Financing Your Medical Education
Successfully Managing Educational Indebtedness
Most medical students take out loans to pay for the cost of their education. Borrowing means that they benefit by having access to someone else's money now because they agree to pay it back with interest later. This reimbursement is a legal obligation that they assume. Those defaulting on repayment can face serious financial and legal consequences, which can impact negatively on borrowers, both personally and professionally.
The majority of students are able to repay their loans. The two major ways to succeed in handling debt repayment is to participate in a loan repayment program (usually sponsored by the federal government), and or practice prudent debt management. The latter is outlined in the five advisory tips discussed on the next page.
TIP 1 Avoid overspending
It is essential that you live within your budget so that your need to borrow will be under control and ultimately your debt load will be restricted to an absolute minimum.
TIP 2 Avoid using credit cards
You must recognize that this form of payment represents an expensive loan. Credit cards should certainly not be used to purchase items that you cannot afford; you should restrict yourself to one credit card and it should be held for identification purposes or emergency use.
TIP 3 Understand your loan
The terms of all loans are different. From the outset you should be aware of the interest rate, duration of your loan, deferment options, and consolidation conditions. You will then know how to handle your loan and avoid under- or overpayments and possible default.
TIP 4 Check your mail
Psychologically, some students try to avoid opening mail from lenders because they do not like to read “bad news.” This attitude obviously can backfire and payments can be missed. Your loan is then passed on to another lender for collection. Also, you may be sending your payments to a wrong address and over a period of time this may result in loan default.
TIP 5 Keep accurate records
To be sure that your payment is properly credited to your account, it is obviously in your best interest to maintain a complete and up-to-date record of all your payments. You should also note the remaining balances and see if they correspond to that indicated on the lender's statement. If there is a discrepancy, contact the lender promptly and call their attention to the apparent possible error.
- Financing Your Medical Education - Scholarships And Loans
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