The average 2025 medical school graduate paid nearly $230,000 for their professional degree, according to data collected by the Education Data Initiative. Few — if any — students are able to pay that cost out of pocket.
Instead, medical students typically turn to loans to cover the cost of attendance. As the government rolls out changes to its student aid programs, private lenders are poised to fill the gaps with specialized loan programs for medical schools. College Ave and Sallie Mae are two major lenders currently offering loans, but they are likely to be joined by others.
“We see these loans becoming easier to get and more competitive,” says Jason DiLorenzo, head of growth for the medical sector for Juno, which helps students negotiate better loan rates.
If medical school is in your future, here’s why you should consider getting a specialized student loan designed for future doctors:
— Federal direct loans might not cover the cost of attendance.
— Interest rates on private loans are competitive.
— You’ll want the option to defer payments in residency.
— It could be the only way to afford medical school.
Federal Direct Loans Might Not Cover the Cost of Attendance
Current medical students can take out Grad PLUS loans from the federal government and roughly half of students do so, according to the AAMC, a non-profit association representing medical schools.
However, these loans will no longer be available to new medical students beginning on July 1, 2026, per a provision of the One Big Beautiful Bill Act, which passed earlier this year. The bill also limits how much students can borrow from the government for professional degrees.
“What used to be uncapped amounts now have a cap,” says Dan Kennedy, chief marketing officer for private lender College Ave.
Under the Grad PLUS program, medical students could borrow up to the cost of attendance. Students beginning medical school on or after July 1, 2026, will only have the option of direct loans. These will be limited to $50,000 annually, with a lifetime cap of $200,000.
Those amounts won’t be enough to cover the cost of medical school for many students. The median debt of 2024 medical school graduates was $205,000, the AAMC says, and the cost of attendance is only going up.
“This is a 30-year problem being created,” says David Lenihan, CEO of Ponce Health Sciences University. He worries that reducing the availability of federal student loans will deter students, particularly those in rural and urban areas, from pursuing a medical degree. That, in turn, could mean fewer physicians in those areas in the decades to come. “Students tend to go back to the communities where they come from,” Lenihan notes.
However, specialized medical student loans from private lenders may help offset the shortfall created by the end of the federal Grad PLUS program.
[SEE: Best Medical School Loans]
Interest Rates on Private Loans Are Competitive
Even if the Grad PLUS program continued, there are reasons to consider private loans. Chief among them is the opportunity for better rates and terms. For instance, the current interest rate for Grad PLUS loans is 8.94%.
Compare that to the current published rates for private medical school or graduate school loans:
— College Ave: 2.89% – 14.47%
— SoFi: 3.18% – 14.83%
— Sallie Mae 2.89% – 14.98%
While federal loans have a fixed rate, which means you’ll pay the same interest rate for the life of the loan, private lenders often offer both fixed and variable rates. They also have a range of rates. Those with better credit receive lower rates while those with a poor or limited credit history may pay more.
Juno works to lower rates even farther by negotiating with private lenders on behalf of groups of students. DiLorenzo says that the company is the only one currently offering this type of service, to the best of his knowledge.
Private lenders may also charge fewer fees. “We do not have any origination fees,” Kennedy says of College Ave loans for medical students. “There is no cost to get the loan.”
Meanwhile, the federal government currently charges a 4.228% origination fee for its Grad PLUS loans and 1.057% for other direct student loans.
That isn’t to say all private student loans have low fees. Be sure to read the fine print and check for pre-payment penalties or other costs before borrowing any money.
[Read: Best Student Loans Without a Co-Signer.]
You’ll Want the Option to Defer Payments in Residency
Traditional student loans may require students to begin making payments soon after graduation, but specialized loan programs for medical students offer additional deferments. That’s important because “You could be looking at 10 years before you start earning substantive money,” Lenihan says.
At College Ave, medical loans offer 36 months of deferment for internships and residency and another 48 months for those who go into a fellowship, according to Kennedy. Other lenders, such as Sallie Mae and Ascent Funding, also have 36-month grace periods.
[Read: Best Private Student Loans.]
It Could Be the Only Way to Afford Medical School
Future doctors may want to consider specialized medical school loans because there are simply few other options available to them.
“The vast, vast, vast majority of students will not be able to afford medical school without other funding,” Lenihan says.
Some students may be able to get scholarships, or they may choose to go to a less expensive medical school. Finding a roommate and paring down non-essential expenses can also help students cover tuition costs, but these measures only go so far.
DiLorenzo thinks there may eventually be innovative programs that will help cover the cost of physician education — “Hospitals might fund doctors,” he suggests — but until then, private loans might be the best option to pay for medical school.
Taking out substantial loans for a medical degree might not seem ideal, but Lenihan hopes that it won’t stop the doctors of tomorrow from pursuing their passion. He says, “Don’t let that fear stop you from going out and helping humanity.”
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Here’s Why Future Doctors Should Consider Specialized Medical School Loans originally appeared on usnews.com
