What you need to know about: 

Student Loans and Student Loan Refinancing 

Unfortunately, the process of becoming a physician is expensive, and physicians often carry forward a lot of debt from their many years of education.  Navigating paying back your student loans be overwhelming, as there are several options available to you, each with its own pros/cons.   This page is intended to give you resources for student loan refinancing (with our negotiated perks!), as well as answer FAQs we often see on the groups regarding forgiveness options, federal versus private loans, and how fast to pay off student loans.  

*Please note that the federal loan landscape is in a period of constant flux/uncertainty at the moment, and you should check the federal websites for the latest updates.  We are not financial advisors and you should do your own due diligence before making decisions based on the information on this page.  Relevant sources to check regarding federal updates have been provided to the best of our ability in the federal loans section.*

Student Loan Refinancing: Where can I do it? 

These are our student loan refinancing partners, all of whom have offered perks such as rate discounts or money back for using our student loan refinancing affiliate links, so feel free to use and share!  Anybody can use these and get our perks.

Splash Financial: Splash Financial has partnered with Physician Side Gigs to provide a $500 cash bonus to its members who refinance. Splash was originally founded to help physicians, so there is no maximum loan limit.  Checking your rate does not impact your credit score, and the entire application can be completed online.  Splash also offers the option for residents and fellows to refinance and pay $100 a month during training.  Members must refinance at least $100k to receive the $500 bonus.  Do so here (affiliate link) at splashfinancial.com/physiciansidegigs.

Laurel Road: Laurel Road has partnered with Physician Side Gigs to provide a $550 cash bonus to its members who refinance.  Checking your rate with Laurel Road only requires a soft credit pull, which will not affect your credit score. To proceed with an application, a hard credit pull will be required, which may affect your credit score.  Check our affiliate link for details at https://www.laurelroad.com/partnerships/physiciansidegigs/.

Credible: Credible has partnered with Physician Side Gigs to offer bonuses to members who refinance. Members receive a $1000 bonus paid by gift card for refinancing amounts at or above $100,000 and $500 bonus paid by gift card for refinancing amounts below $100,000.  Do so here (affiliate link) at www.credible.com/physiciansidegigs.  Terms and conditions apply.

SoFi: SoFi has partnered with Physician Side Gigs to provide a preferential rate discount to our members, which over the course of a loan repayment, can save you thousands given the average amount of debt carried by most physicians coming out of training.  SoFi is a leading student loan refinancing provider and evaluates borrowers holistically to offer low rates.  You can check your rate in 2 minutes with no impact on your credit score at SoFi.com/physiciansidegigs, and must sign up through this (affiliate) link to qualify for our preferential rates. If you have questions, feel free to reach out to (833) 277-7634 or Partner@sofi.com.

 
Frequently Asked Questions

Student Loan Refinancing: What is it and what are the benefits? 

Student loan refinancing involves finding a private lender that will pay off your prior loan and then create a new loan for you that has a lower interest rate and new terms.  The goal is to save you money in interest payments (compounding interest on these large loan balances really adds up).  When you pay less in interest, you can expedite paying off your loans and therefore accelerate your path to financial freedom.  Depending on the term you pick and how much lower the interest rate is, it could also lower your monthly payment, freeing up cash for paying extra towards the principal amount, investing, or otherwise.  

 

This is different than consolidating your loans, which is where you combine multiple federal loans into one federal loan.

 

 *Remember that when you refinance federal loans into a private loan, you lose federal forgiveness options or other protections or initiatives offered by the federal government, so you should not make this decision without carefully exploring your options.  This is particularly important in the current environment where federal student loan interest accumulation is paused and various options for student loan relief are being considered by the federal government.*

Navigating student loan refinancing is relatively straightforward for those with private loans at higher interest rates than the ones currently being offered.  

  • Refinancing student loans does not have associated charges, unlike mortgages, so you can refinance as often as you'd like, and you should do so when you find a significantly lower rate.

  • You should check rates across multiple options to see where you get the best rates, as it will be different for everyone depending on the amount of the loan, the length of time you want to pay loans back in, and various demographic considerations based on your personal situation.  

  • 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 affect your credit.  

  • You will have to assemble the relevant paperwork, but once you've done that, uploading the documents and going through the rest of the refinance process is usually very easy and usually takes just a few weeks.  Even a small reduction in interest rate will 'earn' you lots of money, in addition to getting the perks we have through our affiliate links. TLDR: It's a great ROI for your time!

 

 

What is Public Student Loan Forgiveness (PSLF)?

 

The PSLF Program: Overview

  • A program for FEDERAL, not private, student loans where any remaining federal loans are forgiven after making 10 years of on-time qualifying monthly payments (120 payments).  

  • These payments don't have to be consecutive.

  • You must hold an eligible direct loan and be in a qualifying income driven repayment plan during this time*. 

  • You must be working full time for a qualifying employer, which is typically a government or non-profit organization.

  • The forgiveness is tax free.

  • Read more here on the Federal Student Aid webpage, which will have the most updated information.

  • If you have a high debt burden or long training period, it would take a large difference in income in the private sector to offset the financial benefits of PSLF (though of course your happiness in the job should be considered).

**There is currently an exception to this rule until October 2022, which you can read more about here. Under normal rules, FFEL and Federal Perkins loans don't qualify but can become eligible if consolidated into a Direct Consolidation Loan.  Normally, only the payments after consolidation count towards PSLF, but the current limited PSLF waiver may credit prior payments - see here for a helpful tool.

What is the PSLF process?

  • You should submit this form every year or every time you switch jobs to ensure you're on track. 

  • The number of qualifying payments you have made will only be updated whenever you submit another PSLF form that documents a new period of qualifying employment.  You can check your status by logging into your PSLF servicer account or your StudentAid.gov account, or by looking at your billing statement.

  • You must be working for a qualifying employer at the time you submit the form for forgiveness and at the time the remaining balance on your loan is forgiven.

  • Your employment has to be certified by an authorized official.  This may be someone in your human resources department, but check with your organization to see who is allowed.

Is this legit? I've heard so many stories of people not qualifying.

Yes, it is.  In the first few years where people became eligible for forgiveness, a lot of people did not qualify due to errors in recording, and reports of 99% of people not qualifying include everyone in the program, including those who have not yet made the 120 payments.  However, over the years, the process has become more well known and lots of physicians on our groups have had their loans forgiven.  If you work for a qualifying employer, this can be a great perk and you shouldn't ignore it just because it sounds complicated.  The process is becoming increasingly straightforward if you follow the procedures outlined on the PSLF page referenced throughout this webpage.

*If you think you may end up wanting to use this option because you think you're going to work for a qualifying employer such as a 501c3 or government organization, do NOT refinance your student loans until you've run some more scenarios as you will forfeit this option.*

  • One caveat: Technically, the PSLF program could be discontinued or modified in a way where there is means testing applied.  In this case you may not be eligible for forgiveness or have a smaller amount forgiven.  It seems unlikely politically that those already in the process wouldn't be grandfathered in, but this is technically a risk as nobody has a crystal ball. 

Federal Repayment Programs

 

Options:

  • The various Federal Repayment plans, pros and cons of each, and things to know about them are outlined here.

  • The standard 10 year repayment plan is not a good one for those going for PSLF, as it will pay off your loans in 10 years, but you'll usually pay less than other plans.

  • Graduated repayment plans have lower payments at first, but increase.

  • Common ones that physicians use that usually qualify for PSLF are:

    • Income Contingent Repayment (ICR)

    • Income Based Repayment (IBR)

    • Pay as you Earn (PAYE)

    • Revised Pay As You Earn (REPAYE)

  • You can change the plan you're on at any time, many times for free.

  • Some guidelines people consider:

    • PAYE payments are capped at the 10 year standard repayment amount, whereas REPAYE payments have no cap. Therefore, the more debt you have and the higher your income or expected income, the more likely PAYE is more advantageous than REPAYE.

    • ​If going for PSLF and are single or have a non-working spouse, many use REPAYE while in training then switch to PAYE once income goes up.

      • Note that there may be an interest capitalization in this case.

    • ​If you anticipate refinancing your federal loans after training when your discretionary income goes up, weigh the effective rate under REPAYE against the refinance rate.  Take the lower one.

    • If not going for PSLF and going to pay the loans off, electing for REPAYE during training may decrease interest accumulation.

    • IBR/PAYE may be preferred if there is a high-earning spouse, as filing taxes separately will separate the high-earning spouse’s income from your student loan payment calculation.

    • Under IBR, PAYE, and REPAYE, if you have a subsidized loan, the government forgives 100% of unpaid monthly interest for the first three years of repayment so that your balance doesn't increase during that time.

REPAYE and PAYE

  • REPAYE:

    • Monthly payments are 10% of discretionary income, recalculated every year based on your income/family size.  

    • No cap on payments.

    • If you don’t qualify for the 100% subsidy, and your monthly payment isn’t large enough to cover the monthly interest, the government will forgive 50% of the unpaid interest.

    • Outstanding loan balance will be forgiven after 20 years (if all loans were for undergraduate) or 25 years (if any loans were for graduate or professional study).  

    • You may have to pay income tax on any forgiven amount.

  • PAYE:

    • Must be a new borrower on/after Oct. 1, 2007, and must have received a disbursement of a Direct Loan on or after Oct. 1, 2011.

    • Monthly payments are 10 percent of discretionary income, but payments are capped at what you would have paid under the 10-year Standard Repayment Plan.  Discretionary income is recalculated yearly based on your updated income and family size.

    • Should have high debt relative to income for this to make sense, usually used by those going for PSLF

    • You may have to pay income tax on any amount that is forgiven.

IBR and ICR

  • IBR: 

    • Must have high debt relative to income​

    • Monthly payments will be either 10 or 15% of discretionary income (depending on when you received your first loans) recalculated every year based on your income/family size, but never more than you would have paid under the 10-year Standard Repayment Plan.

    • Any outstanding balance on your loan will be forgiven if you haven't repaid your loan in full after 20 years or 25 years, depending on when you received your first loans.

    • You may have to pay income tax on any amount that is forgiven.

  • ICR

    • Monthly payment will be the lesser of 20% of discretionary income, or the amount you would pay on a repayment plan with a fixed payment over 12 years, adjusted according to your income

    • Any outstanding balance will be forgiven if you haven't repaid your loan in full after 25 years.

    • You may have to pay income tax on any amount that is forgiven.

General Principles about Refinancing

Refinance private student loans whenever you get a lower rate.

  • No downside that we know of for private loans aside from the time it takes to do it (which should be minimal) - a better rate means less interest paid.

  • You also get the money back perks through our affiliate links above.

  • Factors that will get you a lower rate:

    • Lenders consider your income, your savings, your employment status and history, credit scores, and amount of debt.  The better th​see are, in general the better your rate is.  Additionally, the shorter the term of repayment, usually the better the rates you'll get.​

    • Sometimes a co-signer can get you better terms.

    • Variable rates are generally lower and have the potential to go even lower, and if you think you're going to pay the loan off quickly or if you're okay with refinancing again later if rates start to rise, potentially at a higher rate, you could use this strategy.

If you're sure you're going to work for a PSLF qualifying employer, hold off on refinancing.

  • For most people, you'll pay less through one of the qualifying repayment plans over the 10 years than your loan balance assuming that you were enrolled during training when your salary was low.

  • Exception: If your discretionary income calculations mean you'll actually pay more over the 10 years - this is usually if you have a very highly paid spouse.​

  • Exception: if your loan amount is so low that your qualifying plan payments are equal to or greater than your monthly payment calculation through refinance.

  • Exception: If you really think that PSLF won't be around in 10 years and the difference in interest rates between your federal and private loans is very high.

If you are unsure or doubt you will work at a qualifying employer, calculate costs and run projections

  • If you plan on working for a non-qualifying employer (e.g. private practice), you have to look at your future earning potential to weigh refinance vs forgiveness through another route using the other federal options above.  

  • Looking at debt to income (DTI) ratio

    •  If you make much more than you owe, you will likely end up refinancing, but may want to hold on to the loans during residency to get a lower effective interest rate in your lower earning years through a program like REPAYE.  

    • If you owe much more than your yearly salary (high DTI radio, usually > 2.5), you may want to go for forgiveness. If you're not sure, use this resource to help you decide.

  • If you're really not sure where you're going to work, either hold off on refinancing or calculate the difference in federal versus refinanced payments after checking rates, and go from there in terms of how much risk you want to take on that you'll pay significantly more interest with the federal loans.

 

Special Circumstances

Federal Loan benefits

  • Potential for loan forgiveness if the government decides to discharge federal loans or forgive a certain amount

  • Repayment programs that will adjust with you if your income changes

  • ​Potential discharge of student loan debt in the case of disability or death​

    • Some private student loans also offer this​

  • Longer forbearance and deferment periods

When refinancing doesn't make sense

  • Plan to go for PSLF

  • Large family size or spouse with low/no income that may lower your discretionary income calculation under other federal loan forgiveness options

  • Large debt to income ratio where you may get forgiveness under non-PSLF federal repayment programs; this may be more likely if working part time or if you are married to someone else with large student loan burden.

  • You may not qualify for the refinance.

  • May require a cosigner that you don't have if you don't qualify for the loan.

When in Residency

  • If you are planning on going for PSLF or don't know if you'll go for PSLF: 

    • Don't refinance.

    • Look at cash flow and expected salary post graduation and map out scenarios to see whether PAYE, REPAYE, or IBR makes most sense.  You can discuss this with your financial advisor or use this resource to help you decide.

  • If you know you are not going to go for PSLF:

    • Decide whether it makes sense to refinance by looking at your refi interest rate options and comparing with the effective interest rates through the federal programs. For many, while your income is low, it will make sense to stay with federal loans until graduation unless you get a very low rate through private refinancing. ​

 

Terminology and concepts to know

  • Variable versus fixed rates: Both private and federal loans can be variable or fixed (for federal it will depend on when they were originated; all federal loans since 2006 are fixed.  For fixed rates, the interest rate remains the same for the life of the loan, whereas for variable rates, they will fluctuate either up or down depending on economic and market conditions.  Many loans have a cap on how high variable rates can go.

  • Subsidized versus unsubsidized: With subsidized loans, the government pays the interest while in school or deferment, whereas with unsubsidized, interest will accrue regardless.  All private loans are unsubsidized. 

  • Capitalization of Interest: With student loans with large balances, it is often true that your monthly payments don't cover the interest accrued.  What happens to this unpaid interest is important.  If it doesn't capitalize, it just builds up but doesn't accrue interest, whereas if it does capitalize, it gets added to your principal interest and you are responsible for paying interest on your interest.  Federal loans generally capitalize when repayment begins, deferment or forbearance ends, upon default, when payment plans are changed, or loans are consolidated.  While private loans can offer delayed capitalization on unpaid interest in certain situations, you should check your loan terms to make sure.

  • Consolidation - does not lower interest rates but can be helpful to change older variable rate federal loans to fixed rates and to make it easier to make payments.  The interest rate is set by taking the weighted average of your underlying rates and rounding up to the nearest 1/8th percent.  Currently, they can also help make certain loan types previously ineligible for forgiveness eligible.  Know the pros and cons, as you cannot undo consolidation.  You do not have to consolidate all of your loans and can choose to do so only with some.  Consolidating Perkins loans will make you lose some of the unique benefits such as loss of subsidized interest free periods, and loss of forgiveness program options specific to Perkins loans.  Traditionally, consolidating has also reset the clock for PSLF qualifying payments, though that is not currently the case at the time of this writing (please check).  

 

Disclaimers:

We are not in the business of providing formal individualized personal, financial, tax, legal or investment advice and specifically disclaim any liability, loss or risk, which is incurred as a consequence, either directly or indirectly, by the use of any of the information contained on this website, in emails, events, the online communities, or other interactions. We do NOT provide any legal, accounting, securities, investment, tax or other professional services advice and are not intended to be a substitute for meeting with professional advisors. If legal advice or other expert assistance is required, the services of competent, licensed and certified professionals should be sought, who can help assess the appropriateness of any decisions in light of each individual’s specific goals, experiences, circumstances, and financial status. This page contains information about our sponsors, as well as affiliate links, which support the group at no cost to you. While we do our best to vet these companies, we do not endorse ANY specific investments, investment strategies, advisors, or financial service firms, nor the advice that they give to you, which we do not possess the ability to review or the expertise to confirm or deny.  Any references to these should be viewed as introductions to look into rather than formal recommendations or endorsements.  Please do your own research and due diligence prior to making any decisions on the basis of anything you learn from our interactions or platforms.