From a financial perspective, there are few careers more desirable than that of a medical doctor. In addition to significant earning potential, doctors typically enjoy great benefits and even better job security. Those are definitely attractive qualities in a career – assuming you can figure out how to pay for medical school.
Medical school is notoriously expensive, but pinning down the exact costs can be difficult. That said, you can explore several different options to help make medical school more affordable.
How Much Does Medical School Cost?
The cost of medical school largely depends on whether you’re attending a private or public university.
According to the Association of American Medical Colleges (AAMC), the average annual cost of tuition, fees and health insurance for the 2020-21 school year was $41,438 for an in-state student at a public university, and $58,246 a year for an out-of-state student at a public university.
The average cost at a private university was $57,619 a year for in-state students and $61,490 for out-of-state students. Some private schools charge the same rate whether you’re an in-state resident or not.
How to Plan Ahead and Save on Medical School
Most med school students end up with hundreds of thousands in student loans – a high price tag that is largely unavoidable – but there are a few ways to whittle down the cost.
Fill out the FAFSA
Students who want to alleviate the cost of medical school should fill out the Free Application for Federal Student Aid (FAFSA), which often provides access to federal grants and student loans. Many schools also use information from the FAFSA to determine their own scholarships and grants.
Try to fill out the FAFSA as soon as it’s ready, because some grants and scholarships are only available on a first-come, first-serve basis.
Max out federal loans
Medical students should take the maximum amount available in federal student loans because they often have lower interest rates than private loans. As of 2020, federal student loans for med school students have a 5.30% interest rate, while private student loans have interest rates in the double digits. This can lead to a huge difference in total interest paid.
Here’s how it plays out. Let’s say you borrow $50,000 in federal student loans at 5.30% interest. Your monthly payment with a 20-year term would be $338.
If you took out $50,000 in private loans with 9% interest, your monthly payment on a 20-year term would be $450. You would pay $26,770 more in total interest over the life of the loan than if you took out federal loans.
When you receive your acceptance letter from medical schools, they’ll include a financial aid letter showing how much federal aid the college is willing to offer.
Individual universities are the ones who determine how much federal aid you qualify for, not the federal government. Pick the school that’s willing to lend you the most in federal aid so you can save money.
Attend a public university
The easiest way to lower the cost of medical school is to choose an in-state public university. In-state residents pay much less tuition at public universities, which already have lower fees than private universities. Choosing to attend an in-state public college could save you $80,000 in total tuition fees.
Pick a low-cost area
Cost-of-living expenses for medical school graduates add up quickly and should be a key consideration for anyone looking to save money. For example, renting an apartment in New York City will be much more expensive than renting one in North Carolina. Opting for an area with more affordable living expenses could help offset the cost of medical school.
Don’t forget to factor in groceries and transportation. When deciding between med schools, compare the locations with a cost-of-living calculator.
Consider loan forgiveness programs
Doctors are eligible for federal loan forgiveness if they work for an eligible government or nonprofit organization, such as a public hospital or university.
Public Service Loan Forgiveness (PSLF) is the main federal student loan forgiveness program, which erases any remaining balance after 10 year’s worth of payments. Borrowers also won’t have to pay income tax on the amount forgiven.
Many states have their own physician-specific forgiveness programs, usually requiring applicants to work in an underserved or low-income area for a few years. For example, doctors in California can have $50,000 forgiven after working just two years in a designated area. Once those two years are over, they can extend that contract for up to four years in total to have $60,000 more in loans forgiven.
The armed forces also have their own forgiveness programs for doctors who enlist.
Choose private student loans with low rates
If you’ve maxed out your federal student loans and still need money to cover tuition and fees, private lenders can help. Choosing the right lender matters, so don’t just go with the first bank you find. Take the time to compare interest rates and terms between various lenders.
Plan to refinance private student loans
If you take out student loans to cover the cost of medical school, consider refinancing them as soon as you start working. Refinancing private student loans can save you tens of thousands in interest.
For example, let’s say you owe $75,000 in private student loans with a 10% interest rate and a 20-year term. If you refinance those loans to a 5% interest rate, you’ll pay $229 less a month and save $54,912 in total interest.
You can refinance student loans as often as you want. As a doctor, you’ll be a great candidate for student loan refinancing because of your income potential and job stability.
Pay loans while in residency
Many borrowers choose to defer their loans while in residency, but interest still accrues during that time. Even though you don’t make much money as a resident, you should still try to make payments on your student loans.
If you have federal loans, you can take advantage of income-driven repayment plans to lower your monthly payment and make it more manageable.