Financially speaking, it is many years before you are able to earn money as a doctor. Some are lucky to have the help of their parents and relatives but not everyone is so fortunate. Therefore it is important to understand the financial aid available to you and methods of minimizing debt. 

If your parents have unusual circumstances which change their finances (i.e. medical expenses, private tuition fees, more siblings attending college, impending job loss, and increase in capital gains) it is in your best interest to write a "Professional Judgment Review" to the head of the financial aid office. This letter would request your profile to be reassessed for financial aid with the college.

Another issue to improve your financial situation is to establish state residency in a state with many public schools. This can be particularly helpful when you apply to medical school because not only will you get reduced tuition but you will have a better chance of getting into a state medical school than a private school. On the flip side, some states have many state applicants, such as New York, even though they have many state medical schools. Also, it can take an extra year to create residency in a state before you will be able to apply to school.  It may not seem worth the effort after all the work is done. Take home message: 1) Contact individual schools about their residency requirements because they vary from school to school. 2) Look at the number of applicants to public schools in your state of interest.

• Free Application for Federal Student Aid (FAFSA) application: 
  1) Need to be a US Citizen
  2) The application will ask for income and asset from parent and student, number of siblings in college etc.. to compute EFC (expected family contribution). The EFC doesn't take allowance for auto loans and credit card debt. To increase financial aid, the student's financial assets should be kept to a minimum.
  3)Complete each question or put "0" otherwise it may take longer to process your application. Use legal name on social security card when completing application.
  4) If you have credit card debt, it could limit your aid so try to reduce it as much as possible.
  5) Reduce financial assets by paying debt. Savings will work against an applicant.
  6) To be given independent status the student should contact the individual school. Some schools will require you to be independent of your parents household for seven years before they consider you an independent.

• College/University Financial Aid
  1) Some private schools obtain a financial aid profile of each student from the College Board. Unlike FAFSA, the school profile takes into account parent's equity and sibling income could be included.
  2) Do not need to be a US Citizen to be eligible for college aid.

529 Plans

Parents, grandparents should consider opening up a 529 Savings Plan which provides money towards school and board expenses. Even a student can open a 529 savings plans for themselves. If the 529 plan is under the parents, the parents can control the use of the savings and withdraw money for educational purposes federal tax free. A beneficiary doesn't need to be designated at the time of opening the plan.  18 states offer state prepaid 529 programs. The details of the programs vary from state to state so it is important to inquire with individual programs. Some states are closing their programs to new investors due to increased tuition and low investment returns. 
 
Three Types of 529 Plans

• State Sponsored Programs (prepaid) (Applicable to medical school tuition)
  -reduces eligibility for financial aid
  -return based on performance on investment
  -assume you are going to an state university
  -paying for college education at today's prices, freedom from tuition inflation
  -cover books, board, and supplies for undergraduate and graduate school
  
• State Sponsored Savings Programs
  -considered a parental asset, so does not reduce eligibility for financial aid
  -investment risks, subject to market forces
  -grows tax free
  -can go to any college (private or state school).
  
• Independent 529 Plan
  -no investment risk, certificate compounds every year
  -no fees
  -freedom from tuition inflation,  future tuition at a proportion of percentage purchased
  -grows tax free
  -schools offer a median discount of 1% off tuition
  -if not accepted into a private school then investment can be rolled over into a state plan but the return cannot exceed 2%/year
  -includes the following undergraduate private schools and covers tuition costs only/mandatory fees. Includes reputable schools such as University of Chicago, Princeton University and Washington University, St. Louis

Financial Stability

Many students graduate from school with little or no knowledge of handling their financial assets. It is in your best interest to learn about budgeting and investments now. If you have the ability to work in addition to going to school, consider investing in a retirement account, such as a Roth IRA, which allows you to increase your money with compound investing.  Make it a priority to stay abreast of the financial news and market information by viewing Current Events and Financial News.

Tips for Financial Stability:

1. Set a monthly budget.
2. Remove your land telephone line and keep only a cell phone with earpiece.
3. Stay away from credit cards. Only use credit cards in emergency situations. If you must use them, pay the entire balance every month. Unfortunately, graduating college and graduate students are increasingly filing for bankruptcy due to credit card debt.
4. Do not pay ATM fees. Each bank has an ATM machine. If you must withdraw money, use your own bank.
5. Consider becoming a resident advisor or getting a work-study job while in college. 
6. Apply for scholarships. Refer to the Scholarship section for more specific information.
7. Set money aside for retirement.

Financial Aid Resources:
The Right Price: How to Pay for Medical School and Feel Good About It (book)

FastWeb
FinAid
GrantsNet
The Smart Student Guide to Financial Aid
Sallie Mae
Federal Student Aid on the Web
National Health Service Corps
AAMC-Financing Your Medical Education

Related books on this topic: