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Medical School Loans and Refinancing: Your Options

May 4, 2018
Loans, Student Loans
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Going to medical school means taking out a lot of medical school loans. Here’s what you need to know about borrowing and refinancing student loans during medical school, residency and beyond.

Borrowing medical school loans

Purpose: For tuition and living costs during medical school.

There are two main types of medical school loans: federal and private. In general, use federal student loans for medical school before tapping private medical school loans because federal loans have benefits including access to income-driven repayment plans and loan forgiveness programs.

However, if you have excellent credit and don’t plan to pursue Public Service Loan Forgiveness, you may be better off with private medical student loans. Unlike federal loans, which have the same fixed rates for all borrowers, private loans have lower rates for borrowers with good credit, and they typically don’t have fees.

For federal loans: Complete the Free Application for Federal Student Aid — this FAFSA guide can help. Most borrowers qualify for both federal direct unsubsidized loans and federal PLUS loans — there’s no financial need requirement.

There’s no credit check required for direct unsubsidized loans. There is a credit check required for PLUS loans, but you don’t necessarily need good credit to qualify — you just can’t have adverse credit history or negative marks on your credit.

For private loans: Compare your options below and complete an application on the lender’s website. Before approving you, the lender will do a hard credit pull to check your credit history. The interest rate you get will depend on your credit, the loan term and whether you choose a fixed or variable rate.

There are two types of federal loans available for medical students:

  • Federal direct unsubsidized loans: Max out these loans first because they have lower interest rates and fees than PLUS loans. You can borrow up to $20,500 per year and $138,500 total.
  • Federal PLUS loans: Take out PLUS loans if you’ve maxed out unsubsidized loans and you can’t get a lower rate with a private loan. PLUS loan interest rates are 7% for the 2017-18 school year and there’s a 4.26% loan fee.

Federal vs. private medical school loans

The following lenders offer student loans specifically designed for medical students and other graduate-level health professionals, but you can use any private student loan for medical school. Compare the options below with other private student loans to find the best rate you qualify for.

LenderCan you postpone payments in residency?Get started

Federal direct unsubsidized
5.0 NerdWallet rating

Federal direct loan review

4.5 NerdWallet rating
Yes, for up to five years

Discover review

Federal PLUS loan
4.5 NerdWallet rating

Federal PLUS loan review

4.5 NerdWallet rating
Yes, for up to four years

Sallie Mae review

4.5 NerdWallet rating
Yes, for up to three years

Wells Fargo review

4.0 NerdWallet rating
Yes, for up to four years

Citizens One review

3.5 NerdWallet rating

PNC review

Refinancing during residency

Purpose: To lower your interest rate and/or monthly payment during residency.

Medical school loans accrue interest while you’re in school and typically enter repayment six months after you leave school. You’ll have a modest salary as a medical resident, but you’ll also have massive student loan payments. You have a few options:

  • Defer student loans during residency: You can postpone payments on federal loans and many private medical school loans for at least part of your residency or fellowship, but use this option as a last resort. The loans will accrue interest during deferment, increasing your total balance. For example, say you graduated with the average medical school debt ($190,000) and deferred your payments for three years during residency. After deferment, you’d owe more than $224,000, assuming a 6% interest rate, according to NerdWallet’s deferment and forbearance calculator.
  • Go on an income-driven repayment plan: Choose this option if you’re pursuing Public Service Loan Forgiveness — it’ll maximize the amount you get forgiven. There are four federal income-driven plans that cap your monthly payment at a percentage of your income. However, your monthly payment on one of these plans may not cover all of the interest, meaning your total loan balance may increase.
  • Refinance as a medical resident: Refinance lenders generally require that borrowers have a relatively low debt-to-income ratio, which you’re not likely to have as a medical resident. However, the lenders listed below have student loan refinancing programs for medical residents. Refinancing your student loans during residency may be a good option if you qualify for a lower rate and you’re positive that you don’t want to pursue Public Service Loan Forgiveness. You’ll likely qualify for an even lower rate once you complete your residency or fellowship, so consider refinancing again as an attending physician.

  1. Confirm that refinancing is right for you. Before refinancing federal student loans, triple-check that you are comfortable giving up federal loan benefits including access to Public Service Loan Forgiveness and income-driven repayment plans — it’s impossible to qualify for those programs after you refinance.
  2. Check if you qualify. You generally need a credit score that’s at least in the high 600s to qualify for student loan refinancing. The higher your score, the lower the rate you’ll likely get. Some lenders have pre-qualification processes that allow you to see a personalized rate before you officially apply — they’ll do a soft credit pull, which won’t hurt your credit score, to determine your rate.
  3. Shop around to find the lowest rate. Compare your medical resident refinancing options using the chart below. In addition to low rates, look for flexible repayment options like the ability to make lower payments during residency. Paying less will increase your total balance — potentially by thousands of dollars — but it may be helpful to have the ability to make low monthly payments if your finances get tight.
  4. Apply. Some lenders require you to wait until you’re officially employed in your residency, while others allow you to refinance as soon as you’ve matched.

Compare refinancing options during residency

LenderMinimum payment during residencyGet started

5 stars out of 5
NerdWallet rating: 5.0 / 5.0

SoFi review

5.0 stars out of 5
NerdWallet rating: 5.0 / 5.0

Splash Financial review

4.5 stars out of 5
NerdWallet rating: 4.5 / 5.0

Laurel Road review

Refinancing after residency

Purpose: To lower your interest rate and pay off debt as an attending physician.

Student loan refinancing means paying off your existing student loans with a new, lower-rate loan. When you have six-figure medical school debt, lowering your interest rate can make a five-figure difference. For instance, refinancing $190,000 — the average medical school debt — from a 7% APR to a 5% APR would save about $190 a month and almost $23,000 total, assuming a 10-year loan term, according to NerdWallet’s student loan refinance calculator.

Refinancing isn’t for everyone, but physicians are generally ideal student loan refinancing candidates because of their large medical school loan balances and high earning potential. Don’t refinance medical student loans if you want to pursue Public Student Loan Forgiveness or make payments on an income-driven repayment plan, however. Your loans won’t qualify for those federal programs once you refinance through a private lender.

  1. Check if you qualify. You typically need a credit score that’s at least in the high 600s, and enough income to cover your expense and debts.
  2. Shop around for the lowest rate. Many refinance lenders have pre-qualification processes that don’t trigger a hard credit pull, which means you can get personalized rate estimates without hurting your credit score.
  3. Apply. Once you’ve decided on a lender, apply on the lender’s website. After you’re approved, continue making payments on your existing student loans until your new lender repays your original lender or servicer. Going forward, you’ll make monthly payments to the lender you refinanced with.

Compare refinancing options after residency

Rates updated monthly.

LenderAPRGet started

Fixed: 3.09% - 6.69%
Variable: 2.55% - 6.01%

Fixed: 3.2% - 7.25%
Variable: 2.72% - 7.25%

Fixed: 3.75% - 7.03%
Variable: 2.85% - 7.59%
Fixed: 3.49% - 8.72%
Variable: 2.47% - 7.99%

Fixed: 3.5% - 7.02%
Variable: 2.95% - 6.37%

Fixed: 3.75% - 8.69%
Variable: 2.72% - 8.32%

Fixed: 3.89% - 6.32%
Variable: 2.47% - 5.87%

Fixed: 3.899% - 7.804%
Variable: 2.48% - 6.99%

Fixed: 5.24% - 8.24%
Variable: 4.87% - 8.12%
Ready to compare all your student loan refinancing options?

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