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Earning your doctor of medicine degree can lead to a high-paying, meaningful career. But you may have to take on six-figure debt to pay for medical school. The average student debt for medical school graduates in 2021 was $200,000, according to Association of American Medical Colleges (AAMC) data.
Paying off such a massive amount of debt could take more than a decade. One potential solution is refinancing, which could help you reduce the total cost of your medical school loans and pay them off sooner.
Here’s where to find medical student loan refinance lenders, when it does and doesn’t make sense to refinance, and how to refinance your medical student loans.
Where to refinance your medical student loans
Several financial institutions offer refinancing for student loans, including online lenders, credit unions, and banks. Comparing rates from different places can help you find a lender that best matches your borrowing needs.
Several online lenders offer student loan refinancing. This type of lender lets you complete the application process entirely online. Plus, many online lenders offer prequalification, which allows you to get estimated rates and terms without affecting your credit score.
Credible makes it easy to compare student loan refinance rates from private lenders, all in one place.
Some credit unions also offer student loan refinancing. Since credit unions are member-owned, not-for-profit financial institutions, they may offer a lower interest rate and better terms than you’d receive at a bank. But you’ll need to be a member of a credit union to qualify for a student loan refinance.
Although some credit unions offer lower rates than banks loans, keep in mind that rates vary by bank. If you’re an existing customer, a bank may offer you an interest rate discount. This could be a better option than an online lender if you prefer face-to-face interaction and the bank has a physical location nearby.
When you should (and shouldn’t) refinance your medical student loans
When refinancing medical student loans is a good idea
Here are some scenarios where it could make sense for you to refinance your medical student loans:
- You qualify for a lower interest rate. If you can secure a lower interest rate by refinancing, you can save thousands of dollars over the life of the loan.
- You want to pay off your loan faster. Refinancing to a shorter-term loan or securing a lower interest rate can help you get rid of your student loan debt quicker.
- You want to combine multiple student loans. Refinancing multiple loans into a single loan can make it easier to keep track of your bills.
HOW TO DECIDE WHICH STUDENT LOANS TO PAY OFF FIRST
When refinancing medical student loans isn’t a good idea
Refinancing medical student loans isn’t the best move if any of these scenarios applies to you:
- You qualify for federal student loan forgiveness. If you have federal student loans, you may be eligible for a loan forgiveness program, like Public Service Loan Forgiveness (PSLF). To qualify for this program, you must make 120 qualifying payments while working full-time for a qualifying government or not-for-profit employer. But if you refinance your federal loans into a private student loan, you’d no longer qualify for any benefits that come with federal loans, such as PSLF and income-driven repayment plans.
- You have bad credit. If you have less-than-stellar credit, you’ll likely have a tough time qualifying for a lower interest rate without a cosigner.
- You have minimal or no income. When you apply for refinancing, a lender will check your income to see if you can afford to repay your loan. If you haven’t started working in your field yet and have little or no income, it could prevent you from qualifying.
How to refinance medical student loans
Review your goals to determine whether refinancing makes sense for you. For example, if you have federal and private loans, you should refinance just the private student loans unless you don’t need access to federal loan benefits and protections.
If you’re ready to refinance your medical student loans, follow these steps:
- Check your credit score. Before you apply for refinancing, check your credit score so you know where you stand and to see if you meet a lender’s minimum credit score requirements. You can request free copies of your credit report by visiting AnnualCreditReport.com, or you can view your score by using a free credit-scoring app or website.
- Shop around and compare rates. To make sure you’re getting the best deal for your situation, compare rates and terms from as many lenders as possible. Be sure to note if any of the lenders charge fees, such as origination fees or late payment fees.
- Submit a refinance application. Once you’ve chosen a lender, submit a loan application. You’ll likely have to provide the following documentation: W-2s, pay stubs, and tax returns.
- Manage your new loan. Continue making payments on your original loans until you get confirmation that they’ve been paid off. Then, start repaying your new refinance loan on time as agreed, to avoid late fees and damage to your credit score. To ensure you pay your bill on time, you can sign up for automatic payments if the lender offers an autopay feature.
Visit Credible to see your prequalified student loan refinance rates to find the one that works best for you.
How much can you save by refinancing?
The amount you can save by refinancing depends on several factors, like the interest rate you receive, your new loan term, and the amount you’re refinancing.
For example, say you have a 10-year, $200,000 student loan with an 8% interest rate and $2,427 monthly payment. If you refinanced to a loan with the same term but a 4% interest rate, you’d lower your monthly payment to $2,025. This would save you $48,198 in interest over the life of the loan.
You can use Credible’s student loan refinancing calculator to get an idea of your potential savings.
STUDENT LOAN REFINANCING CAN POTENTIALLY SAVE BORROWERS $5K WHILE FIXED RATES ARE LOW
How to get the best interest rate when refinancing med school loans
To get the best interest rate when refinancing med school loans, start by shopping around and comparing loan options from at least three to five different lenders. If you can afford the higher monthly payment, a shorter loan repayment term will likely come with lower interest rates than a longer repayment term.
As you’re comparing lenders, look for any special discounts they may offer, like an autopay discount for setting up automatic payments or a loyalty discount for being an existing customer.
When you apply for refinancing, a lender typically considers your credit history and income. The higher your credit score, the better your chances of securing a lower rate. If you want to work on improving your credit before you apply for a refinance, focus on paying all your bills on time and paying down other debts to help boost your score.
If you have minimal income or bad credit, consider adding a cosigner — someone who agrees to repay your loan if you can’t — to your loan application. Adding a cosigner who has strong income and good credit could increase your chances of qualifying and securing a lower rate.
If refinancing is the right move for you, Credible makes it easy to compare student loan refinance rates from private lenders — and it only takes a few minutes.
Refinancing medical school loans during vs. after residency
If you’re in residency, you may be wondering whether it makes sense to refinance your medical school loans now or to wait until your residency ends. A disadvantage of refinancing now is that you’re making less money than you would once you begin your official medical career. As a result, you might not be able to pay down as much of your loans as you’d like.
But some lenders offer specific types of loans or benefits designed for medical students in residency. For example, Citizens Bank (a Credible partner) only requires you to pay $100 a month while completing residency or fellowship.
The benefit of refinancing after residency is that it gives you more time to build your credit score and boost your income to get the lowest rate available to you when you choose to refinance.
Medical school loan FAQs
Here are answers to some common questions about refinancing medical school loans.
Can you refinance your federal and private loans together into one loan?
It’s possible to refinance federal loans, private loans, or a combination of the two into a new private loan. You can do this by taking out a private student loan large enough to pay off your existing loans, then start making payments on your new loan.
But you should think twice before refinancing your federal loans. When you refinance your federal loans, you give up access to certain federal benefits, such as forbearance, student loan forgiveness programs, and income-driven repayment plans.
Can you consolidate medical school loans?
Yes, it’s possible to consolidate medical school loans. Your student loan consolidation options depend on whether you have federal or private medical school loans. If you want to consolidate private loans (or a mixture of federal and private loans), you can do so by refinancing.
If you want to consolidate your federal loans but don’t want to lose access to federal benefits, you can apply for a federal Direct Consolidation Loan. If you qualify, your interest rate may not go down — it will be a weighted average of all the loans you consolidate.
Can you refinance medical school loans multiple times?
You can refinance your medical student loans as many times as you want. But refinancing multiple times might not be in your best interest in some situations.
For example, say your credit has taken a major hit or student loan interest rates have increased a lot since you took out your loans. In those scenarios, you may have a tough time qualifying for a new loan or securing a low enough rate to make refinancing worth it.
Will refinancing hurt your credit score?
When you submit a loan application, a lender reviews your credit history — this results in a hard credit inquiry on your credit reports. This type of inquiry can temporarily ding your credit score by up to five points, according to FICO. In addition, taking out a new loan lowers the average age of your credit accounts, which can also lower your score.
But if you practice good credit habits, like paying all your bills on time, your credit score should recover over time.
Is it difficult to refinance medical student loans?
How hard it is to refinance your medical student loans will depend on personal factors, such as your income and credit score.
If you have minimal income and bad credit, you may have trouble finding a lender that’ll approve you for refinancing. But if you have good to excellent credit and a high income, you should have a much easier time getting approved.