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How to get a medical residency relocation student loan

Are you worried about affording the move to your residency program? A medical relocation loan could help. (iStock)

When you’ve closed your last textbook, and you’re preparing to start your residency, don’t be surprised when unexpected expenses add up. Between traveling for residencies, taking review courses, paying for your boards, and finding a new place to live, the money can add up quickly.

If you’re struggling to cover all your expenses, you may be able to get help with a medical residency relocation loan. A medical residency relocation loan helps fourth-year medical students afford small costs to get them to their residency.

What is a residency loan?

A residency loan is not a federal loan. Unlike federal loans, this type of student loan does not have to be approved by your school’s financial aid office, according to Johns Hopkins School of Medicine. Federal loans typically offer lower interest rates than private loans. Additionally, federal student loans offer income-based repayment options and could potentially be forgiven, if you qualify.


Medical students who opt to apply for this loan can use the funds to pay for things that your federal student loan won’t cover, like moving expenses, travel, and deposits on a new apartment near your residency.

How does a residency relocation loan work?

If you decide to apply for a medical residency relocation loan, you’ll want to do some homework to make sure you get a fair deal. Residency loan terms vary based on the lender you choose. Still, many of these loans offer a grace period where they don’t charge interest or a set repayment period, which allows you to begin making payments once you complete your residency.

The funds used from this type of loan must be used for expenses related to post-medical school only.


Costs of the loan

The best residency student loans offer interest rates between 4.91 percent and 12 percent. While that’s a wide range, terms for this type of loan can vary based on your credit history and the lender you choose. Many lenders offer a medical residency relocation loan with no fees, so make sure to ask if any additional costs (like early repayment or a loan origination fee) apply.

Borrowing limits

Most medical residency relocation loans are small (as little as $1,000) due to the specific nature of the funding. This number will vary depending on the lender you use, though. Sallie Mae offers loans up to $30,000, while Discover offers various loan amounts (up to $18,000) depending on your medical profession.


Repayment options

As with most loans, interest kicks in as soon as you accept the credit. However, student loans often qualify for interest deferment or payment deferment. Deferment means that medical students active in a residency program may be able to defer their payments and the accrual of interest up to 9 months after they complete their program. Alternatively, students can make interest-only payments while in school or a fixed-payment each month to help lower the amount they owe.

When it’s time to repay your loan, talk to your lender about reducing your interest rate. Some lenders will reduce your interest rate by 0.25 percent or more if you opt for autopay. The typical student loan has a repayment period of 20 years, but smaller loans may have shorter repayment terms.

How do you get a residency loan?

When you’re ready to move forward in your search for a relocation loan, here are a few things you’ll need to do:

Make sure you qualify: Qualifying students must be 180 days or less from graduation (before or after), and you must have a good credit score. If you’re concerned about your credit score, you may be able to qualify with a cosigner.HOW TO RECERTIFY YOUR STUDENT LOAN INCOME-DRIVEN REPAYMENT PLAN?

Research your options: Review your lender options. Sallie Mae is a popular option due to its longer repayment terms and lower interest rates. However, they offer variable interest rates, which means it can go up or down during your repayment period. You may be able to get similar repayment terms with a fixed interest rate, with a little extra research. Talk with each lender about any fees, restrictions, and repayment terms before you decide.

Apply: You can apply to most lenders online. Once you’ve submitted your application, the lender will reach out for more information. They may ask for additional documentation and/or speak to your school to ensure you meet lending requirements.

Don’t hesitate to use a loan comparison tool to compare rates before narrowing down your choices. A little time researching could save you a lot of money.

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