Comprehensive Guide to Private Student Loans

• After maximizing all Federal Direct Loan eligibility.
• If a student is ineligible for Grad PLUS due to credit or due to the elimination of Grad PLUS for new borrowers as of 7/1/2026.
• For international students (with U.S. cosigner), who are ineligible for federal aid.

To apply for a private student loan:

• Check your credit report to ensure everything looks accurate and it contains no errors.
• Research and select a private lender that best meets your needs.
• Review your budget and cost of attendance (COA) to determine the amount to apply for. The 2026-2027 COA will be determined by the end of April.
• Complete the lender’s online application and credit review.
• Your lender will request school certification from New York Medical College.
• Once certified, funds will be disbursed to the College and applied to your student account not before the scheduled disbursement dates for each semester.

Important Considerations & Consumer Warnings

Private loans differ from federal loans in important ways, including interest rate structures, repayment options, and borrower protections. Students should carefully review loan terms and understand that private loans are not eligible for federal income-driven repayment plans or federal loan forgiveness programs.

Helpful Tips for Medical Students

• Borrow only what is necessary to meet educational expenses. This can include all direct and indirect expenses in your budget/cost of attendance.
• It is important to determine how much you may need to borrow realistically. If you estimate too low, requesting to increase your private loan means submitting a new application with the lender, which can trigger another hard pull on your credit.
• Consider fixed interest rates for long term stability.
• Ask about Cosigner release policies.
• Understand when interest capitalization occurs, especially during residency and fellowship.
• Some lenders offer multi-year approvals options. This allows you to complete a single credit approval that may cover future academic years, rather than reapplying each year. This means only one hard credit pull happens during your initial application. This can be helpful for students who anticipate borrowing in multiple academic years. Students are encouraged to review all loan terms carefully and consult with the Office of Student Financial Planning before selecting a multi-year option.

When applying for a private student loan, lenders will review your credit. It is important to understand the difference between a soft credit inquiry and a hard credit inquiry, and how each may affect your credit profile.

Soft Credit Inquiry

A soft credit inquiry (sometimes called a “soft pull”) does not impact your credit score.

Soft inquiries typically occur when:

• You check your own credit.
• A lender provides a prequalification or rate estimate.
• A company performs a background or promotional check.

Many private lenders offer a prequalification process using a soft credit pull. This allows you to view potential interest rates and terms without affecting your credit score. This can be helpful when comparing lenders.

Hard Credit Inquiry

A hard credit inquiry (sometimes called a “hard pull”) may temporarily lower your credit score by a few points.

Hard inquiries occur when:

• You formally submit a private loan application
• A lender performs a full credit review for approval

Hard inquiries:

• Are visible to other lenders
• Remain on your credit report for up to two years
• Typically affect your score for a shorter period (often 6–12 months).
  • It is recommended to avoid too many hard pulls on your credit before applying for a private loan.

If you apply with a cosigner, a hard credit inquiry will typically appear on both your credit report and your cosigner’s credit report.

Rate Shopping & Multiple Applications

If you apply to multiple lenders within a short period (often 14–45 days, depending on the credit scoring model), credit scoring systems may treat multiple inquiries for the same type of loan as a single inquiry for scoring purposes.

This allows students to compare lenders responsibly without significant impact to their credit.

Additional Considerations:

• Not all scoring models treat inquiries the same way
• You should confirm whether a lender uses a soft or hard pull during prequalification
• If borrowing over multiple academic years, ask lenders if they offer multi-year approvals, and if so, whether multi-year approval avoids additional hard credit pulls.
• Discuss credit impact with your cosigner before applying.
• Avoid submitting multiple full applications over an extended period of time.

Students are encouraged to review lender policies carefully and consult the Office of Student Financial Planning with questions before submitting a formal application.

When applying for a private student loan, you will be asked to select a repayment option during the application process. The choice you make will affect your monthly payment while enrolled, the total cost of the loan, and how much interest accrues over time. It is important to carefully review each option before finalizing your application.

Private lenders commonly offer the following repayment structures; however, repayment options vary and may differ from lender to lender:

1. Immediate (Full) Repayment

You begin making full principal and interest payments while enrolled in school.

• Highest monthly payment during enrollment
• Lowest total interest cost over the life of the loan
• Reduces long-term borrowing expense

This option may not be the preferred option and only may be appropriate for students who have outside financial support and wish to minimize total loan cost.

2. Interest-Only Payments While Enrolled

You make monthly interest payments during enrollment, but do not pay down principal.

• Lower monthly payment than full repayment
• Prevents interest from capitalizing (being added to the principal) while in school
• Results in lower total cost than full deferment

This option can help reduce long-term interest growth while maintaining manageable payments during medical school.

Before choosing this option, make sure that you will be able to make the interest only payment each month. Depending on your loan amount, the interest only payment could be a few hundred dollars each month.

3. Fixed (Flat) In-School Payment

You make a small, fixed monthly payment (commonly $25–$50) while enrolled.

• Modest required payment during school
• Some interest will still accrue and may capitalize
• Total loan cost will be higher than interest-only repayment

This option offers a balance between affordability and reducing future interest growth.

Please note that not all lenders offer this option.

4. Full Deferment While Enrolled

No payments are required while you are enrolled at least half-time.

• No required monthly payment during school
• Interest accrues during enrollment
• Accrued interest may capitalize at the end of the deferment period
• Results in the highest total loan cost over time

While this option provides the most short-term flexibility, it significantly increases the total amount repaid.

However, if you have little to no income while in school, this may be the best option for you. When researching lenders, always check if you can make early payments without penalty, that way you can make interest payments when you have additional funds available.

Additional Repayment Considerations

When selecting a private loan, you should also review:

• Grace Period: The time between graduation (or dropping below half-time) and when repayment begins.
• Ask lenders what their policy on deferment/repayment is if you need to take a Leave of Absence at any point during your program
• Residency/Fellowship Deferment: Whether the lender offers deferment options during medical residency training.
• Interest Rate Type: Fixed rates remain the same over time; variable rates may change based on market conditions.
• Interest Capitalization: When unpaid interest is added to the principal balance.
• Cosigner Release Options: Requirements for removing a cosigner after a period of on-time payments.

Many private student loans require a creditworthy cosigner, particularly for students with limited credit history. A cosigner is an individual often a parent, guardian, or other trusted adult who agrees to share equal responsibility for repaying the loan.

What It Means to Be a Cosigner

When someone cosigns a private loan:

• The cosigner is legally responsible for repayment if the borrower does not pay.
• The loan will appear on the cosigner’s credit report.
• Missed or late payments may negatively affect both the borrower’s and cosigner’s credit.

Cosigning a loan is a significant financial commitment and should be discussed carefully before applying.

Why a Cosigner May Be Required

Private lenders evaluate:

• Credit score
• Debt-to-income ratio
• Credit history

Students in medical school often have limited income and established credit history, applying with a cosigner with a good credit history could help acquire a better interest rate.

Students with good credit may also acquire a better interest rate when applying with a cosigner.

A qualified cosigner may:

• Increase the likelihood of loan approval
• Help secure a lower interest rate
• Improve overall loan terms

Cosigner Release Options

Some lenders offer a cosigner release option after a certain number of consecutive, on-time payments (for example, 12–48 months).

Students should review:

• Whether cosigner release is available
• The number of required on-time payments
• Any income or credit requirements at the time of release

Cosigner release is not automatic and typically requires a formal application and credit review.

Important Considerations Before Cosigning

Before agreeing to cosign, individuals should understand:

• The long-term repayment timeline for medical education borrowing
• Potential deferment periods during residency
• The impact of additional borrowing in future academic years
• How it can impact the cosigner’s own personal credit report

Students are encouraged to fully discuss the terms and responsibilities with their cosigner before submitting a private loan application.

After graduation and often after residency or fellowship, some borrowers consider refinancing their private and/or federal student loans through a private lender.

Refinancing means replacing one or more existing loans with a new private loan, ideally with a lower interest rate or different repayment term.

When Do Medical Graduates Typically Consider Refinancing?

Medical graduates may explore refinancing:

• Only consider including your federal loan in private refinancing if you are not pursing Public Service Loan Forgiveness (PSLF)
• After completing residency or fellowship
• Once income increases significantly
• When their credit profile has strengthened
• If seeking to lower their interest rate

Lenders evaluate credit, income, debt-to-income ratio, and employment stability at the time of refinancing.

Potential Benefits of Refinancing

• Lower interest rate
• Reduced monthly payment
• Simplified repayment through consolidation into one loan
• Option to change repayment term (shorter or longer)

Important Private Loan Refinancing Risks to Consider

If federal student loans are refinanced into a private loan:

• The loans permanently lose eligibility for federal income-driven repayment plans.
• The loans permanently lose eligibility for federal loan forgiveness programs.
• Federal deferment and forbearance options will no longer apply.

Refinancing federal loans into a private loan cannot be reversed.

For borrowers pursuing careers that may qualify for federal loan forgiveness programs, refinancing federal loans should be carefully evaluated.

Before Refinancing

Students and graduates are encouraged to:

• Compare multiple lenders
• Review fixed vs. variable interest rate options
• Understand repayment term differences
• Evaluate long-term financial goals

Consulting a financial professional may also be beneficial before making refinancing decisions.