Risk vs. Reward: Refinancing Medical Student Loans

By Hillary Eames
Thursday, May 14, 2020

Medical students with good credit may have the option to refinance federal student loans into private loans, but for some, the risks may outweigh the benefits.

Choosing to refinance federal student loans to private loans, in most cases, will expose medical students to additional financial risk. Federal student loans often maintain a fixed interest rate, whereas private loans’ interest rates may have different structures. Private student loans may also not have the same flexible repayment options many federal student loans offer.

In addition, refinancing student loans to private lenders may be unnecessary if medical students choose to work in public service, including during fellowship or residency. After 10 years of public service work and making 120 on-time payments, as well as meeting other additional requirements, some physicians may be eligible for loan forgiveness.

For physicians who choose to refinance their medical student loans, the Association of American Medical Colleges makes the following recommendations.

  • Select a reputable private lender.
  • Ask about the benefits you will be losing by refinancing with a private lender — high-quality lenders will tell you directly.
  • Evaluate your current financial situation, and ensure you could assume the financial risk if something unexpected were to occur.
  • Try to pay off your medical student loans as early as possible to save on the amount of interest you will be required to pay.