3 Reasons a Residency Relocation Loan Could Help New Doctors

residency relocation loan

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 2018!
LenderRates (APR)Loan Amount 
1 Includes AutoPay discount. Important Disclosures for SoFi.

SoFi Disclosures

  1. Terms and Conditions Apply: SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi’s underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Finance Lender Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (www.nmlsconsumeraccess.org)
  2. Personal Loans: Fixed rates from 5.49% APR to 14.24% APR (with AutoPay). Variable rates from 5.29% APR to 11.44% APR (with AutoPay). SoFi rate ranges are current as of December 1, 2017 and are subject to change without notice. Not all rates and amounts available in all states. See Personal Loan eligibility details. Not all applicants qualify for the lowest rate. If approved for a loan, to qualify for the lowest rate, you must have a responsible financial history and meet other conditions. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your credit worthiness, years of professional experience, income and other factors. Interest rates on variable rate loans are capped at 14.95%. Lowest variable rate of 5.29% APR assumes current 1-month LIBOR rate of 1.34% plus 4.20% margin minus 0.25% AutoPay discount. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account.

2 Important Disclosures for Citizens Bank.

Citizens Bank Disclosures

  1. Personal Loan Rate Disclosure: Fixed interest rates range from 5.99% – 16.24% (5.99% – 16.24% APR) based on applicable terms and presence of a co-applicant. Lowest rates shown are for eligible applicants, require a 3-year repayment term, and include our Loyalty and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.
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  3. Automatic Payment Benefit: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their Citizens Bank Personal Loan during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account two or more times within any 12-month period, the borrower will no longer be eligible for this discount.
7.39% - 29.99%$1,000 - $50,000Visit Upstart
5.29% - 14.24%1$5,000 - $100,000Visit SoFi
8.00% - 25.00%$5,000 - $35,000Visit Payoff
5.99% - 16.24%2$5,000 - $50,000Visit Citizens
5.99% - 35.89%$1,000 - $40,000Visit LendingClub
5.25% - 14.24%$2,000 - $50,000Visit Earnest
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