When you should, and shouldn’t, refinance medical student loans. (iStock) Refinancing student loans involves exchanging your current loan for a new loan with a lower interest rate. These private loans offered by lenders, banks and credit unions can be a major asset to medical grads, who carry an average of more than $215,000 of student debt. Reach out to Credible to see compare student loan refinance options. While refinancing can be a useful strategy for someone looking to pay off their medical school debt, it isn’t necessarily the right choice for everyone. To decide whether refinancing is a good call, you need to consider the type of loans you have, evaluate your repayment options and compare rates. PAYING OFF MEDICAL SCHOOL DEBT IN 2021? 4 THINGS TO CONSIDER Understanding your medical school loans There are two types of medical school loans: federal and private. Medical students may have access to a handful of federal financial aid options, including health professions student loans, direct unsubsidized loans and PLUS loans. While an adverse credit history may impact your access to a PLUS loan, federal student loan rates are usually fixed and are not affected by your credit score. Private medical school loans are offered by lenders, with rates based on your credit score, loan term and whether you opt for a variable or fixed rate. Some private lenders offer specialized plans for medical students, allowing you to adjust payments during residency. Repayment options Federal education loan repayment is generally more flexible, with features like grace periods and forbearances. They also offer the following benefits: Federal and private borrowers can also save money by refinancing medical school loans. Use an online tool like Credible to compare student loan refinancing rates from multiple lenders at once without affecting your credit score. When is refinancing medical school loans a good idea? If the situations below sound like yours, you may want to consider refinancing: 1. You have private loans with high interest: If you have private education loans, refinancing could lead to significant savings. Use an online tool like Credible to view a rates table that compares rates from multiple lenders at once. 2. You’re ineligible for loan forgiveness programs: If you don’t qualify for the government’s loan forgiveness programs, perhaps by working at a private medical practice rather than a non-profit, refinancing might be best. 3. You have a steady income and healthy credit: Swapping a federal loan for a private one means forfeiting benefits like income-driven repayment and forbearance. Make sure you’re financially stable before making this move. Likewise, remember refinancing rates are based on credit. CONSIDERING REFINANCING YOUR STUDENT LOANS? WHAT TO KNOW When refinancing is not recommended (and alternatives to consider) While refinancing is a good call in the instances above, it doesn’t make sense to refinance in the scenarios below: In addition to refinancing your medical school loans, here are a few alternatives to consider: WHY OLDER AMERICANS WITH STUDENT LOAN DEBT MIGHT WANT TO CONSIDER REFINANCING Wondering how much you might save by consolidating or refinancing your student loans? Use an online student loan refinancing calculator to get a sense of what your new monthly payments could be. Refinance your medical school loans when it makes financial sense Whether you’re an intern, resident, or attending, it’s important to take a step back to evaluate your student loan repayment plan. Depending on the type of loans you have and your professional plans, refinancing might make sense. Weigh the pros and cons of refinancing medical school loans and carefully consider the benefits of federal student loans before refinancing them into a private one. If you’re curious about how much you could save by refinancing, use an online tool like Credible to get prequalified student loan refinancing rates without affecting your credit score. Have a finance-related question, but don't know who to ask? Email The Credible Money Expert at [email protected] and your question might be answered by Credible in our Money Expert column. Source: Read Full Article