Managing Undergraduate Loans in Medical School

by Jennifer Willcox, former associate director of financial aid at Albany Medical College Congratulations—you did it! You completed your undergraduate degree, MCAT, and the medical school interview process. You are now taking your first steps toward becoming a doctor. If you borrowed student loans for your undergraduate degree, however, there are a few things you need to think about before you get caught up in daydreaming about your Gross Anatomy lab, white coat ceremony, reciting the Hippocratic Oath. The first piece of information you need to pinpoint is what type of student loans you borrowed. Did you just borrow loans from the federal government, or did you borrow private education loans as well? Each has different terms and processes, as described below. Federal Student Loans You can view your federal loans on the Federal Student Aid website. Once you are logged in, find the “My Aid” section, and select “view loan servicer details” (or call the Federal Student Aid Information Center at 1-800-433-3243 for assistance). Federal student loans have a six-month grace period before you are required to start making monthly payments. This means it is likely that, if you haven’t taken any time off, you won’t enter student loan repayment before you start medical school. While you are not required to make payments during your grace period, you are still allowed to do so and any payments you can make during this time will reduce your loan debt prior to entering medical school. Upon matriculation into medical school, as long as you continue to be enrolled at least half time, your loans will be placed into an in-school deferment, so no payments will be required. If, however, you have Unsubsidized Direct Loans, interest will accrue during your enrollment. Note: Your loan servicer should receive automatic updates from your school on your enrollment status electronically. It is a good idea to double-check periodically, however, to make sure your loans are properly showing in deferment. If not, you can follow up with your university’s Registrar’s Office to get deferment paperwork completed. If you take one or more gap years before beginning medical school, you will use up your six-month grace period and will enter repayment on your undergraduate loans, with monthly payments due each month before being deferred again upon med school enrollment. If you are having trouble making your loan payments during this time, consider available income-driven repayment plans that may make managing your monthly payments a little easier. If income-driven payments are still challenging, you can request a temporary forbearance of payments. While in a forbearance, interest will accrue on all your loans (Subsidized and Unsubsidized), but no payments will be required. Reach out to your student loan servicer to discuss options. Note: Upon enrolling in medical school, it can take up to two months for your undergraduate loans to automatically be placed in an in-school deferment status, so plan your finances accordingly if payments are coming due. Private or Institutional Loans Private and institutional loans will not appear on the Federal Student Aid website. To learn your rights and responsibilities as a borrower, as well as the terms of these loans, you will need to review your promissory note(s) or contact your loan servicer(s). If you are unsure who your private student loan lender or loan servicer is, you can check with the school you attended when you borrowed the loan(s) or review your credit report. Private loans are different from federal student loans, and may not have the repayment and deferral options that are guaranteed on your federal loans. For any questions about private loan repayment, talk to your loan servicer. They are there to help. While in medical school, you will be busy studying, preparing for exams, and soaking in every bit of knowledge possible! Diligent study is not an excuse, however, for neglecting a notification from your lender or not paying attention that your student loan should be in an in-school deferment status but is not. Make a point to keep your loan servicer updated with changing contact information and to stay on top of your loans, as small student loan problems get bigger the longer they are ignored. The Association of American Medical Colleges (AAMC) has a great free tool for keeping track of your student loans called the MedLoans Organizer and Calculator (MLOC). Whether you use the AAMC MLOC or an Excel spreadsheet, keeping all of your student loan data in one location will help make it easier to navigate loan repayment options once you complete medical school. So, no matter what option you choose to keep yourself organized, pick one and keep it updated!