The Health Education Assistance Loan (HEAL) program was created in 1978 to help medical students finance their degrees. The HEAL program insured loans made by participating lenders to help graduate students in various health care fields — including medicine, dentistry, and clinical psychology — cover the costs of their schooling.
HEAL loans are no longer available, as the federal government discontinued the program in 1998. However, there are other ways medical students can finance their degrees. In this guide, learn about options that can help borrowers cover the cost of medical school today as well as what you should know if you’re still paying off HEAL student loan debt from years ago.
Table of Contents
Key Points
• Medical school now costs a median of $297,745 for four years at public institutions and $408,150 at private schools. The average medical school debt of graduates is $246,659.
• The HEAL program began in 1978 to help medical students finance their degrees.
• HEAL loans typically had variable compounding interest rates and a repayment term of up to 33 years.
• The HEAL program ended in 1998, but borrowers are still responsible for repaying their outstanding loan debt.
• Current medical students can use federal Direct Loans, private student loans, and Health Resources and Services Administration (HRSA) loans to finance their education.
Overview of HEAL Student Loans
Getting a medical degree, which typically takes more than 10 years to complete, can be very expensive. Including undergraduate debt, the total average medical school debt of graduates is $246,659 according to the Education Data Initiative.
The cost of medical school continues to rise each year. For the class of 2026, the median cost of four years of attendance at a public school is $297,745, while attending a private school costs $408,150 according to the American Association of Medical Colleges.
Through the HEAL program, from 1978 to 1998, the U.S. Department of Health and Human Services insured loans lenders made to graduate students in the health care field to help them pay for medical school. The federal government insured these loans against loss due to borrowers’ death, disability, bankruptcy, or default. The purpose of the program was to ensure that funds would be available to future students who needed them.
Key Features of HEAL Student Loans
With HEAL loans, eligible students could borrow up to $80,000 to help pay their medical education costs. Interest accrued and compounded on the loans while the student was in school and during the nine-month grace period these loans allowed afterward.
HEAL loans typically had variable compounding interest rates, though lenders could offer fixed rates if they chose. With compounding interest, interest accrues on the loan balance, and future interest accrues on the new, higher balance.
Borrowers could take up to 33 years to repay their HEAL loans. Because of the long repayment term, HEAL borrowers may still be paying off their loans.
End of the HEAL Program and Current Status
The HEAL program ended on September 30, 1998. In 2014, the U.S. Department of Health and Human Services transferred outstanding HEAL loans to the Department of Education. Even though the program has ended, borrowers with outstanding HEAL loans must still repay them.
To simplify the payment process, borrowers with more than one HEAL loan can consider consolidating their loans into a federal Direct Consolidation loan. Through this process, you pay off your old loans with one new Direct Consolidation loan. Under the new loan, you have one monthly payment. You may also qualify for federal benefits, such as income-driven repayment.
If you’re struggling to make your HEAL payments, contact your student loan servicer. Defaulting on federal student loans has serious repercussions. A lender can send a borrower’s account to collections or take a borrower to court, among other consequences. Statute of limitation laws do not apply to HEAL loans, so theoretically, a lender can indefinitely pursue a borrower who is in default to try to collect on the loans.
If you’re currently in default on your HEAL loans, contact the Department of Education’s HEAL program team at [email protected].
HEAL Loans vs Current Federal Student Loans
While HEAL loans are no longer available, there are other types of student loans for health professionals, including federal student loans and private student loans.
Medical students can apply for federal financial aid by filling out the Free Application for Federal Student Aid®. Although graduate students are not eligible for Direct Subsidized Loans, they may qualify for other types of federal loans. They can also apply for private student loans. Here’s more information on each loan type.
Direct Unsubsidized Loans: With these federal loans, medical students can borrow money unsubsidized. This means the borrower is responsible for paying all of the interest on the loan. The interest begins accruing immediately and continues to accrue while they’re in school. Certain medical graduates may take out up to $40,500 per academic year in Direct Unsubsidized Loans, with an aggregate limit of up to $224,000.
Direct PLUS Loans: Often called a Grad PLUS Loan, the federal Direct PLUS Loan covers the difference between the cost of attending school and any other sources of funding, including Direct Unsubsidized Loans. Getting a Direct PLUS Loan requires a credit check. These loans are also unsubsidized, and they tend to have higher interest rates than Direct Unsubsidized Loans.
HRSA loans: The HRSA, an agency of the U.S. Department of Health and Human Services, offers loan programs to some schools. These institutions then offer several types of low-interest loans to qualifying students in need who are pursuing certain health care degrees. Check with your school to see if they offer HRSA loans and whether you are eligible.
Private student loans: Students can supplement federal student loans with private loans to help pay for medical school. These loans are available from banks, credit unions, and online lenders. Private loans may have fixed or variable interest rates, and your interest rate will depend in part on your credit history. If the rate you end up with is higher than you hoped for, you could refinance medical school loans later on if you can qualify for a lower rate or more favorable terms. You may pay more interest over the life of the loan if you refinance with an extended term.
Private loans typically don’t offer the same benefits as federal student loans, such as income-driven repayment plans and Public Service Loan Forgiveness. For that reason, students may wish to explore other forms of funding first.
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The Takeaway
The HEAL Program ended in 1998, but some medical professionals may still be repaying their HEAL loans. If you have outstanding HEAL loans, you might be able to consolidate them into a federal Direct Consolidation Loan and potentially qualify for an income-driven repayment plan, which could make repayment easier. Check with your loan servicer for more information.
Current medical students have a variety of funding options today that could help cover the cost of school, including federal loans and private loans. Explore the different alternatives to decide which type of financing is best for you, and remember that it’s possible to refinance federal and private student loans in the future once your medical career is underway.
Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.
FAQ
Can I still apply for a HEAL loan?
The Health Education Assistance Loan (HEAL) program ended in 1998, and these loans are no longer available. However, there are other federal student loans for medical students, including Direct Unsubsidized Loans, Direct PLUS Loans, and Health Resources and Services Administration (HRSA) loans. In addition, there are private student loans for those studying to become medical professionals.
Can you consolidate HEAL loans be consolidated with other student loans?
Yes, you can consolidate Health Education Assistance Loan (HEAL) program loans with other federal student loans, including Direct Unsubsidized Loans, Direct PLUS Loans, and Federal Family Education Loans (FFEL), into a Direct Consolidation Loan. This may allow you to take advantage of income-driven repayment plans and potentially qualify for student loan forgiveness.
What should I do if I’m struggling to repay my HEAL loan?
Contact your loan servicer right away if you’re having trouble repaying your Health Education Assistance Loan (HEAL). The servicer can explain your payment options. Whatever you do, avoid missing payments. If you default on HEAL loans, the consequences can be serious. Your lender can send your account to collections or take you to court, among other repercussions. If you’re already in default, contact the Department of Education’s HEAL program team at [email protected].
About the author
Melissa Brock
Melissa Brock is a higher education and personal finance expert with more than a decade of experience writing online content. She spent 12 years in college admission prior to switching to full-time freelance writing and editing. Read full bio.
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