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Availability
of student loans for medical
students and residents
Many private student
loans are available to medical students given their earning potential,
and equally importantly, the fact that few students leave medical
school before getting their MD.
Borrowing limits vary by lender, but most offer up to "full-expense
less aid," and "full-expense" can sometimes defined
rather liberally. Individual lenders, such as Citibank and Sallie
Mae, set the interest rates - but rates often track within a couple
of points of the prime rate, and depend on the duration and terms
of the loan.
In addition, there are unsubsidized Stafford Loans (Federal
Student Loans) available to medical students. This particularly
important since HEAL student loans (Health Education Assistance
Loans) are no longer available, having been phased out starting
in 1998. Other medical school loans, such as Medloans from the
AAMC, are also available.
Debt from Medical
School Loans
Medical school loan debt, especially high-interest rate
debt, is a growing problem. The AAMC (1) recently reported that
over the past two decades, the cost of private medical schools has
risen 165% and the cost of public medical schools has gone up 312%.
A similar study by the AMA (2) found that medical school costs have
been increasing at a faster clip than inflation. On average, medical
students graduate with about $100,000 in debt.
Compound this with slow
physician salary growth, young physicians are faced with increasing
difficulty in paying their college student loans and medical student
loans.
All medical schools now recognize this problem. The LCME asks
every medical school how they intend to reduce medical debt during
their regular re-accredition process. This medical schoo feel
pressure to either reduce costs or find creative ways to help
students finance their debt.
Trends for student
loans
Nearly 50%
of recent college graduates took out student loans, with an average
borrowed around $10,000 (3). Until recently, student loan interest
rates ran between 6-8%. Recently, though, rates have fallen very
low. As of fall 2003, Stafford loan interest rates were in 3-4%
range (4).
Like any debt, student loans can influence your credit and your
future decisions. Students who borrowed a substantial amount for
college (more than $5000) are less likely to pursue higher education
(3). Two ways to reduce the debt burden are: 1)
Reduce your monthly payment. Since debt burden is measured by
comparing your loan payment to your income, reducing your payment
helps your credit evaluation. One of the simplest ways of doing
this is through student
loan consolidation. 2) reduce or eliminate the principal
balance. Specific types of loans can sometimes be forgiven by
service or other higher education - look into the specific student
loan program you have.
References
- Medical
School Tuition and Young Physician Indebtedness. AAMC, 2004
- Medical
School Debt. AMA, 2004
- National
Center for Education Statistics
- Consolidation
recommendations of the College Journal: from the Wall Street
Journal
Useful Links
Doctor's Debt
Management - Specialized Student Loan Consolidation for Doctors
by Doctors.
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