The average cost of medical school is $230,296 in total, according to the Education Data Initiative. The yearly cost currently sits at $57,574, and we’re seeing an increase of $1,030 each year.
If you are currently pursuing or already in medical school, the expense is not something to be taken lightly. Almost 70 percent of medical students rely on student loans to help pay for medical school, and the average medical student graduates with just over $250,000 in total student loan debt (this includes debt from their undergraduate degree).
The average physician salary ranges from $194,000 to $250,000, with some specialties making close to $800,000 per year. While these numbers are well above the national average mean wage of $61,900 per year, paying for medical school and paying off medical school student loans is still no easy feat.
How to Pay for Medical School
With the average cost of medical school being well above six figures, finding a way to pay for it is one of the biggest hurdles future medical students face. By being proactive about finding ways to pay for medical school, you may be able to reduce your overall student debt load and save thousands of dollars in interest.
Scholarships
Scholarships aren’t always easy to get at the graduate level, but it’s not impossible. Some schools offer merit-based scholarships to incoming medical students who show exceptional academic capabilities and have a unique life experience. Students can also look into more individualized scholarships geared toward their location, specific area of study, or previous work experience.
Scholarships are offered by colleges and universities, businesses, local organizations, churches, and more. While it may take some time to find scholarships you qualify for and apply for them, the end result could save you thousands in medical school tuition expenses.
Military Service
Some medical professionals choose to obtain their medical degree by participating in a military physician 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 two options for medical students in the military are the Health Professions Scholarship Program and Uniformed Services University of Health Sciences. Both programs pay for the cost of medical school but require a service commitment once the student graduates.
Federal Financial Aid
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: Grants, such as the Pell Grant, do not have to be paid back unless the student withdraws from school and owes a refund. Grants are needs-based and the maximum amount for the 2023-2024 academic school year is $7,395.
• Work-Study: Federal work-study jobs are needs-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.
• Federal 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, medical 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.
Recommended: Comparing Subsidized vs. Unsubsidized Student Loans
Private Student Loans
Private student loans are usually used once federal student loans have been exhausted. Based on federal loan limits and the cost of medical schools, medical students may need additional funding. Certain private student loan lenders, including SoFi, allow borrowing up to 100% of the cost of attendance.
To get a private loan with a competitive interest rate, a borrower generally needs to have a strong credit profile and a low debt-to-income ratio. If a borrower doesn’t meet these qualifications, they may want to consider using a cosigner to qualify for a better rate.
Have a Budget Plan in Place
Finding the right resources to pay for medical school is important, but learning to live within a budget can also 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.
Recommended: How to Create a Budget in 6 Steps
Once a student determines how much will be coming in from various sources (work, 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.
Next, it’s a good idea to see where you can cut back on spending. Is there inexpensive public transportation available? Will there be roommates to split rent and utility bills? Other ideas to reduce expenses include meal planning and cooking at home, canceling subscription services, buying in bulk, and working out at home.
By living on a budget while in school, throughout residency, and for your first few years as an attending physician, you can take out less in loans, pay off your student loans quicker, and set yourself up for financial success down the line.
How to Pay Off Medical School Debt
It’s no secret that physicians have the potential to earn a higher-than-average salary once they finish their residency and start practicing. Here are the average annual salaries of a variety of medical specialties:
• Plastic Surgery: $619,000
• Cardiology: $507,000
• Radiology: $483,000
• Anesthesiology: $448,000
• General Surgery: $412,000
• Emergency Medicine: $352,000
• Ob/Gyn: $337,000
• Family Medicine: $255,000
• Pediatrics: $251,000
However, these are not earned until both medical school and residency (typically four years) are completed. Luckily, there are medical school loan repayment strategies that can be used without waiting for a big payday.
Loan Forgiveness and Repayment Through Service
There are several student loan 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 most common 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 of their federal direct loans after making 120 qualifying payments while employed by certain public service employers.
Another program is 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.
Federal Repayment Programs
There are several student loan 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, such as income-based repayment, are based on a percentage of discretionary income and family size.
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 one-eighth of a percentage), 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. Also, federal loan consolidation is only for federal loans—the borrower can’t include private student loans. The borrower does, however, keep federal protections and benefits with a Direct Consolidation Loan.
Private Student Loan Refinancing
With student loan refinancing, one or more student loans are combined into one new loan with one new payment, with a new and possibly lower interest rate.
Advantages of a student loan refinance include a possible lower monthly payment, but borrowers should be sure they are prepared to give up federal benefits that are no longer accessible if you refinance, including access to income-driven repayment plans and loan forgiveness. Note: You may pay more interest over the life of the loan if you refinance with an extended term.
Refinancing generally works best for borrowers who have improved their financial situation after graduation with a good job and solid credit profile.
The Takeaway
Medical school is an expensive endeavor, with the average cost being more than $200,000. Many students rely on savings, grants, scholarships, and student loans to pay for their medical education.
When it comes time to pay off those loans, there are many options new graduates can consider. These include federal repayment plans, student loan forgiveness, federal loan consolidation, and student loan refinancing. Those who opt to refinance to a possibly lower rate, though, must be aware that they will lose access to federal protections and benefits.
If you do choose to refinance your student loans, consider SoFi. It takes just two minutes to check your rate and your credit will not be impacted when you prequalify.
SoFi Student Loan Refinance
SoFi Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org). SoFi Student Loan Refinance Loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Public Service Loan Forgiveness, Income-Based Repayment, Income-Contingent Repayment, PAYE or SAVE. Additional terms and conditions apply. Lowest rates reserved for the most creditworthy borrowers. For additional product-specific legal and licensing information, see SoFi.com/legal.
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