Stafford Student Loans for Medical School
The average medical student borrows $130,000 in student loans during their four years of school, and that does NOT include any student loans that you may be carrying from undergraduate school. The majority of students rely upon student loans to obtain their education.
Most students attending an accredited institution in the United States qualify for government loans, better known as Stafford student loans. There are two kinds of Stafford student loans: subsidized and unsubsidized. Always apply for Stafford loans first. Medical students can borrow a maximum $8,500 in subsidized loans, and $30,000 maximum in unsubsidized Stafford student loans. Maximum amounts vary for disciplines; check with your financial aid office or prospective lender if you are in any other program.
The government pays the interest on subsidized Stafford student loans while you are in school and internship/residency training for up to three years. You are responsible for the interest on the unsubsidized student loans; it continues to accrue while you are in school and during internship/residency training. Usually the interest on your student loans is capitalized at graduation, and may be capitalized at additional times after that, including when you enter repayment. Each time the interest is capitalized, the prior interest that is accrued becomes part of the principal, and you are accruing interest on the interest that previously accrued.
Alternative or Private Loans
Most students also have to borrow additional funds from private lenders. These are commonly known as alternative or private student loans. Try to borrow as little as possible from alternative loans. These student loans typically have a higher rate of interest, and are credit-based loans. This means that the better your credit is, the cheaper it will be for you to borrow. If you do not have good credit, you will need a co-borrower to sign along with you in order for you to borrow the money. Of course, this means that this student loan will be listed on your co-borrower’s credit history until it is paid off, and may prohibit your co-borrower from receiving credit. This person is also responsible for paying back this loan if you default, die, or become totally and permanently disabled.
The aggregate limit for Stafford student loans that a medical student can borrow is $189,125. Of this amount, no more than $65,000 can be subsidized Stafford loans. The total amount, including federal and private student loans that a medical student can borrow without a co-borrower is $200,000. There is no limit with a co-borrower. Bear in mind that student loan limits can vary from lender to lender.
We urge you to consider the amount you are borrowing carefully. These loans do not just go away. You will be repaying them for a good portion of your life, and private student loans are not forgiven upon death or disability. If something happens to you, your spouse and/or co-borrower will be left with the added responsibility of paying back your loan. We see it over and over: students want to borrow as much as they can in medical school, then once into repayment, regret it. In addition, they have a lot of years to think about it as they are repaying those loans.
May 10th, 2008 at 8:41 pm
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