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 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 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. For more information about how private loans differ from federal loans, review the Federal vs. Private Education Loans fact sheet.

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 Before Borrowing

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 released 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?
  • Are there any pre-payment penalties?
Customer Service
  • Can I reach a live representative to discuss my loan during convenient hours?
  • Can I access my account online?

Before borrowing a Residency and Relocation Loan, talk to your Financial Aid Administrator (FAA). You may have other options available that you haven’t considered. Your FAA can help you evaluate your options so that you make the best decision for your financial needs.   

 

Search Financial Aid Resources

Find a complete list of all financial aid resources, services, and tools. 

MedLoans® Organizer and Calculator (MLOC)

The MedLoans® Organizer and Calculator was developed to assist medical students and residents with managing their education debt.

AAMC Financial Wellness

None
Access free financial calculators, articles, and videos to help you create a budget, track your spending, create financial goals, and enhance your financial knowledge about credit, financial planning, money management, and more!

Education Debt Manager (EDM) for Matriculating and Graduating Medical School Students

None
This comprehensive financial guide helps professionals at all levels of the medical education continuum navigate the complexities of financing medical school by borrowing wisely and repaying student loan debt responsibly.

Contact FIRST

655 K St., NW, Suite 100
Washington, D.C. 20001-12399