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Applying to refinance medical school loans could be a savvy way to save thousands of dollars on interest.
Earning your medical degree is an incredible achievement, but it often comes hand in hand with student loan debt. According to the Association of American Medical Colleges., the average medical school graduate with loans in the Class of 2018 left school owing $196,520.
The good news is, you might be able to lower your interest rate and get better terms through refinancing your medical school student loans. Read on to learn how refinancing student loans from medical school could help you, along with situations where you’re better off leaving your loans alone.
- 4 reasons to refinance medical school loans
- 4 reasons not to refinance medical school loans
- Best lenders to refinance student loans from medical school
4 reasons to refinance medical school loans
Doctors and other healthcare professionals are some of the best candidates for student loan refinancing, since they often have the strong financial credentials to qualify. Here are four times when medical school loan refinance could be a savvy move.
You can refinance medical school loans to save on interest
The most compelling reason to refinance medical school loans is to save on interest. When when you refinance your student loans from medical school, you trade your old loans for a new one with a better interest rate.
The best medical school refinance lenders offer rates starting as low as 1.90%.
Let’s say you owe $150,000 from medical school. At a 7.08% rate, you’d pay a massive $59,738 over 10 years.
But refinance to a 3.5% rate? You’d save $31,743 in interest over that same time period.
By lowering your interest rate through refinancing, you could be looking at massive savings, especially if you’ve got six figures of medical school student loan debt.
You want to select new repayment terms
Along with a getting a better rate, refinancing lets you select new terms on your student loans from medical school. Most lenders offer refinancing terms of 5, 7, 10, 15, and 20 years.
Let’s consider that $150,000 loan at a 3.5% rate. Here’s how your monthly payment and interest charges would change depending on the loan term you choose.
| Loan Term | Monthly Payment | Total Interest |
| 5 years | $2,729 | $13,726 |
| 7 years | $2,016 | $19,342 |
| 10 years | $1,483 | $27,995 |
| 15 years | $1,072 | $43,018 |
| 20 years | $870 | $58,786 |
As you can see, a short term means higher monthly payments, but it saves you money on interest and gets you out of debt faster.
A long term means lower monthly payments, but obviously you’ll be in debt longer so you’ll spend more on interest.
In the end, you want to choose the loan term that makes sense for your situation, since you’ll be stuck with it for years to come (unless you refinance for a second time to choose new terms).
So make sure to do out the math and choose a repayment term that makes sense for your goals and budget.
You’d like to switch to a new loan servicer
Unless you’re refinancing with the lender you already have, you’ll likely switch to a new lender and loan servicer when you refinance. If you’ve had bad experiences with your past lender, this might be a welcome change.
All of the refinancing providers we recommend have a good reputation for customer service. So if you have issues with your loans, you’ll hopefully be in better hands with your new loan servicer than your last one.
Plus, refinancing multiple loans means you won’t have to deal with multiple loan servicers and accounts. Instead, you can just pay off one loan to a single loan servicer each month, thereby making things a lot simpler and easier to track.
You’re trying to pay your student loans faster
Finally, refinancing for a shorter term than you currently have could help you pay your loans off faster, especially if your payments are reduced due to a better interest rate.
Once you’re done with medical school and residency, chances are your income is going to increase substantially.
So if you start making more money, reduce your interest rate, and refinance for shorter terms, you could pay back your student loans a lot faster than if you stuck with the standard 10-year plan.
4 reasons not to refinance medical school loans
Refinancing student loans from medical school isn’t a good idea for everyone, especially if you’re counting on federal protections. Here’s why.
You’re working toward loan forgiveness
If you’re working toward Public Service Loan Forgiveness (PSLF) or another federal forgiveness program, you don’t want to refinance your federal student loans from medical school.
That’s because these programs only forgive federal student loans, but refinancing with a private lender turns your loans private.
As a result, they become ineligible for PSLF or a similar program. So if you’re counting on federal forgiveness programs, don’t make your loans ineligible through refinancing.
You want an income-driven repayment plan
Refinancing federal loans with a private lender also makes them ineligible for federal income-driven repayment plans, such as Income-Based Repayment, Pay As You Earn, and others.
These plans are useful protections if you need to lower your monthly student loan payments. But you won’t be able to use them if you refinance your federal loans.
So if you want to stay eligible for an income-driven plan, don’t refinance your federal loans.
You need federal forbearance or deferment
Forbearance and deferment are two other federal options you might want to preserve. Both let you pause payments on your loans in the event of financial hardship or going back to school.
A lot of medical school students defer their loans while in medical school and during residency, since they’re not making much money (if any) and can’t afford to pay back their loans until after they graduate and start working.
If you’re worried about giving up forbearance or deferment options, it’s probably not a good idea to refinance your federal student loans. Some private lenders do offer forbearance and deferment options, but they’re usually not as flexible as the federal plans.
You can’t meet credit and income requirements
Finally, refinancing might not be in reach for you right now if you can’t meet a lender’s credit and income requirements. Most refinancing providers look for strong credit and a steady income before approving you for refinancing.
This is basically their way of ensuring you’ll be able to pay back the loan. If you can’t meet the standards yourself, you could try applying with a creditworthy cosigner.
But if this isn’t an option — or you don’t want to ask someone to share debt — you’ll probably need to take steps to build your credit before you can refinance medical school loans.
Best medical school refinance lenders
Here are our recommendations for the best lenders and banks to refinance your medical school loans:
Why’d we choose them? Well, all these lenders offer,
- Competitive interest rates
- Flexible repayment terms
- No origination, disbursement, or repayment fees
- A good reputation for customer service
- Instant online rate quotes that don’t impact your credit
- Cash back welcome bonuses of up to $200 for Student Loan Gal readers
For more information on each one, head here to see the full list.
Want better rates? Here are the best banks to refinance student loans:
| 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 |