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This article first appeared on the Credible blog.
Heading into the healthcare field can be rewarding and lucrative. However, it can also be expensive to get there — students who attend a healthcare program leave with an average medical school debt of $232,300.
While this might seem like a massive amount of debt, there are fortunately a few options that can help you manage it. For example, refinancing medical school loans might help you save money and potentially pay off your loans faster.
Learn more about Credible’s partner lenders:
Brazos
If you’re a Texas resident, Brazos might be a good choice for refinancing. You can refinance $10,000 to $400,000 if you graduated with a medical degree.
Pros
- Competitive interest rates
- 0.25% autopay discount
- No application, origination, or disbursement fees
Cons
- Not available outside of Texas
- Cosigner release not offered
- Requires a minimum income of $60,000 ($30,000 with a cosigner), which might make it difficult for new graduates to qualify
Citizens
With Citizens, medical school graduates can refinance $10,000 to $750,000. Refinancing is also available to borrowers who didn’t complete their degree — though this will affect the maximum amount they can refinance with Citizens.
Additionally, if you already have an account with Citizens, you could get a 0.25% rate discount — plus another 0.25% off your rate if you sign up for autopay.
Pros
- 0.25% loyalty discount
- 0.25% autopay discount
- Degree not required
Cons
- Doesn’t disclose minimum income or credit score requirements
- Long cosigner release period (36 months)
- Cosigner release not available on the Education Refinance Loan for Parents
College Ave
With College Ave, you can refinance $5,000 to $300,000 of medical school debt and can choose from 16 repayment terms ranging from five to 20 years.
Pros
- 16 repayment terms to choose from
- 0.25% autopay discount
- Cosigner release offered (after 24 months)
Cons
- Doesn’t disclose minimum income or credit score requirements
- No physical locations
- Not available in Maine
EdvestinU
While EdvestinU won’t refinance as much debt as some of its competitors, it does offer a wide range of loan terms and a choice of a fixed or variable interest rate. Refinancing is available to those who did not graduate.
Plus, EdvestinU offers deferment options should you fall on hard times.
Pros
- Variable and fixed rates available
- Offers refinancing to borrowers who haven’t completed their degrees
- No application, origination, or prepayment fees
Cons
- Long cosigner release period (36 months)
- Borrowers with poor or fair credit might not qualify
ELFI
If you have a large amount of debt, Education Loan Finance (ELFI) might be a good choice — you can refinance a minimum of $10,000 with no set maximum.
Pros
- No maximum loan limit
- Variable-rate loans capped at 9.95% APR
- Up to 12 months of forbearance available for borrowers experiencing financial hardship
Cons
- No discounts available
- Cosigner release not offered
- Might be hard to qualify if you have poor or fair credit
INvestEd
Unlike many lenders, INvestEd doesn’t require borrowers to have graduated to apply for refinancing, which could make it a good option if you didn’t complete your degree. With INvestEd, you can refinance $5,000 to $250,000.
Pros
- 0.25% autopay discount
- Up to 24 months of forbearance available over the life of the loan (one to three months duration per forbearance)
- Degree not required
Cons
- Can only refinance up to $250,000, which might not fully cover your medical school debt
- Might be hard to qualify if you have poor or fair credit
- Long cosigner release period (48 months)
ISL Education Lending
ISL Education Lending offers a variety of refinancing options — which includes being able to refinance while you’re still in school.
In addition to a standard repayment plan, ISL Education Lending provides a graduated repayment plan to borrowers who choose a 10-, 15-, or 20-year term (plus seven-year terms in some cases). This type of plan starts with low payments that gradually increase over time.
Pros
- 0.25% autopay discount
- Can refinance while still in school
- Graduated repayment plan available
Cons
- Rates can be higher than competing lenders
- Cosigner release period longer than some lenders (24 months)
MEFA
The Massachusetts Educational Financing Authority (MEFA) offers refinancing to borrowers who attended public or nonprofit universities.
With MEFA, you can refinance $10,000 up to your total amount of qualified education debt, which could make it a good choice if you have a large balance you want to refinance.
Pros
- No maximum loan amount
- Competitive rates
- No application, origination, or disbursement fees
Cons
- No discounts available
- Cosigner release not offered
- Not available for students who attended for-profit colleges
PenFed
PenFed offers refinancing on loans from $7,500 to $300,000. It’s also the only lender that will allow you to consolidate your loans with your spouse.
Keep in mind that if you apply with PenFed and are approved, you’ll need to join the credit union to accept your loan.
Pros
- Can refinance loans with a spouse
- Cosigner release offered after just 12 months
- Interest capped on variable-rate loans
Cons
- No discounts available
- 20-year term not offered
- Minimum income of $42,000 to $50,000 required (depending on loan amount), which might make it difficult for recent graduates to qualify
RISLA
The Rhode Island Student Loan Authority (RISLA) could be a smart choice for refinancing if you’re worried about job security down the line. Unlike most private lenders, RISLA offers an income-based repayment (IBR) plan for borrowers who demonstrate financial hardship.
Additionally, if you make on-time, consecutive payments for 25 years under this IBR plan, RISLA will forgive any remaining balance you might have.
Pros
- Income-based repayment plan available
- 0.25% autopay discount
- Can defer payments for 36 months if you decide to go back to school
Cons
- Variable rates not available
- 20-year term not offered
- Cosigner release not offered
Find out if refinancing is right for you. Checking rates on Credible takes about 2 minutes and won’t impact your credit score.
Other student loan refinancing lenders
There are also several other lenders that will refinance student loans from medical school. However, because the lenders in the table below aren’t Credible partners, you won’t be able to use Credible to compare them.
Discover
Loan terms: 10 or 20 years
Max loan balance: $249,000 (undergrad), $199,000 (grad)
First Republic Bank
Loan terms: 5, 7, 10, or 15 years
Max loan balance: $500,000 (undergrad), $500,000 (grad)
iHelp
Loan terms: 10, 15, or 20 years
Max loan balance: $249,000 (undergrad), $249,000 (grad)
Laurel Road
Loan terms: 5, 7, 10, or 15 years
Max loan balance: None
PNC
Loan terms: 5, 10, or 15 years
Max loan balance: $99,000 (undergrad), $150,000 (grad)
SoFi
Loan terms: 5, 7, 10, 15, or 20 years
Max loan balance: None
Splash Financial
Loan terms: Does not disclose
Max loan balance: None
How much you could save when refinancing medical school loans
If you refinance your medical school loans, you might qualify for a lower interest rate, which will save you money over the life of your loan.
However, the exact amount you could save depends on several factors — including your credit and whether you can reduce the interest rate you currently have.
For example: If you’re looking to pay off $100,000 in student loans — or even pay off $200,000 or more in student loans — getting a lower interest rate might save you hundreds or thousands of dollars in interest on your medical school debt.
Does refinancing make sense for you? Compare offers from top refinancing lenders to determine your actual savings.
When you should (and shouldn’t) refinance law school loans
Whether or not you should refinance your student loans will ultimately depend on your individual circumstances and financial goals.
For example, maybe you can score a lower interest rate and pay off your loans faster through refinancing. Or could qualify for student loan forgiveness on your federal student loans, which would make refinancing a bad idea.
Here are a few scenarios when refinancing your medical school loans could be a wise move:
You can get a better interest rate
If you can qualify for a lower interest rate, you could save money on interest charges over the life of your loan and even pay off your medical school debt ahead of schedule.
You want a lower monthly payment
If you opt for a longer repayment term through refinancing, you could lower your student loan payment and ease the strain on your budget.
This might be especially helpful during residency when you aren’t making as much money as you likely will later in your career. However, keep in mind that choosing a longer repayment term means you’ll pay more in interest over time.
You want to change the type of interest rate you have
Through refinancing, you can change from a fixed rate to a variable rate — or vice versa. With a fixed rate, your interest rate and payments will never change.
Variable rates often start out lower than fixed rates but might fluctuate over time. You’ll have to decide which type of rate is best for you.
And here are some situations where refinancing might not be smart:
You can’t get a better rate
If you already have a low interest rate, refinancing might not be worth it.
You have federal student loans
While you can refinance federal student loans, doing so will cost you federal protections, such as access to income-driven repayment plans and student loan forgiveness programs.
Additionally, you’ll also lose your federal benefits under the CARES Act, which has suspended federal student loan payments and interest accrual through at least August 31, 2022 due to the COVID-19 pandemic. As such, it might be a good idea to wait to refinance federal student loans while focusing on private student loans for now.
You could qualify for student loan forgiveness
There are several student loan forgiveness programs available to doctors, nurses, and other healthcare professionals who have federal student loans. If you could qualify for one of these medical school loan forgiveness programs, refinancing probably isn’t a good idea.
Tip: Medical students who have started their residency might also qualify for refinancing. This might get you a better rate or more favorable terms, which could make your debt easier to manage.
Some lenders — such as SoFi — even offer special refinancing rates and terms for medical residents.
If you decide to refinance your student loans, you might be able to save money on interest and even pay off your loans early. You can estimate how long it’ll take to pay off your student loan debt using the calculator below. Use the slider to see how increasing your payments can change the payoff date.
Does refinancing make sense for you? Compare offers from top refinancing lenders to determine your actual savings.
How to get the best interest rate when refinancing medical school loans
Here are a few tips that could help you get the best interest rate you can when refinancing your medical school loans:
- Improve your credit. You’ll generally need good to excellent credit to qualify for the lowest rates from lenders. If you can wait to refinance, it could be a good idea to spend some time improving your credit first to score a lower rate in the future. Some ways to potentially build your credit include becoming an authorized user on a credit card, disputing any errors on your credit reports, and making on-time payments on all of your bills.
- Consider a cosigner. If you’re looking to refinance student loans with bad credit, applying with a cosigner could be a good idea. Even if you don’t need a cosigner to qualify, having one could get you a lower interest rate than you’d get on your own. Just keep in mind that your cosigner will be equally responsible for the loan if you can’t make your payments.
- Shop around and compare lenders. Be sure to compare as many student loan refinance companies as possible to find the right loan for you. Rates vary between lenders, so considering as many options as you can could help you find a good deal.
Is refinancing a good idea?
If you can lower your interest rate, get a payment that fits more comfortably in your budget, or otherwise simplify your student loan repayment, then refinancing might be a good idea.
However, it isn’t always right for everyone. You’ll need to consider your personal circumstances and financial goals to make the best decision for you.
For example: Say you have the average medical school debt of $232,300 with an 8% interest rate and a 15-year term. If you kept this loan as is, you’d pay $167,296 in interest charges by the time you paid off the loan.
However, if you refinanced to a new 15-year loan with a 7% rate — just 1% lower — you’d save $23,760 in interest over the life of your loan.
Will refinancing hurt your credit score?
Generally, refinancing shouldn’t hurt your credit score since your loan balances aren’t changing. You might see a slightly negative impact on your score when you apply and the lender performs a hard credit check — however, this is usually only temporary, and your score will likely bounce back within a few months.
Also keep in mind that there’s no limit on how often you can refinance student loans, meaning you could refinance again if rates drop in the future.
Tip: Refinancing lets you consolidate your student loans, leaving you with one loan and just one payment to worry about. Additionally, you might consider refinancing your undergraduate loans to potentially save you money while you’re still in medical school.
About the author: Aly J. Yale is a mortgage and real estate authority. Her work has appeared in Forbes, Fox Business, The Motley Fool, Bankrate, The Balance, and more.
