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If you attended medical school, you know the costs of tuition can be astronomical. Lots of medical students take on debt to pay for tuition. Among those who borrow, the Association of American Medical College estimates the median debt at graduation to be a whopping $200,000.
Refinancing medical school loans can be a good strategy for reducing your interest charges and potentially even paying off your loans faster. Depending on your credit, you could score a better interest rate than you have now, which could lead to thousands of dollars in savings over the life of your loans.
What is medical school loan refinance?
Medical school loan refinance is when you exchange one or more of your medical school loans for a new one with better terms.
Through refinancing, you could potentially get a better interest rate than you have now. Lowering your interest rate even a small amount can lead to major savings, especially if you owe a large debt balance.
Plus, you can choose new repayment terms, usually between five years and 20 years. A shorter term can help you get out of debt faster, while a long term can be useful if you need to make your monthly payments more affordable.
Another benefit of refinancing is the option to combine multiple loans into one. Instead of having to track multiple bills from different loan servicers, you can pay back a single refinanced loan with one monthly payment.
Best lenders for medical school loan refinance
There are a number of refinancing lenders that offer competitive rates and no fees on medical school lenders. Here are the top picks:
| Variable rates start at... | Fixed rates start at... | Repayment terms | Welcome bonus | Check your rates | |
|---|---|---|---|---|---|
 | 4.54% | 4.49% | 5 - 20 years | $200 | Visit LendKey |
 | 4.99% | 4.47% | 5 - 20 years | $200 | Visit Earnest |
 | 4.22% | 3.97% | 5, 7, 10, 15, and 20 years | $120 | Visit Laurel Road |
 | 4.53% | 4.40% | 5 - 20 years | $100 or $200, depending on the amount you refinance | Visit Credible |
 | 5.09% | 4.74% | 5, 7, 10, 15, and 20 years | $100 | Visit SoFi |
 | 4.53% | 4.83% | 5, 7, 10, 15, and 20 years | $100 | Visit ELFI |
Should you refinance your medical school loans?
Along with the benefits of student loan refinancing, there are a few downsides to consider. For one, you need to have good credit to qualify. Lenders offer a range of rates, but you’ll need strong credit (usually 670 or higher) to get the lowest rates.
Some lenders let you apply with a cosigner, which could help reduce your rate. However, you’ll need to be comfortable sharing debt, as your cosigner will be equally responsible for the new loan.
Tip: Some lenders let you release your cosigner after a certain number of on-time payments. That means you could reap the benefits of applying with a cosigner and then get them off the hook for your debt in a year or two. However, you may need to have good credit and a steady income to qualify.
Be cautious about refinancing federal student loans
The other major downside worth mentioning is that refinancing federal student loans turns them private. That means your new, refinanced student loan won’t be eligible for federal protections, such as income-driven repayment, forgiveness programs, or deferment options.
It wouldn’t be a good idea to refinance federal student loans if you want to hang onto any of these federal benefits. If you don’t mind giving them up, that wouldn’t be an issue. And if your medical school loans are already private, you won’t have to worry about this.
Ultimately, the decision to refinance medical school loans comes down to whether it would be financially beneficial for you. If you can lower your interest rate and restructure your loan terms in a way that saves you money, refinancing could be the right move.
Can you refinance medical school loans in residency?
Many lenders let you refinance medical school loans in residency. Some even let you refinance while you’re still a student, though you may have to be in your final year.
Some lenders also offer reduced payments while you’re in residency. SoFi, for instance, lets medical residents pay $100 per month while in residency for up to seven years.
Does refinancing medical school loans cost anything?
Most reputable lenders don’t charge anything to refinance medical school loans. You won’t have to worry about a borrowing fee, origination fee, or administrative fee.
Some lenders, however, may charge a fee if you make late payments. Check with your lender about its specific fee structure before signing any loan agreements so you know what to expect.
How to refinance your medical school loans
If you’re ready to refinance your medical school loans, here are the steps you’ll need to take:
- Review your credit. Most lenders look for a score in the mid- to high-600s — the higher the better. You can apply with a cosigner to strengthen this part of your application, but keep in mind that your cosigner will be equally responsible for the loan and their credit will be impacted by your payments. On-time payments can help build credit, while late or missed payments can drag it down.
- Check your rates with multiple lenders. Lots of refinancing lenders let you prequalify for student loan refinancing online with no impact on your credit. By taking advantage of this prequalification, you can shop around and find a loan with the best terms. Keep an eye on rates, terms, and other loan features to determine which offer is best for you.
- Submit a complete application. If you decide to move forward with an offer, you’ll submit a full application. You’ll provide your personal details, as well as any required documentation, like loan statements and pay stubs. The lender will run a hard credit check at this point, which could temporarily reduce your credit score by a few points (usually five points or less).
- Sign your final loan agreement. Once everything goes through, your new lender will pay off your old loans and issue your new, refinanced loan. Make sure to keep paying off your old loans until everything is up and running. Once your new loan is active, you’ll pay it back on the loan term you selected. Most lenders will give you a 0.25% discount on your interest rate if you set up automatic payments.
How much can refinancing medical school loans save you?
Refinancing your medical school loans has the potential to save you thousands of dollars, but it all depends on your loan balance, interest rates, and repayment term.
Let’s say you owe $200,000 at a 10% rate on a 10-year term. If you refinance right away to an 8% rate, you could save $20,909.55 over 10 years. If you score a 6% rate, you could save $47,106.69 in total interest charges.
There are lots of online student loan refinance calculators you can use to figure out how much you’d save from refinancing.
Be careful about adding time to your repayment term, though. While a longer term means lower monthly payments, it also means more time in debt and higher interest charges overall.
As long as you’re intentional about which loans you refinance and what repayment term you choose, refinancing your medical school loans could be a savvy strategy that saves you money and brings you closer to a debt-free life.