Last Updated on July 8, 2022
According to the American Medical Association, 74% of medical school graduates have $100,000 or more in student loans, and the average amount of medical school debt is $215,900. Needless to say, as a doctor, you’ve likely racked up a significant amount of medical school debt to finish your education.
However, carrying six figures of education debt isn’t as dire for you as it can be for someone working in another field. As a doctor, you likely have a relatively high salary. In fact, the Bureau of Labor Statistics reported that the average salary for family and general practitioners is $235,930.
With your education and income, you’re a prime candidate for student loan refinancing, often referred to as consolidation. Refinancing your medical school student loans can help you save money and pay off your loans early.
Why you should refinance student loans after medical school
When you have such a large amount of student loan debt, interest charges can have a significant impact on your balances. Over time, interest charges can add thousands to your loan cost.
Unfortunately, the interest rates on medical school loans can be quite high. Even if you qualified for federal Grad PLUS Loans, you can face steep rates. As of July 2022, the interest rate on Direct PLUS Loans is a whopping 7.54%.
To put that rate in perspective, let’s say you had $100,000 in student loan debt at 7.54% interest and a 10-year repayment term. Your monthly payment would be $1,189 per month, and by the end of your loan term, you will repay a total of $142,693. Interest charges would cost you over $42,000. Pretty scary, right?
When you refinance medical school loans, you may qualify for a loan with a lower interest rate. Or, you can extend your repayment term if you want a more affordable monthly payment. Depending on what option you choose, the savings can be significant.
If you refinanced your loans and qualified for a 10-year loan at 4.5% interest, your monthly payment would drop to $1,036 per month. However, you’d pay just $124,366 over the length of your loan. By refinancing your debt, you’d save over $15,000.
If you’re considering student loan refinancing but you aren’t sure whether now is a good time, consider the following scenarios. If one or more of these apply to you, it could mean this is a great time to consider seeking a better rate on your loans:
- You aren’t eligible for Public Service Loan forgiveness
- You plan to work in the private sector
- You have high-interest private medical school loans
- Your spouse’s income is high, which increases your income-based payments
- You have a healthy credit score
If your payments are significant, you’re unlikely to receive any type of loan forgiveness and your credit score enables you to earn competitive rates, why wait? Refinancing could lower your payment and offer you the opportunity to change your repayment term to best fit your financial goals.
Refinancing medical school loans during your residency
Some lenders offer payments as low as $100 per month to students still in residency, which enables you to tackle a small portion of your medical school debt before starting full payments.
This financial option would be a good fit for medical students with good credit who can earn competitive interest rates when refinancing, as well as those who have a cosigner readily available. Refinancing during residency may be an especially good move for borrowers with a significant number of private loans.
Bear in mind, however, that because your payments are so low during residency, you may pay more in interest than you would otherwise. That said, refinancing during residency can be a fantastic way to jumpstart your journey toward financial freedom.
Refinancing medical school loans after your residency
If you aren’t planning to refinance during your residency, but you know this is an option you’d like to explore after graduating from medical school, use residency as an opportunity to prepare yourself for financial success.
Be sure to pay your bills on time, maintain long-standing lines of credit and avoid applying for more credit than you need. These actions will help to increase or maintain your credit score for the best possible chance at earning a competitive interest rate when refinancing medical school loans after your residency.
One benefit of refinancing after your residency is that your increased income will provide you with more student loan refinancing options, and you’re much less likely to need a cosigner.
Downsides to refinancing medical school debt
Regardless of your initial loan type, when you refinance your medical school debt, you take out a new loan with a private lender – ideally at a meaningfully lower interest rate. With this new private loan, you can lose access to federal benefits like:
- Income-driven repayment plans
- Ability to pause payments through deferment and forbearance programs
- Loan forgiveness programs
Other than losing out on federal borrower benefits, refinancing your loans might not make sense right now. If you already have a low-interest loan, refinancing may not offer significant savings. Try ELFI’s student loan refinancing calculator to discover what you could save1.
Additionally, some banks charge fees that could potentially offset interest savings. Fortunately, with ELFI, you’ll never pay:
- Application fees
- Origination fees
- Prepayment penalties
Finally, if you’re still in your residency or fellowship, it might make sense to wait until you have a higher income or better credit score, both of which will impact the interest rates available to you. Or you might consider having a cosigner to help you achieve an even lower rate.
Carefully consider whether refinancing your medical school debt in or after residency could help kickstart your long-term financial goals. Whether you choose to refinance immediately or take the time to prepare your credit score for long-term success, if you’ve adequately researched your options, refinancing could be the perfect way to lower your interest rate and choose a repayment term that fits your lifestyle.
How to refinance medical school loans
You can refinance your medical school loans in five simple steps:
1. Find out if you qualify
First, make sure you meet the student loan refinancing eligibility requirements to refinance your medical student loans. As a baseline, you must:
- Have earned a bachelor’s degree or higher from an approved college or university
- Be a U.S. citizen or permanent resident
- Be at the age of majority — 18 years old, in most states — or older
- Have a good credit history
- Have a minimum credit score in the upper 600s
2. Consider asking a cosigner for help
If you’ve just started practicing, you may not have established your credit history yet, or you may not be making much money. If that’s the case, consider asking a cosigner for help. A cosigner is a friend or relative with good credit and income who agrees to sign the loan application with you. If you don’t make the minimum payments on time, the lender will go to the cosigner for them, instead.
While a cosigner isn’t required, adding one to your application can improve your chances of qualifying for a loan and getting a low interest rate.
3. Get a rate quote
Next, get a rate quote to see what kind of terms you can qualify for. With ELFI’s Find My Rate tool, you can get an estimated rate on both variable and fixed interest rate loans in just a few minutes without any impact on your credit score.*
4. Compare interest rates from multiple lenders
It’s important to compare rates from different lenders to ensure you’re receiving the best value when refinancing your student loans.
ELFI specializes in refinancing medical student loans, and customers are assigned to a specific Personal Loan Advisor who can help with every step of the refinancing process. The benefits of student loan refinancing with ELFI also include:
- No application fees
- No origination fees
- No prepayment penalties
Current Student Loan Refinancing Interest Rates
 | Sofi | Earnest | Laurel Road | |
|---|---|---|---|---|
| Fixed Rates APR | 4.84% - 8.69% | 5.24% - 9.99% | 4.89% - 9.74% | 5.24% - 8.75% |
| Variable Rates APR | 5.28% - 8.99% | 6.24% - 9.99% | 5.89% - 9.74% | 5.34% - 8.85% |
| Loan Terms | 5, 7, 10, 15, or 20 years | 5, 7, 10, 15, or 20 years | 5 to 20 years | 5, 7, 10, 15, or 20 years |
| TrustPilot Score | 4.8 | 4.5 | 4.7 | 2.8 |
| NerdWallet Rating | 4.5 | 4.5 | 5.0 | 4.0 |
| US News Rating | 4.7 | 4.4 | 4.7 | 4.3 |
Rates and scores in this chart were obtained from lenders’ and aggregators’ websites on 8/27/2024. All information and rates are subject to change at any time. Please see each lender’s website for current information.
5. Submit your loan application
Once you find a loan that works for you and your budget, you can move forward with the application.
You’ll need to provide your personal information, including:
- Details about your loans and employer
- Recent pay stubs or W-2 for
- A copy of your government-issued identification, such as a driver’s license
Once you complete the application, ELFI will review your information and will contact you with a decision. Until you find out you’re approved and the loan is disbursed, keep making the payments on your existing debt to avoid late payment fees and penalties.
5 other options to pay off your medical school debt
Refinancing student loan debt can be a great way to improve your finances, but it’s not for everyone. If you decide that student loan refinancing isn’t a good fit for you, there are a few other options for managing your medical school debt:
1. Federal income-driven repayment plans
If you have federal student loans — such as Grad PLUS Loans or Direct Unsubsidized Loans — you may be eligible for an income-driven repayment (IDR) plan. With IDR plans, your loan servicer will extend your repayment term and reduce your monthly payment. Your new payment is dependent on your loan balance, income, and family size. Depending on your situation, you can significantly lower your payment amount.
2. Public Service Loan Forgiveness
If you work for a non-profit hospital, organization, or government agency, you may qualify for Public Service Loan Forgiveness (PSLF). With PSLF, the government will forgive your remaining loan balance after making 10 years’ worth of qualifying payments while working for an eligible employer.
However, not many people will meet the PSLF criteria. In fact, 98% of PSLF applicants were rejected last year.
3. State student loan repayment assistance programs
Depending on where you live, you may be able to get some help with your debt through state student loan repayment assistance programs. Some states offer healthcare professionals money to repay their loans in exchange for a service commitment to work in a high-need area.
For example, doctors who live and work in Kansas can receive up to $95,000 to repay student loans. In return, you must agree to work in an approved facility in a health professional shortage area.
4. Locum tenens work
Another option is to take on locum tenens work. With this approach, you fill in for another physician on a temporary basis. Some terms can be for just a few days, while others can last for months.
Why is this a good idea? It can be lucrative. Qualified professionals can earn large bonuses, which you can use to make lump sum payments on your debt.
5. Establish a budget and limit expenses
Now that you’re no longer in residency, it may be tempting to spend some of your new income on a larger apartment or a better car. However, it’s a good idea to continue living like you’re still in residency to limit your expenses. By keeping your living costs low, you can free up more money for debt repayment.
Refinancing your medical school loans with ELFI
As a healthcare provider, you likely have a substantial amount of debt. If your student loans are causing you stress, refinancing your medical school loans can be a smart way to manage your debt. Use the student loan refinance calculator to find out how much you can save by refinancing your student loans.*