4 Top Medical Residency and Relocation Loan Options

Most aspiring physicians begin their educational journey knowing full well that medical school will be expensive. But what some medical students might not realize is that the costs of becoming a doctor don’t end at graduation.

Medical school grads have to complete residencies, which often means moving to a different city or state. There are also costs related to preparing for and taking board certification exams. A study published in JAMA found the mean initial exam fee was $1,863, with oral certification and subspecialty exam fees at an additional $1,695 and $2,104.

To make matters worse, residents are forced to cover these costs while earning salaries far below their attending salaries. And since resident physicians aren’t enrolled in a degree program, they can no longer supplement those salaries with student loan funding, such as federal student loans.

But alternative funding in the form of medical residency and relocation loan options from private lenders might be available. Below, we explain how medical residency relocation loans work and where you can find them.

What are medical residency and relocation loans?

Medical residency and relocation loans are meant to help cover costs that a healthcare professional might need to pay after graduating from medical school but before becoming board-certified. Examples include relocating for a residency or internship, board certification and clinical exams.

The money from a medical residency relocation loan goes straight to the borrower. This is different from student loans which have a disbursement to academic institutions to cover the cost of attendance. Technically, residents can spend residency loan funds however they choose, which makes them a bit riskier for the lender.

As Travis Hornsby, founder of Student Loan Planner® explained, “It's more like a personal loan from a credit standpoint.” For this reason, residency and relocation loans might have higher interest rates than private student loans and student loan refinancing. They also generally have significantly lower loan limits.

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Medical residency and relocation loans vs. personal loans

Although medical residency and relocation loans are similar to personal loans, there are a few key differences. First, personal loans are open to more borrowers, as any creditworthy borrower can apply. To qualify for a resident loan, however, you’ll need to provide proof of residency or internship (such as a match letter).

But stricter eligibility criteria also means that residency relocation loans might offer better interest rates and loan terms. Hornsby said, “Lenders give lower rates to residents and fellows because they're a lower risk.” Additionally, many of these loans offer borrowers lower payments or even full loan deferment during their residency period.

Finally, personal loans tend to offer higher maximum borrowing caps than medical residency loans. Although residency loan limits generally range between $15,000 to $45,000,  a loan program that offers personal loans might offer up to $100,000 of funding.

4 lenders offering medical residency and relocation loans

Below is a breakdown of some of the best medical residency and relocation loans from private lenders.

1. Sallie Mae

Sallie Mae’s student loan product line includes a variety of undergraduate, graduate and parent loans. But eligible borrowers can also apply for the Sallie Mae Medical Residency and Relocation Loan. Students can apply for this loan during their final year of medical or veterinary school or within 12 months after graduating. Here are the loan’s key details:

• Rate type: Variable and fixed
• Terms: 20 years
• Minimum loan amount: $1,000
• Maximum loan amount: $30,000
• Cosigners allowed: Yes
• Origination fee: None
• Prepayment penalty: None

Monthly payments aren’t required on the Sallie Mae medical residency relocation loan until three years after graduation or nine months after leaving school. Other benefits include a 0.25% autopay discount and the ability to apply for cosigner release after just 12 on-time principal and interest payments.

2. Citizens

In addition to private student loans and student loan refinancing, Citizens offers a Medical Residency Loan. You can apply for this loan if you’ve graduated from a qualifying medical school program within the last 12 months or are at least in your second year of studies.

Furthermore, you must plan to work in one of the following residency or internship programs after graduating from medical school: MD, DMD, DDS, OD, DO, PharmD, DPM or DVM. If you meet these requirements, here’s what you need to know about the loan:

• Rate type: Variable and fixed
• Terms: 5 or 10 years
• Minimum loan amount: $1,000
• Maximum loan amount: $20,000
• Cosigners allowed: Yes
• Origination fee: None
• Prepayment penalty: None

One of the most unique features of the Citizens Medical Residency Loan is that it offers multi-year approval. That way, you can know after filling out just one application how much funding you’re eligible to receive through each year of residency.

In addition to interest-only and fixed loan payments, Medical Residency Loan borrowers can fully defer payments for up to 48 months after medical school graduation. It also offers combined loyalty and autopay discounts of up to 0.50%.

3. PNC

PNC can offer up to $15,000 of funding to medical residents through its PNC Solution Loan for Health Professions Residency. To qualify for this loan, you must be currently participating in a PNC-approved MD, DDS, DO or DVM residency program or planning to begin one within a year. Here are key details of the loan:

• Rate type: Variable and fixed
• Terms: 5, 10, or 15 years
• Minimum loan amount: $1,000
• Maximum loan amount: $15,000
• Cosigners allowed: Yes
• Origination fee: None
• Prepayment penalty: None

Payments on this PNC Solution Loan® can be deferred during residency for up to four years or six months after your residency ends. Repayment options like interest-only payments during residency are also allowed.

Other benefits of this loan from PNC include a hefty 0.50% interest rate discount for automatic payments through your bank account and a cosigner release option after 48 consecutive on-time payments.

4. Laurel Road

Laurel Road’s focus on healthcare professionals makes it a must-check for student loan refinancing if you’re a medical professional. It also offers personal loans that are tailored specifically to medical residents. Here are the loan’s key terms and benefits:

• Rate type: Fixed
• Terms: 5 or 7 years
• Minimum loan amount: $5,000
• Maximum loan amount: $45,000
• Cosigners allowed: Yes
• Origination fee: None
• Prepayment penalty: None

Of all the loans on our list, Laurel Road’s personal loans for medical residents have the highest maximum borrowing amounts at $45,000. However, these loans also have the highest minimum loan amount of $5,000.

Laurel Road won’t be a good option if you’re looking for a long-term repayment. Its medical resident personal loans don’t offer terms longer than seven years. However, Laurel Road accepts reduced payments (as low as $25) during residency for up to 60 months. A 0.25% autopay discount is available as well. Learn more about Laurel Road.

Should you apply for a medical residency and relocation loan?

Residency and board certification requirements mean that most medical students will deal with expenses that aren’t eligible for financial aid. If you need help covering some of these expenses, applying for a medical residency and relocation loan could be worth it.

But since the funds from a residency loan go directly to you, avoid borrowing more than you need and stay disciplined with how you use funds. And as they're likely to have higher interest rates (you can get the best rates with a positive credit history) and fewer benefits than your in-school student loans, consider prioritizing their repayment once you start your medical practice. They are a better alternative to credit card debt and may have more loan repayment options.

Keep in mind that there are ways to reduce your expenses during residency without taking out new student debt, like joining an income-driven repayment (IDR) plan. But making the wrong choices could cost you thousands of dollars. Learn how to avoid the top mistakes doctors make in residency.