Graduate school loans may help cover the cost of your education, but what about the living expenses you may incur while waiting to take a professional exam like the bar or while you’re serving a medical residency? Ancillary loans are a cousin of student loans that help students defray these costs.
Graduate school is expensive, with costs having increased nearly 35 percent over the past 10 years. However, getting a diploma may not be the end of the costs associated with your education. Some professions require graduates to take an extensive exam before being certified. This exam can take months to study for. Also, in the medical profession, students will have to spend time in residency before becoming a full doctor, and while they are paid at this time, their pay may not be sufficient to support themselves and handle graduate school loan repayments.
Here are a few of the types of ancillary loans available, and under what circumstances they may be necessary.
Bar Exam Loans: For aspiring attorneys, graduating law school isn’t the final step to their new career. New attorneys must pass the bar exam before they can begin work as a lawyer. The bar exam is an extremely difficult test, and takes months of preparation before most people can successfully take it. During the wait, law school graduates may run into tough financial times as they balance the demands of studying for the exam with supporting themselves. A bar exam loan can help take some of the burden off students, providing funds for the exam and for living expenses while they prepare.
There are a number of companies that provide bar exam loans, including Sallie Mae and Wells Fargo. Most bar loan programs do not require borrowers to have a prior borrowing history. The lenders will green light loans based on applicants’ creditworthiness and once the loan is approved a check will be sent from the lender to the borrower.
Amounts of bar exam loans vary, but most have a maximum between $10,000 and $15,000. Many also carry an origination fee of six percent or less.
Medical Residency Loans: After medical students graduate from med school, they’re required to complete an internship and residency before becoming full doctors. A residency may require the student to move to another area, a costly proposition for many recent college graduates. Medical residency loans can help. Primarily offered through private lenders, on average these loans have a maximum of $10,000 to $15,000 and can help with moving expenses and provide extra funds to residents, who aren’t paid as well as full doctors.
Dental Residency Loans — These loans are very much like medical residency loans. Before becoming full dentists, prospective dentists must complete a residency with a dentist. Like medical residencies, these residencies are not often highly paid, making additional income necessary for manys students. Most students can receive $10,000 to $15,000 in funding to cover moving and other costs.
Nearly two-thirds of undergraduate students finish college owing an average of $23,000. Graduate students will owe even more, as the average cost of graduate school ranges between 30,000 and $100,000 depending on the institution attended and degree pursued. Median debts for graduate school are $25,000 for a master’s degree and $52,000 for a doctorate and nearly $80,000 for post-doctoral or professional degrees.
Because of the high debt burden students are already leaving college with, students should think carefully before taking on additional debt in the form of ancillary loans. It may be worthwhile to take on temporary or part-time employment instead of adding to your overall debt burden. Also, it’s a good idea to look into fellowship programs that will front you some of the costs an ancillary loan might cover.
Another important thing to consider when thinking about taking out an ancillary loan is repayment terms. Unlike federally-backed student loans, ancillary loans are private loans that don’t have the flexible repayment options that federally-backed loans offer. This means that you’re not likely to be able to change the terms of repayment to suit your economic circumstances or obtain a deferment or forbearance on your loan. If you have doubts about your ability to repay an ancillary loan, you may want to try getting a part-time job to help finance your living expenses while you study for the bar or to save up to move for your residency.
