When you hear talk of the steep price of a medical degree and the huge debt load you can expect after graduation, keep it in perspective. This may be a common experience, but it is not shared across the board.
The cost of your medical education will depend on the school you attend and your personal living expenses—both of which vary significantly across the country. And the amount of debt you graduate with (if any) will depend on the financial resources you started with.
In an MD survey, we found that about 16% of students expect to finish medical school with no debt at all. Another 38% figure they will have debt anywhere from hundreds of dollars to $100,000. But most students—46%—expect to have debts of over $100,000.1
First, explore non-loan options
Most students will fund their medical education from a few sources. To minimize interest costs, here’s the order we recommend.
1. FREE MONEY
Scholarships, grants and bursaries
- Canada Student Grants are offered through the federal government based on financial need (not available for students in the Northwest Territories, Nunavut or Quebec).
- The Canadian Medical Foundation provides medical bursaries and scholarships in partnership with the provincial/territorial medical associations and universities across Canada.
- Visit your school’s financial aid office to learn what scholarships and bursaries are available.
Registered education savings plan
- Your parents and/or grandparents may have contributed to an RESP, which over the years will have benefited from the Canada Education Savings Grant as well as investment growth.
Non-registered and other savings
- Your parents may have saved through a trust account.
- You may have savings from your part-time jobs, summer jobs or internships.
Lifelong Learning Plan
- If you have money in an RRSP, you can withdraw up to $10,000 in a calendar year to fund your education or your spouse’s (up to a total of $20,000 for a particular program).
- You don’t have to pay tax on these withdrawals but you will have to pay the funds back to your RRSP over a 10-year period.
- Canada Student Loans are offered through the federal government based on assessed financial need.
- Provincial and territorial loans are also available, and are integrated with the federal loan in British Columbia, Saskatchewan, Ontario, New Brunswick and Newfoundland.
- These student loans are interest-free until you graduate. You can defer interest payments until six months after you finish.
Lines of credit
- Medical students and residents can usually borrow up to $275,000 in a line of credit from a major financial institution.
- Interest costs start accruing right away, but you can defer interest and capital payments until 12 months after you finish residency.
WHAT TO DO WITH EXCESS FUNDS
If you find you have excess funds that you don’t need, investing in a tax-free savings account gives you more options than a regular savings accounts.
- You can invest in anything that’s eligible in an RRSP: GICs, stocks, bonds, mutual funds
- Contribute up to $6,000 a year (unused contribution room can be carried forward)
- Investments grow tax-free
- Withdrawals are tax-free
Your MD Advisor can review the options available to you and help you determine the best path for your individual situation—no matter where you stand.
1MD Physician Loyalty Survey, December 2015 and June 2016 (combined)