Student loans, especially for doctors and dentists, can seem daunting at times. Yet, there are many actions that you can use to pay them off quicker. One of these is refinancing your loan so that you’ll pay less interest over the long-term.
Refinancing can be helpful, but it’s important to work with reputable companies. Here are some of the things physicians and dentists should look for in a lender when you are thinking about refinancing your student loans.
If you have a fixed rate, then your payment will be set for the term of the loan. Conversely, variable rates can fluctuate and even raise your monthly payment. There are many factors that impact interest rates like changes in the prime rate. Fixed rates will make it easier to budget your student loan payment.
Every lender has different term amounts, which can range from 5 to 20 years. Some other options include 7,10, or 15-year terms. Having a longer-term means that you’ll pay less per month, but pay more in interest over the long run.
Shorter terms will increase your monthly payment, but you’ll be debt-free sooner. Use this calculator to evaluate interest savings based on your loan amount, term, and other factors!
Credit scores impact debts like auto loans, mortgages, credit cards, business loans, and student loans. Having a good credit score (usually 700 and above) shows lenders that you’re responsible and can be trusted. Many lenders have minimum credit scores. For example, Laurel Road and CommonBond require minimum scores of 660 and 680, respectively.
Some items that influence your credit score include types of credit, amount of debt, payment history, credit history, and hard inquiries. Soft inquiries include checking free credit reports, receiving credit offers in the mail, and when employers conduct credit checks.
These don’t affect your credit score, but hard inquiries like applying for a loan or mortgage can temporarily decrease them. Hard inquiries minimally impact your score and they fall off your credit score after a few years.
The best student loan refinancing companies have plenty of competition, so they must differentiate themselves from the crowd. Some lenders like SoFi have memberships that provide additional perks.
SoFi’s membership lets users access financial advisors, earn referral bonuses, obtain discounts, and even consult career counselors. This lender also has an unemployment protection program, which pauses loan payments and offers guidance when searching for a new job.
The first item a financial planner evaluates when comparing the best student loan refinancing companies is the interest rate. Refinancing will replace your old loan with a new one that has a lower interest rate. This differs from consolidation, which just organizes your outstanding debts without lowering the rate.
Refinancing can save you money, but be cautious if you have federal student loans. If you refinance federal student loans, then you can lose protections like income-based repayment options, the 6-month payment free grace period after graduation, and qualifying for the Public Service Loan Forgiveness (PSLF) program.
Many, if not most lenders conduct business online. One of the main differentiating factors among the best student loan refinancing companies is a secure and easy loan process. Lenders ask simple questions about your income, net worth, mortgage or rent payment, credit score, and other factors.
It will take 5 minutes to complete these short questionnaires. Once you submit these questions, you’ll either be denied or prequalified for a loan. Pre-qualification lets you shop among different lenders for the best rate. It doesn’t impact your credit score and you aren’t guaranteed to a loan with a certain amount and rate.
On the other hand, pre-approval is more official as it’s a step closer to being able to borrow a specific amount at a predetermined rate. Pre-approval requires you to submit paperwork like pay stubs, bank statements, proof of graduation, and credit reports. Once you’ve been pre-approved, you still have to wait for final approval, which locks in your loan terms. The entire process takes 3-4 weeks.
The best student loan refinancing companies have excellent customer support. You can use sites like Trustpilot and Yelp to see previous reviews. Be sure that every prospective lender has timely support, multiple customer service channels (email, phone, in-person), ethical and knowledgeable representatives.
Spaugh Dameron Tenny works with MassMutual to help clients simplify and save on your student loans by refinancing through CommonBond. This partnership offer benefits like:
Each Spaugh Dameron Tenny client’s refinancing through CommonBond has also funded medical mission trips through SDT’s GOtoGROW program. These valuable funds have sponsored doctors to serve patients for a week at a time in Honduras, Haiti, and Nicaragua.
Another great refinancing company to consider is Laurel Road. Laurel Road helps make paying off student loans more manageable by leading you through the process. Here are some of the benefits they have:
Sofi is committed to helping individuals with their financial goals. Here are some of the benefits they have to offer:
Owing six figures in medical or dental school debt might seem intimidating as you start your career. But, taking simple actions like looking into income-driven repayment plans or even refinancing your loans can make your payment more manageable. What may seem like a small reduction of your interest rate might not be so small in the long run. Reducing your interest rate can save you tens of thousands over time.
The best student loan refinancing companies for doctors and dentists have competitive rates, efficient processes, and excellent customer service. Always ask your financial advisor or professional association if they have connections to respected lenders as well. If you are considering refinancing your student debt, schedule a complimentary student loan consultation with our team or download the Student Loan Repayment Guide to get started.
For over 50 years, Spaugh Dameron Tenny has provided comprehensive financial planning for physicians and dentists across the U.S. In addition to providing personalized advice, we walk our clients through their options to help maximize finances and maintain financial security.
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