Upon graduation, medical students are faced with the daunting reality of paying off their student loans. The average cost of medical school in the United States is a staggering $218,792, leaving many doctors with significant debt – typically via multiple loans – to repay.
To manage medical student debt more efficiently, many medical school graduates consider consolidating or refinancing their loans. Deciding if either of these paths is right for your financial situation comes down to a variety of factors.
Factors to consider
Some important factors to consider when making the decision to consolidate or refinance your medical school debt include:
Pros and cons of medical student loan consolidation
As you consider the different types of consolidation loans available and the potential benefits and drawbacks of choosing this route, doing your research and speaking to an expert is important. You can schedule a free 30-minute consultation with a student loan specialist here to get help understanding if consolidation aligns with your financial goals. Some pros and cons of medical student loan consolidation you might consider include:
Simplified repayment – consolidation facilitates the consolidation of multiple loans into a singular more manageable monthly payment
No lower interest rate – Unlike refinancing, consolidation does not result in a reduction of your interest rate. Its primary advantage lies in simplifying your payment structure.
Access to federal student loan benefits – federal student loan consolidation could potentially make you eligible for Income-Driven Repayment (IDR) plans which offer repayment flexibility based on your income and eventual forgiveness.
Loss of benefits – be mindful of potential loss of any borrower benefits from the original loan such as interest rate discounts or principal rebates.
Pros and cons of medical student loan refinancing
Refinancing medical student loans could provide an opportunity to pay off your original debt with a new, consolidated loan with more favorable repayment terms and a potentially lower interest rate. Some of the top potential benefits of refinancing to consider include:
- Saving money over the lifetime of your medical student loans
- Paying off your medial student loans quicker
- Lowering your monthly payment amount
- Changing from a fixed rate to a variable rate, or vice versa
- Reducing the number of loans in repayment
- Gaining terms and rates based on their current financial situation and creditworthiness
Different lenders have their own criteria for determining eligibility and rates, but generally, borrowers in good financial standing who can demonstrate a strong career trajectory and have good credit scores are more likely to be approved with a potentially lower interest rate. Use our student loan refinancing calculator below to get a sense of your potential refinancing rates and terms.
One major drawback that federal student loan borrowers should be aware of is the loss of federal benefits that comes with refinancing federal loans with a private lender. Refinancing your federal student loans with a private lender means you will no longer be eligible for Income-Driven Repayment (IDR) plans or the Public Service Loan Forgiveness (PSLF) program. Depending on how much federal student loan debt you have, how long you’ve been in repayment, and other financial factors, it may make more sense to take advantage of federal benefits than to refinance. A student loan specialist can help determine which path is right for you.
Making the best choice for your medical student loans
As you consider both strategies for your medical student loans – consolidation or refinancing – your decision ultimately hinges on a meticulous evaluation of your financial circumstances and career trajectory. Given the substantial financial investment in your medical education, it’s crucial to make informed choices that align with your personal financial goals.
Our student loan specialists have worked with many medical professionals and understand that managing medical student debt is a critical component of your overall financial success. Informed decisions will not only ease the burden of debt but can also set you on a path towards achieving your professional aspirations. To learn more about your medical school debt management options, visit some of our other resources for medical professionals: