Editor's Note: For the latest developments regarding federal student loan debt repayment, check out our student debt guide.
A career in medicine can be rewarding, but the high cost of medical school means many students take on additional student debt on top of their existing undergraduate student loans.
Some students defer student loan payments while they’re in medical school and others choose to refinance their student debt. The right choice for you depends on a number of factors, such as whether you have federal or private student loans. Here’s what to know about refinancing student loans during medical school.
What You Can Expect to Pay
Going to medical school is expensive: The average cost of medical school is $330,180 for four years at a private institution, according to a 2020 report from the Association of American Medical Colleges (AAMC). For a public medical school, it’s $250,222.
Many students need loans to cover the high cost of medical school tuition and other educational expenses. In fact, 73% of those surveyed in the AAMC report said they had education debt, with students in 2020 carrying an average medical school loan debt of $200,000 (including existing undergraduate loans).
If you don’t have the option for in-school deferment for your undergraduate loans while you’re enrolled in med school, refinancing your undergraduate student loans might be worthwhile and may help lower your medical school loan payments. Here’s what you need to know to decide if refinancing loans as a medical student is right for you.
Can You Refinance Student Loans During Medical School?
Whether you have federal or private student loans, you can technically refinance them at any time along your journey toward becoming a physician.
During a student loan refinance, you can combine multiple student loans of any type — federal and private — into one new refinance loan. This new loan is from a private lender, and comes with a new interest rate and different loan term.
The lender will repay your original loans that were included in the refinance process. You’ll then repay the lender, based on the details of your refinance loan agreement, in incremental monthly payments.
Another Option for Federal Student Loans During Medical School
It’s important to know that if you have federal student loans, refinancing them will remove you from the federal student loan program.
Keeping your federal student loans within the Department of Education’s loan system gives you access to benefits and protections that can be useful while in medical school, like extended deferment or forbearance.
Generally, automatic student loan deferment is applied to federal Direct Loans of borrowers who are enrolled at least half-time at an eligible school. If your federal student loans from your undergrad program weren’t placed on in-school deferment status, reach out to your school and ask them to report your enrollment status.
This student loan refinancing alternative can postpone your monthly payment requirement until after you leave school. However, if you borrowed Direct Unsubsidized Loans or Direct PLUS Loans, you’re responsible for repaying interest that accrues during this time.
Pros of Refinancing During Medical School
A student loan refinance during medical school can offer benefits.
Extend Your Loan Term
Generally, once you’ve signed your student loan agreement you’ve committed to a specific repayment term. For example, if your private student loan has a 5-year term, you’ll need to repay the loan’s balance, plus interest, in that time period.
However, repaying your loan balance while attending medical school might be difficult. With a student loan refinance, you can choose to prolong your repayment timeline over a longer term, like 10 or 15 years.
Lower Monthly Payments
By extending your student loan refinance term, your monthly installment payments become smaller since they’re stretched over a longer period. Prolonging your loan term can result in paying more interest over the life of the loan. However, it affords you a lower monthly payment so you have more funds in your budget toward the day-to-day cost of medical school.
Some Refinancing Lenders Offer Deferment
Some refinancing lenders, like SoFi, offer borrowers the option to defer their student loan refinance payments while in medical school. Generally, you’ll need to meet the lender’s minimum enrollment status and possibly meet other requirements.
This benefit, however, isn’t offered by all lenders so always confirm with the lender before finalizing any student loan refinance offer.
Cons of Refinancing During Medical School
Although there are benefits to refinancing your student loans, there are downsides to this repayment strategy as well.
You Could Pay More Interest Over Time
Extending your loan term causes you to pay more interest throughout the life of the loan, assuming you don’t make extra monthly payments. This means that you’ll ultimately pay more overall for your undergraduate degree.
You’ll Lose Access to Loan Forgiveness
If you refinance federal student loans, you’ll lose access to federal benefits and protections. Physicians who expect to work in the government or nonprofit sector might be eligible for loan forgiveness under the Public Service Loan Forgiveness (PSLF) program.
To be eligible for forgiveness, you must have eligible Direct Loans, and have made 120 qualifying payments toward your federal loan debt while working for a qualifying employer. After PSLF requirements are met, the program forgives the remainder of your eligible federal loan balance.
You’ll lose access to this significant benefit if you refinance federal loans into a private refinance student loan.
Should You Refinance Your Student Loans?
Student loan refinancing is a strategy that can be advantageous for certain borrowers in specific circumstances. For instance, it might be a good option for borrowers who already have a private undergraduate loan and simply want to lower their interest rate to save money.
It can also be a strategy to extend your term if your main goal is to lower your monthly undergraduate loan payments. Borrowers who have adequate savings, reliable income while in medical school, and who are confident that they won’t participate in programs, like PSLF, might benefit most.
Assess your current financial situation, and talk to your loan servicer or undergraduate loan lender to get a full understanding of your repayment options during medical school.
Refinancing Student Loans With SoFi
If refinancing your student loans is the right choice for you, consider SoFi Student Loan Refinancing.
SoFi offers low fixed or variable rates with flexible terms, no fees, no prepayment penalties — and you can view your rate in two minutes.
Can you refinance student loans in residency?
Yes, you can refinance student loans while in residency. However, if you refinance federal loans, it will make that portion of your student debt ineligible for federal loan forgiveness in the future.
Do doctors ever pay off their student loans?
Yes, doctors pay off their student loans, though how they do so can vary. Some also make extra payments toward their debt or take on extra shifts at their hospital, while others refinance or pursue loan forgiveness programs.
When should I refinance my medical student loans?
Exploring a private student loan refinance can be done at any time, especially if your income is stable and your credit has improved since you first took out the loan. If you have federal student loan debt, consider whether you’ll pursue loan forgiveness at any point along your career journey. If you might, your student loans must be kept within the federal loan program to be eligible for forgiveness.
Student Loan Refinancing
If you are a federal student loan borrower you should take time now to prepare for your payments to restart, including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. (You may pay more interest over the life of the loan if you refinance with an extended term.) Please note that once you refinance federal student loans, you will no longer be eligible for current or future flexible payment options available to federal loan borrowers, including but not limited to income-based repayment plans, such as the SAVE Plan, or extended repayment plans.
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