Refinance Medical School Student Loans [Complete Guide] | The White Coat Investor (2024)

Do I Have Any High-Rate Student Loans That Aren't Federal Loans?

These include any private medical school loans you may have taken out. Those aren't eligible for the RePAYE interest subsidy and not eligible for PSLF, so you might as well refinance them if you can get a lower rate (which you usually can).

Am I Sure I Will NOT Be Going for Public Service Loan Forgiveness (PSLF)?

PSLFis a program where any remaining direct federal student loans are forgiven tax-free after you make 120 on-time monthly payments in a qualifying program while working full-timefor a qualifying employer.

If you're absolutely positive that working at a 501(c)(3) and going for PSLF is not in your future, then you can consider refinancing federal loans. If you're not sure, don't refinance!!

Refinance or PSLF?

• If you're sure you won't work at a 501(c)(3) and going for PSLF is NOT in your future → Refinance
• If there's a chance you will work at a 501(c)(3) → Don't Refinance
• Debt-to-income ratio of 1.25 or lower → Refinance
• Debt-to-income ratio of 1.25 – 2, run the numbers on refinancing vs PSLF. The longer your training (residency, fellowship, internship), the better PSLF is.
• Debt-to-income ratio of 2 or higher → PSLF
• Weigh the risk of not being awarded PSLF
• Decide on PAYE vs REPAYE
• If deciding between PAYE and IBR (Income-Based Repayment) → Choose PAYE
• If heavily indebted and unable to work at a 501(c)(3) → Consider REPAYE/PAYE

You can learn more about PSLF vs refinancing by reading Refinance and Pay off or Go for PSLF. If you're needing help understanding federal student loan programs like PSLF, PAYE, REPAYE, IBR, IDR, etc, you'll want to also familiarize yourself with our Ultimate Guide to Student Loan Debt Management. If you don't want to wade through blog posts and DIY your student loan management, set up an appointment with one of our consultants at StudentLoanAdvice.com. You'll have an experienced professional to answer your questions and guide you through your best options.

If you're not going for PSLF, then refinance today! With companies out there offering 0% for 6 months and cashback bonuses, it really makes the decision easy.

What Is the Effective Rate of My Federal Loans Under RePAYE?

This will differ for everyone, but if you are a married resident with kids and have a stay-at-home partner, your effective rate could be as low as half of your loan interest rate. If you are married (and filing Married Filing Jointly) with your orthopedic surgeon partner, it is likely equal to your loan interest rate. Everyone else will be somewhere in between. So log in to the federal system and figure out what your RePAYE payment will be. (While you're at it, enroll in RePAYE ASAP—even before your graduate med school.) Once you know your payment, you can calculate your effective interest rate.

If your RePAYE payment is $200, and you have $200K in loans at 6%, then your monthly interest charge is 6%*$200,000/12 = $1000 per month. So essentially, you pay $200 a month, $400 a month gets added to the loan balance, and $400 a month is forgiven. Your effective interest rate equals:

6% * ($200 + $400)/$1000 = 3.6%

Bear in mind that this effective rate is likely to change every year of your training along with your RePAYE payment as your income fluctuates.

What Rate Can You Get from Student Loan Refinance Companies?

Each student loan refinancing company is unique, but the bottom line is that you should apply with several of them and, assuming the service you receive is adequate, take the one that offers you the lowest rate with the best cashback bonus.

Check Your Refinance Rates

Student Loan Refinance Requirements

Lenders take many factors into consideration including your:

• Income
• Job History
• Savings
• Credit Score
• Debt

The better you are in each of these categories, the better the rate you will generally receive.

Private practice physicians who refinance often have a combination of these factors:

• Household debt-to-income ratios below 1.5
• A spouse that could NOT benefit from PSLF
• Smaller family size
• Desire to reach financial independence from medicine as fast as possible
• A spouse that earns a lot of money but who also has a minimal amount of debt

Can You Refinance Federal Student Loans?

Yes, you can refinance federal student loans, but should you refinance them? With the federal student loan interest rate at 0% since March 2020, many borrowers have held off refinancing federal student loans. 0% is obviously a great deal but this federal loan interest moratorium is due to expire on September 30, 2021, and supposedly, interest rates will go back to normal. Uncertainty remains, however, surrounding what the Biden Administration will actually do come Summer's end. Should you refinance now or continue to hold off?

There is one way you can refinance today, lock in a low long-term interest rate, AND still keep a 0% rate in the short term. Common Bond is offering 0% for 6 months when you refinance at least one federal loan. That's an even better deal than the government and a huge reason to consider refinancing today.

Are there key considerations when moving from federal to private loans?

Yes. The government offers very real, very legitimate benefits, such as:

1. Loan forgiveness
2. Repayment programs
3. Longer forbearance and deferment periods
4. More generous loan discharge if you pass away or become totally or permanently disabled before loans are paid off or forgiven

When moving from a federal to a private loan, you’ll lose some benefits. If you’re going to lose federal benefits, you better get the best deal.

A couple of disadvantages of moving to private loans include:

1. Less flexible repayment options
2. High payments in early career years when income tends to be lower (except the small payments offered in residency)
3. Inability to convert private loans to federal loans
4. Private loans tend to have shorter forbearance periods that are commonly limited to a year, while federal loans have longer deferments and forbearances available to borrowers
5. Death and disability discharges are less common
6. Private loans don’t offer nearly as many loan forgiveness programs

Can You Refinance Private Student Loans?

Yes, always shop for better interest rates on your student loans! Refinancing rates are historically low, so if you have private student loans and are not going for PSLF or getting a REPAYE subsidy, it is worth it to see if you can save even more money by refinancing those again.

Get off your duff and get this important financial chore done, then get busy living like a resident to pay them off. Even if you have refinanced previously, you can do so again and should whenever rates drop (and if you go through a different company, you can even get another cashback bonus). There is no break-even period since there is no cost to you to refinance, so keep refinancing over and over until you have obliterated those student loans!

Compare Your Rates and Get Cash Back

Can You Refinance Medical School Loans Multiple Times?

Perhaps you didn't get the best rate when you refinanced due to your credit score. Or perhaps interest rates have dropped. Or now you qualify for a 5-year term or you decide to change to a variable rate loan. There is absolutely nothing stopping you from refinancing again.

In fact, it's probably a lot easier since you now only have one loan to enter the information for. And yes, you get the bonus money every time you do it. In fact, probably even the refinancing companies like it when you do this. They've already sold your previous loan off to investors. Doing it all again means more business for them.

See How Much You Can Save

Can You Refinance Subsidized Student Loans?

Yes. But, remember subsidized loans will not accrue interest while you’re enrolled in school. Once they are converted to private student loans they will likely begin to accrue interest.

Do You Have to Refinance All Student Loans?

No, you can refinance one or all of your loans.

Can You Refinance Your Student Loans While in Your Residency?

It depends. Some refinancers will work with you while you’re in residency. Others wait until you’re an attending.

Can You Refinance Your Federal and Private Loans Together into One loan?

Yes. Private loan servicers can consolidate all your federal and private loans together. They can even consolidate your partner’s student loans with yours into one loan.