A Rant on Interest Rates and Refinancing Student Loans

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Refinancing medical student loans should be easy, but it's not. Here's fair warning, from personal experience, about how difficult it is.

As many long time readers know, my husband is a newly graduated physician who has six figures of student loan debt. I’m not going to rant today about how ridiculously expensive medical school is or how there is a doctor shortage with a serious lack of residency positions. That’s another rant post for another day.

What I want to rant about is how extremely difficult it is to get a decent interest rate when refinancing student loans. Let me explain:

The Impossible Barriers of Refinancing Student Loans


Both my sister, who is about to graduate from medical school, and my husband have had the hardest time refinancing student loans.

Most of my husband’s student loans have 6-7% interest rates. The interest on his medical school loans accrues at $70 per day. 

Student loan refinance companies advertise everywhere and talk about how much money you’ll save if you refinance through them. However, they are not hospitable to medical students and medical residents, at least not at this time.

The primary reason we keep getting denied for student loan refinancing is that my husband doesn’t make enough money relative to his debt load. He’s currently in residency making $50,000 per year. To the bank, even with me as a co-signer, he doesn’t have enough income to satisfy their debt to income requirement.

I even talked to one of the higher ups at SoFi at the most recent FinCon. He said they would be rolling out a new program for medical resident refinancing soon. I stayed in touch with the SoFi team a few times about this issue, but I never got a satisfactory answer or real help with my husband’s refinance.

I did, however, refinance my own student loans with SoFi, but that process was very straightforward because I had a much lower student loan balance at around $30,000.

It frustrates me because banks are totally fine loaning out hundreds of thousands of dollars to future physicians so med students can become educated and take care of people.

However, when these students become resident physicians and want to pay back those loans and lower their interest rates, the banks are suddenly not hospitable and complain that students have too much debt.

At this time, I don’t think we’ll be able to get a lower interest rate on my husband’s loans until he is a fully practicing physician with a higher income.

Refinancing medical student loans should be easy, but it's not. Here's fair warning, from personal experience, about how difficult it is.

It’s Super Easy to Get A Car Loan


Oh but wait! Forget trying to get low interest rates for student loans that will be used to educate the world. Let’s definitely penalize the people who work 15 hours a day and know how to save people who come into the ER bleeding.

But you know what? If one of those doctors has a great credit score, by all means they can get a low interest rate on a car loan! After all, after working 15 hours a day, shouldn’t they have a nice shiny car to drive home?

We just bought a new SUV after our 250,000 mile SUV finally bit the dust. Guess what interest rate I got on the car loan? Seriously, just guess.


And here’s the kicker. The $12,000 I borrowed for my car literally got put in my bank account in cash in two days. Then, I went into the dealership as a cash buyer and bought an SUV.

Same income I tried to use to co-sign my husband’s student loans. Same credit score over 800. Same job. Same security. Same checking account balances and same investment balances.

Why is it easier to buy a car than it is to lower the interest rates on student loans?

What is up with that? Why do I have to jump through so many hoops and beg banks to lower student loan interest rates from 7% to 5%, when I can literally get a 1.74% interest rate on a car in five minutes flat?

Maybe I’m comparing apples to oranges, and I know that a $12,000 car is a very different amount from a $300,000 medical school education.

I just don’t understand why one is so much easier to come by than the other when we are the same people with the same credit scores and the same income.

I really look forward to the day when all of this debt is behind me; when none of this will matter; but until then, I’ll just rant about it.


Did you have luck when refinancing your student loans? Am I the only one who is irritated by the difference in interest rates between car loans and student loan refinancing?


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Catherine Alford is the go to personal finance expert for parents who want to better their finances and take on a more active financial role in their families.


  • Alyssa says:

    I have over $100k in student loans (a combination of out-of-state tuition, interest and capitalization, and the stupidity of an 18-20 year old). I have a regular BA and cannot refinance for the life of me. About 4 of my private loans are over 10%, and I can’t even find someone to refinance just those 4! I have great credit and have never missed a payment, but because I don’t make enough, I can’t refinance, although the same company had no problem giving a 19 year old kid that much to go to school. So frustrating and feels like a catch-22 sometimes. I feel your pain.

  • John W says:

    I feel your frustration: you want to do well for your community and for yourselves, but the banks seem two-faced. They are happy to set loan terms to get you through school, but they won’t discuss improving those terms now that you are ready to do your thing and help the world.

    However, take a look through the bank’s eyes. To the lender it’s a business issue, and it comes down to risk and return. The car loan has collateral behind it: if someone does not pay on their car loan, the bank takes the car and sells it to pay off the loan. Your student loans do not have collateral backing them up. They have your career and your skill and your future backing them up, but the bank can’t sell those (because that would be slavery!) so the bank sets a higher interest rate to compensate for the risk that someone might default on their student loans and stop paying them. Even now with you out pursuing your career the risk of default has not gone down substantially, so the banks are not too keen on lowering the interest rate.

    Hang in there, live frugally, make sure you keep up with all the payment due dates on all the loans (penalties and fees can turn a low 6-figure debt into a high 6-figure debt, and that’s no fun), ask the hospital or medical practice if they have programs to pay some of the cost of student loans, and maybe even see if there is a way to become eligible for the public service loan forgiveness program:

    Good Luck

    • Cat says:

      Hi John! Thanks for the comment. I should have put it in the post but I got an unsecured loan for my car. They just put the cash in the bank and I have the title to my car. They have no collateral.

  • Val says:

    Thanks so much for writing about this! I feel like health professionals with student loans get overlooked because of their salary. I’m a recent pharmacy school graduate with over 200k in loans. Currently making only half of what a pharmacist makes since I don’t have my pharmacist license yet. (Also, pharmacy residents only make 45k-50k a year as well.) I’ve gotten so much mail from different refinance companies that I know will deny me. It’s really tough since my payments will be $2300 a month once my grace period is over. Right now, I’m just waiting to refinance once I actually have a pharmacist income. I’m pretty young so my top priority is to pay off my student loans as soon as possible (5 years!) before kids or buying a house. 🙂 Good luck on your end as well!

    • John Schmoll says:

      It can definitely be that way, unfortunately, Val. Best wishes on your end as well, it can be done! 🙂

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