Loans, in Plain English

Part of The Training Years. If the words "principal," "capitalization," and "income-driven repayment" make your eyes glaze over, mine did too. This is the version I'd explain to a younger cousin at the kitchen table. No jargon, just the stuff that matters. The full numbers live on the Personal Finance Crash Course.

If you remember only three things

Med school costs a lot, and most people borrow it. That's normal, not a red flag.
The federal government will not lend you all of it anymore. It stops at $200,000, and the rest has to come from somewhere else. This is new since July 2026 and it is the biggest thing on this page.
You barely pay anything while you're training. Your payments are based on what you earn, and residents don't earn much.

Forgiveness used to be the fourth thing on this list. It still matters, but it is worth noticeably less to you than to the people a few years ahead of you, for reasons that take a section to explain.

One exception you need to know about before you read any further. All of this describes the federal loan system, and federal student aid requires citizenship or an eligible noncitizen status. Neither DACA nor undocumented status qualifies, so the federal loans, the income-based plans, and the forgiveness program on this page are all unavailable. If that is your situation, this page describes a system you cannot enter, and Immigration Status & the Path to Medicine is the page to read instead.

What a loan even is

A loan is borrowed money. You pay it back later, plus a little extra every year for the privilege of borrowing it. That "little extra" is called interest. Think of it as rent on money. You're renting the bank's money until you can give it back.

Medical school loans have one mean little feature. The rent starts the day the money lands, while you're still in school. You're not paying it yet, but it's adding up in the background the whole time.¹

The government will not lend you all of it

Until July 2026 you could borrow the entire cost of medical school from the federal government. A loan called Grad PLUS covered whatever your other federal loans didn't, and in practice almost everyone who got in could borrow the whole thing.

That ended. Federal borrowing now stops at $50,000 a year and $200,000 in total, and Grad PLUS no longer exists for new borrowers.²

The median four-year cost of medical school is about $298,000 in-state public and $408,000 private. So for a lot of people there is a gap of roughly $98,000, or $208,000, that the federal government will not lend you. It has to come from a grant, a scholarship, savings, family, a service commitment, or a private lender.

That last one is a different kind of thing, and the reason matters. Federal loans never asked whether you were a good bet. A private loan does. It looks at a credit score and an income, and a twenty-two-year-old with neither is often told to find a cosigner.

Can You Actually Get the Money? works all of this out properly, and If You Have No Cosigner is the page to read if that last paragraph just described a wall rather than an inconvenience.

Why the number used to grow, and why it won't for you

This part used to surprise everyone. While you were in school and training, you weren't paying enough to keep up with the rent, so the unpaid rent got added onto the pile and then you were paying rent on the bigger pile. It snowballed. That's how someone could borrow $200,000 and owe $250,000 or $300,000 a few years later without ever missing a payment.

If your first federal loan is from July 2026 onward, that doesn't happen to you. You're on a plan called RAP, the Repayment Assistance Plan, and RAP waives the unpaid interest instead of piling it on.³ Your balance doesn't snowball during residency. It drops, slowly.

That's genuinely good news, and hold onto it, because it's also the reason the forgiveness section below says what it says.

You won't be crushed during residency

The scary version people imagine is "I'll owe $2,000 a month the second I graduate." That's not how it works.

During residency, when you're a doctor but earning around $65,000 to $70,000, your federal payment is based on your income rather than your debt. In practice that's a few hundred dollars a month. The system is built so you can survive the training years, and that part still works.

The word doing the work there is "federal." Anything you had to borrow above the $200,000 cap is a private loan, and a private loan sets its payment from the balance rather than from your income. It does not shrink because you are a resident. In the worked case further down this page it is $1,579 a month from the month of graduation, alongside a federal payment of $341. So the honest version is that the federal system will not crush you during residency, and whatever sits above the cap is the part that can.

PSLF, and what it's actually worth to you

This is the one everybody has heard of. The version that gets passed around is the payoff with the conditions stripped off, so here are the conditions first.

PSLF stands for Public Service Loan Forgiveness. Work full-time for a government or nonprofit hospital, make your income-based payments, and once you've made 120 of them the government cancels whatever is left, and you don't pay tax on it.⁴

Read that as 120 qualifying payments rather than ten calendar years, because they aren't the same thing. Ten years of employment with eight months paused is 112 payments, and you finish eight months later than you thought. Nearly every trap here is a version of that sentence.

Now what it's worth, and this is where the advice from people a few years ahead of you stops describing your situation.

For them it was worth a fortune. They could borrow the whole cost of medical school federally, the balance snowballed all through training, and when the 120th payment finally landed there was often two or three hundred thousand dollars still sitting there to be canceled.

Neither of those things is true for you. Your federal balance stops at $200,000, and once you're an attending, RAP takes roughly a tenth of your income against it, which is far more than the interest. So the balance falls steadily for years before payment 120 arrives, and what's left to forgive is smaller. In our own model of a hospitalist it comes to about $166,000 rather than the two or three hundred thousand the older advice quotes. ⟳ Verify: that figure is our arithmetic on the cap and the RAP rules rather than published guidance, so check it with your loan servicer and your school's aid office.⁵

$166,000 is still a great deal of money, and PSLF is still worth doing correctly. Residency counts toward the 120, the payments during it are small, and the plan you're on decides whether the clock runs at all. And the debt that actually follows you now is the private piece above the cap, which forgiveness has never touched and still doesn't.

The same doctor, on either side of July 2026

The difference is easier to see worked all the way through than to describe, so here it is in full.

Two people, identical in every way that matters. Each borrowed $300,000 across four years of medical school, each did a three-year primary care residency on the AAMC's stipends of $68,166, $70,499 and $73,301, and each took a nonprofit job paying $287,500. One borrowed before July 2026. One borrowed after.

Four years of interest turns $300,000 borrowed into $369,515 owed on the day you graduate. For the second doctor the cap splits that into $246,344 federal and $124,618 private, which is nearly the same money on worse terms.

Borrowed before July 2026 · all federal, on PAYE

Year	Payment	Balance
1	$369/mo	$394,913
3	$411/mo	$444,960
5	$2,196/mo	$451,888
10	$2,196/mo	$469,208

Borrowed after July 2026 · $246,344 federal on RAP, plus $124,618 private at 9%

Year	Federal, on RAP	Private	What they actually pay	Federal balance
1	$341/mo	$1,579/mo	$1,920/mo	$245,744
3	$428/mo	$1,579/mo	$2,007/mo	$244,544
5	$2,396/mo	$1,579/mo	$3,975/mo	$225,047
10	$2,396/mo	$1,579/mo	$3,975/mo	$160,094

At payment 120 the first doctor has $469,208 canceled. The second has $160,094 canceled and has been paying the private loan the whole time.

Across the same ten years the first doctor pays $198,507 out of pocket. The second pays $404,839. That is the comparison, and it is roughly double.

The private loan is the part a federal comparison never shows you, and it does not care what you earn. It is $1,579 a month from the month you graduate, in residency on $68,166 and as an attending on $287,500 alike, and no income-driven plan touches it. During training the post-2026 doctor is paying about $1,920 a month against the other doctor's $369.

On the federal side alone, the difference lives in the interest. Interest on $369,515 runs about $2,485 a month. The old plan asked $369 during residency and $2,196 as an attending, so it never once covered that, and the shortfall piled up for a decade until PSLF erased the whole overhang. RAP waives the shortfall rather than charging it, and takes at least $50 a month off the principal even when the payment is small, so the balance falls from the first month instead. The forgiveness rule is unchanged at 120 payments. What shrank is the balance standing there when the 120th one lands.

Which is where the two halves meet. RAP's kindness and the smaller discharge are the same fact seen twice. A balance that falls every month is a balance that is smaller when forgiveness arrives. The plan is gentler month to month on the federal piece, and it hands back less at the end, and the money the cap pushed into the private market is charged at 9% and forgiven by nobody.

⟳ Verify: every figure in those two tables is our own arithmetic on the published rules rather than guidance from anyone official, and a model is only as good as its assumptions.⁶ The two doing the most work are the 8.07% rate compounding through four years of school, which alone creates $69,515 of that graduation-day balance, and the fact that the old plan's payment never caught its interest. Check your own numbers with your loan servicer and your school's aid office.

So certify your employment every year, stay on a qualifying plan, and take a job you'd want anyway. Just don't pick a specialty, or turn one down, on the strength of a number that was calculated for somebody who could borrow twice what you can.

Two things not to do

You don't need to become a finance expert. You need to avoid two traps.

Don't hit "pause" on your payments during residency. There's a button called forbearance that sets your payment to $0. It feels like a gift and it's usually a trap: those months don't count toward your 120, and you finish later than you planned. Make the small payment instead. It beats $0.⁴
Don't let a company talk you into refinancing if there's any chance you'll use PSLF. As an attending you'll get slick offers to move your loans to a private company at a lower rate. Do that and you permanently lose PSLF and every federal protection along with it, because only federal loans qualify and refinancing turns yours private.⁴ Only consider it once you're certain you won't work for a nonprofit. When in doubt, don't.

The honest hard part

I don't want to make this sound easier than it is. Most people who go to medical school end up with debt, often around $200,000, and carrying it is heavy. It can sit on you for years after you're a doctor and quietly take some of the joy out of having gotten there.

And the hardest part to say: becoming a doctor isn't guaranteed. Some people borrow all of it and don't match into residency. They don't get to practice, and the loan is still there. That danger is worst at Caribbean and for-profit schools, where the debt is bigger and the chance of matching is much smaller.⁷ People have ended up hundreds of thousands of dollars down with no doctor's job to pay for it.

So, said with care: becoming a doctor should not wreck your life. If you look at this kind of debt and your gut says that's more than I'm willing to risk, that's a completely okay answer and often a wise one. Medicine isn't the only good way to help people, and nobody should make you feel ashamed for protecting your future.

A few people get through with little or no debt. That's wonderful when it happens. Hope for it, don't count on it.

The bottom line

Debt is the thing that scares people like us away from medicine more than anything else. I get it. I counted every dollar for years.

The honest version sits in the middle. The payments during training are survivable and always were. What changed in 2026 is that the government stopped lending the whole amount, and forgiveness now does less of the heavy lifting than it did, so the question that deserves your attention first is how much can I actually get, and from whom, rather than how much will be forgiven at the end.

Don't be paralyzed by it, and don't be told it's nothing. Look at it honestly and decide with your eyes open whether it's a risk you're willing to take.

Two other pages carry what this one deliberately doesn't: The Personal Finance Crash Course has the full arithmetic, and if the application fees themselves are the immediate problem, the AAMC's Fee Assistance Program is worth roughly $2,000 and most people who qualify never apply — Free Tools You Should Be Using covers how.⁸

References

This is a simplified overview to get you oriented; the details and current numbers live on the full Personal Finance Crash Course page. Federal loan rules change often, so verify specifics on studentaid.gov and with the AAMC. Educational information, not financial advice. — Last reviewed: 2026-08-12

Direct Unsubsidized loans, which are what medical students borrow, accrue interest from the day of disbursement, including while the student is enrolled. Federal Student Aid, subsidized and unsubsidized loans: https://studentaid.gov/understand-aid/types/loans/subsidized-unsubsidized ↩
Federal borrowing for professional programs is capped at $50,000 a year and $200,000 in total from 1 July 2026, and Grad PLUS is eliminated for new borrowers. A separate $257,500 lifetime ceiling counts every Direct loan you have ever taken, undergraduate included. 34 CFR 685.200: https://www.ecfr.gov/current/title-34/subtitle-B/chapter-VI/part-685/subpart-B/section-685.200 · Cost-of-attendance medians of $297,745 in-state public and $408,150 private are the AAMC's for the class of 2025: https://store.aamc.org/downloadable/download/sample/sample_id/652/ · The full working, including who the lifetime ceiling catches, is on Can You Actually Get the Money?. ↩
The Repayment Assistance Plan, the only income-driven plan open to borrowers whose first loan is disbursed on or after 1 July 2026, waives interest the scheduled payment does not cover and applies a minimum of $50 a month to principal. Federal Student Aid, income-driven repayment: https://studentaid.gov/manage-loans/repayment/plans/income-driven · The full arithmetic and the sourcing for it are on The Personal Finance Crash Course. ↩
Public Service Loan Forgiveness: 120 qualifying monthly payments made while working full time for a government or qualifying non-profit employer, with the forgiven balance not treated as taxable income. Months in forbearance or deferment do not count as qualifying payments, and only Direct Loans are eligible, so refinancing with a private lender ends eligibility permanently. Federal Student Aid: https://studentaid.gov/manage-loans/forgiveness-cancellation/public-service · The plan matters as well as the employer: RAP, IBR, PAYE and ICR earn credit and the Tiered Standard Plan does not, so a resident who lands on the default earns nothing toward the 120 and pays more. National Consumer Law Center on the July 2026 changes: https://library.nclc.org/article/major-july-changes-federal-student-loan-repayment ↩ ↩² ↩³
⟳ Verify. The $166,000 figure is this site's own arithmetic on two rules, the $200,000 federal ceiling and RAP's waiver of interest an on-time payment does not cover, rather than a published finding by anyone. It is worked out on The Friend Who Went Into Tech, which models a hospitalist's career year by year. An earlier version of that model charged no federal interest during medical school and concluded the discharge was $0, which was wrong and is corrected; treat any figure of this kind, including this one, as something to confirm with your own servicer and aid office before making a career decision on it. RAP bands and the interest waiver: 34 CFR 685.209 ↩
⟳ Verify. The two tables are computed year by year across both paths, from the rules below, so the arithmetic can be checked rather than taken on trust. Rules, all from 34 CFR 685.209: RAP's monthly payment is an annual base of 1% to 10% of adjusted gross income divided by twelve, on a ladder rising a point per $10,000 and flat at 10% above $100,000, minus $50 per dependent (b)(2) and (f)(5); the Secretary "does not charge the borrower's account for any accrued interest that is not covered by the borrower's on-time payment" (h)(4)(i); and a matching principal payment tops the monthly principal reduction up to $50 (o)(2)(i). PAYE and IBR take 10% of adjusted gross income above 150% of the poverty guideline and are capped at the ten-year standard payment, while RAP is uncapped; Federal Student Aid's plan comparison: https://studentaid.gov/manage-loans/repayment/plans/income-driven · A first disbursement on or after 1 July 2026 ends eligibility for IBR, ICR and PAYE, which is why the two doctors are on different plans: https://studentaid.gov/manage-loans/repayment/plans Inputs: 8.07% federal and 9% private, the rates used in the model behind The Friend Who Went Into Tech; resident stipends from the AAMC's 2025 survey; the $287,500 attending salary from the band on What Doctors Actually Make; and the 2026 federal poverty guideline of $15,960 for a household of one, from HHS: https://aspe.hhs.gov/topics/poverty-economic-mobility/poverty-guidelines Two simplifications: the model holds income flat across the seven attending years, and it assumes 120 consecutive qualifying payments with nothing paused. Both make the discharge look larger than a real career usually delivers. ↩
2026 NRMP Main Residency Match outcomes by applicant type: US MD seniors 93.5%, US-citizen international medical graduates 70.0%, non-US-citizen international graduates 56.4%. NRMP, Results and Data: 2026 Main Residency Match, published May 2026: https://www.nrmp.org/wp-content/uploads/2026/05/Main_Match_Results_and_Data-2026.pdf ⟳ Verify the current cycle's figures before quoting them. Attrition at US MD-granting schools averaged 3.1% across matriculation years 2000–01 through 2019–20, and 96.1% of students graduated within six years of matriculating: AAMC Data Snapshot, October 2025, drawn from the AAMC Student Records System: https://www.aamc.org/data-reports/students-residents/report/graduation-rates-and-attrition-rates-us-medical-students . Two things changed here on 2026-08-18. The link went to an NRMP index page that no longer resolves to the report holding these figures, and the attrition sentence was cited to NRMP, which does not publish attrition; the figure it gave, near 4%, was also a little above the AAMC's own. The sentence that followed it, comparing US attrition against Caribbean programs, is gone: no source this site accepts publishes a comparable rate. Foreign medical schools are under no requirement to report graduation or attrition, and the GAO found that applicants had no reliable source for those rates and recommended the Department of Education begin collecting them: https://www.gao.gov/products/gao-10-412 ↩
The AAMC Fee Assistance Program: reduced MCAT registration, free official preparation materials, waived AMCAS fees for a set number of schools, and a complimentary MSAR subscription. Eligibility is based on family income against the federal poverty level. https://students-residents.aamc.org/fee-assistance-program ↩