The Benefits and Risks of a Medical Residency Loan

Most medical residency loans cover unique costs of transitioning from a student to resident not covered by traditional student loans. For example, student loans typically cover the cost of medical school. However, making the transition into residency requires time and expenses in taking a board exam, participating in residency interviews and even relocating to a new location for residency. A medical residency loan can meet these needs at a time when salaries are very low and money is short.

Cover Board Exam Expenses

The medical board exam costs over $1,000 just for registration. Since the exam is only administered in regional centers, you will likely have to travel in order to sit for the exam. Studying for the exam also costs time and money, including the cost of books and classes. Most students will choose not to work while studying for the exams full time, meaning there is not a salary coming in the door. Medical residency loans can help in this period of time when student loans are no longer applicable, but a resident's salary has not yet been secured.

Receive Funds for Interview Expenses

Once you have taken the boards, it will be time to interview for placement at a number of residency programs. You do not have the ultimate say in where you will attend school; you will have to match with a program that additionally is interested in you. As such, most resident applicants will travel to 5 or more interviews in order to receive the best chance of matching. Traveling to the interviews, dressing appropriately, and covering the cost of food and other expenses while away from home can be very costly. Residency loans can start early enough to cover these expenses for you, eliminating additional stress.

Gain Relocation and Living Assistance

Once you match your residency program, you may need to move to a new city or state. Residency loans can cover the cost of relocation. Since residency programs are very low paying, particularly in the beginning, the loans can additionally help cover living expenses in the short-run. You will have the chance to pay for certain restricted expenses, such as groceries and utilities. Most medical residency loans will not cover the cost of entertainment.

Beware of Long Loan Periods and Too Much Debt

Ultimately, there are few drawbacks to medical student loans beyond the actual burden of repaying the debts. Medical doctors are low risk borrowers because they have stable careers and solid job security. Most lenders willingly extend the loans, and they will even allow residents to suspend payments for long periods of time. While many take advantage of this option, they may end up in debt far into their adult lives. Adding medical residency loans to loans for undergraduate school, medical school and living expenses for 10 or more years can lead to a heft sum of money owed back to various lenders. This debt can significantly reduce the profitability of a medical career if not repaid as promptly as possible, and at the lowest rate possible.


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