The average debt reported among medical school graduates in 2018 was $241,600. It has become increasingly important for medical students to be financially literate in light of rising tuition costs and costs of living. With many medical students coming from wealthier families, this number is likely to be even higher for those independently financing their medical education. In light of this, applicants to medical schools must be proactive about understanding how to pay for medical school.
In this blog post, we discuss:
- What types of financial aid are offered
- How to apply for financial aid for medical school
- How to maximize the amount of aid you receive
Do medical schools offer financial aid?
The majority of medical schools in the United States do offer financial aid. Medical school financial assistance ranges from federal loans, school loans, school grants, and scholarships. Most medical school students who qualify for financial aid will receive a combination of loans, grants, and scholarships. Ideally, you want more scholarships and grants to reduce your total debt burden!
Federal loans (Direct Unsubsidized Loans, Grad PLUS Loans)
- Loans are money given to you by the government, through the school, that you must eventually pay back with interest. The best loans to take out are federal loans, as these often have lower interest rates, more payment options, and additional protections. Federal loans are available from the majority of accredited, not-for-profit schools of medicine. Direct unsubsidized loans have lower interest rates than Grad PLUS Loans but are limited at $224,000 in your lifetime, which is not usually enough to cover the full cost of attendance.
- There are many financial concepts related to student loans, including payment strategies and their pros and cons. But at this stage, the most relevant concepts for borrowing medical students are the origination fee and interest rate.
The origination fee is the amount when you pay upon initially accepting the loans. This is often ~1% – so if you take out a loan of $10,000 you would pay $100 and receive $9,900.
The interest rate is how much the amount that you need to re-pay grows. Interest is calculated by multiplying your principal (the amount you took out) by the interest rate. Direct unsubsidized loans often have an interest rate of 6-7% – so for a loan of $10,000, you would incur $600-700 per year, or $50-$58 per month, or $1.64-$1.92 daily. The interest that you accumulate is “capitalized,” or added to your principal, after you graduate. So if you accumulated $2,600 of interest, your new loan principle used to calculate interest after medical school is $10,000 + $2,600 = $12,600.
- These are loans given to you by private lenders. Like federal loans, they must be repaid with interest. Students are advised to avoid relying on private loans for medical school.
Need-based scholarships and grants
- Grants and scholarships are synonymous terms referring to money given to you by the school which does NOT need to be repaid. Need-based grants and scholarships consider you and your family’s income/wealth in determining eligibility as well as amount granted.
Merit-based scholarships and grants
- Merit-based grants and scholarships are typically awarded on the basis of merit, whether academic, extracurricular, or otherwise.
How to apply for financial aid for medical school
As part of your thank you letter, there are four key areas that you should make sure to highlight to leave a memorable and favorable impression. These include expressing gratitude, referencing specific conversation points, connecting your past experiences to opportunities, and re-iterating your strong interest.
Many first-time borrowers may not know how to apply for financial aid for medical school. However, the process is quite simple on the applicant-side. Most schools will request that you fill out the following prior to determining your financial aid “package”, or a summary of the mix of grants/scholarships and loans offered to you to pay for medical school.
- FAFSA: FAFSA stands for “Free Application for Federal Student Aid” and is used by schools to assess your family’s assets and income in order to calculate an expected family contribution (EFC), or the amount that schools expect your family to contribute toward paying for your school. The FAFSA deadline is in the early to late Winter (March 1) for most schools. We recommend that students send their FAFSA as early as possible to all schools they interview at in order to receive their financial aid package early!
- CSS Profile: CSS stands for College Scholarship Service and is also an application used by schools, though more often for determining grant/scholarship allocation instead of loans. The CSS Profile usually requests more information about your family’s finances than FAFSA and is a longer application to complete. Some schools will not require a CSS Profile, but the majority do. Some schools have their own in-home version of the CSS Profile.
Maximize Your Financial Aid Awards
Some schools are more or less receptive to adjusting financial aid offers as a recruitment strategy depending on availability of resources and your attractiveness as a candidate. If you are in the fortunate position of holding multiple acceptance offers with a better financial aid package at one school relative to another, you should not be afraid to ask for a better offer from the other school. When done tactfully and professionally, this can yield some success and potentially dramatically reduce your debt burden—and all it takes is an email to the admissions office. Please see an example email below:
Sample Letter to a Medical School’s Financial Aid Office:
Dear XSOM Financial Aid Office,
Thank you for calculating my financial aid package and answering my questions over the phone. I appreciate the information provided to help me better understand my financial situation if I were to attend XSOM, which has been my number one choice since the start of the application cycle.
However, cost is an important consideration for me as I will be independently financing my medical education. In addition, I have received a competitive full cost of attendance scholarship from YSOM, which is attached to this email. Although I still prefer XSOM for its location and ideal fit for my career goals, it is difficult for me to choose my top choice with a debt difference of over $XXX,XXX over four years.
I understand that every school differs in its aid determination and funding availability; and would like to emphasize that I feel in no way entitled to reconsideration. But if there are any additional scholarships or grants available to reduce costs, I would be immensely grateful to the scholarship committee and financial aid office in making the decision to matriculate to XSOM more financially viable for me.
Thank you for your consideration,
AMCAS ID: #”
When should you send an email to the medical school financial aid office asking for more aid?
There is some disagreement about when it is best to send such emails. While there is no objectively correct answer, we believe that the best time is after you have received an initial financial aid offer from both schools. Other students might preliminarily send such letters to their top choice schools as a prophylactic measure. We are happy to discuss individual cases with students in these situations.
Written by Kevin Li
Frequently Asked Questions
Yes. Schools have no way of verifying which students are independently financing their education and act on the assumption that all students’ families will contribute an amount proportional to their assets/income. If you are independent from your parents, you may need to provide evidence to the school and explain how your parents do not help you with finances.
The calculation above may differ for more non-traditional students and we recommend consulting with specific medical school’s financial aid offices regarding special circumstances. Often, if you have personal income from working a part-time or full-time job, that gets incorporated into the financial aid calculation.
While applying early is unlikely to result in a better financial aid package, we believe it is still to your advantage to submit necessary financial aid documents as soon as possible.
Most are disbursed quarterly (e.g. in fall, winter, and spring) rather than altogether. So a federal loan of $40,000 would be disbursed $13,300 in fall, $13,3000 in winter, and the remainder in spring.
There are many online resources for medical students, residents, and physicians to learn more about finances. One popular resource is https://www.whitecoatinvestor.com/classic-blog/.
If you are applying to medical school this year or next year, be sure to check out our other blogs with important information: