The Wall Street Journal reported Thursday the move is a first among major U.S. medical schools.
Rising tuition and six-figure loans have been pushing new doctors into higher-paying fields and contributing to a shortage of researchers and primary care physicians.
The associate dean for admissions and financial aid, Dr. Rafael Rivera, says there's a "moral imperative" to reduce debt.
Tuition had been set at about $55,000 for the coming year.
Most medical students will still need to pay about $29,000 for annual room and board and other living expenses.
NYU estimates it will need about $600 million to fund the tuition package in perpetuity. It has raised more than $450 million.