How to finish medical school with less debt

Paying for medical school is one of the biggest challenges medical students face. The costs can be astronomical, leaving new graduates hundreds of thousands of dollars in debt.

Fortunately, there are many options for trimming the bill. Some of the best include the following:

Applying for scholarships

Scholarships can be a game-changer for medical students who are hoping to keep the cost of DO schooling reasonable.

To learn more about available scholarships, check with your school’s financial aid office. Schools typically provide scholarships to students based both on financial need and academic merit.

Other scholarships also are available, such as ones specifically for students studying to become osteopathic physicians. For example, the American Association of Colleges of Osteopathic Medicine (AACOM) offers application fee waivers to financially disadvantaged students who apply via AACOMAS, the centralized online application service for colleges of osteopathic medicine.

Additional examples of scholarships include:

• Dr. Rose M. Green Thomas Academic Medicine Scholarship Award. This $1,000 scholarship is available to a minority female who pledges a career in academic medicine.
• Northwest Osteopathic Medical Foundation tuition assistance. Students in the states of Alaska, Idaho, Montana, Oregon and Washington are eligible.
• William G. Anderson, DO, Minority Scholarship. Given to an outstanding minority osteopathic medical student who has excelled in several areas.

National Medical Fellowships (NMF) offers scholarships mostly to first- and second-year minority medical students based on financial need.

In addition, NMF provides several scholarship programs for students who pledge to serve in underrepresented communities. For example, the California Community Service-Learning Program provides a $5,000 scholarship to students who engage in 200 hours of self-directed community service.

Timeliness is important when applying for scholarships, says Julie Fresne, director of student financial services at the Association of American Medical Colleges.

“Make sure you apply on time,” she says. “If you apply late, the school may already have awarded their scholarship funds.”

Enrolling in service programs

Service programs offer another way to reduce—or even eliminate—medical school debt. Some service programs are available to students and offer scholarships that cover the full cost of tuition in addition to a living stipend in exchange for a service commitment after graduation. Other programs sign on newly graduated physicians and offer loan forgiveness or repayment in exchange for years of service. Some programs have different tracks for students and graduates.

Examples of such programs include:

• Department of Education’s Public Service Loan Forgiveness
• National Health Service Corps
• Indian Health Service Corps
• The armed services (Navy, Army and Air Force)
• State and private loan forgiveness programs

Some hospitals provide a sign-on bonus that can be used to pay down debts.

This service option is popular with medical students. More than half of graduating osteopathic medical students in 2016 expressed their intent to enter the Public Service Loan Forgiveness program, according to AACOM.

Getting the right loans

The majority of medical school students will turn to federal student loans if they need to borrow to pay for medical school, says Fresne.

Such loans—administered by the U.S. Department of Education—are available to pay for tuition, books, room and board, and other expenses. Students typically can borrow up to their budget needs, or what is known as the “cost of attendance,” which is set by the individual schools.

Federal loans offer competitive rates and payment flexibility, says Fresne. Some of the other advantages of federal loans include that they:

• Offer deferment and forbearance options
• May be forgiven in the event of death or disability
• Have a fixed interest rate for the life of the loan
• Offer various repayment plan options

“There are very manageable ways to pay back a federal loan,” Fresne says.

Private loans are also increasingly available, although many students will not qualify for them.

“Private loans are tougher to get, because they usually base them on (financial) need—occasionally on merit, but usually on need,” Fresne says.

In addition, private loans tend to have higher interest rates than federal loans. Unlike federal loans, private loans may require you to start paying back the loan while you’re still in school.

Finally, some medical schools have institutional loans from their endowment. “They tend to be very good loans,” Fresne says.