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For many physicians in training, a resident’s stipend is not enough to make ends meet. For this reason, there are loans designed for doctors during their residency years. Let’s look at the details.

What extra costs are associated with residency?

When you enter into the match process, you’ll incur costs. Travel, lodging, food — it all adds up. And once you do match, you’ll likely have some relocation costs.

Even if you stay put, your living situation usually changes compared to your med school days. Don’t forget board exam fees and study courses. Finally, you may have to buy textbooks or special instruments associated with your chosen specialty.

What types of loans are available?

Loans taken out to cover medical residency costs are made by private lenders. The loans are designed specifically for new physicians about to begin their residency. These loans differ from federal student loans.

Who are the major lenders?

Some well-known lenders making loans to medical residents are:

Sallie Mae

Discover

PNC Bank

Wells Fargo

How soon can I apply?

Many plans allow you to apply for a medical residency loan up to 12 months before graduating medical school.

What are the eligibility requirements?

Most lenders require that you be a U.S. citizen or permanent resident. You must also be currently enrolled in your last year of medical school. Some lenders allow you to borrow up to 12 months before your med school graduation. Borrower credit rating also helps determine loan eligibility.

Is there are application fee?

Nearly all lenders for medical residency loans do not charge an application fee.

How much can I borrow?

While it’s best to borrow only as much as you need, most lenders provide loan maximums between $15,000 to $18,000. Sallie Mae allows you to borrow up to $20,000.

What are interest rates?

Interest rates vary among lenders. Typical variable interest rates range from 3.43 percent APR to 10.46 percent APR. Fixed rate loans can be anywhere between 6.23 percent APR and 12.99 percent APR. Wells Fargo offers fixed interest rates range from 9.30 percent APR to 9.53 percent APR.

When and how do I receive the funds?

Once your loan application is processed and approved, the funds are typically available within one business week. Your loan can be deposited, in full, directly into your bank account.

What are the repayment terms?

You can find repayment terms ranging from 15 to 20 years on medical resident loans. You can certainly pay back the loan sooner, but be sure to check about any prepayment fees.

What about loan deferment?

Many loans come with a deferment or grace period. For example, Discover allows for a 9-month grace period starting with graduation. If you enroll in an internship and residency, you can also qualify for a 5-year loan deferment.

Are there any discounts available?

For most lenders, a discount of 0.25 percent to 0.50 percent is available for borrowers who pay with direct debit. PNC Bank offers a 0.50 percent discount if you use automated payments.

Conclusion

If you are in your final year of medical school or starting your residency, consider a loan to cover costs associated with internship and residency.

Vincent Chough is a writer who earned his medical degree from the University of Pittsburgh School of Medicine and practiced in the U.S. for 10 years. He now lives in Argentina, where he’s involved in NGO management at the executive level.