What to know about loans for medical school and residencies

Medical school is a significant investment of time, emotion, and money. The courses, exams, boards, and rotations are enough of a grind; affording your education and living expenses is no easy endeavor, either.

Fortunately, you can use student loans to pay for medical school just like you did with undergrad. However, the options are a bit different this time around. Here’s what you need to know before deciding how to fund medical school.

There are both federal and private student loans available for medical students. Federal options include the direct unsubsidized loan and grad PLUS loan; meanwhile, there are a number of private lenders and loans to choose from.

So which is the best option: a federal or private student loan? Here are some similarities and differences to help you make your decision:

* Direct Unsubsidized Loans for grad school have a $20,500 yearly borrowing limit.

Arguably federal student loans' biggest advantage for medical students is the loan forgiveness programs. That could be especially relevant to you since the average medical school debt for 2017 grads was $189,000.

To qualify for the Public Service Loan Forgiveness (PSLF) Program, you would need to work full-time at a government agency or nonprofit organization for 10 years — all while consistently making your monthly student loan payments. If you successfully complete the PSLF Program, then whatever federal student debt you have remaining, after those 10 years, is forgiven and doesn't need to be repaid.

However, qualifying for the PSLF Program could limit your pay and employment options for those 10 years. That could be a non-starter for some; for others, the prospect of releasing a chunk of their student debt is worth some sacrifice in income and employment opportunities.

Looking for a middle ground? You could always take out a federal loan and a private loan to cover medical school expenses. That way, if you're a creditworthy applicant, you could capitalize on the lower interest rate of a private lender, while leaving the door open for some loan forgiveness if you successfully complete the PSLF requirements.

It may be hard to think about now, but you'll be matching with your residency before you know it!

The costs of applying and interviewing for these residency programs can add up in a hurry. For example, if you're in school in Boston but interviewing for a residency at a Chicago hospital, you'll need to book airfare and perhaps a hotel room, costs that aren't covered by your traditional student loans. Fortunately, some private lenders offer residency loans that cover those expenses and others, including:

• Exam fees and prep courses for medical board certifications
• Relocation and living expenses before starting a residency program

Note: Some private lenders offer residency loans to cover interview and travel expenses as you apply for programs.

The residency loan lasts up until you start your residency. At that point, you'll be earning an income that will help cover your living and other expenses.

Getting through medical school is stressful enough. You don't want to compound that stress by making the wrong choice to fund your education. That's why it's critical to research all your options to find the best fit for you.

Enrolling in medical school is a major accomplishment. Need help funding your dream? Learn about Citizens medical student loan options.