Should You Refinance Your Medical School Loans?
- 1 day ago
- 8 min read
Medical school graduates often carry substantial student loan debt, with an average of almost $255,000 reported by the doctors in our online physician community. For some physicians, the initial strategy after graduation is to keep federal loans while evaluating programs like Public Service Loan Forgiveness (PSLF) or other forgiveness options. Not every physician, however, plans to pursue loan forgiveness. If you work in private practice, are employed by a for-profit healthcare system, or plan to aggressively pay down your loans to accelerate your path to financial independence, refinancing your medical school loans can be worth considering, especially when interest rates drop. Understanding what refinancing is and when it makes sense can help you decide whether it’s the right strategy for your situation.
Disclosure/Disclaimer: This page contains information about our sponsors and/or affiliate links, which support us monetarily at no cost to you, and often provide you with perks, so we hope it's win-win. These should be viewed as introductions rather than formal recommendations. Our content is for generalized educational purposes. While we try to ensure it is accurate and updated, we cannot guarantee it. Rules/laws can change frequently. We are not formal financial, legal, or tax professionals and do not provide individualized advice specific to your situation. You should consult these as appropriate and/or do your own due diligence before making decisions based on this page. To learn more, visit our disclaimers and disclosures.
Resource: Student Loan Refinancing for Doctors
Our resources for student loan refinancing for physicians page lists our partners, who provide our readers with rate discounts and other perks, as well as personalized guidance for your student loan situation.
What does refinancing your medical school loans mean?
Refinancing your student loans involves taking out a new loan with a private lender to pay off your existing student loans. This new loan replaces your old loans and typically comes with new terms, such as a different:
Interest rate
Repayment period
Monthly payment
The goal of refinancing is often to save money on interest payments, which can expedite paying off your loans. Refinancing can also:
Reduce the monthly payment amount
Shorten (or extend) the repayment timeline
Consolidate multiple loans into one payment
Why forgiveness matters when you’re considering refinancing your student loans
One of the most important things to understand about student loan refinancing is that refinancing federal student loans with a private lender removes them from federal programs such as PSLF and income-driven repayment forgiveness programs. It can also remove certain federal hardship protections in place for federal student loans.
Because of this, many doctors with federal loans delay refinancing early in their careers while they determine whether pursuing forgiveness is realistic.
If you’ve already decided that loan forgiveness is not part of your plan because you’re committed to private practice or an employer that would not offer forgiveness, refinancing can become a much more attractive option. If you’re unsure which path might be the best option for your specific situation, we have a resource (with a special member perk) that can help.
Related PSG resources:
Should I refinance my federal student loans if I’m working for a PSLF-qualified employer?
Grad Loan Advice helps individuals optimize their student loan repayment strategy. Every consultant is a Certified Student Loan Professional (CSLP), bringing expertise and clarity to the often-confusing world of student loans. Through a 1-hour consultation, they’ll break down your options in detail, empowering you to make informed decisions about your debt. PSG members receive $50 off when you schedule your consultation today through our dedicated partner page.
Should I refinance my student loans? When refinancing your medical school loans makes sense
For physicians who are not pursuing forgiveness for their student loans, refinancing can be a powerful way to reduce the total cost of their medical school debt and expedite loan payoff.
Unlike refinancing a mortgage, refinancing your student loans typically does not have associated charges, so you can refinance as often as you’d like. There are several situations where refinancing medical school loans can be beneficial.
Refinancing can lower the interest rate on your student loans
This is the most common (and obvious) reason we see for refinancing medical school loans. Federal graduate loans often carry relatively high rates compared to what many attending physicians can qualify for with a private lender through refinancing. Interest rates for private student loans fluctuate with market influences, so physicians with private student loans can also save by refinancing to a lower interest rate than what they already have when rates drop.
Even a small reduction in your interest rate can make a significant difference with a large loan balance.
It’s worth checking current interest rates to see what you can get versus what you have. Our partners at SoFi offer a special perk to our PSG members.
Related PSG resource:
SoFi has partnered with Physician Side Gigs to offer a 0.25% rate discount when you refinance student loans. SoFi is a leader in student debt refinancing that’s going beyond their already competitive rates for members like you. You could save thousands with this exclusive member discount rate. Flexible terms let you lower monthly payments or pay off your debt sooner. You could even get a discount for autopay—or just for having a medical school loan. And SoFi charges no fees. See terms and view your rate in two minutes at SoFi.com/PhysicianSideGigs.
You would pay more to pay off your loans even through the forgiveness programs than you would if you just paid them off quickly through the refinancing route
With recent changes in the available federal income based repayment options, some physicians, particularly those in high income specialties or with low student loan amounts, may realize that their calculated payments over the 10-20 years of being in the forgiveness program are actually greater than the amount of their principal balance. In these cases, you may be much better off just paying off your loans as quickly as possible, and refinancing your loans to a lower interest rate would help you to do that with the lowest amount of your money going towards interest rather than principal.
Your income has increased after training
During medical school and residency, borrowers often qualify for less favorable loan terms due to limited income and/or credit history. Once you become an attending physician, your financial profile often improves dramatically.
Higher income, stable employment, and a higher credit score can help you qualify for better refinancing rates than what you originally received when securing your medical school loans.
Additionally, as your income increases, income based repayment programs may adjust your monthly required payment accounts to much higher amounts. This may alter the mathematics of holding the student loan significantly.
You want to simplify your loan payments, ideally at a lower overall average rate
Many doctors graduate with multiple loans throughout their years of medical school and training. Refinancing can combine these loans into a new, single loan with one monthly payment. Remember that refinancing is different than consolidating loans, which you can do with the federal program as well. However, in the federal consolidation program, your overall interest rate will likely stay the same, while student loan refinancing may reduce the interest rate as well (with the added benefit of making managing repayment easier as well).
You want to aggressively pay off your student loans
If your goal is to eliminate your debt quickly, refinancing to a short loan term can help support this goal. Private lenders often allow borrowers to choose shorter repayment terms such as 5 years or 7 years.
It’s worth noting that you typically don’t have to refinance student loans to pay them off quicker, as most lenders will let you pay off your loans early without penalties. Shorter terms, however, may qualify you for a lower interest rate, which will also allow you to direct more of your payments towards the principal and pay them off faster.
Situations where refinancing your student loans may not be ideal
As we mentioned above, you’ll want to carefully consider before refinancing any federal student loans, especially if you may be eligible for forgiveness through federal programs of if you anticipate potential financial hardships in paying off your loans. If you’re working for a PSLF-qualifying employer, it likely makes sense to hold off on refinancing, unless you’ll still pay more through the repayment program for PSLF than you will through refinancing.
If you aren’t eligible for loan forgiveness through your employer, a few other situations where refinancing may be less ideal include:
You have federal loans and are still in training. Most residents and fellows have relatively low income compared to what they’ll make as an attending physician. Some lenders offer refinancing programs to residents, but the rates available may not be as competitive as what you’ll be able to get as an attending. In addition, you don’t know the future, and may end up working for a PSLF-eligible employer that can provide options for forgiveness you can explore before refinancing to private loans.
You need more payment flexibility with your federal student loans. Federal loans can offer more flexible repayment options, including income-driven plans and deferment options if you’re in a situation of financial hardship. Private lenders may offer some payment assistance programs, but they are generally less flexible. If your financial stability is currently in flux, or you’re struggling to make your minimum payments for your student loans, it can be worth assessing repayment plan options before refinancing to private loans.
Considerations when refinancing your student loans
A few things to know as you consider refinancing:
Compare multiple lenders. Rates can vary widely across lenders, so get a few quotes to see where you can get the best rate. Explore student loans refinancing options for doctors.
Checking rates shouldn’t impact your credit score. It usually takes less than 5 minutes to check rates, and companies won't do a hard pull on your credit until you decide to go forward with the formal refinance process, so checking your rates won't usually affect your credit (but make sure on the particular platform you’re searching).
Evaluate repayment timelines carefully. A shorter term may save interest but can increase your monthly payment. Likewise, extending your payment term can lower your monthly payment but costs you more in the long run.
You may not qualify for refinancing. You may not qualify for a refinance, depending on some of the factors mentioned above such as your income and credit score.
Check for other forgiveness or repayment programs before refinancing federal loans. Even if you won’t benefit from income-driven repayment options, depending on where you work, you may be eligible for other federal or state repayment benefits, such as PSLF, EDRP, or NHSC. Learn more about student loan repayment benefits doctors get through their employers.
Conclusion
If you’re not planning to pursue student loan forgiveness, refinancing your medical school loans can be a smart financial strategy, especially if you can lower your interest rate. Lower interest rates can help accelerate repayment and save you tens of thousands of dollars over the life of your loans. If you aren’t sure if you qualify for forgiveness, it’s important to understand your options and be confident in your repayment strategy before refinancing federal student loans to private loans.
Additional student loan resources for physicians
Sign up for our weekly newsletter for updates on student loan forgiveness programs, free educational webinars on student loans and other personal finance topics, and related educational content.
Related PSG resources: