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How medical resident student loan refinancing works

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How to hold off on repayments or get a better deal during your residency or fellowship.

Refinancing could be a solution if you’re struggling to juggle student loan repayments and personal expenses while living off a small resident or fellowship salary.

Some lenders offer options to trade in your private student loans for a lower rate or repayment plan that fits your career path. But it might not be the best choice for your federal loans, and you could end up paying more in interest in the long run.

Our top pick: SoFi Student Loan Refinancing Fixed Rate (with Autopay)

  • Min. Credit Score Required: 650
  • Min. Loan Amount: $5,000
  • APR: 3.46% to 7.94%
  • Quick rate quote.
  • Member perks.
  • No hidden fees.

Our top pick: SoFi Student Loan Refinancing Fixed Rate (with Autopay)

Refinance your student loans and pay them off sooner at fixed rates through this highly rated lender.

  • Min. Credit Score Required: 650
  • Min. Loan Amount: $5,000
  • APR: 3.46% to 7.94%
  • Requirements: $5,000+ in student loan debt, employed, US citizen
Promoted

How does medical residency refinancing work?

Medical residency refinancing works a lot like any other type of student loan refinancing. You take out a new loan with a different company with different rates and terms.

But there’s one key difference: It allows you to make reduced repayments during your medical or dental residency or fellowship and up to six months after.

With minimum repayments typically clocking in at $100 per month, this option makes it easier to stay on top of your loans while you’re earning a low salary.

Compare lenders that offer medical residency refinancing

LoanFixed APRLoan amountTermsEligibilityHow it works
SoFiFixed rates: 4.149% to 8.564% with autopay

Variable rates: 2.72% to 7.93% with autopay

Starting at $10,0005, 7, 10, 15, 20 years
  • Medical or dental resident or fellow.
  • Less than 4 years left in your program.
  • Graduate of a Title IV program.
Pay $100 a month while you’re in your residency or fellowship and 6 months after it ends.
Go to SoFi's site
Laurel RoadFixed rates: 3.87% to 7.44%

Variable rates: 3.61% to 7.11%

Starting at $5,0005, 7, 10, 15, 20 years
  • Accepted to a medical or dental residency or fellowship.
  • Degree from a Title IV school.
  • 660+ credit score.
  • DTI ratio of 43% or lower.
Pay $100 a month while you’re in your residency or fellowship and 6 months after it ends.Read review
Link CapitalFixed rates: 4.44% to 7.13% with autopay$40,000 to $450,0007, 10, 15, 20 years
  • Earned an eligible degree from a Title IV school.
  • Already completed at least one year of post-graduate training.
  • Meet Link Capital’s credit requirements.
Pay $75 a month while you’re in your residency or fellowship for up to 6 years.

Can I qualify?

Each refinancing company has different eligibility requirements. Typically, these involve the following factors:

  • Your specialization. Some lenders only offer medical residency refinancing to certain specializations.
  • Your school. Typically, you must attend a Title IV school — which is any school that’s eligible for federal student aid — to qualify.
  • How long you have left in the program. Most lenders have limits on how long you can hold off on repayments — often from one to six years. Some also might require you to be accepted into a program before you can apply.
  • Your credit score. Medical resident refinancing providers generally require you to have good to excellent credit.
  • Your DTI. Even lenders that don’t advertise it often check your debt-to-income (DTI) ratio when considering your application. You can use our DTI calculator to check yours — most accept anything below 43%.
  • Your legal status. You generally must be a US citizen or permanent resident to qualify with most refinancing companies, though some like SoFi accept borrowers with a J-1, H-1B, E-2, O-1 or TN visa.
  • Your age. Doogie Howsers are out of luck — you need to be at least 18 to qualify for medical resident refinancing in most states. The legal age is 19 in Alabama and Nebraska, and 21 in Mississippi.

Is refinancing during my residency right for me?

Medical residency refinancing might be right for you if:

  • You have private student loans. You likely won’t be able to defer your loans for the length of your residency and won’t have access to income-driven repayment plans or other federal loan benefits that could help reduce your repayments.
  • You have a high debt load. You might end up paying more on forbearance if you have a high enough debt load.
  • You want lower repayments. If an income-driven repayment plan gives you repayments higher than $100, a medical residency refinancing loan is more affordable in the short term.

What are the drawbacks of medical residency refinancing?

Medical residency refinancing might make it easier to pay off your loans in the short term, but there are several reasons why it might not always be the best financial decision.

  • Interest capitalization

Interest capitalization is when your lender adds any unpaid interest that accumulated while you were making reduced repayments to your loan balance. This increases your loan’s principal, and you’re effectively paying interest on interest. However, it’s possible to find lenders that don’t use this practice, like SoFi and Link Capital.

Let’s look at an example: Say you have $100,000 in student loans and refinance them with a medical residency refinancing provider. After your residency, you look at your statement and notice that $10,000 in unpaid interest has added up. Once your lender capitalizes that $10,000 in interest, your debt load will be $10,000 higher than if you’d made full repayments.
  • Lose eligibility for income-driven repayments

If you have federal student loans, you won’t be eligible for an income-driven repayment plan (IDR) if you refinance your loans with a private provider.

But if your spouse has a high salary, you might not be able to benefit much from IDR anyway — if you can even qualify. In that case, your loss of eligibility might not make much of a difference, unless you want to apply for Public Service Loan Forgiveness (PSLF).

Compare student loan repayment plans

  • Lose eligibility for Public Service Loan Forgiveness

Refinancing your federal loans with a private refinancing company also means you won’t be eligible for PSLF. While there are other forgiveness programs available to medical professionals, this is the only one that entirely forgives your student loans after 10 years of repaying them on an IDR while working at an eligible public service position.

Is refinancing my federal loans the right move for me?

4 alternatives to a medical residency refinancing loan

A medical residency refinancing loan isn’t the only way to lower your repayments. You might want to look into one of these alternatives instead:

Sign up for an income-driven repayment plan

Federal loan holders might want to consider signing up for an income-driven repayment plan. With most IDRs, your repayments are around 20% of your salary and your loans are completely forgiven after 20 or 25 years of repayment.

Your interest won’t capitalize after you finish your residency. And signing up satisfies one of the requirements to apply for PSLF.

How to apply for an income-driven repayment plan

Apply for deferment or forbearance

Got subsidized federal student loans? That’s one of the few cases where unpaid interest doesn’t add up while you’re in deferment, which can help you save. In fact, all federal loan holders are eligible for deferment or forbearance specifically for being a medical resident.

Even private lenders might offer deferment or forbearance to medical and dental residents — especially if you applied for financing designed for medical students. This gives you reduced repayments while you’re in your program without having to apply for another loan. Reach out to your lender to learn about your options before considering refinancing.

Compare deferment and forbearance options

Sign up for an extended graduated repayment plan

Federal loan holders who don’t want to pay a full 20% of their salary might want to consider signing up for an extended graduated repayment plan. With this plan, you have 25 years to pay off your loan with repayments that start low and increase over time. Depending on your debt load, it might not save you much, but your interest won’t capitalize.

Refinance with any lender for a longer term

Private student loan holders might also want to consider just extending their loan term to lower monthly repayments. You’ll have more options to choose from if you don’t go with a medical residency refinancing provider specifically, and you might even end up getting more favorable rates.

Compare student loan refinancing options

Updated October 16th, 2019
Name Product Min. Credit Score Max. Loan Amount APR
660
None
Starting at 2.45%
Save on your student loans with this market-leading newcomer.
Good to excellent credit
None
Starting at 2.8%
Get prequalified offers from top student loan refinancing providers in one place.
680
None
3.29% to 6.69%
Lower your student debt costs with manageable payments, affordable rates and flexible terms.
650
None
2.05% to 6.49%
Get a tailored interest rate and repayment plan with no hidden fees.
650
Full balance of your qualified education loans
2.14% to 7.94%
A leader in student loan refinancing, SoFi can help you refinance your loans and pay them off sooner.
620
$300,000
3.01% to 8.61%
Refinance all types of student loans — including federal and parent PLUS loans.

Compare up to 4 providers

Bottom line

Medical resident refinancing is one way to make your student loan repayments more affordable when you’re just starting your career. But you might want to look into other options if you have federal student loans — there might be a cheaper way to lower the initial cost.

Learn more about how it all works with our page on student loan refinancing and our master guide to student loans.

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