Student Loans 101: Your Essential College/Medical School Guide

Surprising fact: the AAMC reports median total medical school costs of about $286,454 for public programs and $390,848 for private programs for the class of 2025.

I wrote this guide because the borrowing landscape shifts in 2025–2026 and those totals matter when you choose where to train.

Here I explain current costs, the difference between federal loans and private options, how interest and fees change lifetime cost, and what new rules mean — like Direct PLUS at 8.94% for 2025–2026 disbursements and the planned elimination of Grad PLUS for new borrowers after July 1, 2026.

I’ll show how protections such as IDR, PSLF, deferment, and discharge shape your plan and why timing your borrowing and school choices can save tens of thousands.

Key Takeaways

• Medical school costs can top hundreds of thousands; know your likely total before borrowing.
• Federal loans offer fixed rates and safety nets like IDR and PSLF; private loans often lack these protections.
• Direct PLUS carries an 8.94% rate for 2025–2026 disbursements; Grad PLUS ends for new borrowers after 7/1/2026.
• Borrow conservatively, document everything, and prioritize federal options when possible.
• Timing matters: disbursement dates, school choice, and sequencing undergrad vs. grad borrowing affect total cost.
• Use this guide to pick repayment strategies that match your career stage and cash flow.

Why I Wrote This Ultimate Guide for College and Medical School Borrowers

I wrote this guide because my aim is simple: show what matters now for borrowing so you avoid costly mistakes during school and beyond.

The cost of attendance keeps rising. AAMC reports median totals near $286,454 for public and $390,848 for private programs for the class of 2025. Those figures make smart choices about loans and financial aid urgent.

I walk you through what I learned from college to residency and into practice. I explain why I favor federal programs when possible and where private lending can still fit specific gaps.

Small decisions compound. Accepting only the minimum loan amount, syncing borrowing with life milestones, and tracking servicers saved me tens of thousands. I share a simple system to track accounts, documents, and deadlines.

I promise jargon-light explanations, current 2025–2026 rules, and clear signs for when to seek professional advice. This guide is the practical, up-to-date need know for any student weighing loans and planning a career in medicine.

Understanding Student Loans Today: What I Wish I Knew Before Borrowing

Before I signed any promissory note, I wish someone had walked me through what loans can and cannot cover today.

What these loans can pay for and why they don’t vanish in bankruptcy

Student loans must fund tuition, fees, supplies, and living costs tied to school. Using them for unrelated purchases is fraudulent and can lead to trouble with your servicer.

Most federal and many private loans survive bankruptcy. They are usually only discharged for death or total disability. That reality shaped how I set my borrowing limits from day one.

How interest works and why compounding cuts both ways

Interest accrues daily on unsubsidized funds and is added to your balance if unpaid. Capitalized interest raises the loan amount and then earns more interest. That compounding makes pauses costly.

Even a small change in interest rate or loan amount can add thousands over years of payments. I run simple projections before borrowing and choose small in-school payments to slow growth.

Type	When interest accrues	Why it matters
Subsidized	No accrual while eligible	Lower total cost; priority for undergrads
Unsubsidized	Accrues immediately	Capitalization can boost balance fast

Read loan disclosures for rate, capitalization rules, and fees before accepting any offer. That small step saved me from surprises in residency.

Federal Student Loans vs. Private Loans: How I Decide What to Borrow First

My borrowing decisions start with one question: what protections do I keep if income falls? That lens makes federal options my default because they bundle fixed terms and safety nets I can’t get elsewhere.

Federal student loans offer fixed rates, access to IDR plans like SAVE and PAYE, and PSLF eligibility for qualifying public work. They also include deferment, forbearance, and discharge for death or total disability. I file FAFSA early, save my master promissory note, and factor origination fees into the amount I accept.

Private loans can fill gaps when federal limits bite. Lenders may offer lower interest or competitive fixed rates if I have strong credit or a cosigner. But private loans often start payments in school, lack IDR and forgiveness programs, and carry state-by-state collection rules—statutes of limitation vary from about 3–10 years. I treat private offers as last resorts and model rising-rate scenarios before signing.

What I do next

• I accept subsidized loans first in undergrad because they stop interest while I study.
• I prefer direct loans and federal student options before private loans for long-term flexibility.
• I document FAFSA, disbursements, and promissory notes to avoid future disputes.

Costs of Attendance in 2025: What AAMC Data Means for Your Loan Amount

Real numbers matter: I set loan targets using AAMC medians and a city budget so I borrow only what I must to pay medical school bills.

I break the cost of attendance into clear parts: tuition, mandatory fees, equipment and books, exams, and cost living. That helps me match the loan amount to real needs instead of lifestyle choices.

Annual COA ranges from about $30,000 to over $90,000, and total medians for 2025 are $286,454 (public) and $390,848 (private). I use those medians to test whether a school is financially viable for me.

How I plan and trim costs

• I compare total cost, not just tuition, when evaluating financial aid packages.
• I map high-cost cities against housing and transport to avoid over-borrowing.
• I cut expenses early: used gear, shared housing, and campus services.

Component	Typical annual range	Why it matters
Tuition & fees	$25,000 – $70,000	Main driver of loan amount and eligibility for aid
Supplies & exams	$1,000 – $6,000	Often overlooked; budgeting reduces extra borrowing
Cost of living	$4,000 – $20,000+	Varies by city; biggest swing in total COA

Small rate changes matter: an extra 0.5–1.0 percentage point in interest rate on a six-figure balance adds thousands over time. I only take loans I need and plan semiannual budgets that align with disbursements and aid timing.

Smart Borrowing in Undergrad: How I Minimize Debt Before Med School

I treated undergrad as a staging ground: lower costs now meant more options and less interest later.

Choose school first. I pick affordable, in‑state programs or ones that offer real scholarships so I don’t need many student loans. That step shrinks my baseline borrowing and preserves future options.

Mix aid and work. I combine financial aid, work‑study, and a part‑time job that fits my schedule. I protect study time while covering essentials and avoiding extra loan draws.

Living choices matter. Roommates, cooking, buying used books, or living at home cut cost living and reduce how much I borrow.

Loan strategy and timing

I prioritize subsidized loans in college because they stop interest while I’m enrolled. For senior year, I sometimes time undergrad borrowing to use better undergraduate terms before graduate rates apply.

“Every dollar I don’t borrow now is cheaper than any dollar I pay later in interest.”

• I track expenses monthly so loan draws match real need.
• I keep a small emergency fund to avoid mid‑term borrowing spikes.
• I budget for applications and interviews so those costs don’t derail my plan.

Action	Why it helps	Quick tip
Pick affordable school	Lower tuition → less borrowing	Compare net price, not sticker price
Use subsidized loans	Interest suppression while enrolled	Accept these before unsubsidized
Cut living costs	Reduces annual COA and loan need	Cook, share housing, buy used books

Paying for Medical School Without Over-Borrowing: My Step-by-Step Playbook

Reducing debt started for me with a simple rule: accept the minimum that pays school and rent. That mindset keeps my future payments realistic and stops lifestyle drift from inflating my loan amount.

Cost-of-living moves that cut borrowing fast

I build a tight cost-of-living plan: roommates, transit or biking, and buying used gear. Small savings every term add up and lower how much I need to borrow.

I time purchases around disbursements so I don’t cover gaps with credit cards. If I win extra scholarships mid-year, I reduce future loans instead of upgrading my lifestyle.

Programs and contracts that change the math

I target high-aid schools and free-tuition programs—like those at some university systems—because one acceptance can erase years of debt. I also research university-sponsored loans that offer better terms than private options.

I weigh contract scholarships (HPSP, NHSC, IHS, state programs) carefully. They can cut or eliminate loans but require service. I accept them only when the obligation fits my career goals.

• Document everything: save award letters, loan disclosures, and renewal rules.
• Check federal eligibility: some foreign or Caribbean schools don’t qualify for federal aid; that raises risk.
• Live lower-cost where possible: city choice often determines total loans needed to finish school.

“Accept just enough aid to cover essentials, and let every extra dollar reduce borrowing.”

Direct Loans, Subsidized and Unsubsidized, and PLUS: What I Actually Use

I plan borrowing around caps, rates, and the protections that follow the loan.

I start with Direct Unsubsidized loans up to the annual cap for my year in school. Those come first because they have predictable terms and keep options open for repayment programs.

When the unsubsidized cap is not enough, I evaluate Direct PLUS for 2025–2026. For loans first disbursed on or after July 1, 2025 and before July 1, 2026, the PLUS interest rate is 8.94% fixed and a loan fee reduces net proceeds.

How I weigh choices

I compare caps, effective rate after fees, and the value of IDR and PSLF eligibility. Federal protections—IDR, PSLF, deferment/forbearance, and discharge for death or total disability—factor heavily into my decision.

The scheduled elimination of Grad PLUS for new students after July 1, 2026 changes my timing. Current borrowers are grandfathered, so I document everything and lock plans before policy dates if possible.

• I avoid over‑borrowing at higher rates and recheck my school budget each term.
• I model projected total interest by loan type so I see how fees and rates affect lifetime cost.
• I track origination fees closely to know how much actually arrives after disbursement.

Loan type	Typical use in my plan	Key 2025–2026 detail
Direct Unsubsidized	Primary grad loan up to cap	Fixed federal terms; feeds IDR/PSLF eligibility
Direct PLUS	Cover remaining need in 2025–2026	8.94% fixed (7/1/25–7/1/26 disbursals) + origination fee
Grad PLUS (policy)	Consider only if disbursed before 7/1/2026	Eliminated for new students after 7/1/2026; current borrowers grandfathered

“I choose federal loans deliberately because program protections often outweigh small rate differences when my goal includes forgiveness.”

Repayment Plans Updated for 2025: How I Pick the Right Path

Choosing a repayment route felt like a puzzle until I mapped cash flow, forgiveness goals, and how family size changes monthly numbers. I now pick plans based on where I am—student, resident, or attending—and what protections I need.

Traditional plans: predictability vs. flexibility

Standard gives a fixed payment over 10–30 years. I use it when I can afford steady payments and want the lowest total interest.

Graduated starts lower and rises, usually over 10 years. It can help during residency when early cash flow is tight.

Extended stretches payments to 25 years and requires a balance over $30,000. I consider Extended only if I need lower monthly payments and don’t plan to seek forgiveness.

Income-driven repayment (IDR) in 2025

In 2025 the main IDR options are SAVE, IBR, PAYE, and ICR. Payments are based on my income and my family size, so updating my servicer after life changes is critical.

• I model projected payments under SAVE and PAYE to see trade-offs in interest accrual.
• If my reported income is low, IDR can produce $0 payments—useful in training years.
• I keep thorough records to verify qualifying payments for any forgiveness path.

What’s changing by July 2026

By July 2026, plans are expected to consolidate and a new Repayment Assistance Plan (RAP) will appear. RAP proposes a $10 minimum monthly payment and 30-year forgiveness. I’d pivot to RAP only after confirming how past payments count toward forgiveness.

“I revisit my repayment choice every year—income, family size, and career goals change, and so should my plan.”

Plan type	When I pick it	Key trade-off
Standard	Stable income, aim to minimize interest	Higher monthly, lower total interest
IDR (SAVE/IBR/PAYE/ICR)	Low or variable income; seeking forgiveness	Lower payments now, more interest over time
RAP (expected)	Post-2026 when consolidated rules are clear	Very low minimum, 30-year forgiveness; verify crediting

Practical tips: recertify income on time, track qualifying payments for PSLF, and model interest accrual for each option. If I plan public service, I prioritize IDR to preserve eligibility for service loan forgiveness. If I plan to refinance for a lower interest rate later, I only consider it once forgiveness is no longer part of my strategy.

Public Service Loan Forgiveness (PSLF): My Approach to Tax-Free Forgiveness

I treat PSLF as a long-term plan that guides my job choices and loan moves. It requires steady qualifying steps, and I protect eligibility by staying organized.

What qualifies: full-time work for a 501(c)(3) or other qualifying public service employer, loans in the Direct program, payments made under an eligible income-driven repayment plan, and 120 qualifying payments.

How I keep my records and stay current

• I file the Employment Certification Form annually and after each job change.
• I save pay stubs, W-2s, HR letters, and servicer messages in one folder for easy retrieval.
• I check my servicer’s payment count every year and fix any errors immediately.

Requirement	My action	Why it matters
Qualifying employer	Confirm 501(c)(3) status with HR	Ensures payments count toward forgiveness
Direct Loans	Avoid private refinance	Refinancing ends PSLF eligibility
120 payments under IDR	Recertify income on time	Maintains qualifying payment status

As of July 2025 there is no borrower action required. I still monitor Department of Education guidance and executive actions so I spot changes fast.

“When I hit 120 qualifying payments, I will get written confirmation and then request tax-free forgiveness completion.”

Deferment vs. Forbearance: When I Hit Pause—and When I Don’t

Pausing payments feels safe, but the math of interest and capitalization often tells a different story. I separate deferment and forbearance so my choices match the long view.

Deferment commonly runs in six‑month blocks. Subsidized loans usually stop accruing interest during deferment. Most graduate school loans, though, are unsubsidized and keep growing while I wait.

Forbearance (including resident “mandatory” forbearance) generally covers 12 months and pauses required payments. Interest accrues on both subsidized and unsubsidized loans and often capitalizes when the pause ends. That capitalization raises the principal and future interest charges.

Why I usually pick small IDR payments

I prefer making a modest payment under an IDR plan during training. Small payments reduce interest growth and preserve credit toward loan forgiveness.

• I call servicers before a pause to confirm how interest will capitalize and what my next payment will be.
• I use targeted forbearance only for true emergencies and update my repayment plan immediately after any pause.
• I prioritize IDR payments to protect progress toward forgiveness and limit long‑term interest.

“A tiny payment now often saves thousands later.”

Refinancing Strategy: How I Lock in a Lower Interest Rate at the Right Time

Refinancing is a tool, not a reflex. I only move when I can get a clear benefit: a lower interest rate, a payment that fits my cash flow, or both.

I start by comparing resident-friendly programs like Laurel Road, SoFi, and Reset. These lenders often offer resident plans with low monthly payments—sometimes $75–$100—while cutting rates into the mid‑single digits for strong credit or a cosigner.

Resident-friendly refinancing programs and payment options

I weigh term, autopay discounts, and borrower protections. A shorter term saves interest but raises monthly payment. A longer term lowers the payment and keeps cash flowing during training.

Why I never refinance federal loans if I’m pursuing PSLF

Important caution: refinancing federal loans with a private lender ends my access to PSLF, IDR, federal forbearance, and discharge programs. If I plan public service or forgiveness, I keep federal loans until eligibility is secured.

• I compare multiple offers and calculate total interest saved.
• I consider a cosigner only if the rate benefit outweighs the risk.
• I time refinance after residency or when an attending contract raises income.

Lender	Typical resident payment	Possible post-refi rate	When I use it
Laurel Road	$75–$100/mo	4–6%	Short term while in residency with cosigner
SoFi	$80–$110/mo	3.5–6%	After residency when income stabilizes
Reset Refinance	$75–$95/mo	4–6%	When I want flexible resident plans

“I avoid serial refinancing — I refinance only when net savings are clear and documentation is complete.”

From Resident to Attending: How I Tackle Monthly Payments and Interest Rates

As my income rose, I built a simple plan to keep spending steady while accelerating repayment. I treated the first two attending years as a bridge: I kept my resident budget, redirected surplus cash to principal, and stayed disciplined about new expenses.

Living lean, paying faster

I keep living like a resident for a year or two so extra pay goes straight to loans. That strategy lowers balances quickly and reduces how much interest I pay over time.

I automate extra monthly payments so I never forget to pay a bit more. Small automatic increases cut principal and shrink total interest fast.

• I reassess IDR vs fixed payment now that income supports larger monthly payments.
• I pick a repayment path—debt avalanche or a steady fixed plan—and stick with it while tracking tax and savings goals.
• I prioritize retirement contributions and a modest emergency fund alongside aggressive payoff.

Refinance and rate check-ins

When my credit and income looked strong, I evaluated refinance loans to capture a lower interest rate. But I avoided refinancing federal loans if I still valued PSLF or other forgiveness options.

I schedule periodic rate check-ins in case market moves justify another refinance. I track my amortization schedule so I can see real progress and stay motivated.

“Living below my means for a short time let me pay loans faster without stress—and kept forgiveness options intact when I needed them.”

Student-Loans-101-College-Medical-School: My Most Actionable Tips in One Place

This is a compact checklist of the moves I use every term to keep borrowing controlled and options intact. Use these as immediate actions you can apply in 2025.

Borrow federal first. Federal loans offer protections and flexibility I value. I accept only what the cost of attendance requires and refuse lifestyle top-ups.

Borrow federal first, accept only what you need, and document everything

I keep digital copies of aid offers, promissory notes, disbursement records, and employment certification forms. Documenting these items saved me months of paperwork when I certified for PSLF.

Match your repayment plan to income, family size, and career goals

I pick an income-driven repayment plan when training lowers my income and switch to a higher fixed payment once earnings rise. If I aim for public service, I protect Direct loan status and track qualifying payments for service loan forgiveness.

• I favor small IDR payments over long forbearance to curb interest growth.
• I run refinancing math only when forgiveness isn’t part of my plan.
• I apply to high-aid schools and scholarships first to lower total loans before signing a loan.

“Clarity and consistency—more than any trick—drive the best outcomes with student loans.”

Special Situations I Plan For: Caribbean Schools, Foreign Programs, and Consolidation

Before I commit to a program abroad, I verify its federal aid status and run private loan scenarios so I avoid surprises.

Eligibility and funding paths

I check whether a school qualifies for federal loans before enrolling. Some Caribbean programs are eligible—St. George’s, Saba, AUC, and Ross are more likely, but status can change each year.

If a program is not eligible, I assume private loans will be needed and model the worst-case cost and cosigner terms.

Consolidation versus refinancing

Federal consolidation merges federal accounts, preserves benefits, and averages rates (rounded up). It can restore IDR or PSLF access for older loans.

Refinancing replaces existing debt with a private lender. That can lower rate but ends federal protections and any future forgiveness.

• I confirm if Parent PLUS or FFEL loans need consolidation to qualify for IDR or PSLF.
• I budget for visa, currency, travel, exams, and relocation so loans cover essentials only.
• I check lender rules on deferment, forbearance, and cosigner release before signing.

“I document every award, loan paper, and servicer message so transitions never break my repayment or forgiveness trajectory.”

Building a Realistic Budget: Interest Rates, Family Size, and Cost of Living

A realistic budget turns abstract interest rates and repayment rules into clear monthly choices.

I start by listing current balances, the applicable interest rates, and my household headcount so I know how family size affects payments. That gives me a baseline monthly number to compare to take‑home pay.

Projecting monthly payments under IDR vs. fixed plans

I run two simple scenarios: an income‑driven repayment estimate and a fixed plan amortization. IDR can drop my monthly payments to near $0 if my reported income is low for my income family size.

Fixed plans show predictable payments but often more total interest. I weigh cash‑flow needs today against total cost over time when I choose a path.

How I align savings, emergency funds, and loan payoff milestones

I build a safety cushion before aggressive payoff. A small emergency fund prevents pauses that add interest and hurt forgiveness crediting.

• I keep a 3–6 month basic fund and set triggers to apply raises, bonuses, or tax refunds to extra payments.
• I do sensitivity checks with slightly higher rates so my plan survives market shifts.
• I track recertification dates, license fees, and relocation costs on a 12‑month calendar so monthly payments stay steady.

“Budgeting is the foundation that makes repayment, refinance, or forgiveness actually work in real life.”

Conclusion

A clear plan today keeps loans from narrowing your career choices tomorrow. I recap the essentials: borrow federal first, accept only what you need, and keep clean records for aid and repayment programs. Small steps now protect options later.

I watch PSLF as a real option if I commit to qualifying employment and the right IDR plan. File certifications annually to preserve credit toward public service loan and service loan forgiveness under existing forgiveness programs.

Look ahead to 2026: plan consolidation and RAP, plus Grad PLUS changes, affect timing. Model payments under SAVE, IBR, PAYE, and ICR so you know monthly impact and long‑run cost before you borrow or refinance.

Keep a budget, build an emergency fund, and recertify income on time. If forgiveness matters, don’t refinance federal loans. Do these things and you can pay loans without letting them define your life as a student or professional.

FAQ

What types of federal loans can I use for college and medical school?

I rely primarily on Direct Loans for both undergrad and graduate study. For undergrad, subsidized and unsubsidized Direct Loans are common. For medical school, Grad PLUS was typical, but rules changed for new borrowers after July 1, 2026. Always check current FAFSA guidance and your school’s financial aid office before borrowing.

How does interest work and why does compounding matter?

Interest accrues daily on most education loans and can capitalize (be added to principal) in certain situations like forbearance or leaving deferment. That means I pay interest on interest if I don’t manage accrual. Choosing subsidized loans when available and making interest-only payments during school can limit long-term cost.

When should I choose federal loans over private loans?

I choose federal loans first because they offer fixed rates, access to income-driven repayment plans, and loan forgiveness programs like PSLF. Private loans may have lower rates for some borrowers but lack IDR and federal protections. I only consider private lenders after maximizing federal aid and exhausting scholarships.

Can I get forgiveness through Public Service Loan Forgiveness (PSLF)?

Yes, if I have Direct Loans, make qualifying payments under an eligible IDR plan while working full time for a qualifying public service employer (often a 501(c)(3)), and submit employment and payment certification. I track payments closely and keep employer records to prevent problems.

What’s the difference between deferment and forbearance?

Deferment temporarily pauses payments and, for subsidized loans, stops interest accrual during deferment. Forbearance pauses payments but interest continues to accrue on all loans. I generally prefer small IDR payments rather than pausing, because that avoids capitalization and keeps progress toward forgiveness when relevant.

How do income-driven repayment plans like SAVE affect my monthly bill?

IDR plans base payments on income and family size. The SAVE plan tends to lower payments more than older plans for many borrowers and offers forgiveness after a long repayment term. I recertify income each year and factor family size into calculations to estimate my monthly obligation.

Should I refinance federal loans to get a lower rate?

I avoid refinancing federal loans if I plan to pursue PSLF or need IDR protections. Refinancing to a private lender can cut your rate but eliminates federal benefits. I might refinance only after I’m sure I don’t need federal options and I can secure a better fixed rate.

How do I qualify for loan forgiveness if I work in public service?

I must have Direct Loans (or consolidate other federal loans into Direct), work full time for a qualifying employer, make 120 qualifying payments under an eligible repayment plan, and submit employment certification forms regularly. Documentation and timely income recertification are key to success.

What should I know about Grad PLUS and rule changes after 2026?

Grad PLUS historically helped fund graduate study when other federal limits were reached. A key change is the elimination of Grad PLUS for new borrowers after July 1, 2026, so I’d plan alternative funding or rely more on unsubsidized Direct Loans, institutional aid, and scholarships for students starting after that date.

How do cost-of-attendance estimates affect how much I should borrow?

Cost-of-attendance includes tuition, fees, supplies, and living expenses. I compare AAMC and school data to set realistic budgets, borrow only what I need, and reduce discretionary living costs. Lower borrowing now saves thousands in interest later.

What documentation should I keep for PSLF and IDR?

I keep employment certification forms, pay stubs, W-2s, loan statements, and annual income documentation. I submit the PSLF form whenever I change employers and keep a personal log of payments and loan servicer communications to prevent gaps in qualifying credit.

How do family size and income affect repayment under IDR?

IDR payment calculations consider your adjusted gross income and family size; larger family size reduces discretionary income and lowers monthly payments. I update my family size and income during annual recertification to ensure accurate payments and avoid surprises.

Are there special rules for foreign or Caribbean medical programs?

Some foreign and Caribbean schools qualify for federal loans but many do not. If my school isn’t eligible, I may need private loans or alternative financing. I verify school eligibility on the Department of Education’s database before committing to a program.

What’s the best strategy during residency to manage loans?

I live modestly, make interest or small IDR payments, and avoid lifestyle inflation. Many residents use resident-friendly refinancing options only for private loans, and I don’t refinance federal loans if I plan for PSLF. Accelerating payments when possible reduces total interest paid.

How does consolidation differ from refinancing?

Consolidation is a federal process that combines federal loans into a Direct Consolidation Loan and preserves federal protections like IDR and PSLF eligibility. Refinancing is done through private lenders and replaces federal loans with private debt, usually losing federal benefits. I weigh goals before choosing either path.

How can I estimate monthly payments and plan a budget?

I use loan servicer calculators and the Department of Education’s tools to project payments under IDR versus standard plans. I factor in interest rates, loan balances, income, and family size, then set savings and emergency fund targets to stay on track.