While students in medical school can expect to be busy with their studies, they also can expect to be busy with their work in order to pay for their studies. Tuition, housing, transportation, books, insurance and everyday living costs for students in medical school add up to a significant amount, often more than what can be made by a part-time job.

To aid medical students in Kansas in planning for their future, we explain how borrowing during medical school can be manageable as part of a student’s overall financial planning during medical school.

Medical students should aim to control expenses and control how today’s financial decisions affect the first several years of their medical career, not to try to cut expenses to zero in medical school, with the recognition that many students will have to borrow to complete their medical education.

Know What Medical School Will Really Cost

Besides tuition, there are other expenses that medical students incur during their time in medical school. These include rent, food, utilities, health insurance, test preparation, and professional clothes to name a few.

Medical school students also need to budget for their living costs including rent, food, utilities, health insurance, and transportation. Many also budget for additional costs like licensing exams, test preparation for school and for exams, professional clothing, technology, and for clinical supplies and equipment that they may use during their clinical training. In addition, some students may travel for some of their clinical rotations, as well as for interviews for their residency program.

Some of these costs can be anticipated while others can pop up unexpectedly.

Look at your school’s published cost-of-attendance figures for medical school. Then look at your real living situation and expenses. Compare the two. There are many factors to consider when trying to estimate what the actual cost of attendance for a year of medical school will be. These factors include tuition, books, traveling for rotations, and more.

This means that even though two students may be attending school in the same state, their costs could differ quite a bit. For example, a student living with a few other medical students in a rental house in Wichita may pay a fraction of what a student paying for a high-cost-of-attendance school like KU Med Center would for rent. Other costs such as food, utilities, and transportation may differ as well.

Budgeting for necessary borrowing and tracking future expenses will help med students determine how much to borrow to reach their goals.

Borrow With the Next Several Years in Mind

Stating that one can borrow the maximum amount for every year of medical school, and then pay off the student loans after graduation, does not do justice to the full complexity of student loans for medical school.

Small choices can add up quickly.

That $3,000 extra for a couple of years of living expenses early in medical school seems like a minor detail. You’ve got lots of time to repay the extra amounts, and you need to borrow the maximum amount possible every year for 7 years. The amounts, when added up for each year, and the added interest over time will become a very large number by the time you finish medical school and start your residency.

Students should recognize that there is a difference between borrowing money for necessary expenses and “convenience borrowing” for expensive items to enhance their lifestyle.

“Necessary” borrowing would equal the costs of tuition and the fundamental requirements of housing, eating, traveling, and so on for medical school; “convenience” borrowing would be for more costly housing, and the many expensive meals eaten out instead of cooked at home, the most expensive computer games, and other forms of expensive entertainment such as business class travel (as opposed to economy class).

It doesn’t have to mean you are stuck in a tiny apartment with no freedom. Borrowed money has a future cost, so it’s wise to be aware of how you’re spending your money during medical school.

Build a Budget That Works During Medical School

A medical student does not have a steady paycheck, so a typical budget would fail in its attempt to control the finances of such a student.

Others receive financial aid during the year and have money dispersed to them in specific chunks throughout the academic year. Therefore, there must be a cash flow plan devised to handle these funds until they are spent.

For another strategy, see: “Medical School Budgeting”.

Another scenario to illustrate another aspect of budgeting for medical students is to have a student get a disbursement for four months’ worth of living expenses. Instead of treating the entire $4,000 as available cash to spend at his or her discretion, the student could transfer a month’s worth of budgeted expenses into his or her checking account every few weeks.

This creates an artificial monthly paycheck.

Finally, as was mentioned before, having a “mini-monthly-paycheck” around for the months of academic study that have disbursements will keep students from spending all of the disbursement money too quickly.

For the students, here is a list of typical items to include in your budget during Medical School: Housing, Groceries, Utilities, Transportation, Health Insurance, Personal Expenses, School Supplies and others.

In other words, it doesn’t have to be a detailed list of each and every individual purchase, rather it can be a summary of the student’s ongoing monthly expenses, in comparison to the funds that he/she has available to spend, to ensure that they are not consistently overspending during a given semester.

Understand Your Loans Before Residency Begins

By the time you are in your fourth year of medical school, you should have a good grasp of the types of loans you have for your education.

Federal student loans and private student loans are two completely different animals when it comes to interest rates, terms of repayment, and the amount of protection that the borrower has. It’s wise to have records for each of the student loans for a given student (i.e. for a single academic year), and include the current balance, rate of interest, and servicer of each, as well as information with respect to the status of repayment of each.

Finally, it is very important to understand the details of your loans in the fourth year of medical school, when you start to prepare for residency. This is when you start to think about the financial reality of being in residency and paying back your loans.

Income-driven repayment plans may be better for some graduates, while others will want to explore refinancing medical student loans. This can be done once they have a better understanding of their income, career, credit, etc. and can weigh the pros and cons of giving up federal borrower benefits in order to take advantage of lower interest rates offered by private lenders.

That decision should not be rushed.

Keep a Small Emergency Fund if Possible

Emergency funds during medical school can be extremely difficult to save up, given that most of the funds come from loans that the student depends on to attend medical school. However, having some reserve of cash can be very valuable in times of unexpected expenditure.

You don’t need to save a lot of money in an emergency fund. Even a small amount of money can be very helpful in unexpected situations.

Having even a small amount of cash on hand can be a huge asset in the event of an unexpected car repair, an unexpected trip home for a family emergency, a broken laptop charger, or an unexpected medical bill.

A student who receives money (from a tax refund, a scholarship, a gift, etc.) that will be available to them for a period of time (e.g., four months) should attempt to divide that money into monthly spending amounts and attempt to spend only that.

Just set aside a portion of funds from such income as tax refunds, or scholarships, or even a gift for instance. The aim here is just to have a very small emergency fund, to have cash for unforeseen expenses, and it does not have to be as large as for someone with a full-time job.

Financial Stability Is About Maintaining Options

Medical students in Kansas do not need to solve every financial problem before becoming physicians.

They do need awareness.

When we know how much money we are borrowing, where that money is being spent, and what our repayment of that debt will look like in the future, we can make the best choices for ourselves. These choices could include where to live during our residency, how quickly to begin saving for a down payment on a house, which ways of repaying debt to choose, and even what jobs to choose when offered a position.