Residency and Relocation Loans -- To Borrow or Not to Borrow

Fourth-year medical students may encounter expenses not included in the standard student budget and may find it necessary to borrow additional funds through a residency and relocation loan.
If you are considering a residency and relocation loan to cover some of your additional expenses associated with the residency match (traveling for interviews, related meals, lodging) or relocation costs, it’s important to understand how these private loans differ from federal loans.

Itemize Anticipated Expenses in Your Last Year

Medical school may be coming to an end but there are still many additional expenses that pop up in your last year that are necessary, even required, to help you get ready for your residency.

Although you may have anticipated these additional expenses, do you have adequate funds to cover them?  Do you find yourself in the situation of needing some extra resources to help you get through your last year as you prepare for interviewing and relocating? It’s helpful to itemize your anticipated expenses to determine if your need for this loan is legitimate or if it’s just a “nice cushion to have.” One of the costliest mistakes medical students make is to borrow funds they don’t really need.

Residency and Relocation Loans are Private Loans

Residency and Relocation Loans are referred to as private (or alternative) loans; they are not federal student loans. Borrowing this type of loan is strictly between you (the borrower) and the lender. Your medical school’s financial aid office does not certify your eligibility for this loan; however, they may be asked to confirm your enrollment status.

The fees and interest rate you pay will be based on your credit-worthiness, or the creditworthiness of you and your co-signer.

Be discriminating when you choose these loans and compare all information before making a final decision to borrow. It’s important to know what you’re getting into – remember this is money that you will have to pay back, and typically, private loans may cost you more than other loans.

Evaluate the Following:

  • interest rates
  • maximum loan amount
  • processing time
  • disbursement dates
  • postponement of payment options
  • length of loan repayment
  • terms and conditions of the loan

Some Questions to Ask

Interest Rates, Fees, and Terms
  • How is the interest rate calculated?
  • Is it a fixed or variable rate loan?
  • What are the terms of the loan?
  • Does the Financial Aid Office have any additional information about these loans?
Loan Application Process
  • Is it an online application?
  • Is instant loan approval offered?
  • Is a co-signer required?
  • If a co-signer is needed, can the co-signer eventually be removed from the loan and what's the process for that?
Repaying Your Loan
  • When does repayment start?
  • Are deferment and forbearance options offered after graduation and during residency?
  • Are incentives offered for on-time or electronic payments?
Customer Service
  • Can I reach a live representative to discuss my loan during convenient hours?

Before borrowing a Residency and Relocation Loan, talk to your Financial Aid Administrator. You may have other options to consider before borrowing a private loan.


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