still in college, but want to prepare now for paying for medical school. Are there any basic tips about managing my money that will help me?
Julie Fresne
If at all possible, start medical school with a clean slate (financially speaking). Pay off your credit cards and minimize the number of cards you carry/keep. It’s particularly important to keep credit card debt under control as an undergraduate since credit card payments are not included in a financial aid budget. Create a spending plan if you haven’t already and get in the habit of living within your means. Another important part of a clean start is to make sure that all of your existing student loans are in good standing (that is, not delinquent and not in default). You can find the necessary information about your federal student loans at the National Student Loan Data System.
Joetta Bradica
Living within your means is a fundamental money management strategy. Creating a budget and planning your expenses in advance is the best place to start. Before you apply for medical school, pay down credit card balances to make your student budget easier to manage. Be sure to get all of your existing loan paperwork in order and make sure that all previous student loans are accounted for and in good standing. Reference the FIRST fact sheets to get helpful tips on how to manage a student budget.
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My parents have been laid off. What advice do you have for students whose parents don’t have much money or whose circumstances have changed because of the economy?
Julie Fresne
Many times in life we’re thrown an unexpected curve ball. If your parents lose their jobs, or if you come from a family with limited means, don’t assume it means that you have to give up your dream of becoming a doctor. Contact the financial aid office at the medical school(s) you are interested in for information about available grants, scholarships and loans. If you have already applied for financial aid, let the financial aid administrator (FAO) know that your circumstances have changed. FAOs have the authority to make adjustments to your original financial aid eligibility.
Joetta Bradica
Eligibility for federal loans is based solely upon a student’s (and spouse’s if applicable) financial situation. Medical schools that award their own institutional funds may require submission of parental financial data and use this information to determine a student’s eligibility for their institutional funds. Financial aid officers have the ability to use professional judgment to address special circumstances, for example, the loss of a job. Contact the financial aid office if there is a special circumstance that has affected your family’s financial situation.
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I’ve got a lot of credit card debt and am delinquent on payments. Does that have an effect on getting financial aid to pay for medical school?
Julie Fresne
Poor credit or a high ratio of debt to income can adversely affect your ability to obtain certain loans, so it is particularly important to keep credit card debt under control. Anyone can get a copy of their credit report free of charge. Be aware of deceptive advertising, as there are Web sites that advertise free credit reports but really are selling some kind of service or product. Get your free credit report at www.annualcreditreport.com. Review it, contact your creditors and do all in your power to get current on your obligations.
Creating a spending plan is also key to managing finances. Not only will it help you to understand where and how you are spending, it will help you understand just how much you will need to borrow for medical school. AAMC resources on the FIRST Web site can help demystify the process and provide you with tools to develop your individual plan.
Joetta Bradica
Federal Stafford loans and Federal Perkins loans do not require credit checks for approval, but the Federal Graduate PLUS loan does require a credit check. It is therefore extremely important to clean up your credit record before applying to medical school. Credit card payments cannot be considered as part of your student budget in medical school so a large credit card balance can cause serious problems with making your student budget dollars stretch.
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I know that most medical students borrow to pay for medical school. How much can I borrow to pay for medical school? And, will I actually be able to pay it back after becoming an M.D.?
Julie Fresne
Despite the high cost and potential debt, medical school is still a good investment. Most students are able to borrow sufficient funds to pay for their medical education through the Federal Stafford loan and Federal Graduate PLUS loan programs. And, current evidence suggests that graduates are able to pay their loans back on-time, and in many cases early. This doesn’t mean that you don’t need to be careful about how much you borrow. Borrow only as much as you absolutely need to get through school. If you make responsible decisions about your loans, there is good reason to believe that barring any unusual circumstances, you’ll be able to pay those loans back.
Joetta Bradica
If eligible, you are able to borrow the amount needed to cover your cost of attendance for medical school. The school’s financial aid office must determine a modest but adequate student budget, which includes cost of tuition, fees, books, equipment, required insurance, rent, food, transportation, and personal miscellaneous items. These amounts determine the cost of attendance.
Physicians have the lowest default rate of any cohort of professionals, so historical data show that physicians are able to pay back their loans. You will be able to choose a payment plan that fits your financial situation. The servicer (Sallie Mae is a common servicer) of your loans will assist you with this process.
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I've heard that there are programs that will pay off my education loans. Is this true?
Julie Fresne
There are a number of great programs that forgive or pay all or part of your education loans in exchange for your service. For instance, Public Service Loan Forgiveness is a new program for federal student loan borrowers who work in certain kinds of jobs (non-profit, government, etc.). It will forgive remaining debt after 10 years of eligible employment and qualifying loan payments. Visit FIRST for more information on federal and state loan repayment programs.
Joetta Bradica
There are more than 100 loan forgiveness programs in 46 states. Information about these programs can be found at www.aamc.org/stloan. There is also a Loan Forgiveness for Public Service Program administered by the federal government. Read the FIRST fact sheet: Doing Well by Doing Good, to learn more about this program and others.
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Is there any financial aid that I don’t have to pay back, such as grants or scholarships for medical students?
Julie Fresne
Some medical schools, based on the availability of funds, offer need-based and merit-based scholarships. Other options to minimize the amount borrowed should always be explored. Check out scholarships from outside sources, such as your faith affiliation, civic organizations, etc. There are also service-based scholarships, including military and public health service programs (for example, the National Health Service Corps).
The medical school financial aid office is your primary point of contact for all financial aid matters and a valuable resource for detailed information about various student grant and loan programs–so visit them to discuss alternatives to borrowing. Be proactive in your search for alternatives to loans and don’t be afraid to ask questions.
Joetta Bradica
There are scholarship programs, such as those administered by the branches of the military (Air Force, Army, Navy and National Guard) and another program administered by the National Health Service Corps that pay tuition, fees, books, health insurance and provide a living allowance in exchange for service time after graduation. There are other scholarship opportunities listed at www.aamc.org/stloan.
Many medical school Web sites have information about scholarships and grants. The following are suggestions for finding potential assistance opportunities:
- Talk with upper-class students;
- Search Internet databases such as www.fastweb.com;
- Explore the Hispanic Scholarship Fund Web site;
- Check out the Native American Scholarship Fund;
- Inquire about scholarships offered by places of worship;
- Request information from with local medical societies;
- Reach out to chapters of American Medical Association (AMA);
- Contact charitable foundations;
- Get in touch with service organizations such as Rotary Clubs; and
- Research scholarship directories in libraries or student aid offices.
A word of caution – never pay for scholarship information.
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