The Med School Money Map

A four-minute signature with a fifteen-year tail

In the week before orientation, you will sign a Master Promissory Note. The signature takes about four minutes. The terms follow you for ten to twenty-five years. For loans first disbursed in the 2026–27 year, a graduate Direct Unsubsidized loan carries a fixed 8.07% rate, and the meter starts the day the money moves: about $11 per day on your first $50,000, before you have attended a single lecture. By graduation, a student who borrows the federal maximum owes roughly $240,350 against $197,886 that actually arrived — $42,464 of interest and origination fees accumulated while studying. The map was also redrawn on July 1, 2026: the Grad PLUS program closed to new borrowers, and students entering professional school now face a $200,000 aggregate federal cap. Which side of that date you signed on determines which rules govern you. Most attendings still making payments at 38 are not paying for choices they made at 30. They are paying for signatures they gave at 23 without reading the map. This module is the map: the two loan types, the real accrual math, and the grace-period mechanics your servicer will assume you already know.

Direct Unsubsidized Loan

A federal loan for graduate and professional students that accrues interest from the day of disbursement; the government pays none of the interest at any point, including while you are in school.

Federal borrowing for medical school runs through two instruments, and one of them is being retired. For loans first disbursed between July 1, 2026 and June 30, 2027, the Direct Unsubsidized loan carries a fixed 8.07% rate with a 1.057% origination fee withheld from every disbursement. The Grad PLUS loan — 9.07% with a 4.228% fee — historically filled the gap up to full cost of attendance. The 2025 reconciliation law (Public Law 119-21) closed Grad PLUS to new borrowers as of July 1, 2026. If you were enrolled in your program by June 30, 2026 and had received a federal loan for it, you keep the old menu for the lesser of three academic years or your remaining time to completion. If you entered in fall 2026 or later, your federal map is smaller: $50,000 per year and $200,000 aggregate for professional school, inside a $257,500 lifetime cap across all your federal student loans. Every dollar of cost above that line must come from somewhere other than the federal government.

Why it matters: Which side of July 1, 2026 you fall on changes both your rates and your ceiling. A grandfathered borrower choosing between the two loan types saves one full percentage point of interest and 3.171 points of origination fee by exhausting Direct Unsubsidized before touching Grad PLUS. A new borrower has no second federal loan to reach for — the planning question becomes how to cover costs above $200,000 without it.

Four years of quiet accrual: $42,464 before your first paycheck

Your school's total cost of attendance across four years is $220,000. You enter in fall 2026 and borrow the new federal maximum for a professional student: $50,000 each year at 8.07%, reaching the $200,000 aggregate cap. The remaining $20,000 of cost must come from savings, family, institutional aid, or private debt — the federal map now stops at $200,000.

Bottom line: Four years of maximum federal borrowing turns $197,886 of delivered money into a $240,350 balance on graduation day — $42,464 of interest and fees accrued before your first residency paycheck.

Grace defers payments, not interest

The six months after graduation are described as breathing room, and for your checking account they are: no payment is due. For your balance, nothing pauses. The mechanics below are also where the most outdated advice circulates — the capitalization rules changed on July 1, 2023, and much of what older residents will tell you describes the previous regime. Tap each card.

Check the map before intern year

One question before the summary. The distinction it tests is the single most commonly misstated fact about post-graduation loan mechanics — including by people who graduated only a few years before you.

Your grace period begins the day you graduate. Which statement about those six months is accurate for a Direct Unsubsidized loan first disbursed in 2026?

1. Interest pauses until repayment begins, then resumes at the same rate
2. Interest accrues daily, and the accrued amount capitalizes into principal when the grace period ends
3. Interest accrues daily, and the accrued amount remains non-capitalized accrued interest when repayment begins — the answer
4. Payments are required during grace, but at a reduced interest-only amount

Grace defers payments, never accrual: $200,000 of unsubsidized principal at 8.07% adds about $44 per day through all six months. The second option was the rule before July 1, 2023 and is the answer most circulating advice still gives — but the Department of Education eliminated capitalization upon entering repayment. Your accrued interest remains a separate pool, and your payments are applied to outstanding interest before principal.

Know your loan file cold

• For loans first disbursed July 1, 2026 through June 30, 2027, graduate Direct Unsubsidized loans carry a fixed 8.07% rate with a 1.057% origination fee, and Grad PLUS carries 9.07% with a 4.228% fee.
• Grad PLUS closed to new borrowers on July 1, 2026 under Public Law 119-21; new professional students face a $50,000 annual and $200,000 aggregate federal cap, while grandfathered students keep the old menu for up to three academic years.
• Unsubsidized interest accrues daily from the day of disbursement — about $11 per day per $50,000 borrowed — so a maximum federal borrower graduates owing roughly $240,350 on $197,886 actually received.
• Since July 1, 2023, interest no longer capitalizes when your grace period ends; capitalization now occurs only at statutory events such as the end of a deferment on an unsubsidized loan, leaving Income-Based Repayment, or consolidation.

Do this next: Log in to studentaid.gov this week, open your full loan file, and write down every loan's type, current balance, interest rate, and disbursement date — you should be able to recite your loan mix cold before your first repayment decision.