How to Get Private Medical School Loans (and a Rant About Why This Is So Hard Now!)

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It’s a little bit of a mess right now in the medical school private student loan space. Here at The White Coat Investor, we’re trying to sort through it as fast as we can so we can help students and lenders quickly come up with a workable solution, lest it have a serious effect on the availability of physicians, dentists, and others when we need them a decade or two from now. We’ve already been working behind the scenes with the lenders. Today’s post is mostly for the students.

How OBBBA Changed the Medical School Loan Landscape

In case you’re not aware, Congress passed the One Big Beautiful Bill Act (OBBBA) in July 2025, and the president signed it into law. As part of that big law, first-year medical and dental students starting in 2026 can no longer borrow more than $50,000 in federal student loans per year ($200,000 total). Since paying for medical and dental school completely with borrowed money often requires more than $50,000 per year at current prices, that means students now need at least some private loans.

Next year, both MS1s and MS2s will need these private loans (current MS2s and higher are grandfathered in to the federal loan system). Three years from now, something like 15,000-20,000 med/dental students a year will need private loans. There are also students at new schools or at Caribbean schools who do not yet qualify to get federal loans for whom these issues apply right now.

Problems with Private Loans

With the federal student loan landscape becoming so generous over the decades with subsidized Income Driven Repayment (IDR) programs like the Repayment Assistance Program (RAP) that ensure loan balances fall during residency and forgiveness programs like Public Service Loan Forgiveness (PSLF), an aspiring professional student should generally not take out any private student loans (which have to be paid back and can grow during school and during training) until they have already borrowed $50,000 in federal loans for the year. I’m sorry about that run-on sentence, but it’s packed with important information. Read it again if you must.

At any rate, I figured this was no big deal. Thirty years ago, plenty of medical students used private loans to pay for school, and many of us have refinanced federal loans into private loans over the years to get a lower interest rate and (if you went through the links here at WCI, you also got some cash back). Obviously, this is a great business for lenders to be in, and so I assumed they would all jump right in and meet this need. Even before July 2026, we started lining up the lenders we’ve worked with for years to partner with us in offering private loans to medical students. However, there have been more hiccups than I expected.

I recently heard from a WCIer who said an incoming medical student he worked with was having trouble getting loans and was thinking about turning down her acceptance because she couldn’t actually get any private loans at all. I told him to send her to our lending partners. He said she had already applied with them, and due to credit history, credit score, debt-to-income ratios, and so forth, they were requiring co-signers. She didn’t have one. I thought, “No way!” and asked our WCI staff member managing those relationships to check on this. Sure enough, she came back and let me know it was true. Even worse, a few students are being offered double-digit interest rates and feeling lucky to get them.

I went ballistic. I almost couldn’t believe it. Especially when I started hearing more and more similar stories. Let me explain why.

The reason lenders should lend money to medical students is not because they have a great credit score or a great credit history or a great debt-to-income ratio or a great co-signer. It is because THEY ARE GOING TO BECOME A DOCTOR. The average income for doctors is $386,000 per year. Half of them make more. That’s plenty of money to pay back $50,000, $100,000, $200,000, $400,000, or even $600,000 in student loans.

If a lender wants to ask a question before lending money to pay for medical school, it should be something like:

• Are you going to an established US MD or DO school?
• What specialty do you think you’ll go into?
• Do you think you’ll practice full time for at least five years after training?
• Any reason we should worry about you matching into your chosen specialty?

That’s what determines whether the lender is going to get their principal (and interest) back. And none of that has anything to do with credit score, credit history, debt-to-income ratio, or a co-signer. Why would a traditional medical student have an awesome credit history? They haven’t done anything in their life yet but go to school. Of course they don’t have any income. And who cares what their FICO score is? You’re loaning them money because they’re going to medical school. That’s it. Period. Stop. No more questions.

Medical students have an impressively low default rate on their student loans. Less than 1.5%. By comparison, the general student loan default rate is 10%. Yet we’re giving loans to these people at 12%, 14%, or even 18%? That’s highway robbery. Those are credit card interest rates. Those are interest rates that are used for auto loans for people who had their last three cars repossessed. Not people with a default rate of 1.5% whose loans don’t go away in bankruptcy. And sometimes they can’t even get the loans? And we’re asking for a co-signer? Why are we asking for someone’s mom who makes $35,000 a year cleaning houses to co-sign their daughter’s (who will be earning $400,000) medical school loans? It doesn’t make any sense at all. Do we really want great doctors to NOT go to medical school because they can’t get loans? Do we really only want doctors coming from the upper socioeconomic strata of society where no more than $50,000 a year has to be borrowed or where finding a co-signer is easy? Of course not.

OK, the rant is over. But you can see how fired up I was. I asked our staff member to see if she could set up some appointments for us to meet with the decision-makers at our lending partners and/or find us some new ones. After some of those meetings, I understood a little bit better what is going on, and I have some advice for students seeking private loans. But first, a few words for medical school administrators.

More information here:

• Student Loans 101: Ultimate Guide to Student Loans
• Closing the Gap with Private Student Loans for First-Year Med Students

Medical Schools Need to Lower Tuition

Remember that New Yorker, Jimmy McMillan, who was running for mayor more than a decade ago? His entire campaign was a one-liner, “The rent is too damn high.” Well, guess what? The tuition is too damn high. This is a big part of the reason Congress and the administration put these student loan changes into OBBBA. They want to put some pressure on you to not raise tuition so quickly and maybe even to lower tuition.

Average in-state tuition right now is >$43,000. Out-of-state and private tuition is >$68,000. Medical students also like to eat. And sleep with a roof over their head. So pretty much all of them who don’t receive some sort of scholarship; who don’t sign some sort of an MD/PhD, HPSP (military), or similar contract; or who don’t have wealthy parents are going to need some private loans. Fix it! Go to your state legislature or your donors or your hospital administrators or whoever and fix the tuition problem.

A few schools already have done something about this but it’s not enough, and too many of the new schools opening up seem to be of the “for-profit” variety. If you don’t fix it, you’ll probably still fill your medical school classes. But will it really be with the people you want in there?

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Tips for Students to Get Private Loans

Here are the tips for the students.

#1 Don’t Quit

DO NOT bail out of school due to this issue. We’ll get it fixed. Have some faith and some patience. It probably still makes financial sense to go to medical school even if you have to borrow the entire cost of doing so. I say probably because if you borrow $800,000 at 14% and then don’t match or you take a part-time job paying $150,000, it actually doesn’t make financial sense. But borrowing $200,000-$400,000 for a $250,000-$600,000 job is still a pretty smart move.

#2 Shop Around

This is no longer a one-lender game. If you can find lenders offering fair interest rates who don’t require income, credit scores, credit history, in-school payments, or co-signers, support them by borrowing from them (and pass their names along to us so we can partner with them). Most of them will let you apply/check your rate without a hard credit pull, so it’s only your time you’re spending here to apply with two or three or six different lenders.

Our lending partners offer rates from 3.5%-18%, but the averages tend to be in the 8%-10% range. Who gets the 14% interest rates? Those with low credit scores, little credit history, and no co-signer. They’re people who almost got denied completely. Some lenders say they don’t really care about the score; they’re mostly just looking to see if you’ve defaulted on a loan before. Who gets the 4% interest rates? People married to a spouse with income, people with incredible credit from a prior career, or (most likely) people with a high-income co-signer with a great credit score. Everybody else is in between. You might even get a better interest rate than the Feds are offering (8%-9% with a 1%-4% origination fee). If you’re sure you won’t need IDRs or PSLF, you might even consider using all private loans if the interest rate is much lower.

The interest rate is probably the most important of the lending terms, but the others matter, too. For example, when does the interest capitalize? Most will say after the grace period. But is that grace period after med school or after residency? It varies by lender. Will your loans be automatically deferred for residency? Best to know from the beginning. Will payments be required during medical school? If so, you will need to borrow enough to make the payments, too. Does the lender offer multi-year eligibility? Does that go away if you miss a payment on your loans or even an unrelated credit card? Is there an origination fee? Some lenders (including the Feds) have one, some don’t.

#3 Establish Credit Early

Dave Ramsey is famous for telling people they don’t need a credit score. Maybe you don’t, but life sure is a lot easier if you have one. Don’t get me wrong, I’m not a fan of debt, and we’ve been debt-free for nearly a decade now ourselves. But we’ve still got a multi-decade credit history and an 800+ credit score just from using a credit card like a debit card.

Too many entities care about your credit score . . .

• Lenders
• Employers,
• Utility companies,
• Government,
• Landlords, and
• Insurance companies

. . . to not have one. So, get a credit score. You can get some dumb “college student” card with a $500 credit limit. Put your cell phone bill on it and set it up so it is paid in full automatically every month. Or your gasoline. Or something you’re going to buy regularly anyway. It doesn’t take much borrowing to have a great score and a two-year credit history.

#4 Get Great Credit Quickly

Oops! Nobody told you to establish credit as a college sophomore if you want to be a doctor? Now what? Well, there is a shortcut if you have someone who loves you and has great credit. Ask them to name you as an authorized user of the credit card they’ve had the longest. They don’t have to give you a card. They don’t even have to tell you the number. Within just a few months, you’ll have both a score and a potentially lengthy credit history.

My 18-year-old has a 15-year credit history. Feels like cheating, but it’s perfectly legal. If lenders want to do dumb stuff like care about the credit score for a medical student loan, they shouldn’t be surprised when we do dumb stuff to get that credit score for them. Be aware there is some risk in this technique . . . for the student. Make sure that credit history you’re hitching your wagon to really is good, or, at least, know that the owner will get you off the card before it goes bad!

#5 Pick the Right Loan Product

As lenders try to sort out the best way to underwrite these loans (i.e., which students are going to pay them back and which aren’t), pay attention to what they’re offering. For example, one lender offers four sets of repayment terms:

1. Full payments during medical school
2. Interest-only payments during medical school
3. $25 per month payments during medical school
4. No payments during medical school

You might think the obvious answer is the “no payments during medical school” option. Med students don’t even have an income, so any payments they made would be with borrowed money anyway, right? The lenders don’t care. Their regulators demand they have some sort of method to figure out who is a risky person for lending money. One of those methods is to have them make payments. Borrow an extra $300 a year to make those tiny $25 monthly payments as a student, and you’re more likely to get the loan. It might even make sense to make FULL payments during school if the offered interest rate is much lower and you can borrow enough to do so. Goofy little game, eh? Well, now you know the rules.

Interestingly, I am told that those who make payments—even $25 payments made with borrowed money—are actually much less likely to default on their loans. Nobody has really tested that with medical students/doctors yet, but until they do (and then hopefully get rid of this requirement), I suggest you believe them when they tell you that you’ll get a better deal doing something that seems a little nonsensical.

#6 Get a Co-Signer

I’ve been against using a co-signer for many years. I’ve always felt that if someone has to use a co-signer, that probably means they shouldn’t buy whatever it is they’re buying because they can’t afford it. As far as student loans go, I’ve always felt that if anyone borrows for school, it should be the student.

I’ve now changed my mind. See if you can get a co-signer. This does two things.

1. It might make it possible for you to get a loan when you otherwise can’t.
2. It will probably (but not always) get you a lower interest rate.

Ideally, your co-signer has a FICO score of 850, a 30-year credit history, and an income of $500,000. The lenders care about the better credit profile between you and your co-signer. Even if your credit sucks, a good co-signer still means you get a great loan. After you’ve made “real” (attending-level) payments for a year on that loan, the co-signer can often be released from the loan, too.

Why would anyone co-sign for your loans? Probably only because they love you very much and have great faith in your ability to eventually get a real doctor job. But honestly, the risk for them isn’t that high. The default rate on medical student loans is low, and even if the borrower dies or gets permanently disabled, many lenders won’t go after the co-signer. Read the fine print, of course, but even if the lender doesn’t offer those provisions, just go buy a cheap little $250,000 10-year term life policy and maybe some disability insurance to protect your co-signer. It will be much cheaper than the higher interest rates on a $200,000 loan.

#7 Refinance, Refinance, Refinance

Most people will keep their federal loans in an IDR program like RAP during residency until they decide whether they’re going to take a PSLF-qualifying job as an attending. But private loans will never qualify for PSLF, so you might as well refinance them every time you can get a lower interest rate. Some lenders offer very low payments during residency, like $100 a month. You can afford to make those, especially if it means saving 3% a year on $200,ooo in debt ($6,000 per year). Maybe you refinance as an intern, then again as a senior resident, then again as a young attending, then again every couple of years (hopefully only once or twice) until they’re gone.

If you use the WCI refinancing links, you’ll likely get some cash back and maybe a free online course at the same time.

More information here:

• Helping a Pre-Med Run the Numbers on Medical School
• How to Go to Medical School for (Almost) Free
• Cheapest Medical Schools in the US

Lenders! Take a Chance on Medical Students

Medical students are great credit risks. Very few of them don’t match, and even fewer default on their loans. Even if they do, they can’t wipe them out in bankruptcy. I understand this is a new game for many of you since medical students have almost entirely used only federal loans for more than two decades. I understand you have regulators, attorneys, investors, board members, and executives to answer to, and they want to see that you’re not taking any unreasonable risks. Study as much data as you can get your hands on and try to minimize the underwriting requirements for medical student loans. We need doctors, and we want the best ones we can get—even if those doctors have to borrow a couple hundred thousand in private loans in addition to federal loans to get through school.

The sooner you address underwriting snafus, the more market share you’re going to grab in this new lending environment. Beat your competitors to the market by being the first to offer sensible underwriting criteria. Then tell us about it.

Here are our current partners:

What The White Coat Investor Is Doing

The primary mission of The White Coat Investor is to support doctors in their financial lives. Right now, this is one of the biggest issues facing docs, so we’re appropriately focusing a lot of effort on it. We’re working with the partners we already have to make sure a common-sense solution emerges ASAP. We’re also looking for new lending partners.

Thank you for letting us know about your experience getting private loans this year. We want as much positive feedback, negative feedback, horror stories, and suggestions as we can get as we work toward reasonable solutions. We have great faith the industry is going to adapt and apply sensible underwriting criteria to all medical school loans as soon as they can, but it might take a year or two. Until then, muddle through as best you can.

How is it going? Have you applied for private student loans this year? What obstacles are you running into? Could you get loans? What was required? What interest rates are you seeing? 

The post How to Get Private Medical School Loans (and a Rant About Why This Is So Hard Now!) appeared first on The White Coat Investor – Investing & Personal Finance for Doctors.

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