Credit Card Rental Insurance: What Is It and How Does It Work?

Whether you’re renting a car to use while on vacation or because your usual vehicle is temporarily out of commission, you might have been asked if you’d like to purchase additional car rental protection. If you paid for your car rental reservation using a credit card, your card may already offer some form of rental protection. However, not all credit cards offer this benefit, and those that do provide varying car rental insurance benefits.

Learning the requirements and limits of your credit card’s car rental insurance coverage — if any at all — can help you make an informed decision when booking or picking up your car rental.

Recommended: What is the Average Credit Card Limit

What Is Credit Card Rental Car Insurance?

Rental car insurance through a credit card is also called an “Auto Rental Collision Damage Waiver.” It generally states that if a rental car that was purchased using the card sustains damage due to an automobile collision or theft, you can file a reimbursement claim through your credit card issuer.

This might include a range of damage, from a smashed window due to theft to a car accident involving another vehicle. An Auto Rental Collision Damage Waiver typically covers damage-related costs of the vehicle itself, but it doesn’t cover stolen personal items resulting from the theft, like a laptop, or costs related to bodily injury. Knowing these ins and outs can be especially helpful given the recent rental car rebound.

Understanding Your Credit Card’s Coverage for Rentals

Not all credit card car rental insurance terms offer the same level of coverage. For example, some credit card rental car insurance only kicks-in after your personal auto insurance coverage and with reimbursement limitations.

Credit card car insurance generally falls into one of two categories: primary or secondary coverage.

Related: How Much Auto Insurance You Need.

Primary Coverage

Certain issuers offer credit card rental car insurance as primary coverage. Primary coverage means that, in the event of damage or theft, you can file a claim directly through the card issuer for reimbursement. You’re not required to file a claim through other insurance sources, like your personal auto insurance company, before the primary credit card car rental insurance benefit applies.

Secondary Coverage

Unlike primary coverage, secondary coverage rental car insurance protection through a credit card offers supplemental reimbursement. With secondary coverage, you’ll first need to file a claim through your personal insurance coverage policy or other sources, such as supplemental insurance through the rental company.

Let’s say you’ve reached your maximum reimbursement through other insurance sources, but you have a remaining reimbursable amount. In this scenario, your credit card rental car insurance benefit can then be used to claim the remaining amount.

How Does Credit Card Rental Insurance Work?

If you’ve rented a car using a credit card that offers rental insurance benefits, you’ll need to follow certain steps to claim a reimbursement. Requirements might vary slightly between card issuers, but below are the general steps you can expect to follow:

1.    Use a credit card with rental insurance protection. The first question you’ll need to answer is, does my credit card cover rental car insurance? If it does, put the entire cost of the rental on your credit card. Keep that card on file with the rental company in case any eligible damage occurs.

2.    Opt out of the car rental company’s collision insurance coverage. If you purchase coverage through the rental company, that becomes the primary source of coverage instead of your credit card issuer.

3.    Pay for damages out-of-pocket. If an incident occurs involving the rental vehicle, your credit card will be charged. You’ll then file a reimbursement claim for the amount of any applicable repair costs through your credit card rental car insurance coverage. Some card issuers allow claim payments to go directly to the rental company, upon request.

4.    Maintain documentation. This includes police reports, if available, as well as rental receipts, damage charges from the car rental agency to your credit card, towing receipts, and any other documentation or proof of expense as a result of the incident.

5.    Submit your claim ASAP. File a Auto Rental Collision Damage reimbursement claim as soon as possible, as it can take weeks to settle a claim. If your card issuer’s benefits administrator reaches out for additional information or documents, submit those details within their designated timeline to avoid issues or possible denial of your claim.

Recommended: What is a Charge Card

Questions to Ask Your Credit Card Issuer

In addition to learning what your own car insurance covers, it’s important to know your credit card’s rules around its Auto Rental Collision Damage Waiver benefit. If you’re unclear about how your card can protect you while using a rental car, contact your issuer’s customer support number. Here are some important questions to ask:

•   Does the rental car insurance benefit offer primary or secondary coverage? The answer to this question can help you choose the best payment option to use for your next rental car. It will also give you a sense of what to expect if you need to file a claim.

•   What is included and not included in the coverage? In addition to reimbursements for damage, you’ll want to know if the card’s rental car insurance covers loss-of-use charges from the rental company, for example. Be clear on what isn’t eligible for reimbursement, too.

•   What are the coverage timelines? Depending on your credit card issuer, the number of days when your rental coverage is in effect might be limited.

•   Are there any countries in which the coverage is ineligible? Rental car insurance coverage might not be offered if the incident occurred in certain countries.

•   What do I need to do to ensure I’m covered? Ask what you can do on your end to ensure your rental car is covered by the credit card’s insurance benefit. This may include putting the entire purchase on the card, declining supplemental rental insurance coverage from the rental company, or other requirements stipulated by your insurer.

•   What’s the process for filing a claim? Knowing how to swiftly file a claim after an incident can offer some peace of mind during an already stressful situation.

Recommended: When Are Credit Card Payments Due

Guide to Choosing the Right Credit Card for Car Rental Insurance

If you have multiple credit cards in your rotation that offer differing levels of credit card car insurance protection, consider using the card that offers primary coverage. This helps you avoid the added step of going through your own auto insurance company before being able to successfully file a claim through the card issuer.

The next factor for consideration is coverage amounts. Your maximum reimbursement amount will vary between insurance coverages, so be mindful about how high or low this limit is. Also, pay attention to the exclusions for coverage, including ineligible countries, activities (e.g. off-roading in the rental vehicle), and restrictions on vehicle type.

Other Ways Your Card Can Protect You When You Travel

When a credit card is used responsibly, it can offer many travel-related benefits. In addition to rental car insurance coverage, some credit cards provide protection for lost luggage expenses and trip interruptions. Credit card travel insurance is especially useful if your travel plans are canceled due to reasons like severe weather or illness.

Keep in mind that many premium travel credit cards will have higher credit score requirements, which is another reason why good credit is important if you’re interested in accessing these benefits.

Recommended: Does Applying For a Credit Card Hurt Your Credit Score

The Takeaway

If your credit card covers rental car insurance, in many cases, you can decline the duplicative car rental company’s offer for collision coverage. However, it’s worth learning whether your credit card car rental insurance coverage is primary or secondary and what its coverage limits are in case you need to file a claim

If you’re comfortable using a credit card strategically when renting a car, compare the rental car insurance credit card benefits offered by different credit cards. Depending on your credit card, you might even be able to earn cash back rewards on your next car rental.

For example, the SoFi credit card offers cardholders 2% unlimited cash back rewards when redeemed to save, invest, or pay down eligible SoFi debt. Cardholders earn 1% cash back rewards when redeemed for a statement credit.1 Plus, the SoFi credit card offers cell phone protection, and the incentive to lower your APR by 1% when you make on-time payments of at least the minimum amount that’s due for 12 months.

The SoFi Credit Card offers unlimited 2% cash back on all eligible purchases. There are no spending categories or reward caps to worry about.1



Take advantage of this offer by applying for a SoFi credit card today.

FAQ

Do you need a credit card to rent a car?

No, you generally do not need a credit card to rent a car through many national car rental companies, like Enterprise, Hertz, and Avis. Major car rental companies often accept a debit card to secure your rental. Depending on the rental company, your debit card may need to have the logo of a credit network, such as Visa, MasterCard, Discover, or American Express.

Do all credit cards have car rental insurance?

No, not all credit cards provide car rental insurance benefits. However, many credit cards offer this protection to some extent, whether as a primary or secondary coverage. If you’re interested in accessing this benefit, make sure to familiarize yourself with what credit cards cover rental car insurance.

How do I know if my card comes with primary or secondary insurance?

You can refer to your credit card’s terms and conditions to learn whether your credit card offers car rental insurance protection, and if it does, whether it’s primary or secondary coverage. You can also contact the customer support phone number listed on the back of your credit card to speak to a representative about your specific card’s car rental insurance benefits.


Photo credit: iStock/g-stockstudio

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

The SoFi Credit Card is issued by SoFi Bank, N.A. pursuant to license by Mastercard® International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

1See Rewards Details at SoFi.com/card/rewards.

1Members earn 2 rewards points for every dollar spent on purchases. No rewards points will be earned with respect to reversed transactions, returned purchases, or other similar transactions. When you elect to redeem rewards points into your SoFi Checking or Savings account, SoFi Money® account, SoFi Active Invest account, SoFi Credit Card account, or SoFi Personal, Private Student, or Student Loan Refinance, your rewards points will redeem at a rate of 1 cent per every point. For more details please visit the Rewards page. Brokerage and Active investing products offered through SoFi Securities LLC, member FINRA/SIPC. SoFi Securities LLC is an affiliate of SoFi Bank, N.A.

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Refinancing Student Loans During Medical School: What to Know

Refinancing Student Loans During Medical School: What to Know

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.

Learn more about a SoFi student loan refinance today.

FAQ

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.


SoFi Student Loan Refinance
If you are a federal student loan borrower, you should consider all of your repayment opportunities including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. 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 or extended repayment plans.


SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

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Guide to Student Loan Interest Rates for the 2022 School Year

Once a year, usually in June, the government announces interest rates for federal student loans that will be first disbursed after July 1. Whether you’re a freshman or, say, a junior, these rates apply to the loans you get for the academic year that starts in the fall.

Federal student loan interest rates are determined differently than private student loan interest rates. Here’s what you should know about federal and private student loan interest rates in 2022 and 2023.

Federal Student Loan Interest Rates for 2022

As just noted, interest rates on federal student loans for the upcoming academic year are set by the government. By federal law, they’re based on the 10-year Treasury note auction in May. The rates set for the 2022 to 2023 school year are for loans first disbursed from July 1, 2022 to June 30, 2023.

For the 2023-2024 school year, the interest rate on Direct Subsidized or Unsubsidized loans for undergraduates is 5.50%, the rate on Direct Unsubsidized loans for graduate and professional students is 7.05%, and the rate on Direct PLUS loans for graduate students, professional students, and parents is 8.05%. The interest rates on federal student loans are fixed and are set annually by Congress.

How Federal Student Loan Interest Rates Work

Interest rates on federal student loans are fixed for the life of the loan. That means that if you borrowed a Direct Subsidized Loan for the 2020 – 2021 school year, and your interest rate was 2.75%, that interest rate is locked in at 2.75% for the life of that loan.

But, if you borrowed another Direct Subsidized Loan to pay for the 2021 – 2022 school year, your new loan will be disbursed with the 3.73% interest rate offered during that school year.

Since 2006, interest rates on federal student loans have fluctuated from anywhere between 2.75 to 8.50%, depending on the type of loan.

Difference Between Federal and Private Student Loan Interest Rates

Unlike federal student loans, interest rates for private student loans are set based on economic factors and underwriting unique to each lender that issues them. Lenders typically take into account a borrower’s credit history, earning potential, and other personal financial factors.

If you borrowed a private student loan, you may have applied with a cosigner to secure a more competitive interest rate. That’s likely because most college students don’t have much credit history or employment history, so interest rates on private student loans can be higher than those on federal student loans without a well-qualified cosigner.

While federal student loans have a fixed-interest rate, private student loans can have either a fixed or variable interest rate. Borrowing a variable rate loan means that the interest rate can change periodically.

How Private Student Loan Interest Rates Work

The frequency of changes in the interest rate will depend on the terms of the loan and on market factors; typically, private lenders adjust the interest on variable-rate loans monthly, quarterly, or annually. Interest rates on private student loans are typically tied to the London Interbank Offered Rate (LIBOR) or the 10-year Treasury yield.

So as the LIBOR changes, for example, interest rates on variable-rate student loans can change as well. Typically, lenders will add a margin to the LIBOR, which is determined based on credit score (and, the credit score of your co-signer if applicable).

Generally, the LIBOR tracks the federal funds rate closely. In June 2020, the Federal Reserve announced that it plans to keep the federal funds rate close to zero, likely through 2022.

This means that, so long as the federal funds rate remains low, the interest rates on private student loans are not likely to increase during that time period. However, it’s important to pay attention to interest rates, especially for borrowers with private student loans with a variable-interest rate, since these changes could cause fluctuations to the interest rate of the loan.

And given that LIBOR is scheduled to be discontinued around the end of 2021 , rates could change in other ways as new indices are chosen by lenders.

Lowering the Interest Rate on a Private Variable-Rate Loan

If you have a private variable-rate loan and are worried about interest-rate volatility, there are options available to protect against an interest-rate hike. One option is switching to a fixed-rate loan via student loan refinancing.

When you refinance your student loans, you take out a new loan (typically with a new lender).

The new loan effectively pays off your existing loans, and gives you a new loan with new terms, including a new interest rate. Private lenders, like SoFi, review personal financial factors like your credit and employment history, among other factors, to determine a new interest rate.

If you qualify to refinance, you’re then able to choose between a fixed or variable rate loan, so if you’re worried about rising interest rates in the future, you may have a chance to qualify to lock in a new (hopefully lower) fixed interest rate.

Monthly Payments and Private Loans

You should also have the opportunity to set a new repayment plan, either extending or shortening the term of the loan. If you extend your student loan repayment term, you’ll likely have lower monthly payments, but will pay more in interest over the life of the loan.

Shortening your repayment plan typically has the opposite effect. You may owe more each month, but will most likely spend less on interest over the life of the loan.

To get a general idea of how much refinancing your student loans could impact your repayment, take a look at SoFi’s student loan refinance calculator, where you can compare your current loan to current SoFi refinance student loan rates.

Refinancing Federal Student Loans

Federal student loans can be refinanced, too. Typically, a student wouldn’t do this while still in school, since the government is paying the interest on certain federal loans during this time. Also, federal student loan interest rates are generally lower than rates for private loans disbursed in the same time period.

It should be noted, however, that refinancing a federal student loan with a private lender means you’ll no longer be eligible for federal programs and protections like income-driven repayment, forbearance, or Public Service Loan Forgiveness (PSLF).

The Takeaway

Interest rates for federal student loans reset every year in June for the upcoming school year. For the 2022 school year, rates are up roughly 1% compared to the previous year, which saw the lowest rates in years.

If you refinance your student loans with SoFi, there are no origination fees or prepayment penalties. The application process can be completed online, and you can find out if you prequalify for a loan, and at what interest rate, in just a few minutes.

Ready to take control of your student loans in 2022 and beyond? See how refinancing with SoFi can help.




SoFi Student Loan Refinance
If you are a federal student loan borrower, you should consider all of your repayment opportunities including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. 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 or extended repayment plans.


External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.


SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

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Can You Roll Your Student Loans Into Your Mortgage?

It’s possible to roll student loans into a mortgage using a cash-out refinance. In order to to do this, you’ll already need to have enough equity in your home. While this could potentially help you secure a lower interest rate, it’s not the right choice for everyone. Read on for more information on situations when it may make sense to roll your student loan into a mortgage and other strategies to pay off student loan debt.

Paying Your Student Loans

Paying off one loan with another is a standard form of debt reshuffling or consolidation. When it comes to student loans, though, your options may seem limited. It is, however, possible to roll student loan debt into a new mortgage through a cash-out refinance loan — as long as you have sufficient equity in your home.

But just because you can, it doesn’t mean you should. Here are some tips on how to consolidate student loans into a mortgage — and whether it may be the right move for you.

Rolling Student Loans Into a Mortgage

A cash-out refinance is a type of mortgage loan that enables you to turn a portion of your home’s equity into cash. Simply refinance your existing mortgage for more than what you currently owe into a new loan with new terms and keep the difference.

Once you have the cash in hand, and as long as there are no loan conditions to pay off specific debt with the cashout, you can do whatever you want with it, including paying off your student loans.

You may need to do the legwork of determining how much you need to add to the new proposed loan and may be responsible for ordering the final payoff. If it is not a condition of the new mortgage loan, the lender would normally not request escrow to order the payoff and pay the loan in full at loan closing. If you would like escrow to perform this service for you, just let them know.

Once you’ve completed the loan consolidation process, you may still have the same amount of debt as you did before (possibly more if you added any applicable closing costs to your new loan). You’ll just be paying it all in one monthly payment, based on your new mortgage terms.

If you want to refinance student loans into a mortgage, it could be beneficial in some situations. However, it’s important to understand the benefits and drawbacks of doing so and also to compare the benefits of this option with other alternatives.

One such drawback is that you may no longer be eligible for federal student loan benefits , such as the ability to pursue federal student loan forgiveness or federal student loan repayment plans. This includes income-driven repayment plans, where your monthly student loan repayment changes according to your income.

Pros and Cons of Rolling Student Loans into a Mortgage

Depending on your debt situation and your credit profile, consolidating student loans and your mortgage into new terms could be a smart idea or a terrible one. Here are some of the pros and cons to consider.

Pros of Rolling Student Loans into Mortgage

•   It could lower your interest rate: If you pay a higher interest rate on your student loans and current mortgage vs. a new Cash-Out Refi, consolidating may help reduce how much you pay in overall interest.

•   It could lower your monthly payment: If you qualify for a lower interest rate and choose a longer repayment period with the new loan, it may significantly lower the total amount you pay each month for your mortgage and student loans combined. Keep in mind that extending the life of the loan may mean you pay more in interest in the long-term.

•   It simplifies your finances: Having a single monthly payment might make your finances easier to manage. The fewer monthly payments you have to keep track of, the better. If you have multiple student loans, rolling them into your mortgage can make your life easier.

Cons of Rolling Student Loans into Mortgage

•   You could end up paying more interest over time: Stretching a 10-year student loan repayment term to up to 30 years could end up costing you more in interest, even if the interest rate is lower. Also, if you have paid down a 30 year mortgage for a few years and originate a new 30 year mortgage, you will be extending your existing loan term and may be paying additional interest over the life of the loan.

•   You may not be eligible: To qualify for a cash-out refinance loan, you typically need to have at least 20% equity left over after the new loan amount on the cash-out refinance. Even if you do have more than 20% equity right now, the difference might not be enough to pay your student loan in full.

•   You may pay closing costs: Depending upon the rate and term you choose, you may have applicable closing costs. FannieMae offers a program for student loan cash-out refinance loans. Consider getting a quote for this program and compare the rate and fees of this program to a standard cash-out refi.

•   You may be reducing the amount of available equity in your home: Taking cash out of your home can reduce the amount of available equity in your home. Market value fluctuations can also impact the amount of available equity.

3 Alternatives to Rolling Student Loans into a Mortgage

Before you seriously consider consolidating student loans into a mortgage, it’s important to know what other options you may have for paying down your debt faster.

1. Refinancing Your Student Loans

Whether you have federal or private student loans, you can refinance your student loans with a private lender like SoFi. Depending on your credit, income, and financial profile, you may qualify for a lower interest rate, monthly payment, or both.

You can also gain some flexibility by choosing a longer or shorter repayment term. Keep in mind that refinancing federal student loans means they’ll no longer be eligible for any federal programs or borrower protections, such as income-driven repayment plans.

2. Seeking Repayment Assistance

Employers are increasingly offering student loan repayment assistance as an employee benefit. Well-known companies that provide this repayment benefit include Aetna, Fidelity, PricewaterhouseCoopers, SoFi, and more. If your current employer doesn’t offer student loan repayment assistance, consider finding a job that does when you are next seeking employment.

3. Apply for Student Loan Forgiveness or Grants

Depending on your career path, you may qualify for student loan forgiveness or grant programs. Examples of these programs include (but are not limited to):

•   Health care

•   Veterinary medicine

•   Law

•   Military

•   STEM

If you’re working in one of these fields or a similar one, check to see if there are forgiveness or grant programs for which you may qualify. As previously mentioned, a cash-out refi may make you ineligible to participate in these programs. Check on any possible loss of benefits before considering a refinance of these loans.

Deciding If Rolling Student Loans into a Mortgage Is Right for You

Using a cash-out refinance to consolidate student loans and a mortgage into one affordable monthly payment sounds appealing, especially if you can get a lower interest rate than what you’re currently paying. But it’s crucial to consider all of the costs involved before you make a decision.

A lower interest rate, for instance, doesn’t necessarily mean you’ll pay less interest over the life of the loan. Work with a mortgage loan officer or run an amortization schedule in order to do the math.

Also, keep closing costs in mind. Closing costs can vary depending upon the loan scenario and is tied to factors such as the interest rate you choose, your credit score, loan type, property type, and more.

And paying closing costs is not a given. For instance, you can choose to take a higher interest rate (if it is still lower than what you currently have) and use the lender rebate money built into that higher rate to cover some or all of your applicable closing costs. When the time comes to lock in your rate, speak with your chosen lender about various loan programs and the estimated closing costs tied to each rate and term option.

Finally, take a look at some of the other options out there and determine whether you could potentially save more money in interest with them. The more time you spend researching, the better your chances of settling on the option that is most affordable overall.

Can You Buy a House With Student Loans?

While existing debt can impact whether you’re approved for a loan, or the interest rate and loan terms if you are approved, it’s still possible to buy a house with student loan debt. When you apply for a mortgage, the lender will review your complete financial picture including your debt obligations, which might include student loans, credit card debt, or a car loan.

Debt-to-income ratio is one important consideration for lenders. This is a measurement of how much debt one has in comparison to how much money you earn and lenders rely on this metric to inform whether or not you’d be able to make the monthly payments on a new loan, considering your existing debt. Generally speaking, lenders are unlikely to approve anyone for a mortgage with a debt-to-income ratio higher than 43%, though lenders may be more inclined to lend to someone with a debt-to-income ratio lower at or less than 36%.

Beyond debt-to-income ratio, lenders will also evaluate factors such as the borrower’s credit score.

Before applying, do some number crunching to see what a mortgage might cost and how it will impact your overall debt-to-income ratio. This might be helpful in understanding the mortgage rates you may be eligible for.

In addition to traditional home loans there are programs available for first-time home buyers that might make buying a home with student loan debt more achievable.

Refinancing Student Loans With SoFi

If you are interested in consolidating your student loan debt at a lower interest rate but don’t want to roll them into your mortgage, you may instead want to consider student loan refinancing. With SoFi student loan refinancing, you can refinance your private or federal loans (or both!) with no application fees, origination fees, or prepayment penalties. And you still get the benefit of consolidating your loans to one payment, with a new (and potentially better) interest rate and loan terms. Keep in mind that refinancing any federal loans will eliminate them from federal programs and borrower protections such as income-driven repayment plans or deferment options.

The Takeaway

When paying down student loan debt faster, there’s no one-size-fits-all solution. The more information you gather about your options, the easier it will be to eliminate your debt as quickly as possible.

If you’re interested in refinancing your student loans, consider SoFi. Student loan refinancing at SoFi has no fees and as a SoFi member, borrowers qualify for perks such as career coaching, community events, and more.

Learn more about SoFi student loan refinancing.

FAQ

Is it a good idea to roll your student loans into a mortgage?

Evaluate all loan details carefully before rolling your student loans into a mortgage. Factors such as closing costs, loan term, any additional fees, and interest rate can all influence how much it will cost to borrow money over the life of a loan. In some cases, it may be possible to qualify for a lower interest rate when borrowing a mortgage. In other cases, extending the repayment of your student loans over a 30-year period with your mortgage may make it more expensive. If you have any questions on your personal financial situation, consider speaking with a qualified financial professional or mortgage loan officer who can offer a personalized assessment.

Can student loans be included in a mortgage?

Student loans can be included in a mortgage if you have enough equity in your home. Rolling student loans into a mortgage generally requires the borrower to take out a cash-out refinance loan, which allows you to turn a portion of your home’s equity into cash. Once you have the cashout in hand, you can pay off your existing student loans.

Terms may vary by lender. There are certain programs, such as Fannie Mae’s Student Loan CashOut Refi that specialize in this type of borrowing.

How much of student loans is counted for a mortgage?

Student loans are evaluated as a part of your overall debt-to-income ratio. In general, lenders avoid lending to borrowers with a debt-to-income ratio greater than 43%.


SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.


SoFi Student Loan Refinance
If you are a federal student loan borrower, you should consider all of your repayment opportunities including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. 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 or extended repayment plans.


External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Tips for Choosing a Medical School

Choosing the Right Medical School

Medical school is a big commitment. Not only will students spend four years of their life working towards a medical degree, but they’ll pay a big chunk of change for it (financing medical school is a major undertaking and can lead to debt). Which is why choosing the right medical school is so important. Keep reading for insight into how to pick the right medical school and how to finance it.

What Is Medical School?

Medical school is a necessary step towards becoming a doctor and generally, it takes four years to complete in order to receive an M.D., N.D., or D.O. degree. After medical school, graduates will need to pursue a medical residency in their specialty before they can become practicing doctors.

Recommended: How to Pay for Medical School

Different Types of Medical Courses

One of the first steps potential medical students can take to find the right medical school for them, is to better understand the different types of medical courses there are. Once they know what type of medical courses they want to take, they can narrow their search to just medical schools that offer those courses.

Traditional Courses

Some medical students may be attracted to more traditional courses that have students finish two years of pre-clinical work before they move on to the three years of clinical work they need to complete to get their degree. Typically, pre-clinical work occurs in a classroom setting. This is where medical students can learn the key principles of medical science. Once they move on to the clinical work portion of their studies, they will need to work in hospitals or clinics with direct supervision, while attending lectures.

This combination educates students on medical practices while making sure they get the hands-on experience they need to use their pre-clinical knowledge in real life situations.

Integrated Courses

Integrated courses are becoming more and more popular at medical schools, as this style, of course, combines pre-clinical and clinical education. In an integrated course, medical students can expect to learn practical clinical skills and work through problem-based learning.

Often in integrated courses, a lot of the students’ work is self-directed and early patient contact is encouraged.

Intercalated Courses

Intercalated courses are unique, as they allow students to take a year out of medical school to earn a BSc or MSc in a related subject. It’s not a guarantee that every medical school will allow students to do this, but in some schools students have the option or are mandated to do intercalated courses.

Recommended: Making Sense of the Rising Cost of Medical School

How to Choose Your Medical School

Every medical student had to ask themself at one point, which medical school is right for me? Here’s a few factors medical students can take into consideration to make answering that very important question easier.

1. Cost

Med school tuition is pricey and it’s not uncommon for students to take on debt for medical school. On top of tuition, students will also need to pay additional costs such as service fees and textbooks.

While medical schools do offer financial aid such as grants and medical school scholarships to their students, it’s important to prepare for the cost of medical school as not everyone receives financial assistance.

Attending an in-state school could help medical students find a lower tuition cost than at out-of-state or private options. For example, at the University of Utah, tuition for medical school if the student lives in-state is about $40,000 a year, whereas out-of-state students can expect to pay closer to $77,000 a year on tuition at the same school.

Each school charges different tuition rates, but generally, staying in-state can save medical students a lot of money.

Recommended: Average Cost of Medical School

2. Programs Offered

Apart from their general MD program, medical schools typically have multiple programs to choose from that lead to different careers paths. Before applying to medical school, students can take into consideration how many different programs are offered, how many students are accepted to each program, how long their ideal program takes to finish, and how that program aligns with their career goals.

3. Admissions Criteria

One of the easiest ways to start a search for the right medical school is by looking for schools where the applicant meets the admissions criteria. Students can do some research on the admissions criteria for each school to make sure their qualifications lineup, as well as what they need to do to apply to each specific school.

4. Location

Location matters. The location of a medical school can affect how much it costs a student to attend, what their housing situation looks like, and what their lifestyles outside of school is like. By choosing a local school, students may be able to save money on tuition or be able to cut costs by living with a family member. Not to mention, some locations simply have a higher cost of living than others. Students can crunch the numbers on what it would cost them to live at each medical school they want to apply to, so they can get a better idea of what attending medical school will cost them as a whole.

5. Career Path Opportunities

There are a wide variety of career opportunities that can arise after medical school and not all of them involve working as a practicing doctor. Medical school graduates can pursue teaching, research, and business opportunities amongst other exciting career paths. Students can check what career path opportunities a school’s curriculum and counseling center support before they apply to get a feel for if that medical school can help them meet their unique career goals.

SoFi’s Private Student Loans For Medical School

Students that need to take out medical school student loans, may find that SoFi’s private student loans can meet their needs. It only takes minutes to apply online and borrowers can apply with a cosigner. Keep in mind that because private student loans don’t have to offer the same benefits or protections as federal student loans (like the opportunity to apply for Public Service Loan Forgiveness), they are generally considered by students only after they have thoroughly reviewed all other financing options.

Borrowers can repay their SoFi student loans in a way that works for them by choosing a monthly student loan payment and rate that fits their budget. Borrowers never have to worry about fees and can enjoy a six-month grace period after graduation so that they have time to get settled in their post-grad life before they need to start making monthly loan payments.

Recommended: Smart Medical School Loan Repayment Strategies

The Takeaway

Choosing medical schools to apply to is a lot of work, but that research is a key step students need to take to find the best medical school for them.

For help covering the costs of medical school, learn more about SoFi private student loans.

FAQ

Is 30 too old for med school?

No, 30 is not too old to attend medical school. Applicants that apply for medical school will be in their mid-thirties four years later whether or not they pursue a degree. It’s up to them if those four years make a difference in the scheme of things.

What makes a good med school?

A good medical school is one that meets the needs of the student, when it comes to location, finances, and program opportunities.

How do you compare med schools?

Potential medical students can take factors like cost, location, and areas of study into account to compare and contrast their different medical school options.


Photo credit: iStock/Courtney Hale

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.


SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.


Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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