Financing Your Medical Education

Scholarships largely come from two sources: medical schools and the federal government. All medical schools have some scholarships or tuition-remission grants available that are awarded on the basis of financial need and scholastic performance. The school catalogs usually give the necessary details. The federal government provides most of the funds that the medical schools, as well as banks and other lending institutions, make available to students.

Bottom Line

The following issues should be taken into consideration when financing your professional education:

• • Educational costs. Medical school has become incredibly expensive over past decades. On average, students pay an annual tuition of around $12,000 at medical schools in their home state, while out-of-staters pay around $30,000. Private schools obviously have far higher tuition levels. When estimating your total expenses, you need to consider costs beyond tuition, such items as administrative and laboratory fees, textbooks, and instruments, all of which can be substantial. Additionally, a variety of expenses that are part of living expenses must be included.
• • Strategic planning. The understandable goal of most students attending medical school is to maintain a desirable lifestyle while simultaneously repaying their debt. Although this is an ideal situation, in reality, to avoid excessive debt, one may need to adjust one's lifestyle downward to some extent. The key element is staying within a budget that is designed to keep your debt manageable. This will serve to diminish unnecessary stress and strain, and let you focus better on your education.
• • Good credit. Having a favorable credit record prior to applying for financial aid is essential. Medical schools will check it and they have the prerogative of canceling an acceptance if they feel the applicant will be unable to secure loans to pay for their education due to a poor credit history.
• • Formulate a budget. This is a most critical element in maintaining financial stability. It is done by determining income from all sources, estimating all anticipated expenses, and then subtracting the latter from the former. This will reveal the extent of supplementary financial support that is necessary to meet one's needs.
• • Financial aid sources. Students should not feel uncomfortable about the need to obtain financial aid from outside sources. More than two-thirds of medical students are in this position.
• • Financial aid. This may be secured as:
  • (a) Scholarships without a service obligation to repay.
  • (b) Scholarships with a service obligation.
  • (c) Loans subsidized by the government.
  • (d) Loans not subsidized by the government.
  • (e) Other financial sources.

Seeking financial aid. It is in your best interest to apply for scholarships and loans. Seek your librarian's assistance in uncovering suitable scholarship sources. When you apply through the school's Financial Aid Office, your eligibility for need-based funding will be evaluated. It is important that you understand your scholarship/loan terms and obligations. If you are unclear about them, clarify the issue with your school's Financial Aid Officer. Be aware that some financial aid programs are subject to change at the discretion of the funding agency. Each loan has different rules about when and exactly how it must be paid back.

Scholarships

Scholarships for First-year Students of Exceptional Financial Need

U.S. citizens or permanent residents who have been accepted and are planning to enroll as freshmen in medical school, and have exceptional financial need, can apply for such a scholarship. While funds under this program are very limited, they do provide for tuition as well as a stipend (currently about $6,000) for all other educational expenses. No service payback is required. School financial aid officers are the best sources of information concerning these scholarships.

Armed Forces Health Professions Scholarship Program

All three armed forces offer scholarships to U.S. citizens who have been accepted or are already enrolled at a medical school in the United States or Puerto Rico. These scholarships provide full tuition and payment of educational expenses, plus a substantial stipend (currently in excess of $6,000). Recipients must serve one year of active military duty for each year they receive support, with the usual minimum being three years. Premedical advisors generally have, or can secure, information concerning the individual programs sponsored by the Army, Navy, and Air Force. (See Other loan sources, #2, on page 406.)

National Health Service Corps Scholarship Programs (NHSC)

These scholarships are provided by the U.S. Public Health Service, on a competitive basis, to students enrolled at U.S. medical schools. They provide for tuition, educational expenses, and a substantial stipend (currently about $6,000). Support may be provided for up to four years, and the stipend is subject to annual cost-of-living adjustments. Recipients of such a scholarship, usually upon completion of postgraduate training, must provide one year of service in health manpower shortage areas for each year of financial support provided (two years minimum). The service may be fulfilled as salaried federal employees of the National Health Service Corps, or as self-employed private practitioners.

Loans

Health Education Assistance Loan Program (HEAL)

This program provides insured loans of up to $20,000 a year (with a maximum of $80,000 for four years). Interest is not to exceed 12% during the life of the loan, and the principal is repayable over a 10- to 25-year period starting nine months after completion of postgraduate training. It is also possible (if funds are available) to repay the loan in part or in whole by arranging a service contract through the Department of Health and Human Services.

Federal Stafford Loan

These loans are provided in two forms: subsidized and unsubsidized. For the former, the government pays the interest while the student is in school. The latter requires that the student pay interest throughout the life of the loan. These loans have a variable interest rate with 2.5% cap and provide a maximum of $8,500 (subsidized) and $10,000 (unsubsidized) annually. Repayment begins six to nine months after completing studies. Repayment can be extended up to ten years.

Health Professions Student Loan Program (HPSL)

This program is administered by the medical schools and gives a student who has exceptional need the opportunity to borrow the cost of tuition and up to $2,500 for other expenses per year. The interest rate is 5% and is applied after completion of residency training. The loan is repayable over a ten-year period.

Perkins Loans

Formerly known as the National Direct Student Loan Program (NDSL), it is administered by the U.S. Office of Education. This program enables a student to borrow up to $440,000 (including loans received as an undergraduate). The interest rate is 5% and repayment can extend over a ten-year period. Repayment begins six months after completing school.

Guaranteed Student Loan Program (GSL)

This program is also administered by the U.S. Office of Education. It permits a student to borrow up to $5,000 per year, the maximum not to exceed $25,000 (including undergraduate loans). The sources of these guaranteed funds are banks, savings and loan associations, or other participating lending institutions. Interest is at 9% and repayment begins 6 to 12 months after completing one's studies.

National Health Service Corps: Federal Loan Repayment Program

This program provides payment toward both government and commercial education loans. This can amount to $25,000 per year for the first two years and up to $35,000 for every year thereafter with a minimum two-year commitment.

Other loan sources

Medical schools have loan funds provided by philanthropic foundations, industry, or alumni. Interest rates and repayment policies are determined by the individual schools.

Funds in the form of scholarships and loans in varying amounts are available from many other sources. There are, however, restrictions as to eligibility based on residence, ethnic group, or other requirements. Sources of some of these programs are:

1. National Medical Fellowships, Inc., 250 West 57th Street, New York, NY 10019
2. Armed Forces Health Professions Scholarship Program. Commander, US Army Health Professions Support Agency SGPS-PD, 5109 Lessburg Pike, Falls Church, VA 22041; Commander, Navy Recruiting Command, 801 North Randolph, Arlington, VA 22203; United States Air Force, Recruiting Service, Medical Recruiting Division, Randolph Air Force Base, TX 78148
3. American Medical Association, Education and Research Foundation, 535 North Dearborn Street, Chicago, IL 60610
4. Educational and Scientific Trust of the Pennsylvania Medical Society, P.O. Box 8820, 777 East York Drive, Harrisburg, PA 17105
5. USA Funds Loan Information Services 8349, P.O. Box 6180, Indianapolis, IN 46209
6. National Health Service Corps Scholarship Program, U.S. Public Health Recruitment, 8201 Greensboro Drive, McLean, VA 22102
7. Robert Wood Johnson Student Loan Guarantee Program, 675 Hoes Lane, Piscataway, NJ 08854

There are many sources of information regarding specialized financial aid programs that are offered to state residents or to those entering particular specialty fields. For additional information on such programs, consult the following publications:

1. Medical Scholarship and Loan Fund Program, published by the AMA, 535 North Dearborn Street, Chicago, IL 60610.
2. FIND: Financial Information National Directory—Health Careers, published by the AMA, 535 North Dearborn Street, Chicago, IL 60610.
3. “The Health Education Assistance Loan Program: A New Way to Help Finance Your Health Professions Education.” HEAL, 5600 Fishers Lane, Rockville, MD 20857.
4. “The Health Field Needs You! Sources of Financial Aid Information,” published by the Bureau of Health Professions, Health Resources and Service Administration, DHHS, Parklawn Building, 5600 Fishers Lane, Rockville, MD 20857.

In addition, there are several programs for women and minority group students. Information on these programs is included in Chapters 8 and 9.