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Medical Student Line of Credit

A medical student line of credit is a financial arrangement in which a lender makes credit available to a medical student. The medical student uses this line of credit to cover the costs of medical school and related expenses.

Lenders make these lines of credit available to medical students in the expectation that the student will graduate med school and have a successful career as a doctor. Since doctors incomes are among the highest in our society, the lender expects to be paid back.

Medical students often need a line of credit because of the high cost of medical school. Since medical school is time intensive medical students often don’t have a chance to work to augment their income and loans. A line of credit can enable a student to complete medical school and begin a career in medicine.

Lines of Credit Explained

A line of credit is a financial arrangement where a lender makes a set amount of credit available for a borrower to use. The borrower can use as much or as little of the credit they want. A line of credit usually comes with a limit, so only a specific amount of credit is available.

A line of credit is usually an open ended arrangement which means credit becomes available again when the borrower pays it off. For example if a borrower has a $10,000 line of credit with an $8,000 balance on it and pays $2,000 of the balance off, the borrower will have $4,000 in credit available.

This means that a medical student with a line of credit can pay part of the money they owe off by working part time or working on the summers. Using a medical student line of credit can help a medical student pay for medical school by themselves.

Many lenders will make medical student lines of credit available in the expectation that medical students will pay them off when they start practicing medicine. The lender makes money off the line of credit by charging interest on it. Interest is how the lender makes money off the line of credit.

Medical Student Line of Credit Lenders

Many banks will make medical student lines of credit available. There are also lenders that specialize in student lines of credit.

A medical student or resident should be able to find a line of credit by going online. Typing the term medical student line of credit into a search engine should produce a list of these lenders. These lenders usually make the terms and interest rates charged available on their websites.

Students should try to get a line of credit with the prime rate. The prime rate is the lowest interest rate charged. The prime rate is the rate of interest banks pay when they borrow money from the Federal Reserve. Students can learn what the prime rate is by going online and researching it.

Don’t Abuse Student Lines of Credit

Students and residents should remember that a medical student line of credit will have to be paid back at some point in the future. They should also remember that lines of credit accrue interest which increases the amount owed.

The more a medical student accrues on a line of credit will reduce the amount of income the student has available in the student. Many medical students find their income reduced and their job choices limited by high amounts of medical school debt.