Obtaining an education loan for doctors is a common practice for aspiring medical professionals. These specialized loans help cover the significant costs of medical college and enable individuals to pursue their dreams of becoming doctors. With an education loan for doctors, students can focus on their studies and training without the immediate financial burden. Upon graduation, doctors can explore various repayment options and potentially refinance their loans to ensure manageable monthly payments.
According to the American Medical Association, 74% of medical college graduates owe $100,000 or more in student loans, with the average amount owed is $215,900. Needless to say, as a doctor, you’ve most likely accumulated hefty education loans for doctors in order to complete your studies.
Carrying six figures in student debt, on the other hand, isn’t as bad for you as it can be for someone working in another area. You probably make a good living as a doctor. According to the Bureau of Labour Statistics, the average income for family and general practitioners is $235,930.
With your education and money, you are an excellent candidate for student loan refinancing, also known as consolidation. Refinancing your medical college student loans can save you money and allow you to pay them off sooner.
Why should you refinance your education loan for doctors?
Interest charges can have a major influence on your balances when you have a high amount of student loan debt. Interest charges can add hundreds of dollars to the cost of your loan over time.
Unfortunately, medical college loan interest rates can be rather high. Even if you qualify for federal Grad PLUS Loans, you may be subject to high-interest rates. The interest rate on Direct PLUS Loans is 7.54% as of July 2022.
To put that number into context, imagine you had $100,000 in student loan debt with a 7.54% interest rate and a 10-year repayment term. the monthly payment would be $1,189, and you would repay a total of $142,693 by the conclusion of the loan period. Interest would cost you more than $42,000. Isn’t it terrifying?
When you refinance your education loans for doctors, you may be able to get a cheaper interest rate. If you want a lower monthly payment, you can extend your repayment period. Depending on which option you select, the savings can be substantial.
Your monthly payment would be $1,036 if you refinanced your loans and qualified for a 10-year loan at 4.5% interest. However, you would only pay $124,366 over the life of your loan. You’d save almost $15,000 if you refinanced your loan.
Consider the following possibilities if you’re thinking of refinancing your student loans but aren’t sure if now is the right moment. If any of the following apply to you, it may be a good time to look into getting a better interest rate on your loans:
- You do not qualify for Public Service Loan Forgiveness.
- You intend to work in business.
- You have private medical school debts with exorbitant interest rates.
- Your spouse’s income is considerable, thus your income-based payments are increased.
- You have a good credit score.
Why wait if your payments are considerable, you are unlikely to receive loan forgiveness, and your credit score allows you to earn competitive rates? Refinancing may lower your payment and allow you to adjust your repayment term to better suit your financial goals.
Refinancing your medical college loans while in residency
Some lenders offer monthly payments of as little as $100 to students still in residency, allowing you to pay down a portion of your medical college debt before beginning full payments.
This funding option is ideal for medical students with good credit who may earn attractive interest rates when refinancing their education loans for doctors, as well as those who have a cosigner on hand. Refinancing during residence may be especially advantageous for borrowers who have a large number of private education loans for doctors.
However, keep in mind that because your payments are so low during residency, you may end up paying more in interest than you would otherwise. However, refinancing during residency can be an excellent strategy to restart your path to financial independence.
Refinancing your medical college loans after you complete your residency
If you don’t intend to refinance during your residency, but you know it’s something you’d like to look into after medical school, use residency as a time to prepare yourself for financial success.
Pay your invoices on time, keep long-standing lines of credit open, and avoid applying for more credit than you need. These steps will help you improve or maintain your credit score, giving you the best opportunity of receiving a low-interest rate when refinancing your education loans for doctors after your residency.
One advantage of refinancing after the residence is that your higher salary will present you with additional student loan refinancing alternatives, and you will be much less likely to need a cosigner.
The disadvantages of repaying medical college debt
When you refinance your medical college debt, you take out a new loan with a private lender, ideally at a significantly reduced interest rate, regardless of your prior loan type. You may lose access to federal benefits if you take out this new private loan.
- Repayment arrangements based on income
- Payments can be paused through deferment and forbearance programs.
- Loan forgiveness schemes
Apart from the loss of government borrower advantages, refinancing your loans may not make sense right now. If you currently have a low-interest loan, refinancing may not save you much money. To find out how much you could save, use ELFI’s student loan refinancing calculator1.
Furthermore, some banks incur costs that may offset interest savings. Fortunately, with ELFI, you will never have to pay:
- Fees for applications
- Fees for origination
- Penalties for early payment
Finally, if you are still in your residency or fellowship, it may make sense to wait until you have a greater income or a stronger credit score, as both will affect the loan rates accessible to you. You could also consider getting a cosigner to assist you get an even cheaper interest rate.
Consider whether refinancing your education loans for doctors during or after residency could help you achieve your long-term financial objectives. Whether you want to refinance right away or take the time to prepare your credit score for long-term success, refinancing your education loans for doctors could be the ideal approach to cut your interest rate and choose a repayment period that matches your lifestyle if you’ve thoroughly investigated your alternatives.
How to refinance medical college loans
In five simple steps, you can refinance your medical college loans:
1. Determine your eligibility.
To begin, ensure that you meet the student loan refinancing eligibility standards in order to refinance your medical student debts. As a starting point, you must:
- A bachelor’s degree or higher from an accredited college or university
- You must be a US citizen or permanent resident.
- Be of the majority — 18 years old or older in most places — and have a strong credit history
- Have a credit score in the upper 600s at the very least.
2. Consider enlisting the assistance of a cosigner.
If you’re new to the practice, you may not yet have a credit history, or you may not be making much money. If this is the case, consider enlisting the assistance of a cosigner. A cosigner is a friend or family member with strong credit and income who agrees to sign the loan application alongside you. If you fail to make the minimum payments on time, the lender will turn to the cosigner for assistance.
While a cosigner is not required, including one on your application can help you qualify for a loan and get a cheap interest rate.
3. Request a rate quote
Get a rate quotation next to see what kind of terms you qualify for. You can acquire an estimated rate on both variable and fixed interest rate loans in only a few minutes with ELFI’s Find My Rate service, with no influence on your credit score.
4. Examine interest rates from several lenders.
When refinancing your student loans, it’s critical to check rates from several lenders to ensure you’re getting the best deal.
ELFI specializes in refinancing medical student loans, and each customer is assigned a Personal Loan Advisor who can assist with every step of the refinancing process. Other advantages of ELFI student loan refinancing include:
- There are no application fees.
- There are no origination fees.
- There is no prepayment penalty.
On 4/1/2023, the rates and scores in this figure were acquired from the websites of lenders and aggregators. All prices and information are subject to change at any time. For the most up-to-date information, please visit the websites of each lender.
5. Fill up and submit your loan application
You can proceed with the application once you’ve found a loan that fits you and your budget.
You must give your personal information, which includes:
- Information about your loans and employer
- A copy of your government-issued identification, such as a driver’s license or recent pay stubs
After you submit your application, ELFI will review it and notify you of a decision. Continue making payments on your existing debt until you receive approval and the loan is released to prevent late payment fines and penalties.
5. additional ways to Pay off your medical college debt
Student loan debt refinancing might be a terrific option to better your finances, but it is not for everyone. If you determine that student loan refinancing is not the best option for you, you have a few other options for dealing with your medical school debt:
1. Income-based federal repayment plans
You may be eligible for an income-driven repayment (IDR) plan if you have federal education loans for doctors, such as Grad PLUS Loans or Direct Unsubsidized Loans. Your loan servicer will prolong your repayment period and lower your monthly cost with IDR plans. Your new payment is determined by the amount of your loan, your income, and the size of your family. Depending on your circumstances, you may be able to considerably reduce your payment amount.
2. Loan Forgiveness in the Public Sector
You may be eligible for Public Service Loan Forgiveness (PSLF) if you work for a non-profit hospital, organization, or government agency. The government will forgive your remaining loan balance if you make qualifying payments for ten years while working for an eligible employer.
However, only a small number of persons will fit the PSLF criterion. Last year, 98% of PSLF candidates were turned down.
3. Student debt repayment aid programs offered by states
Depending on where you reside, state student loan repayment assistance programs may be able to help you with your debt. Some jurisdictions offer money to repay healthcare professionals’ loans in exchange for a service commitment to work in a high-need area.
Doctors in Kansas, for example, can receive up to $95,000 to repay college loans. In exchange, you must agree to work in an approved facility in a region where health professionals are in limited supply.
4. Work as a locum tenens
Another alternative is to work as a locum tenens. You fill in for another physician on a temporary basis with this strategy. Some terms are only for a few days, while others can span months.
What makes this an excellent idea? It has the potential to be profitable. Qualified experts can earn substantial bonuses, which you can use to make lump-sum debt payments.
5. Create a budget and stick to it.
It may be tempting to spend some of your new money on a larger flat or a nicer car now that you’re no longer in residency. However, to keep your expenses low, continue to live as if you are still in residency. You can free up more money for debt repayment by keeping your living expenses modest.
Using ELFI to refinance your medical college loans
As a healthcare professional, it’s understandable that you may be facing significant debt. Refinancing your education loans for doctors can be a practical strategy for effectively managing your debt if your current student loans are causing you financial concerns. To determine the potential savings you could achieve through refinancing, consider using a student loan refinance calculator. This tool will provide you with valuable insights into the potential benefits of refinancing and help you make informed decisions about your financial future.