Should You Refinance Your Student Loans During Medical Residency?

Jen Williamson Updated on September 7, 2021

If you’re in medical school, chances are you’ll accumulate six figures in student debt before you earn a dime in your new career.

And for several years after school, you’ll be working a medical residency that pays far less than you’ll earn as a full physician—the average is around $51,000-$60,000 per year. Meanwhile, your student loan debt is hanging above your head.

You’ll spend as many as eight years in school—between your undergraduate and medical school training—and an additional three to 10 years in residency, depending on your specialty, before you can start making a dent in those monster loans.

How do you deal with your debt until then? A lot of med students put their loans into deferment or forbearance. The problem with this approach is that your loans accumulate interest during that time—a process known as capitalization—which can add another five or six figures to your debt.

Refinancing is another option. Under refinancing, you replace your multitude of loans with a new single loan—ideally at a lower interest rate. This approach has its pros and cons as well. Here’s a look at how it breaks down.

New call-to-action

What are the benefits of refinancing during residency?

The biggest benefit of refinancing during your residency is getting a lower interest rate and better payment terms.

If you have federal loans for med school, chances are they’re either Direct PLUS Loans for graduate or professional students or unsubsidized Stafford Loans. PLUS Loans carry an interest rate of 7% as of 2018, while the Stafford Loans have a rate of 4.45%.

Some medical students also qualify for Perkins Loans, which carry a 5% fixed interest rate.

Some of these loans are a better deal than others, but there’s room to improve all around. Private lenders offer significantly better interest rates on the low end—as low as 1.88% (as of September 2021) —and that could save you tens of thousands, or more, over the life of your loan.

Unlike the government, private lenders determine your interest rate based on your credit and finances. While every private lender is different, they all have a compelling reason to offer you a good interest rate: as a doctor you’re likely to earn a six-figure paycheck, eventually. You're a relatively safe bet for lending.

Refinancing can also reduce your monthly payment to a manageable level. If you extend the repayment period of your loan while you’re in residency, you could set your monthly payment to a bearable amount—and get a head start on paying off your loans.

You’ll still pay more interest over the long term, but you can step up your payments once you earn more—a reputable lender won’t charge you a penalty for early repayment. And while you’re in medical school or residency, you can keep your loans from ballooning.

See also: 6 Ways for Medical School Graduates to Manage Student Debt 

What are the drawbacks?

The big drawback on refinancing your med school loans is that, if you have federal loans, you'll lose government perks and protections when you refinance.That's why it's important to consider whether you intend on using any of these benefits.

When you refinance, you're replacing your old loan or loans with a new one. The federal loans go away, and a private loan takes its place. You lose your access to programs such as income-driven repayment and student loan forgiveness.

Student loan forgiveness can be a particular sticking point for some medical students—especially if you plan to work in a high-needs area. 

See also: Student Loan Forgiveness for Doctors and Medical Professionals

While Public Service Loan Forgiveness will forgive your loan after 120 qualifying payments—which takes about 10 years for most people—there are some forgiveness programs for physicians will forgive your loans in as little as two.

However, some of these programs—such as the National Health Service Corps Students to Service Loan Repayment Program—will forgive both private and federal loans.

So if you’re considering refinancing but don’t want to lose forgiveness benefits, it pays to do your research and find out which programs you still qualify forand how that fits into your career plans.

How much money could you save by refinancing?

Let's delve into the numbers a little.

Suppose you have a GradPLUS loan for $120,000, and you’re at the beginning of a three-year residency program. You’re considering putting the loan in deferment. At a 7% interest rate, that loan will accumulate $25,200 just in those three years. Worse, that money will be added to your loan principal at the end of your deferment period, meaning that you'll be charged interest on interest. 

So, let’s say you refinance and score a 3% interest rate. That immediately cuts your interest over those three years to $10,800—saving you somewhere in the neighborhood of $14,400 in just three years, and even more money beyond that.

What about monthly payments?

With a six-figure student loan balance and a resident's income, monthly payments may be your chief concern.

That's why several student loan refinancing lenders offer special deals for people with medical school debt. In fact, there are several programs for doctors that will allow you to refinance to a lower interest rate AND reduce payment amounts during your residency. 

Who are the best lenders for medical student loan refinancing?

We’ve got our eye on three lenders who specialize in exactly your situation. They are:

Splash Financial

Another lender that offers a program for medical school graduates is Splash Financial. Because it's hard to manage student loan debt while doing a medical residency or fellowship, Splash allows borrowers to pay just $100 per month during their training, reducing loan payments by $3,000 to $6,000 each year during that time.

Here’s what you need to know:

  • You can refinance amounts anywhere from $5,000 to No Max.
  • Low fixed interest rates are between 2.49% and 6.31% (as of September 2021).
  • Loan terms range from three to 20 years, offering you maximum flexibility.
  • While completing a medical residency or fellowship, borrowers can pay just $100 per month for up to 84 months during training. This essentially defers payment during your training.

In addition to meeting Splash's usual loan requirements, you must have already started your residency or fellowship when you apply for refinancing. There are no application, origination, or pre-payment fees.

Learn more about refinancing with Splash Financial


SoFi is perhaps best known for the way it supports its members, through perks such as career counseling, bi-coastal networking events, and seed funding opportunities for budding entrepreneurs.

But it also offers a specialized program for med students. This program lets you make a minimum payment of as little as $100 per month up until the end of your fellowship or residency, up to 54 months. SoFi’s interest rates are as follows:

  • Fixed-rate loans: 2.74%-6.94% APR (as of September 2021)
  • Variable-rate loans: 2.25%-6.59% APR (as of September 2021)

SoFi will also knock 0.25% off your interest if you sign up for AutoPay. There are no origination fees or prepayment penalties, so you can start paying off your loan more aggressively once you earn more. You can pay it off in five, seven, ten, 15, or 20 years.

To qualify, you have to meet the following criteria:

  • You’re a matched medical resident or fellow with up to 4 years to go in your program.
  • You have more than $10,000 in student loans.
  • You graduated from a Title IV accredited university.
  • You meet SoFi’s basic lending requirements.

Learn more about refinancing with SoFi.

What's best for you?

If you’re in medical school, you don’t have to put your student loans in forbearance or deferment. You can refinance them and keep making payments—and save big over the long term. This option isn’t perfect for everyone—definitely do your research first—but it might just be right for you.

 How much could you really save by refinancing? Find out. 

Published in: Refinance, Student Loan Debt

About the Author
Jen Williamson

Jen Williamson is a freelance writer living in Brooklyn. She has written for a variety of industries, including software, education, business, and personal finance. Prior to that, she worked at an adult literacy nonprofit in Philadelphia, where she coached nontraditional students in passing the GED test and applying for college. When she isn’t writing or reading—which is rare—she can usually be found planning her next travel adventure, training for a marathon, or sneaking in somewhere she’s not supposed to be. Read more by Jen Williamson

Refinance and Save Today With These Lenders

#1 - Nitro Recommended View More Details

Special offers for medical resident and fellow refinance products

  • Fixed rates: 2.49% - 6.31% APR
  • Variable rates: 1.88% - 6.15% APR
  • Minimum credit: 650
View More Details
Visit Splash View Loan Disclosure

Splash Financial is a leader in student loan refinancing with new rates as low as 2.49% fixed APR which can save you tens of thousands of dollars over the life of your loans. No application or origination fees and no prepayment penalties. Splash Financial is in all 50 states and is intensely focused on customer service. Splash Financial is also one of the few companies that offers a great medical resident and fellow refinance product. You can check your rate with Splash in just minutes.

  • Low interest rates – especially for graduate students
  • No application or origination fees. No prepayment penalties.
  • Co-signer release program - you can apply for a cosigner release form your loan after 12 months of on-time payments
  • Specialty product for doctors in training with low monthly payment

Click here to see more of Splash's offerings and to see how you can save money.

#2 View More Details

For every loan they fund, they contribute to the education of a child in need

  • Fixed rates: 2.83% - 6.74% APR
  • Variable rates: 1.99% - 6.84% APR
  • Minimum credit: 660
View More Details
Visit CommonBond View Loan Disclosure

CommonBond was founded in 2011 by three MBA graduates from the University of Pennsylvania’s Wharton School who wanted to help their peers escape from high-interest student loan debt. Its original focus was on grad students, but it has since expanded to cover undergrads as well.

Of all the companies we reviewed, CommonBond has some of the best customer service. The company prides itself on being easy to reach by email, phone, or live chat. It offers networking events, expert panels, insider newsletters, and even has a program help borrowers who lose their jobs to find new ones. CommonBond also makes you feel good about choosing to refinance with them by donating money to an education nonprofit for each loan they write.

CommonBond Student Loan Refinance review

  • Unemployment protections - If you lose your job or decide to go back to school, you can delay your payments for up to 24 months.
  • Social promise - For every loan they fund, they also contribute to the education of a child in need.
  • Hybrid loan option - Offerings include a 10-year hybrid loan with fixed interest for the first five years, and variable interest for the final five.
  • Referral bonus - For every friend you refer who refinances their loans with CommonBond, you’ll earn a $200 cash bonus.
  • Qualification - Borrowers must have graduated at least 2 years prior if they want to apply without a co-signer. And borrowers in 6 states – Idaho, Louisiana, Mississippi, Nevada, South Dakota, and Vermont – cannot currently refinance through CommonBond.

Get a personalized review of your refinancing options with CommonBond today.

#3 View More Details

SoFi is the leading student loan refinancing provider. 

  • Fixed rates: 2.49% - 6.94% APR
  • Variable rates: 2.25% - 6.59% APR
  • Minimum credit: 650
View More Details
Visit SoFi View Loan Disclosure

$30 billion+ in refinanced student loans. SoFi has some of the lowest interest rates and, unlike the other lenders we reviewed, there's no maximum on the amount you can finance. Some state restrictions may apply.

  • Serious savings: Save thousands of dollars thanks to flexible terms and low fixed or variable rates.
  • No hidden fees, no catch: No application or origination fees. No pre-payment penalties.
  • Fast, easy, and all online: Simple online application and access to live customer support 7 days a week.
  • Access to member benefits: SoFi members get career coaching, financial advice, and more—all at no cost.
  • 98% of surveyed members would recommend SoFi to a friend

Save thousands on your student loans and pay off your loans sooner. Find your rate.

#4 View More Details

Ability to apply for cosigner release after 24 consecutive payments. 

View More Details
Visit NelNetBank View Loan Disclosure

Give Your Life’s Journey a Jump-Start.

If you’re ready to put student loans in your rearview mirror, Nelnet Bank student loan refinancing offers low rates and flexible terms to help you start getting ahead.

  • VARIABLE RATES: 1.95% - 5.62% APR See Disclaimer
  • FIXED RATES: 2.48% - 6.62% APR See Disclaimer
  • AUTO DEBIT SAVINGS: We’ll knock .25% off of your interest rate when you enroll in auto debit. See Disclaimer
  • NO ORIGINATION FEES: No application, origination, or prepayment fees on Nelnet Bank loans.
  • HARDSHIP PROTECTION: Hardship forbearance helps protect against unexpected loss of income. See Disclaimer

See How Much You Can Save: Estimate your savings with a student loan refinance from Nelnet Bank.

#5 View More Details

Works with 300+ community lenders for higher approval chances

  • Fixed rates: 2.95% - 7.63% APR
  • Variable rates: 1.90% - 5.25% APR
  • Minimum credit: 660
View More Details
Visit LendKey View Loan Disclosure

Connecting student borrowers to a network of over 300 community lenders with low interest rates. By partnering with these lenders, LendKey is able to give consumers direct access to the best rates available from the most borrower friendly institutions. As the servicer of all loans obtained through its platform, you can rest easy knowing your personal information will be safe and that the best customer service team will be ready to answer your questions from application until your final payment.

LendKey Student Loan Refinance review

  • Lightning fast rate check - 2-minute rate check with no impact on your credit score
  • More lenders, more options - see the best offers from over 300+ community lenders for higher approval chances
  • Life of loan relationship - With LendKey, your personal information will never be sent or passed on to third parties. Their customer service team is with you from the moment you land on their website until you've completely repaid your loan.
  • Unmatched benefits- Community lenders put people over profits and offer unique benefits like cosigner release after 12 on-time payments, interest only repayment options to keep monthly payments low, the largest unemployment protection period in the market, and more.

Get a personalized quote from LendKey now.

#6 View More Details

Best for borrowers who want to customize their repayment schedule to pay off debt fast.

View More Details
Visit Earnest View Loan Disclosure

Using technology, data, and design to build affordable products, Earnest's lending products are built for a new generation seeking to reach life's milestones. The company understands every applicant's unique financial story to offer the lowest possible rates and radically flexible loan options for living life.

  • Commitment-free 2 minute rate check
  • Client Happiness can be reached via in app messaging, email, and phone 
  • No fees for origination, prepayment, or loan disbursement
  • Flexible terms let you pick your exact monthly payment or switch between fixed and variable rates
  • Skip a payment and make it up later
  • Online dashboard is designed to make it easy to apply for and manage your loan

Click here to apply with Earnest and to see how much you can save.

#7 View More Details

16 different loan term options – more flexibility to pay down your loan faster

  • Fixed rates: 3.24% - 5.54% APR
  • Variable rates: 3.34% - 5.69% APR
  • Minimum credit: 680
View More Details
Visit CollegeAve View Loan Disclosure

College Ave Student Loans offers major help and minor stress. We’ll help guide you through the process to find the right loan term and interest rate for you and the family budget.

  • Fast rate check: Get your new rate in 60 seconds 
  • Instant credit decision
  • Super flexible terms: 16 loan terms available from 5 to 20 years
  • No fees to apply

Click here to see more College Ave offerings and to start saving today! 


I reduced my student loan payment by $152 per month, by refinancing thru Nitro:

Save Money Now