Refinancing Student Loans as a Resident


By Brita Mittal, MD:

Like I imagine it does for most residents, my student loan debt has been a significant source of anxiety and frustration for me. Even though I attended a University of California medical school as a state resident, I still graduated with upwards of $150k in student loans (mostly federal Stafford loans). Since my spouse has a regular job and income, we have been able to make some payments on my loans during residency; however these payments barely covered the interest accrued on the loans.

When I initially looked into refinancing options a couple years ago, I reached a dead end when all of the companies I researched were unwilling to refinance physicians still in training.

However, in the last 6 months or so, things have changed and there are now several financial institutions offering refinancing options to residents and fellows. At the suggestion of our financial advisors at the Finity Group, my husband and I looked into refinancing with Darien Rowayton Bank (DRB) and we were pleasantly surprised to find out that we did qualify to refinance my federal Stafford loans and reduce my interest rate to 5.25% on a 10 year fixed repayment plan. Previously, I had been on a 30 year fixed repayment plan at 6.8%. What this meant for my payments was going from paying $800/month for 30 years to roughly $1100/month for 10 years.

The process of applying for the loan involved having a cosigner (my husband), submitting both of our W2’s and tax returns, proof of residency, employment, medical license, etc. I was able to upload everything onto DRB’s website which was relatively easy, and customer service agents were quick to call me if there was a problem with any of my documents. Also, I should mention that there was no cost to refinance the loan.

One of the great things about refinancing my loan with DRB was that they offer an option to reduce monthly payments to $100 while the borrower is still a resident or fellow. My advisors suggested that I sign up for this option in order to use the rest of the money I would have spent on loan payments to contribute to our Roth IRA’s while we are still eligible. DRB also continues to honor the federal loan benefit of discharging the loan if the borrower dies or becomes permanently disabled.

I encourage my fellow residents to look into refinancing options and seriously consider refinancing. For me, it is a big relief to have my loans now at a lower interest rate and to know that I will be free of them sooner, leaving me to concentrate on saving money for retirement, a down payment, future college funds, etc.!


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