What types of student loans are available for medical school students?

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Types Of Student Loans Available For Medical School Students

Medical school graduates look forward to their period of residency with great expectations. However, the excitement of resident life wears off no sooner than it has begun when the newly graduated physicians face the harsh reality of having to repay the debt that they had incurred during their medical school days. The various loans available for such a situation are:

Primary Care Loan (PCL)

If an M.D. student takes on a primary care residency to practice in primary care, he/she would be eligible for PCL and would have to repay only after the completion of postgraduate training. These funds are only available to the neediest of the students and interest is not levied on the borrower during the full-time study period and the period of deferment. Interest is charged during the 10-year repayment period at the rate of 5 percent.

Medical School Student Loans

Due to the rising cost of medical education, students have no way but to incur medical school loan debts. Such debts, especially the high-interest debts, are very common and on an average, a medical student has to incur about $100,000 in debt by the time of graduation as the cost of private medical school has increased by 165% during the past two decades and public medical education costs have gone up by 312%. Even the inflation rate has not been able to keep pace with this increase.

To add fuel to fire, the physician's salaries have not grown to the same level and this has brought greater problems for the young physicians in repaying the loans incurred by them during their college days. Steps are being taken to tackle this situation so that either the costs are brought down or the students are helped in other ways to finance their debt.

Residency / Relocation Loans For Senior Medical Students

Senior medical students have to incur high expenses for taking part in interviews for residency programs and for relocating to new areas. Loan programs are available to help students facing this problem with the repayment starting three to four years after graduation and extending up to 20 years. The fees and interest rates vary from one lender to the other.

Alternative Student Loan Programs

If students do not qualify for Stafford loans, alternate non-need based loan programs are available from many lenders to help them in meeting the education costs. The cost of education less the other financial aid is the amount available but it should not be more than the approved school budget. However, interest starts accruing immediately and the rate of interest is also higher than for Stafford loans. It is advisable to find out the terms and conditions from the lender and the same lender should be used for the alternative loans as for the Stafford loans. If a borrower dies or is disabled, the alternative loans are not insured unlike the Federal Stafford loans.

Unsubsidized Federal Stafford Loan

students are required to pay their own interests which start accruing as soon as the loan is disbursed. However, interest and principal payments can be deferred until the education is complete or the student's status drops below full time. For 2 to 3 years of the residency, payments can be deferred if the borrower so desires. However, interest will keep on accruing and it can be capitalized on the principal. The interest rate is currently based on the 91-Day Treasury Bill + 1.7 percent, capped at 8.25 percent. During repayment the interest rate is the 91-Day Treasury Bill + 2.6 percent.