Financial Literacy for Medical Students

Disbursement

In most cases, your total loan funding for the academic year is divided into equal installments for each semester you will be attending. Loans are disbursed to your account on the second week of classes each semester.

An origination fee is deducted automatically from federal student loans prior to disbursement. If you are borrowing a private student loan, check with your lender to determine any fees that may be deducted prior to disbursement. Read more about loan origination fees on studentaid.gov.

Refunds

A credit balance refund will occur when all payments and financial aid applied to your account exceed the billed charges. Every week, Xavier processes refunds for students who have overpayments on their account. Refer to the Office of the Bursar for information about refund processing and setting up direct deposit.

Budgeting

Staying within your monthly budget can be challenging. Although university-billed costs like tuition and fees are generally fixed and predictable, everyday living expenses can vary from month to month. Developing strong budgeting skills and financial discipline can help you avoid unexpected financial difficulties, reduce stress, and allow you to remain focused on your path to becoming a physician.

Consider using a monthly budget worksheet to track your expenses (we recommend checking out AAMC's monthly budget worksheet). This practice is especially useful if you are relying on financial aid resources to help cover your everyday living expenses throughout the semester.

The Association of American Medical Colleges (AAMC) offers practical budgeting guidance for medical students. Their FIRST (Financial Information, Resources, Services, and Tools) resource provides reliable information about paying for medical school, money management, and planning for student loan repayment. The Federal Student Aid website also provides some useful tips for creating a budget while you’re attending college.

Credit Scores

A credit score is a numeric measure of your creditworthiness based on information contained in your credit report, such as borrowing and repayment history. Lenders use this metric to assess financial risk when making lending decisions. Your credit score can affect your eligibility for credit-based student loans, as well as the interest rates and terms you may be offered. As you continue to finance your education, taking steps to build a strong credit score can improve your borrowing options and potentially reduce your overall borrowing costs.

Maintaining a strong credit score starts with making responsible financial decisions, such as paying bills by their due dates and keeping credit card balances low. Avoid opening unnecessary new accounts or closing older ones, as both can adversely affect your credit score. Borrow only when necessary and follow a carefully planned budget. These habits can help build and maintain a positive credit profile.

Identify Theft

Identity theft occurs when someone uses your personal information to commit financial fraud. Because identity theft can negatively impact your credit score, it is important to monitor your credit report periodically for suspicious activity. The Federal Trade Commission provides information on how to obtain a free credit report, as well as resources to help protect against identity theft and guidance on how to report it if it occurs.

Capitalized Interest

When interest is capitalized, any outstanding interest is added to the original principal of your student loan. This increases the total loan balance, causing future interest to accrue on the higher amount. As a result, your monthly payments may rise. For private loans, your lender will provide information about how interest is calculated. For details about how interest is calculated for federal student loans, refer to the Federal Student Aid website.

Repayment Strategies

Medical students should develop a loan repayment strategy that aligns with their anticipated loan balances, career goals, and projected future earnings. If possible, consider making payments while attending medical school, as even small payments can reduce interest capitalization and lower the total amount repaid over the life of the loan. During residency, federal loan borrowers may qualify for income-based monthly payments that are more manageable while maintaining progress toward repayment goals. Students planning to work for nonprofit or government employers may also wish to explore federal loan forgiveness programs for those in qualifying public service positions.

A well-informed repayment strategy begins with actively monitoring your loan balances and understanding your monthly payment obligations. Federal loan borrowers can use the Federal Student Aid Repayment Calculator to estimate future payments under various repayment plans. Private loan borrowers can enter loan-specific information into finaid.org's loan repayment calculator tool to estimate monthly payment amounts and compare repayment scenarios.

Repayment Options

Federal student loans offer a variety of repayment options, including fixed payment plans and the income driven Repayment Assistance Plan (RAP). Repayment begins six months after you graduate, leave school, or change your enrollment status to less than half-time. Repayment options for private student loans vary by lender. Some lenders require payments while you are still in medical school, whereas others allow you to defer payments while in school or residency.

Loan Consolidation

Federal student loan borrowers with more than one federal loan may be able to consolidate them into a single loan. Doing so can simplify repayment by replacing multiple payments to different loan servicers with a single monthly payment. Consolidation may also provide access to more flexible repayment options. Borrowers should carefully review studentaid.gov's benefits and disadvantages of student loan consolidation.

Private loans generally cannot be consolidated. Instead, private loan borrowers with multiple loans who are seeking to simplify repayment typically refinance their loans with another lender. When you refinance private loans, a lender pays off your existing loans and replaces them with one new loan. This can simplify repayment by giving you a single monthly payment and may lower your interest rate if your credit qualifies. According to finaid.org, there are advantages and drawbacks to refinancing private loans that borrowers should consider. AAMC offers an excellent resource to help you decide if you should refinance your private student loans.

Loan Forgiveness Opportunities

There are several loan forgiveness opportunities available to federal student loan borrowers, including Public Service Loan Forgiveness (PSLF), which is particularly relevant for those in the medical profession. Private lenders generally do not offer loan forgiveness programs. However, some state agencies offer repayment assistance programs for qualifying applicants.

Loan Deferment and Forbearance Options

Federal student loan borrowers who experience financial hardship may qualify for temporary relief through loan deferment and forbearance options. Private student loan borrowers should check with their lender to learn about options for postponing or lowering loan payments.