SoFi

Medical school is a big commitment. Not only will students spend four years of their life working towards a medical degree, but they’ll pay a big chunk of change for it (financing medical school is a major undertaking and can lead to debt). Which is why choosing the right medical school is so important. Keep reading for insight into how to pick the right medical school and how to finance it.

What Is Medical School?

Medical school is a necessary step towards becoming a doctor and generally, it takes four years to complete in order to receive an M.D., N.D., or D.O. degree. After medical school, graduates will need to pursue a medical residency in their specialty before they can become practicing doctors.

Recommended: How to Pay for Medical School

Different Types of Medical Courses

One of the first steps potential medical students can take to find the right medical school for them, is to better understand the different types of medical courses there are. Once they know what type of medical courses they want to take, they can narrow their search to just medical schools that offer those courses.

Traditional Courses

Some medical students may be attracted to more traditional courses that have students finish two years of pre-clinical work before they move on to the three years of clinical work they need to complete to get their degree. Typically, pre-clinical work occurs in a classroom setting. This is where medical students can learn the key principles of medical science. Once they move on to the clinical work portion of their studies, they will need to work in hospitals or clinics with direct supervision, while attending lectures.

This combination educates students on medical practices while making sure they get the hands-on experience they need to use their pre-clinical knowledge in real life situations.

Integrated Courses

Integrated courses are becoming more and more popular at medical schools, as this style, of course, combines pre-clinical and clinical education. In an integrated course, medical students can expect to learn practical clinical skills and work through problem-based learning.

Often in integrated courses, a lot of the students’ work is self-directed and early patient contact is encouraged.

Intercalated Courses

Intercalated courses are unique, as they allow students to take a year out of medical school to earn a BSc or MSc in a related subject. It’s not a guarantee that every medical school will allow students to do this, but in some schools students have the option or are mandated to do intercalated courses.

Recommended: Making Sense of the Rising Cost of Medical School

How to Choose Your Medical School

Every medical student had to ask themself at one point, which medical school is right for me? Here’s a few factors medical students can take into consideration to make answering that very important question easier.

1. Cost

Med school tuition is pricey and it’s not uncommon for students to take on debt for medical school. On top of tuition, students will also need to pay additional costs such as service fees and textbooks.

While medical schools do offer financial aid such as grants and medical school scholarships to their students, it’s important to prepare for the cost of medical school as not everyone receives financial assistance.

Attending an in-state school could help medical students find a lower tuition cost than at out-of-state or private options. For example, at the University of Utah, tuition for medical school if the student lives in-state is about $40,000 a year, whereas out-of-state students can expect to pay closer to $77,000 a year on tuition at the same school.

Each school charges different tuition rates, but generally, staying in-state can save medical students a lot of money.

Recommended: Average Cost of Medical School

2. Programs Offered

Apart from their general MD program, medical schools typically have multiple programs to choose from that lead to different careers paths. Before applying to medical school, students can take into consideration how many different programs are offered, how many students are accepted to each program, how long their ideal program takes to finish, and how that program aligns with their career goals.

3. Admissions Criteria

One of the easiest ways to start a search for the right medical school is by looking for schools where the applicant meets the admissions criteria. Students can do some research on the admissions criteria for each school to make sure their qualifications lineup, as well as what they need to do to apply to each specific school.

4. Location

Location matters. The location of a medical school can affect how much it costs a student to attend, what their housing situation looks like, and what their lifestyles outside of school is like. By choosing a local school, students may be able to save money on tuition or be able to cut costs by living with a family member. Not to mention, some locations simply have a higher cost of living than others. Students can crunch the numbers on what it would cost them to live at each medical school they want to apply to, so they can get a better idea of what attending medical school will cost them as a whole.

5. Career Path Opportunities

There are a wide variety of career opportunities that can arise after medical school and not all of them involve working as a practicing doctor. Medical school graduates can pursue teaching, research, and business opportunities amongst other exciting career paths. Students can check what career path opportunities a school’s curriculum and counseling center support before they apply to get a feel for if that medical school can help them meet their unique career goals.

SoFi’s Private Student Loans For Medical School

Students that need to take out medical school student loans, may find that SoFi’s private student loans can meet their needs. It only takes minutes to apply online and borrowers can apply with a cosigner. Keep in mind that because private student loans don’t have to offer the same benefits or protections as federal student loans (like the opportunity to apply for Public Service Loan Forgiveness), they are generally considered by students only after they have thoroughly reviewed all other financing options.

Borrowers can repay their SoFi student loans in a way that works for them by choosing a monthly student loan payment and rate that fits their budget. Borrowers never have to worry about fees and can enjoy a six-month grace period after graduation so that they have time to get settled in their post-grad life before they need to start making monthly loan payments.

Recommended: Smart Medical School Loan Repayment Strategies

The Takeaway

Choosing medical schools to apply to is a lot of work, but that research is a key step students need to take to find the best medical school for them.

FAQ

Is 30 too old for med school?

No, 30 is not too old to attend medical school. Applicants that apply for medical school will be in their mid-thirties four years later whether or not they pursue a degree. It’s up to them if those four years make a difference in the scheme of things.

What makes a good med school?

A good medical school is one that meets the needs of the student, when it comes to location, finances, and program opportunities.

How do you compare med schools?

Potential medical students can take factors like cost, location, and areas of study into account to compare and contrast their different medical school options.

Photo credit: iStock/Courtney Hale

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SOPS1221053

Considering the average published college tuition according to The College Board ranges from $3,800 for a public two-year institution to $38,070 at private nonprofit four-year institutions, college students need all of the financial help that they can get.

One option is to use scholarships, which are a form of financial aid awarded to students to help pay for tuition and other education expenses. Unlike student loans, scholarships don’t need to be repaid.

Below, you’ll find the answers to “what is a scholarship?” as well as where to get a scholarship and the different types of scholarships that may be available to you.

What Is a Scholarship?

A scholarship is a form of financial aid that’s awarded to students to help pay for school. Over the last 10 years, the number of scholarships awarded has increased by 45%, according to the National Scholarship Providers Association (NSPA). Each year, there’s an estimated $46 billion in grants and scholarship money awarded by the U.S. Department of Education, colleges, and universities and an additional $7.4 billion awarded through private scholarships and fellowships.

Scholarships can be delivered in a lump-sum payment or the scholarship award can be broken up into multiple payments that are sent out each semester or school year. Depending on the scholarship, funds can either be sent directly to the student or sent to the school and the student would pay any additional money owed for tuition, fees, room, and board.

Scholarships are awarded based on a number of different criteria, including academic achievement, athletic achievement, community involvement, job experience, the field of study, financial need, and more.

Unlike student loans, scholarships don’t need to be repaid. Scholarships are generally considered gift aid.

What Is a Full-Ride Scholarship?

A full-ride scholarship is an award that covers everything — tuition, books, fees, room, board, and sometimes even living expenses. Full ride scholarships mean no other additional aid is needed to pay for school.

Full-ride scholarships are highly sought after and some may have strict guidelines and requirements.

Different Types of Scholarships for College Students

There are various forms of gift aid that students can use to pay for college. While there are differences between them, they’re similar in the fact that they do not need to be repaid. Here are different types of scholarships for college students.

Federal Grants

Federal grants are need based financial aid from the U.S. government to help students pay for college. The Department of Education offers a variety of grants to students attending four-year colleges or universities, community colleges, and career schools.

Most federal grants are awarded to students based on financial need, the cost of attendance, and enrollment status. Students can start by submitting a Free Application for Federal Student Aid (FAFSA®) form annually to determine eligibility. Once FAFSA is submitted, your school will let you know how much you may receive and when you may receive it.

Here are grant programs provided by the federal government:

•   Federal Pell Grants

•   Federal Supplemental Educational Opportunity Grants (FSEOG)

•   Iraq and Afghanistan Service Grants

•   Teacher Education Assistance for College and Higher Education (TEACH) Grants

While grants don’t typically have to be repaid, there are circumstances that may require repayment, such as:

•   You withdrew from the program early

•   Your enrollment status changed that reduced your eligibility for the grant

•   You received outside scholarships or grants that reduced the need for federal student aid

•   You received a TEACH Grant but did not meet the requirements for the TEACH Grant service obligation

Recommended: Finding Free Money for College

State Grants and Scholarships

According to the National Association of Student Financial Aid Administrators (NASFAA), almost every state education agency has at least one grant or scholarship available to residents. Eligibility may be restricted to state residents attending an in-state college, but this isn’t always the case. Check what state financial aid programs may be available to you through your state education agency.

Scholarships and Grants From Schools

Institutional aid is awarded to students by the schools they plan to attend. Scholarships and grants from schools may be offered based on need or merit. For example, a student may be awarded a scholarship or grant through the school for strong academic or athletic performance.

It’s also important to read the requirements for scholarships and grants from schools. Some awards may demand that students maintain a minimum GPA throughout the year. Others may only be available for your freshman and sophomore years.

Private Scholarships

Private scholarships are financial aid awarded to students that are funded by foundations, civic groups, companies, religious groups, professional organizations, charities, and individuals. Most private scholarships have specific criteria required to qualify, according to the Massachusetts Educational Financing Authority (MEFA) , and it may take some extra effort to research the availability of private scholarships.

Most private scholarships are only awarded for a single year. Check with the scholarship’s agency to find out if the scholarship is renewable and any criteria you may need to meet.

Main Sources of Scholarships and Grants

The main sources of scholarships and grants are from the four types of scholarships and grants listed above. Here are the major sources of scholarships and grants for college students and the percentage of total grants and/or scholarships that comes from each source:

•   Federal grants: 47%

•   State grants and scholarships: 8%

•   Scholarships and grants from schools: 35%

•   Private scholarships: 10%

Recommended: A Guide to Unclaimed Scholarships and Grants

Reasons to Be Awarded With a Scholarship

Scholarships aren’t only awarded to those with a 4.0 GPA. There are many reasons to be awarded a scholarship and students should consider their skills, areas of interest, and past achievements or awards.

Need-Based

Need-based scholarships are typically awarded to students based on their household income. The school’s financial aid office may also determine how much financial aid the student is able to receive.

Schools subtract your Expected Family Contribution (EFC) from your Cost of Attendance (COA) to determine your financial need and how much need-based aid you can receive. Your COA is the cost to attend the school and your EFC is the number that financial aid staff uses to determine how much financial aid you would receive. Information provided on your FAFSA is used to calculate your EFC.

Academic performance may also be taken into consideration when awarding need-based scholarships.

Academic Scholarships

Academic scholarships, also known as merit scholarships, are awarded to students based on their GPA and SAT/ACT admissions test scores. Award committees may also take other factors into consideration, such as extracurricular activities and leadership qualities.

Athletic Scholarships

Athletic scholarships are awarded to students who show exceptional athletic abilities while also taking academic performance into consideration. The National Collegiate Athletic Association, a nonprofit organization that regulates student-athletes, has provided more than $3.6 billion in athletics scholarships annually to more than 180,000 student-athletes. Athletic scholarships are not available at Division III colleges. Only about 1% to 2% of high school athletes are awarded athletics scholarships to compete in college.

Recommended: Balancing Being a Student Athlete & Academics in College

Community Service Scholarships

There are also scholarship opportunities for students who volunteer in their local communities. For example, the Equitable Excellence Scholarship awards students who have made a positive impact on their communities through volunteer service. The scholarship provides renewable awards of $5,000 to students for a total of $20,000 per recipient as well as one-time $2,500 scholarships.

Scholarships for Hobbies and Extracurriculars

Certain hobbies, interests, or extracurricular activities may also provide scholarships. For example, members of Starfleet, the International Star Trek Fan Association, can be awarded scholarships up to $1,000 in the categories including medicine, engineering, performing arts, international studies, business, science, education, writing, law enforcement, and general studies.

Scholarships based on Identity or Heritage

Some scholarship programs offer funds to help support traditionally underrepresented students. Outside of identity, many of these scholarships may require a minimum GPA, a need for financial assistance, leadership potential or participation in community activities.

There are also scholarships for mothers. When dealing with the costs of child care, many single mothers face unique obstacles to getting their college degrees.

Employer or Military Scholarships

Students may also be able to find opportunities through the employer of a family member. Eligibility and award amounts vary by employer. A variety of scholarships are also available to the children and spouses of active duty, reserve, National Guard, or retired members of the U.S. military.

How Can You Spend a Scholarship for Student?

How you can spend a scholarship for students depends on that specific program. Some programs may send the check directly to the college’s financial aid office to apply the funds to your tuition bill. Funds that are sent to the student may be used for education-related expenses deemed necessary by the school, like tuition, books, supplies, and housing.

Make sure to check with the scholarship program for rules regarding how you can spend your award.

How to Get a Scholarship for Student

There are several ways for students to find and apply for scholarships. Students can contact the financial aid office at the school they wish to attend or use other free resources. Some of these include:

•   Your high school counselor

•   The U.S. Department of Labor’s scholarship search tool

•   Federal agencies

•   Your state grant agency

•   Your library

•   Foundations, religious or community organizations, local businesses or civic groups

•   Organizations related to your field of interest

•   Identity-based organizations

•   Your employer or your parents’ employers

Check with each program to see how to apply and the requirements. Make sure you apply by the deadline.

Scholarship Requirements

Scholarship requirements vary by program. However, you may notice some common criteria, such as:

•   A GPA minimum

•   Age and grade requirements

•   College enrollment requirement

•   An essay requirement

•   Financial requirements

•   Location requirement

•   Test score requirements

Depending on the program, there may be some requirements related to your major, ethnicity, gender, disability or military service. In some cases, applicants may be required to complete an interview. If you’re applying for scholarships, check with each program to be sure you fully understand the application requirements and eligibility criteria.

Recommended: I Didn’t Get Enough Financial Aid: Now What?

Alternative Funding Options for College Students

Outside of scholarships and grants, there are other ways for students to pay for college.

One option is to get a part-time job and send extra income aside to put towards tuition or other school-related expenses. While this will likely not cover everything, it could make your costs more manageable. If you have a 529 college savings plan, you can tap this savings account to pay for qualified education expenses on a tax-free basis.

Students can also turn to the federal government to see if they qualify for federal work-study jobs, federal student loans, aid for military families, aid for international students or certain tax benefits. According to the Department of Education, outstanding federal student aid totals $1.61 trillion, representing 43.4 million students. These are typically awarded based on financial need and students can see what they qualify for by filling out FAFSA each year.

Another option is to use private student loans to pay for college. These are nonfederal loans made by a lender, such as a bank, credit union, state agency, university or other institution. Private student loans can be an option to consider after you’ve exhausted all other forms of aid.

Unlike most federal student loans, private loans require a credit check and the loan’s interest rate will depend on the borrower’s creditworthiness, among other factors. Private student loans are not required to offer the same borrower protections as federal student loans, things like deferment options or income-driven repayment plans.

You can even apply for scholarships and grants to pay off student loans after you’ve already graduated. You may also be able to have your student loans forgiven through state or federal programs.

The Takeaway

Before taking on student loans, scholarships and grants can be used to supplement other forms of financial aid. Before you start applying for scholarships, make sure you read the program’s requirements and turn in the application before the deadline.

If you’ve taken out federal or private student loans, there’s always the option to refinance. By refinancing your student loans, you could potentially qualify for a lower interest rate that could help you pay off the principal faster and/or decrease how much you pay each month. Note that decreasing your monthly payments is often the result of extending your loan term, which can ultimately increase the cost of borrowing over the life of the loan. Refinancing any federal loans will eliminate them from federal protections or programs such as the option to apply for Public Service Loan Forgiveness.

You can refinance the student loan with SoFi. If a competitor offers a lower rate, SoFi will match it and give you $100 after funding the loan.

Photo credit: iStock/fizkes

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

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.

An options spread involves buying and selling different options contracts for the same underlying asset, at the same time. In the world of vertical spreads, there are credit spreads and debit spreads. What is the difference between a credit vs. a debit spread, and how do investors use these strategies?

When an investor chooses a credit spread, or net credit spread, they simultaneously sell a higher premium option and buy a lower premium option, typically of the same security but at a different strike price. This results in a credit to their account.

A debit spread is the inverse: The investor purchases a higher premium option while simultaneously selling a lower premium option of the same security, resulting in a net payment or debit from their account.

Keep reading to learn more about the differences between credit spreads and debit spreads, and how volatility may impact each.

Why Use a Spread Strategy When Trading Options?

Options contracts give their holder the right, but not the obligation, to buy or sell an underlying asset, often a security like a stock. Having different strategies to trade options gives investors exposure to price movement in an underlying asset, allowing them to take a bullish or bearish position without having to own the security itself. Beyond the market price of the underlying, a number of factors — including the level of volatility, time to expiration, and market interest rates — impact the value of the options contract.

With so many factors to consider, investors have developed a host of strategies for how to trade options. A vertical spread comes in two flavors — a credit or a debit spread — which can involve buying (or selling) a call (or put), and simultaneously selling (or buying) another call (or put) at a different strike price, but with the same expiration. Let’s look at these two strategies for trading options.

How a Credit Spread Works

In a credit spread, the investor sells a high-premium option and buys a low-premium option of the same security. Those trades result in a credit to the trader’s account, because the option they sell is worth more than the one they buy. In this scenario, the investor hopes that both options will be out-of-the-money on the expiration date and expire worthless, allowing the investor to keep the original net premium collected.

How a Debit Spread Works

In a debit spread, the investor buys a high-premium option and sells a low-premium option of the same security. Those trades result in a debit from the trader’s account. But they make the trade in the expectation that the price movement during the life of the options contract will result in a profit. The best case scenario is that both options are in-the-money on the day of expiration, allowing the investor to close out both contracts for their maximum potential gain.

Credit Spreads

To help with understanding how credit spreads works: An investor simultaneously buys and sells options on the same underlying security with the same expiration, but at different strike prices. The premium that the investor receives on the option they sell is higher than the premium they pay on the option they buy, which leads to a net return or credit for the investor.

One important note is that credit spreads require traders to use margin loans, because if both options are in-the-money at expiration, their short leg will be more valuable than their long leg. So before a trader can engage in a credit spread, they’ll need to make sure their brokerage account is appropriately set up.

The strategy takes two forms. The first credit spread strategy is the bull put credit spread, in which the investor buys a put option at one strike price and sells a put option at a higher strike price. Put options tend to increase in value as the underlying asset price goes down, and they decrease in value as the underlying price goes up.

Thus, this is a bullish strategy, because the investor hopes for a price increase in the underlying such that both options expire worthless. If the price of the underlying asset is above the higher strike price put on expiration day, the investor achieves the maximum potential profit. On the flip side, if the underlying security falls below the long-put strike price, then the investor would suffer the maximum potential loss on the strategy.

Another factor that can work in favor of the investor in credit spread is time decay. This is the phenomenon whereby options tend to lose value as they approach their expiration date. Holding the price of the underlying asset constant, the difference in value between the two options in a credit spread will naturally evaporate, meaning that the investor can either close out both contracts for a gain or let them expire worthless.

The other credit-spread trading strategy is called the bear call credit spread, or a bear call spread. In a way, it’s the opposite of the bull put spread. The investor buys a call option at one strike price and sells a call option at a lower strike price, hoping for a decrease in the price of the underlying asset.

A bull put spread can be profitable if the price of the security remains under a certain level throughout the duration of the options contracts. If the security is below the lower call’s strike price at expiration, then the spread seller gets to keep the entire premium on the options they sell in the strategy. But there’s a risk, too. If the price of the security underlying the options rises above the long-call strike price at the expiration of the strategy, then the investor will face the maximum loss.

Debit Spreads

A debit spread is the inverse of a credit spread. Like a credit spread, a debit spread involves buying two sets of options, in equal amounts, of the same underlying security with the same expiration date. But in a debit spread, the investor buys one set of options with a higher premium, while selling a set of options with a lower premium.

While the credit spread strategy results in a net credit to the trader’s account when they make the trade, a debit spread strategy results in an immediate net debit in their account, hence the name. The debit occurs because the premium paid on the options the investor purchases is higher than the premium the investor receives for the options they buy.

Investors typically use debit spread strategies as a way to offset the cost of buying an expensive option outright. They may choose a debit spread over purchasing a lone option if they expect moderate price movement in the underlying asset.

Like credit spreads, debit spreads come in bullish and bearish varieties. A bull-debit spread can be constructed using call options, where the investor purchases a call option at a lower strike price and sells a call option at a higher strike price. The maximum potential gain is equal to the difference in strike prices minus the net premium paid up front, and is achieved if the underlying asset goes above the higher strike price call on expiration day. Similarly, one can construct a bear-debit spread using put options.

With debit spread strategies, the investor faces an initial outlay on their trade, which also represents their maximum potential loss. Unlike with credit spreads, time decay is typically working against the investor in a debit spread, since they are hoping for both options to expire in-the-money so that they can close out both contracts and pocket the difference.

Pros and Cons of Credit and Debit Spreads, Depending on Volatility

When comparing a credit spread vs. debit spread, here are a few key details to keep in mind.

The Takeaway

Of the many options strategies that investors employ, one popular type is an options spread: either a credit spread or a debit spread. The spread in these strategies refers to a practice of buying and selling of different options with the same underlying security and expiration date, but with different strike prices.

Key to the strategy is the fact that spreads create upper and lower bounds on potential gains and losses. It’s at the discretion of the investor to choose the strike prices of the options they buy and sell when creating the spread. This gives the investor a degree of flexibility with respect to how much risk they take on.

Ready to start investing? You can get started trading options with a user-friendly platform like SoFi. SoFi’s options trading platform offers investors the ability to trade from the web platform or mobile app, and they can also reference information about options through the library of educational resources.

Photo credit: iStock/Pekic

SoFi Invest®