With colossal student debt balances and high earning potential, dentists are prime candidates for student loan refinancing.
Refinancing dental school loans can save you tens of thousands of dollars, get you out of debt faster, or both. It’s one of several dental school loan repayment options.
Your timeline for refinancing depends on your post-dental-school plans. If you go straight to private practice, for example, consider refinancing once you’re employed.
If you’re doing a residency, there are other factors to consider. Two lenders offer student loan refinancing for dental residents. But depending on the type of residency program, it may be better to hold off on refinancing until your training is complete.
If you refinance and opt to pay about the same monthly amount as you did before refinancing, you’d be debt-free a year sooner and save more than $42,000 in interest.
Refinance dental school loans
Dental school loan refinancing is a smart move if you have:
- Good credit. You need a score at least in the high 600s to qualify.
- Private dental school loans.
- Federal student loans and don’t plan on using income-driven repayment.
- Federal student loans and don’t plan on working in the public sector.
Refinancing federal loans means giving up federal loan benefits including Public Service Loan Forgiveness and income-driven repayment plans. This isn’t an issue for private loans.
When you refinance, your loans are transferred from your existing lender or servicer to the new lender you choose to refinance with. Going forward, you’ll make payments to the new lender. There are no origination or hidden fees.
Before refinancing, compare lenders to find the one that’ll offer you the lowest rate. Members of the American Dental Association get a 0.25% interest rate discount for refinancing through Laurel Road.
Also, pay attention to lenders’ loan limits. A few lenders will refinance as much student debt as you have, a couple of lenders refinance up to $500,000 and others will refinance up to $300,000. But some lenders have loan limits that may be too low for the average dentist.
Compare refinancing options for dentists
Refinance during residency
If you’re doing a dental residency and want to refinance at some point, you generally have two choices: Refinance during residency, or refinance after residency.
- If your residency program offers a stipend: You can consider refinancing during residency. Two student loan refinance lenders — SoFi and Laurel Road — allow you to refinance as a resident and pay as little as $100 a month during your training. Alternatively, enter an income-driven repayment plan during residency and refinance afterwards, when your income is higher.
- If your residency program charges tuition: Refinancing during residency may not be an option. With SoFi, dentists must prove that they’re not taking on additional debt to cover residency tuition. You may be able to defer dental school loan payments during residency, but interest will still accrue. Revisit refinancing once you’re employed.
Your loan balance will likely increase during residency. Whether you’re on income-driven repayment or you’re paying $100 per month after refinancing, your payments likely won’t cover the interest as it accrues. The average student loan balance among class of 2018 dental school graduates — $285,184 — would accrue about $40 in interest per day and almost $1,200 monthly, assuming a 5% APR.
» CALCULATE: Daily and monthly student loan interest