Refinance Medical Student Loans: Options and Considerations

Medical school is a significant investment, and many students rely on loans to finance their education. Upon graduation, managing these loans becomes a priority. Refinancing medical student loans is a strategy to potentially lower interest rates, reduce monthly payments, or shorten the loan term. However, it's crucial to understand the implications and various options available before making a decision.

Understanding Student Loan Refinancing

Student loan refinancing involves taking out a new private loan to replace existing federal and/or private student loans. The new loan ideally has more favorable terms, such as a lower interest rate, which can save money over the life of the loan. Refinancing can also consolidate multiple loans into a single, more manageable loan. It is important to note that student loan refinancing is NOT the same thing as a Federal Direct Consolidation Loan.

Is Refinancing Right for You?

Deciding whether to refinance depends on individual circumstances, particularly the type of loans (federal or private) and career goals.

Federal Student Loans

Consider refinancing federal student loans if:

You do not anticipate needing income-driven repayment plans.
You are not planning to pursue Public Service Loan Forgiveness (PSLF). PSLF is a federal program, and only federal loans qualify.

Refinancing federal loans means losing access to federal benefits such as income-driven repayment plans, deferment, and forbearance options.

Read also: Is Citizens Bank Right for You?

Private Student Loans

If you have private medical school loans, refinancing is generally a good option if you qualify for a lower interest rate. This can occur during residency or after becoming an attending physician.

Refinancing During Residency

Residency is a financially challenging time. Options for managing student loan payments include:

Federal Income-Driven Repayment (IDR) Plans: These plans can lower monthly payments based on income.
Refinancing with Medical Resident Programs: Some lenders offer specific programs for medical residents, allowing for low monthly payments (e.g., $100) during residency, with full payments starting after the residency ends. A co-signer might be required.

Interest may accrue faster than it is paid during residency, potentially increasing the loan balance. Making larger-than-minimum payments can help manage this.

Key Considerations Before Refinancing

Loss of Federal Benefits: Refinancing federal loans into a private loan means losing access to federal benefits like income-driven repayment and loan forgiveness programs.
Interest Rates and Terms: Compare interest rates (fixed vs. variable) and loan terms (5 to 20 years) from multiple lenders to find the most favorable terms.
Credit Score: A good credit score is essential to qualify for the lowest interest rates.
Debt-to-Income Ratio: Lenders consider your debt-to-income ratio when evaluating your application.
Fees and Penalties: Check for origination fees or prepayment penalties. Many lenders, like Laurel Road, do not have origination fees or prepayment penalties.
Eligibility: Ensure you meet the lender's eligibility criteria, such as degree requirements and U.S. citizenship or eligible status.

Refinancing Options

Several lenders offer student loan refinancing, each with unique features and benefits. Here are some options:

Splash Financial: Splash Financial partners with multiple lenders to offer various rates and terms. Fixed Rate options range from 4.25% APR to 10.24% APR, and Variable rate options range from 4.86% APR to 10.74% APR. These rates may include a 0.25% autopay discount. Splash Financial (NMLS #1630038) does not guarantee loan offers.
- Terms and Conditions: Rates and terms are subject to change. Final offers require verified credit information.
- Important Note: Medical student refinance loans are available only to borrowers who are currently in a residency or fellowship program.
SoFi: SoFi offers medical professional refinancing with a minimum payment of $100 per month during residency. Variable rates range from 6.14% APR to 9.84% APR with a 0.25% autopay discount. Variable Interest rates on 5-, 7-, and 10-year terms are capped at 13.95% APR; 15- and 20-year terms are capped at 13.95% APR.
- Important Note: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers.
Earnest: Earnest offers customizable payments and loan terms. Fixed APRs range from 5.24% to 10.24%, and variable APRs range from 6.13% to 10.24% (with autopay discount). Loan amounts range from $5,000 to $500,000.
- Pros: Customizable payments, option to skip one payment every 12 months, and the ability to check rates without a hard credit check.
- Cons: Loans are not available in Nevada.
ELFI (Education Loan Finance): ELFI assigns a student loan advisor to each borrower. Loan amounts range from $10,000 up to the total outstanding loan balance.
- Pros: Refinancing available for medical and dental residents, and parent PLUS loans can be refinanced in your name.
- Cons: Payment postponement is not available for borrowers who return to school, and there is no co-signer release available.
Laurel Road: Laurel Road offers refinancing for medical and dental residents and allows refinancing of parent PLUS loans.
- Pros: Refinancing available for medical and dental residents, and parent PLUS loans can be refinanced in your name. You can see if you’ll qualify and what rate you’ll get without a hard credit check.
- Cons: Payment postponement isn’t available if borrowers return to school.
- Important Information: Refinancing federal student loans with Laurel Road may result in the loss of eligibility for certain federal benefits or programs.
College Ave Student Loans: College Ave offers loan terms between 5 and 20 years. Loan amounts range from $5,000 to $300,000, depending on the degree earned.
- Pros: You can choose any loan term between 5 and 20 years, and you can see if you’ll qualify and what rate you’ll get without a hard credit check.
- Cons: No co-signer release available, and students cannot refinance a parent PLUS loan in their name.
RISLA Student Loan Refinance: RISLA offers an income-based repayment plan with forgiveness after 25 years and co-signer release after 24 months. Loan amounts range from $7,500 to $250,000.
- Pros: Income-based repayment plan available, with forgiveness after 25 years. Co-signer release available after 24 months.
- Cons: Students cannot refinance a parent PLUS loan in their name.
First Tech Federal Credit Union Student Loan Refinance: This is an option for borrowers in the technology industry or those who want lower monthly payments initially.
- Pros: Three repayment options: Fixed, interest-only, or balloon. Greater-than-minimum payments allowed via autopay.
- Cons: No option to temporarily pause payments through forbearance. No death or disability discharge.
EDvestinU Student Loan Refinance: EDvestinU allows refinancing without a degree. Loan amounts range from $7,500 to $200,000.
- Pros: You can refinance without a degree. You can see if you’ll qualify and what rate you’ll get without a hard credit check.
- Cons: You cannot refinance parent PLUS loans in your name.
PNC Student Loan Refinance: PNC allows borrowers to refinance without a degree. Loan amounts range from $10,000 to $75,000.
- Pros: Interest rate discount for autopay is larger than most lenders offer. Borrowers can refinance without a degree.
- Cons: No flexible repayment options for struggling borrowers. You can't see if you’ll qualify and what rate you’ll get without a hard credit check.
Panacea Financial: Panacea Financial refinance podiatry school loans. They refinance federal and private student loans and can consolidate multiple loans.

How to Refinance

Check Your Credit Score: A good credit score increases your chances of getting a lower interest rate.
Gather Loan Information: Collect information on your existing loans, including balances, interest rates, and terms.
Compare Lenders: Request quotes from multiple lenders.
Submit Application: Complete and submit the application with the required documentation.
Review and Accept Loan Offer: Review the loan terms carefully before accepting the offer.

Interest Rates: Fixed vs. Variable

Fixed Interest Rates: The interest rate remains the same over the life of the loan, providing predictability in monthly payments.
Variable Interest Rates: The interest rate can fluctuate based on market conditions, potentially leading to higher or lower payments over time. Variable rates are often tied to an index, such as the 30-day Average Secured Overnight Financing Rate (SOFR).

Autopay Discount

Many lenders offer an interest rate discount for enrolling in autopay, where monthly payments are automatically deducted from a bank account. For example, Splash Financial and SoFi offer a 0.25% autopay discount.

The Role of a Student Loan Advisor

Navigating the complexities of student loan refinancing can be challenging. Consider consulting with a student loan advisor for personalized advice and guidance.

Additional Considerations for Married Borrowers

In income-driven repayment plans, married borrowers can sometimes reduce their payments by filing taxes separately. However, this strategy does not apply after refinancing, as payments are based on loan size, interest rate, and term, not income.

Read also: Student loan refinance guide

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