MD Education Program

Federal Loans for Medical Students

The US Department of Education offers Title IV federal loans to eligible students to help cover the cost of education through the William D. Ford Federal Direct Loan Program. Direct Unsubsidized Loans are a guaranteed source of funding to meet a student’s Cost of Attendance. Additionally, the Direct Loan Grad PLUS Loan meets remaining gaps in a student’s Cost of Attendance.

Other types of loans through Title VII or the US Department of Health and Human Services, including the Federal Primary Care Loan (PCL) and the Loans to Disadvantaged Students (LDS), are available to help fund the cost of medical school education for those who meet the qualifications. Financial information submitted on the FAFSA is used to determine eligibility for all federal loan programs.

Federal Direct Unsubsidized Loans

Federal Direct Unsubsidized Loans are available from the US Department of Education and administered by IU School of Medicine Office of Student Financial Services. Students may borrow up to $40,500 annually — split between the graduate student amount of $20,500 and the health professions student amount of $20,000. Over the four years of medical school, a medical student is capable of borrowing a maximum of $175,334 ($40,500 each year plus a supplemental amount of $6,667 for the summer terms preceding the third and fourth years).

Loan terms to consider:

  • Simple interest accrues continuously from the date of disbursement with the option to pay accrued interest quarterly.
  • Approximately 1.6 percent origination fee is deducted before the loan is dispersed to the school.
  • Current interest rates and repayment options for Federal Direct Unsubidized Loans are available from the US Department of Education.

The Federal Direct Loan maximum aggregate total that a medical student can borrow is $224,000. Some medical students may have borrowed as an undergraduate or graduate student prior to medical school that may limit the student’s borrowing to the maximum aggregate total. In this case, the student can use the Federal Direct Graduate PLUS Loan to meet any gaps in the Cost of Attendance.

Federal Direct Graduate PLUS Loans

The Direct Graduate PLUS Loan is the equivalent of a federal private loan. Available through the US Department of Education, this loan is administered by the IUPUI Office of Student Financial Services. Students may borrow through this loan to cover whatever is needed to meet their Cost of Attendance minus any other financial assistance. There is no maximum aggregate limit, but the loan cannot exceed the student’s Cost of Attendance. Students can apply for a Direct Graduate PLUS Loan at studentloans.gov. This loan requires the completion of the Grad PLUS Loan Master Promissory Note and Entrance Counseling.

Loan terms to consider:

  • The borrower cannot have an adverse credit history to receive a Direct Graduate PLUS Loan approval.
  • Interest accrues continuously from the date of disbursement.
  • Approximately 4.25 percent origination fee is deducted before the loan is dispersed to the school.
  • Current interest rates and repayment options for Federal Direct Graduate PLUS Loans are available from the US Department of Education.

Federal Loans to Disadvantaged Students

Federal Loans to Disadvantaged Students (LDS) are Department of Health and Human Services Title VII fixed-interest loans available only to eligible students from disadvantaged backgrounds who are enrolled full-time.

Students must come from parent households that are deemed economically disadvantaged (using the 200 percent of household poverty income level tables published annually by the US Department of Health and Human Services).  Or, are considered to have come from an environmentally disadvantaged background that inhibited the individual from pursuing health professions. IU School of Medicine identifies candidates in early June and send the LDS application to those identified.

Loan terms to consider:

  • A fixed 5 percent interest rate applies, but the loan does not accrue interest until repayment begins one year after a student is no longer enrolled full-time or after completing residency or up to two years in a graduate fellowship.
  • Program awards up to $10,000 per academic year, based on the availability of funds.
  • To be considered for Federal Loans to Disadvantaged Students, students must complete the FAFSA with parental information.
  • Application submission priority date: July 1.

Federal Primary Care Loan Program

The Primary Care Loan (PCL) program is a 5 percent fixed federal loan program for medical students with financial need who are committed to primary health care practice. Compared with other federal student loans, the Primary Care Loan provides significant savings. Students who receive the Primary Care Loan must complete a primary care residency within four years after graduation. They must also practice primary care for ten years or until the loan is paid in full, whichever occurs first.

Loan terms to consider:

  • This loan does not accrue interest until repayment begins one year after a student is no longer enrolled full-time or after completing their primary care residency training.
  • The maximum award can be up to the cost of attendance (including tuition, educational expenses and living expenses).
  • To apply for this loan, students must complete the FAFSA and notify the school of their interest.