When should you refinance medical school loans?

Step 1: Put your federal loan records on the table

Gather the latest loan statement, promissory note, servicer history, and employer details before requesting a private quote. Separate Direct Loans from other federal loans. The label matters because federal protections attach to the loan type, not simply to the fact that you attended medical school.

Check whether your fellowship employer and past payment history could support PSLF, the federal Public Service Loan Forgiveness program. Annex Wealth Management would want the employment record and qualifying-payment history beside the quote, not discovered after the application is complete.

A careful borrower can still treat every federal loan as interchangeable. That slip can erase a useful protection before anyone has checked whether four more years of qualifying employment are realistic.

• Latest loan statement
• Promissory note
• Servicer payment history
• Employer details

Step 2: Ask whether PSLF or federal relief still matters

Do not refinance while you still need PSLF, federal income-driven payment options, or federal disability discharge; otherwise, compare the first-year interest saving with the value of every protection you would surrender. A private refinance cannot be reversed into a federal loan after the application is complete.

Decide whether the planned attending employer qualifies and whether the remaining four years of qualifying employment fit your career plan. Then compare the federal payment path with the private payment using actual income, family size, and required monthly spending. The payment that works only after extra shifts is not a comfortable payment.

• Planned attending employer
• Qualifying employment years
• Actual family size
• Required monthly spending

Step 3: Price disability discharge and income stability

Read the federal disability discharge rules and the private lender’s disability terms separately. Do not assume that a private promise matches the federal rule. Count dependable W-2 income apart from variable locums income when testing the new payment; if the household needs uncertain shifts to make it, the rate is doing too much of the selling.

• Federal discharge rules
• Private disability language
• Dependable W-2 income
• Variable locums income

Step 4: Check the tax line before comparing rates

Student loan refinancing itself generally does not create taxable income, but interest treatment depends on the borrower and applicable federal rules. Income-driven federal payment calculations generally use adjusted gross income, while a private loan does not preserve that payment formula. Ask a CPA whether the student loan interest deduction could apply; high-income physicians may receive little or no federal benefit under the applicable income rules.

Annex Wealth Management keeps this check tied to cash flow. A lower payment that raises taxable income, changes deductible interest, or removes a federal payment formula belongs in the monthly spending plan before the portfolio enters the conversation.

• Adjusted gross income
• Borrower and tax filing
• Interest paid
• CPA review

Step 5: Run the $300,000 decision with Annex Wealth Management

A $300,000 balance is where a polished quote can look persuasive. The row that flips the answer is Federal protections: they remain with the federal loan and are generally lost after a private refinance. The interest gap is real, but it is only one line in the decision.

Jun and Patrice, hypothetical, are 44 and 43. Jun is a pediatrician on salary. Patrice is an emergency physician with W-2 pay plus $80,000 of annual 1099 locums income. They have no children, $900,000 saved, and are weighing a $1.6 million physician mortgage against investing cash in a solo 401(k) and taxable account. Their student loans were paid off last year, but the example shows the refinance decision they reviewed while the balance was outstanding.

A private quote at 5% looked better beside a 6% federal rate. The arithmetic was simple: $300,000 x 6% = $18,000 of federal interest. $300,000 x 5% = $15,000 of private interest. $18,000 - $15,000 = $3,000 of gross first-year savings before principal declines.

The attractive rate failed their situation. The loan would have been gone within a year, while refinancing would have removed federal disability discharge and future federal payment options. Their monthly spending plan did not require the lower payment. Keeping the federal loan preserved protections for one year at roughly $3,000 of gross interest cost.

The repair was plain. Jun and Patrice kept the federal loan, paid it off, verified the final 1098-E, and treated the $3,000 difference as a cash-flow item, not as a guaranteed investment return. Annex Wealth Management would also review whether variable locums income could support a private payment if the facts were different.

Refinancing a $300,000 federal balance for a 1 percentage-point rate reduction can save about $3,000 of first-year interest while costing access to PSLF and federal disability discharge. That trade can be worth far more than the rate saving.

• $300,000 balance
• 6% federal rate
• 5% private quote
• One-year payoff horizon

Step 6: Send only the refinance application that survives the checklist

Request several written offers only after confirming the loan type, payoff amount, fixed or variable rate, term, origination charges, and disability language. Choose partial refinancing only when the federal and private portions can be serviced separately without relying on uncertain locums income.

The borrower owns the final decision, not the quote page. Any money redirected into a portfolio carries market risk, including the chance of getting back less than you put in. You can gather the statements, employer details, and written offers alone. A conversation with Annex Wealth Management is worth considering when PSLF, disability discharge, tax treatment, or a physician-practice cash-flow decision changes the value of the rate.

• Loan type confirmed
• Payoff amount
• Fixed or variable rate
• Repayment term
• Origination charges
• Disability language