At $183,000, the average amount of student loan debt for a new doctor seems like a lot at first. That’s until you consider the amount of education they need from start to finish.
First, there’s the 4-year bachelor’s degree you need to earn to be admitted into medical school. Then, another four years in medical school, followed by a residency program.
What is a medical residency?
Medical residencies typically span three to seven years. And it’s during their residency that newly-minted doctors practice in a supervised setting in a hospital or clinic.
Resident physicians are paid a modest salary to start, about $40,000 to $50,000 per year on average. Typically this is enough to cover living expenses for new doctors. Or, even perhaps let them get a head start on repaying student loans.
But even before they begin a paid residency, fourth-year med school students need to go through the steps of finding one.
Unfortunately, paying for travel and interview expenses, board examination fees, or relocation costs after acceptance can be difficult to shoulder on a student budget.
That’s where a residency relocation loan comes into play. A residency relocation loan can ultimately help new doctors finance some of these costs that their federal loans may not cover.
However, there are some things to keep in mind before applying for one. Especially since residency relocation loans are a bit different than student loans.
What is a residency relocation loan?
1. It’s a private financial alternative
First off, a residency relocation loan is private, not federal. If you relied on federal loans during pre-med and medical school, Stafford loans aren’t available to pay for your residency search expenses.
Residency relocation loans are alternative loans between you and a private financial institution. And like other private loans, the rates and fees you pay are variable. Ultimately, these depend on your creditworthiness or that of your cosigner.
Keep in mind different lenders carry different terms. That’s why shopping around for the right residency relocation loan is important. So is determining what your possible expenses may be before you apply for one.
2. Could potentially offset your costs
According to the Association of American Medical Colleges, residency program application fees are based on the number of programs you submit per specialty.
For 2017, fees for the Electronic Residency Application Service are:
- $115 for up to 10 applications
- $11 each for applications 11 to 20
- $15 each for applications 21 to 30
- $26 each for 31 or more applications.
Based on these current rates, it would cost you $531 to apply to three dozen hospital residency programs. And in the end, if admitted, you only get to select and attend one program.
The AAMC also notes that transcripts per each application — for both the United States Medical Licensing Examination and the Comprehensive Osteopathic Medical Licensing Examination of the United States — cost $80. That’s a grand total of $2,880 for 36 residency applications.
Then there are travel costs. These can vary according to the airline you choose, your lodgings, and the destination you’re flying to. If you’re applying to residencies across several states, the costs can add up quick.
Plus, if you are admitted to a residency, you will most likely need to relocate as well.
Dr. Steve Christiansen, M.D., writes on his blog that his total expenses for 24 residency applications totaled over $9,600. 80 percent of that included expenses for traveling cross-country for interviews.
A residency relocation loan can offset these expenses greatly.
3. Many lenders offer a residency relocation loan
Some of the top providers of residency loans offer different terms and conditions.
Consider some of these picks as part of your search. Each one can be applied for online.
Discover Residency Loan
Discover’s medical residency loan starts at $1,000 with an $18,000 loan limit for borrowers practicing in Allopathy, Dentistry, Optometry, Osteopathy, Pharmacy, Podiatry and Veterinary Medicine.
Applicants can choose between fixed or variable APR loans and receive a 0.25% discount for auto payments.
The biggest selling point of Discover’s residency loan is its lack of application, origination, or late fees for the life of the loan.
Sallie Mae Medical Residency and Relocation Loan
Borrowers looking for a slightly higher loan limit may want to apply with Sallie Mae.
Their residency and relocation loan maxes out at $20,000, with variable interest rates ranging between 3.58% APR to 9.97% APR.
They also offer a special deferment option that allows borrowers to holds off on payments while in school, and for three years after graduating.
Sallie Mae also offers a similar loan for resident dental students.
Wells Fargo MedCAP-XTRA Loan
For allopathic or osteopathic medical and dentistry students, Wells Fargo’s MedCAP-XTRA loan has a total aggregate loan limit of $250,000. Or, $180,000 for students in all other disciplines
Additional loan limits include $12,500 for medical boards and clinical exams, $15,000 for residency interview and relocation expenses, and $5,000 for internship expenses. These limits can help prevent students from borrowing too much.
The MedCAP-XTRA loan allows students not to make payments until six months after leaving school. Or, up to 60 months for M.D. and D.O. students. There are no fees, and a choice of fixed or variable interest rates.
PNC Solution Loan for Health Professions Residency
This loan from PNC Bank has a $15,000 loan limit for expenses related to finding a medical residency, including interview, relocation and living costs.
It also has a 15-year repayment option and deferment for four years — during a borrower’s residency — as well as up to six months after residency completion.
With no fees of any kind, PNC’s Solution Loan also carries an interest rate discount of 0.5 percent when you set up automatic payments through your checking or savings account.
Why consider a residency relocation loan?
Although residency application and transcript fees may be fixed, there are ways to minimize your costs. When applying for residency relocation loans, avoid borrowing more than you need by getting a fix on your costs from the beginning.
Ultimately, a residency relocation loan can alleviate some of your financial stress during your residency search process. However, be sure to read your loan terms thoroughly and have a good handle on your financial situation before signing up for one.
Interested in a personal loan?
Here are the top personal loan lenders of 2019!| Lender | APR Range | Loan Amount | |
|---|---|---|---|
1 Includes AutoPay discount. Important Disclosures for SoFi. SoFi Disclosures
2 Includes AutoPay discount. Important Disclosures for Payoff. Payoff Disclosures
3 Important Disclosures for FreedomPlus. FreedomPlus Disclosures
4 Important Disclosures for Citizens Bank. Citizens Bank Disclosures
5 Important Disclosures for LendingPoint. LendingPoint Disclosures
6 Important Disclosures for LendingClub. LendingClub DisclosuresAll loans made by WebBank, Member FDIC. Your actual rate depends upon credit score, loan amount, loan term, and credit usage & history. The APR ranges from 6.95% to 35.89%*. The origination fee ranges from 1% to 6% of the original principal balance and is deducted from your loan proceeds. For example, you could receive a loan of $6,000 with an interest rate of 7.99% and a 5.00% origination fee of $300 for an APR of 11.51%. In this example, you will receive $5,700 and will make 36 monthly payments of $187.99. The total amount repayable will be $6,767.64. Your APR will be determined based on your credit at the time of application. The average origination fee is 5.49% as of Q1 2017. In Georgia, the minimum loan amount is $3,025. In Massachusetts, the minimum loan amount is $6,025 if your APR is greater than 12%. There is no down payment and there is never a prepayment penalty. Closing of your loan is contingent upon your agreement of all the required agreements and disclosures on the www.lendingclub.com website. All loans via LendingClub have a minimum repayment term of 36 months. Borrower must be a U.S. citizen, permanent resident or be in the United States on a valid long term visa and at least 18 years old. Valid bank account and Social Security number are required. Equal Housing Lender. All loans are subject to credit approval. LendingClub’s physical address is: LendingClub, 71 Stevenson Street, Suite 1000, San Francisco, CA 94105. †Per reviews collected and authenticated by Bazaarvoice in compliance with the Bazaarvoice Authentication Requirements, supported by anti-fraud technology and human analysis. All reviews can be reviewed at reviews.lendingclub.com **Based on approximately 60% of borrowers who received offers through LendingClub’s marketing partners between January 1, 2018 to July 20,2018. The time it will take to fund your loan may vary. 7 Important Disclosures for Earnest. Earnest Disclosures
8 Important Disclosures for Avant. Avant Disclosures* The actual rate and loan amount that a customer qualifies for may vary based on credit determination and other factors. Funds are generally deposited via ACH for delivery next business day if approved by 4:30pm CT Monday-Friday. Avant branded credit products are issued by WebBank, member FDIC. ** Example: A $5,700 loan with an administration fee of 4.75% and an amount financed of $5,429.25, repayable in 36 monthly installments, would have an APR of 29.95% and monthly payments of $230.33 * Important Disclosures for Upgrade Bank. Upgrade Bank Disclosures* Your loan terms are not guaranteed and are subject to our verification and review process. You may be asked to provide additional documents to enable us to verify your income and your identity. This rate includes an Autopay APR reduction of 0.5%. By enrolling in Autopay your payments will be automatically deducted from you bank account. Selecting Autopay is optional. Annual Percentage Rate is inclusive of a loan origination fee, which is deducted from the loan proceeds. Late payments or subsequent charges and fees may increase the cost of your fixed rate loan. All loans made by WebBank, member FDIC. Please refer to Upgrade’s Terms of Use and Borrower Agreement for all terms, conditions and requirements. ** Accept your loan offer and your funds will be sent to your bank via ACH within one (1) business day of clearing necessary verifications. Availability of the funds is dependent on how quickly your bank processes this transaction. From the time of approval, funds should be available within four (4) business days. |
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 | 7.73% – 29.99% | $1,000 - $50,000 | |
 | 6.26% – 14.87%1 | $5,000 - $100,000 | |
 | 7.99% – 35.89%* | $1,000 - $50,000 | |
 | 5.99% – 24.99%2 | $5,000 - $35,000 | |
 | 4.99% – 29.99%3 | $10,000 - $35,000 | |
 | 5.99% – 18.99%4 | $5,000 - $50,000 | |
 | 15.49% – 34.49%5 | $2,000 - $25,000 | |
 | 6.95% – 35.89%6 | $1,000 - $40,000 | |
 | 6.99% – 18.24%7 | $5,000 - $75,000 | |
 | 9.95% – 35.99%8 | $2,000 - $35,000 | |