Student Loans and Refinancing for Physicians

(Refinancing options, forgiveness programs & repayment plans)

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.

Confused about changes with student loans since payments restarted in October 2023? Check out our page on what physicians should know about federal student loan payments restarting.

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.

Quick Links

Resources

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, which also support us monetarily at no cost to you, so we hope it's a win-win!

SoFi: 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

Splash Financial: Splash Financial has partnered with Physician Side Gigs to provide a $500 cash bonus(1) 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(2), 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(3). Members must refinance at least $100k to receive the $500 bonus. Do so here (affiliate link) at splashfinancial.com/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. See additional disclosures at the bottom of the page.

Student Loan Refinance

Refinancing: Intro and 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!

General Refi Principles

General Principles of Refinancing

Along with the guidelines below, there are a few other special circumstances to consider when assessing whether refinancing is a good move for your situation. In some cases, you might not qualify for a refinance. If you don't qualify by yourself, you may need a cosigner that you don't have.

Refinancing may not make sense if you have a large family or a spouse with low to no income that may lower your discretionary income calculation under other federal loan forgiveness options. If you have a large debt-to-income ratio (if, say, you're working part-time or married to someone else with a large student loan burden), you may get forgiveness under non-PSLF federal repayment programs discussed below.

Federal Loans

Federal loans have the potential for loan forgiveness if the government decides to discharge federal loans or forgive a certain amount. Repayment programs (covered below) are available for federal loans that will adjust with you if your income changes. They also have longer forbearance and deferment periods than private loans.

Federal loans also have potential discharge of student loan debt in the case of disability or death. (Some private loans also offer this, so check before finalizing a refinance.)

If you are unsure or doubt you will work at a qualifying employer, calculate costs and run projections to see if refinancing makes sense for you. 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.

To assess, start by looking at your 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 (learn more below). 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 the federal student loan repayment simulator 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.

Private Loans

There's no downside (that we know of) for refinancing private loans whenever you get a lower rate, aside from the time it takes to do it (which should be minimal). A better rate means less interest paid.

Working for PSLF-Qualified Employers

If you're sure you're going to work for a PSLF (learn more below) 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.

Some exceptions:

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

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 the federal student loan repayment simulator 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.

PSLF

Public Student Loan Forgiveness (PSLF)

The PLSF program is a program for federal, not private, student loans where any remaining federal loans are forgiven after making 120 on-time qualifying monthly payments. These payments don't have to be consecutive. Visit the PSLF website for full details - specific pages are linked below - and the most up to date information, but some highlights:

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 federally tax free (often but not always state tax free)
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).

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 StudentAid.gov account.
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 the PSLF Program Legit?

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 included everyone who applied for the program, including those who had 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.

*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.

What physicians need to know about income driven repayment (IDR) plans for student loans

Other Federal

Federal Repayment Programs

We're going to cover some highlights of the various Federal Repayment plans but always consult the official page for the most up to date guidelines and requirements. The Federal Student Aid website covers different plans available, pros and cons of each, and things to know about them. You may also want to check out our page on what to know about federal student loan payments restarting.

When selecting a repayment plan, you can change the plan you're on at any time, many times for free. Graduated repayment plans have lower payments at first, but increase. The standard ten-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.

Common repayment programs that physicians use that usually qualify for PSLF are:

Income Contingent Repayment (ICR)
New and Old Income Based Repayment (IBR)
Pay as you Earn (PAYE)
Saving on a Valuable Education (SAVE)

Some guidelines people consider:

PAYE payments are capped at the 10 year standard repayment amount, whereas SAVE payments have no cap. Therefore, the higher your income or expected income, the more likely PAYE is more advantageous than SAVE.
If going for PSLF and are single or have a non-working spouse, many use SAVE 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 SAVE against the refinance rate. Take the lower one.
If not going for PSLF and going to pay the loans off, electing for SAVE during training may decrease interest accumulation.
IBR/PAYE/SAVE 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 SAVE, 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.

SAVE and PAYE

Highlights of the SAVE program:

Monthly payments are 5% of discretionary income for undergrad and 10% of discretionary income for grad/medical school, recalculated every year based on your income/family size. If you have a mix of both, a weighted average between 5%-10% is used.
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 100% 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.

Highlights of the PAYE program:

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.
Is being phased out on July 1st, 2024 and replaced by the New IBR plan for new borrowers.

Learn more about what physicians need to know about PAYE ending.

IBR and ICR

Highlights of the IBR program:

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.

Highlights of the ICR program:

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.

Learn more about the federal student loan repayment plan options highlighted above.

Terminology 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).

Splash Disclosures:

See disclaimers at: https://www.splashfinancial.com/disclaimers/

Splash Financial, Inc. (NMLS #1630038), licensed by the DFPI under California Financing Law, license # 60DBO-102545

Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Products may not be available in all states. Rates and terms are subject to change at any point prior to application submission. The information you provide is an inquiry to determine whether Splash’s lending partners can make you a loan offer. To qualify, a borrower must be a U.S. citizen or other eligible status and meet lender underwriting requirements. Lowest rates are reserved for the highest qualified borrowers and may require an autopay discount of 0.25%. Splash does not guarantee that you will receive any loan offers or that your loan application will be approved. If approved, your actual rate will be within a range of rates and will depend on a variety of factors, including term of loan, creditworthiness, income and other factors. This information is current as of December 15, 2023. You should review the benefits of your federal student loan; it may offer specific benefits that a private refinance/consolidation loan may not offer. If you work in the public sector, are in the military or taking advantage of a federal department of relief program, such as income-based repayment or public service forgiveness, you may not want to refinance, as these benefits do not transfer to private refinance/consolidation loans.

Annual Percentage Rate (APR) is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. Fixed APR options range from 5.19% (with autopay) to 10.24% (without autopay). Variable APR options range from 5.99% (with autopay) to 10.24% (without autopay). Variable rates are derived by adding a margin to the 30-day average SOFR index, published two business days preceding such calendar month, rounded up to the nearest one hundredth of one percent (0.01% or 0.0001).

Payment Disclosure. Fixed loans feature repayment terms of 5 to 20 years. For example, the monthly payment for a sample $10,000 with an APR of 5.47% for a 12-year term would be $94.86. Variable loans feature repayment terms of 5 to 25 years. For example, the monthly payment for a sample $10,000 with an APR of 5.90% for a 15-year term would be $83.85.

1Bonus Disclosure. Terms and conditions apply. Offer is subject to lender approval. To receive the offer, you must: (1) be refinancing over either $50,000, $100,000 or $200,000 in student loans depending on the channel partner that is providing the bonus offer (2) register and/or apply through the referral link you were given; (3) complete a loan application with Splash Financial; (4) have and provide a valid US address to receive bonus; (5) and meet Splash Financial’s underwriting criteria. Once conditions are met and the loan has been disbursed, you will receive your welcome bonus via a check to your submitted address within 90-120 calendar days. Bonuses that are not redeemed within 180 calendar days of the date they were made available to the recipient may be subject to forfeit. Bonus amounts of $600 or greater in a single calendar year may be reported to the Internal Revenue Service (IRS) as miscellaneous income to the recipient on Form 1099-MISC in the year received as required by applicable law. Recipient is responsible for any applicable federal, state or local taxes associated with receiving the bonus offer; consult your tax advisor to determine applicable tax consequences. Splash reserves the right to change or terminate the offer at any time with or without notice. Bonus Offer is for new customers only.

2Credit Pull Disclosure. To check the rates and terms you qualify for, Splash Financial conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

3Medical School Loan Refinance Disclosure. Terms and conditions apply. Fixed APR options range from 6.39% to 9.59% APR with a 0.25% autopay discount. Variable APR options range from 6.39% to 9.61% APR with a 0.25% autopay discount. Rates current as of December 6, 2023. Borrowers employed full time as an intern, resident, fellow, or similar postgraduate trainee at the time of loan disbursement are eligible to make $100 monthly payments throughout their training (“Residency Period”). The maximum amount of time they can pay $100 per month is 84 months. Residency and fellowship loans offer fixed and variable rate options and have a loan term of up to 240 months, inclusive of an optional 84-month deferment period during residency or fellowship and provide the option to either immediately repay the principal and interest or to defer repayment. Variable interest rates may increase after consummation. The APR range shown assumes the APR, monthly payment and total payments that would apply to a loan that is made at the end of the residency period in a single disbursement. For example, a refinance loan with a fixed 7.24% APR on a $180,000 principal balance, a 3-month training period with payments of $100 per month, will have a 5-year repayment term after training is complete with payments of $3,649.85 per month. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers. If approved, your actual rate will be within a range of rates and will depend on a variety of factors, including term of loan, a responsible financial history, income and other factors.

Credible Disclosure: This page contains an advertisement from a third-party advertiser, Credible Operations, Inc., which is licensed as a mortgage broker in some, but not all, states (see https://www.credible.com/a/mortgage/licenses). Information contained herein is provided for illustrative purposes only, without any representations or warranty as to its accuracy or applicability to you. All credit requests are subject to review and approval, and your actual loan terms will depend on your financial situation. Credible Operations, Inc. is solely responsible for the content of its advertisement and the services it provides.