When you have a significant student loan balance from medical school, and perhaps even your undergraduate days, it may be little comfort to know that you are not alone. However, if this is the case, then you are among the vast majority of medical school graduates who have student loan debt. Here are some tips for student loan refinancing for new practice clinicians.

According to the Association of American Medical Colleges, almost 70% of medical school students who graduated in 2021 left school with debt. The median debt for this group of graduates, which did not include their undergraduate studies, was $200,000 each.

As a new practice clinician, you are probably looking for options to reduce your expenditures, both for your new healthcare practice and for yourself, personally. One of those options could be refinancing your student loan. Another option might be forgiveness for that debt, depending on your circumstances and your practice location, among other considerations.

For healthcare providers, there are two options for eliminating or reducing your medical school loan repayment: Public Service Loan Forgiveness (PSLF) and Income Driven Repayment (IDR) plans. In addition, you may be eligible for:

• Getting student loan help based on service, which means you commit to work in an underserved region, for a specific government agency, or in a high-need specialty.
• Loan repayment or forgiveness if the state in which your new practice is located offers such assistance for working in Health Professional Shortage Areas. In this case, a certain amount of loan debt may be forgiven after a period of service, or you may qualify for repayment assistance for a fixed timeframe.

If you do not qualify for – or your state does not offer – these repayment and loan forgiveness programs, you may want to consider student loan refinancing. The first step would be to review all of your information and your current status, including your student loan balance and interest rate and terms.

Then, consider some of the pros and cons of refinancing, including:

• A possible lower interest rate. Medical school loans typically range from 5-10%. Refinancing a $300,000 loan from 8% to 3% will save you $15,000 each year in interest. 
• One, potentially lower, payment. Rather than keeping up with multiple payments for a number of different loans, refinancing could reduce the totally amount you pay on the loan each month, freeing up your cash flow for your practice operations.
• Quicker repayment of the total loan. With lower payments, lower interest rates, and a combined monthly payment, you could see progress on reducing the loan balance much quicker.
• Refinancing eliminates PSLF qualifications. Refinancing federal loans results in them becoming private loans that are no longer eligible for the loan forgiveness program.
• Likewise, refinancing eliminates the ability to reduce payments based on income through the Income-Driven Repayment forgiveness program.

Keep in mind, also, that you will need to qualify for refinancing through a private lender. When you were in medical school, it was relatively easy to secure a loan for your education needs. However, to refinance you will have to provide reassurances that you will be able to repay the loan based on your income, credit score, and a reasonable debt-to-income ratio.  

Refinancing may be the key to freeing up cash flow and even repaying your loans sooner, with better terms. Determining whether student loan refinancing will work for you and your new independent practice will require you to weigh these pros and cons, as well as other options available to you.