Harvard Medical School (HMS) announced Tuesday that its students will get bigger loans next year—which means that many doctors-to-be will be eligible for $2,500 less in scholarship aid.

For the first time in eight years, HMS will increase the amount of their “unit loan”—which includes federal and Harvard loans—from $20,000 to a fixed $22,500 for students who entered HMS before the announcement.

Next year’s incoming class will face an even higher loan amount of $23,000, which will also remain fixed until their graduation.

A student’s financial need must exceed the amount of the unit loan before the student is eligible for scholarship aid through Harvard.

As a result of the changes, which were announced in an e-mail sent Tuesday to all students enrolled at HMS, some students will no longer receive scholarship aid from the University.

The cost of attending HMS for each student is financed using three components: family contribution, unit loan, and scholarship aid.

Though the total amount of scholarship money awarded has increased since last year, a dramatic increase in financial need levels over the last two years and a considerable decrease in family resources—down 14 percent on average from last year to this year—sparked the increase in the portion of financial need met by loans, according to Mohan D. Boodram, HMS Director of Admissions and Financial Aid.

“When the unit loan stays flat, as it has for the last seven years, family contribution and the scholarship budget have to absorb any increases in overall costs,” Boodram wrote in an e-mail. “The unexpected surge in scholarship demand has made it impossible to sustain a $20,000 unit loan given available scholarship resources.”

This is the first time the unit loan has increased since 1995 when it reached $29,400, he wrote.

But financial aid officials at HMS insist that the change does not represent a decreased commitment to generous financial aid.

“Even with a unit loan increase, the HMS scholarship budget continues to experience unprecedented growth—well in excess of our tuition increases,” Boodram wrote.

Boodram also said that low interest rates should prevent students from accruing more debt than those students who faced lower unit loans with higher interest rates.

“Despite next year’s increase, with interest rates now at their lowest levels in years, many of our students will have the total loan repayment costs that are comparable to the costs experienced by recent alumni who borrowed smaller amounts at higher interest rates,” he wrote.

But some students are not convinced.

“Even if interest rates are lower than in the past, $2,500 more each year still makes a difference and will definitely decrease the overall satisfaction of most students,” HMS student Thomas Z. Kozhimannio said. “HMS already has a kind of bad rap about financial aid. The packages offered to students here generally aren’t as attractive as those offered by other schools to begin with.”

Despite his concerns, Kozhimannio said that the increase will probably not dissuade potential students to matriculate.

“If you can deal with $20,000, then you can deal with $23,000,” he said.

Boodram also said that the change will not make HMS less attractive to prospective students.

Even with the loan increase, he wrote, the average HMS graduating debt will remain below the 2002 national medical school average and the national private medical school average.

“It is also important to note that at most other medical schools, the bulk of the student debt is comprised of UNsubsidized [sic] student loans, which carry significantly higher repayment costs than the loan programs used to fund the HMS unit loan,” he wrote.

Approximately 70 percent of the HMS student body take out student loans to finance some portion of their medical school expenses. The 2002 average graduating debt was $88,000.

The unit loan generally includes up to three components: the Federal Direct Stafford Loan, the Federal Direct Unsubsidized Stafford Loan, and a campus-based loan. 

—Staff writer Ebonie D. Hazle can be reached at hazle@fas.harvard.edu.