Managing Credit

Physician Loans: The Financial Option Prescribed for New Physicians

Young physician at work, smiling at her colleague
 

Having an “MD” or “DDS” behind your name may provide an above-average salary, but those degrees often come with high student loan balances and lower starting salaries while in training and residency.  

Physician loans—personal, unsecured loans designed specifically for doctors in practice and doctors in training—can help medical professionals maintain control of their finances as their careers begin to take off.

The debt/salary gap most new physicians face

In 2017 the average med-school graduate with debt entered the workforce owing about $191,000. And while nearly one-quarter of residents are fortunate enough to have no med school debt at all, nearly half face more than $200,000.1

Medical School Debt Chart
 

Couple this with the fact that recent grads are likely to make less than $60,000 per year throughout most of their residency (which can last up to eight years).1, 2

“It’s not uncommon for residents to work 80 hours a week, meaning late nights and early mornings. It’s a very stressful time,” notes Kyle Stapleton, physician lending product manager for SunTrust Bank. “So when you start doing the math, it’s not that much money for the amount of work they’re doing. Flexible lending solutions designed for the transition to practicing physician can help alleviate some of their financial stress.”

Salary by Residency Year
 

How physician loans can help - the 7 things you need to know

1. Who’s eligible?

Typically, physician loans and lines of credit are available to doctors in training and doctors in practice. “The unemployment rate for physicians is exceptionally low, says Stapleton. "That makes doctors strong candidates for loans. When you leave med school, when you finish your residency, you are going to find a job.”

  • Doctors in training: Residents, Fellows and 4th-year medical students who have already received their residency match
  • Doctors in practice: Doctors of Osteopathic Medicine, Medical Doctors, Doctors of Podiatry, Doctors of Dental Surgery and Doctors of Medicine in Dentistry

2. What can the funds be used for?

These are personal loans and the funds can be used for personal expenses. Most frequent uses include living and/or moving expenses, debt repayment and/or debt consolidation and other day-to-day or unexpected expenses. Generally, the funds from a physician loan or physician line of credit cannot be used to consolidate private or federal educational loan debt.

3. How are loans structured?

Depending on career stage, choices may include a physician loan that provides a lump sum amount with fixed repayment terms, or a physician line of credit that provides flexible access to funds as needed for a set period of time.

4. What’s the borrowing limit?

Loan and line limits vary by lender and may be structured according to level of training and state of residence, as well as applicant creditworthiness. In general, these unsecured loans and lines offer a maximum amount of $100,000.

5. What about fees?

Many lenders offer loans and lines with no application or origination fees. And most physician loans allow for early repayment with no pre-payment penalty. This is great news for physicians who are able to repay the loan earlier than expected. 

6. What does the repayment schedule look like?

Traditional loans typically have terms of about a decade, while the repayment terms for lines of credit tend to be shorter.

Depending on where you are in your career—and where your credit score stands—an interest-only repayment plan may be an option. “The interest-only option allows a lot of financial flexibility residents might not ordinarily have, which is why this period is so important,” notes Stapleton.

7. What can I expect when applying for a physician loan?

The loan application process is similar to most unsecured loans. The lender will review your assets, credit history and debt before making a decision. Some lenders may also consider your level of training, as well as other factors like earning potential. Depending on how complex your financial situation is, the process could take just a few days or several weeks.

Note: Loan qualifications and terms may differ by lender. Be sure to consult with your financial advisor before applying for a physician loan. 

Deciding to pursue a career in medicine is a life-changing decision that, while rewarding, may also deprive you certain things (like sleep!). Make sure you take time to focus on yourself, and that includes your finances. Consider available lending options to ensure your financial confidence both now and for the many years ahead.

Get confidence when starting out.

See how physician loans can help you cover extra costs as you start your career. Talk to a SunTrust banker today, or apply over the phone at 800.241.6905.

1 “Medscape Residents Salary & Debt Report 2018,” July 18, 2018, Medscape

2 “Medical Student Education: Debt, Costs, and Loan Repayment Fact Card,” October 2017, Association of American Medical Colleges

This content does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.

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