Refinancing Nursing School Loans: Everything You Need to Know
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Learn everything you need to know about refinancing nursing school loans. Find out how to get the lowest interest rates, who should not refinance, and why.
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Student loan refinancing has become more popular today in response to the rising cost of financing a nursing education. There are many options for nursing school graduates to refinance federal subsidized and unsubsidized student loans and private student loans. Refinancing involves taking out a new loan with new terms; the new lender pays off the old loan balance.
Read on to learn more about the advantages to refinancing your student loans.
Student Loan Refinancing for Nurses Explained
Student loan refinancing is the process of consolidating private or federal student loans into a single loan offered by a private lender or bank. The reason most people refinance their student loans is to get a better interest rate, lower their monthly payments, and save money.
Many people refinance their student loans for a shorter loan term; this allows them to pay off their debt sooner.
There are several reasons to refinance your nursing school loans, including:
- To save money with a new loan that offers better terms, such as a lower interest rate (you may lower your interest rate to as little as 3.5%)
- To lower interest rates which translates to paying back less money overall
- To simplify loan payments (you can consolidate loans together and combine them into one loan with a single monthly payment)
- To pay off debt faster
- To lower loan-to-debt ratio
Once nursing school graduates make the decision to refinance their student loans, they will need to locate the company they want to work with and apply for a new, private loan.
Once you've selected a company to work with, the first step is to fill out an application. Typically, you can do this online in as little as 20 minutes. After the application is submitted, the entire process can take 2-3 weeks before your loan is approved and then processed.
The steps include:
- Application submission (20 minutes)
- Underwriters review application and make a decision (1-2 days)
- New loan is processed, old loan is paid off, and new loan terms apply (10 days)
Pros and Cons of Refinancing Nursing Student Loans
Student loan refinancing can be an excellent option for some graduates, but nurses should be aware that the process comes with pros and cons. While it's true refinancing can lead to you paying less on your loans overall, you may also become ineligible for certain federal loan forgiveness programs.
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Student Loan Refinancing Eligibility
Nursing school graduates can determine their eligibility for refinancing student loans once they have completed their program and received their nursing degree. In most cases, though, it's best to wait until you're employed as a stable income can lead to better terms.
Nurses can refinance private loans, federal loans, and Direct PLUS loans, which are for nurses pursuing graduate professions. While each lending institution has its own eligibility requirements, common ones for refinancing nursing student loans include:
- Nurses must have completed the minimum of a four-year bachelor's program to qualify for private refinancing.
- Nurses must have a minimum credit rating.
- Nurse graduates must be employed, and their income must meet minimum standards for loan approval.
- Applicants' debt-to-income ratio must be within the acceptable limit.
- Nurses must show proof of employment.
How to Refinance Nursing School Loans
There are several steps in refinancing nursing school loans.
Decide if refinancing is right for you.
Gather information about your current student loan(s) to see if you can save money by lowering your interest rate.
Find the right lender.
Shop around to locate a lender that offers eligibility standards you qualify for (e.g., credit ratings, income earnings, and more). They should provide the lowest interest rates you qualify for.
Discuss options with several lenders.
Contact lenders and discuss rates, eligibility, loan protection, and other factors. Ask any questions you have about loan terms or the overall process.
Choose a lender.
Select the lender you want to work with and fill out an application.
Wait for loan approval.
Wait approximately 2-3 days for loan approval from underwriters.
Fill out all paperwork.
Complete all mandatory paperwork for loan processing.
Wait for loan payoff.
Wait around 10 days for the old student loan payoff by a new lender.
Begin paying a new lender.
Start paying lower monthly payments to the new lender or continue with the same amount of student loan payments for a shorter overall loan term.
How to Tell If Student Loan Refinancing Is Right for You
Before refinancing, it's important to assess your current and future employment goals. If you plan to pursue a new job or go to graduate school, it may not be the best time to refinance your student loans.
Nurses also have other loan repayment assistance options available, such as federal student loan forgiveness for nurses programs. Full or partial loan forgiveness is possible for nurses who:
- Teach at approved nursing programs for a specific number of years after they graduate
- Work in certain areas, deemed a critical shortage facility, for a predetermined amount of time
- Work in government jobs or at certain nonprofits (may be eligible for Public Service Loan Forgiveness)
- Enlist in the Armed Forces and complete their tour of duty as a registered nurse
Student loan forgiveness programs enact preset requirements such as the number of years a nurse must work in an underserved area to qualify for loan forgiveness.
Each loan forgiveness program decides the maximum amount of the loan allowed for nurse graduates to qualify to write off as forgiven. In some instances, nurse graduates can be forgiven for up to 85% of their student loan amount over a specific time period.
Other considerations for deciding if refinancing your student loans is right for you include:
- Some lenders will only refinance loans from nonprofit colleges and universities.
- Nurse graduates who don't qualify for lower interest rates because of credit issues may be able to get attractive loan terms with a cosigner.
- Nurse graduates struggling to pay federal student loan debt may want to explore an income-driven loan repayment plan which can lower monthly payments to 10-15% of your income, instead of refinancing with a new lender. Private lenders do not offer this option.
- Consolidation loans combine several student loans into one payment. When consolidating, nurse graduates should consider a new, private lender to get the best loan terms. This is because federal student loans employ weighted interest rates which end up being the same amount of money paid in interest as before consolidation.
Frequently Asked Questions About Refinancing Nursing Student Loans
Can nurses refinance their student loans while attending school?
Nurses must graduate with at least a bachelor's degree before being eligible to refinancing their student loans. Most private lenders will not consider refinancing loans for nurses who graduated from practical nursing, associate nursing, or diploma programs.
Is it worth refinancing your nursing student loans?
In many instances, it can be worth it to refinance your nursing student loans, considering the interest rate will be lower on the new loan than on the pre-existing one(s).
Nurse graduates must consider many options when deciding whether refinancing is worth it, such as do you qualify for refinancing? Is your credit good enough to qualify for a lower rate? Are you eligible for any special benefits such as student loan forgiveness programs?
The answers to these questions will help you determine whether it's worth it to refinance your nursing student loans.
What are the consequences of refinancing student loans?
By refinancing student loans, nurse graduates may forgo some of the benefits and protections provided by federal loan providers, such as loan forgiveness or income-driven repayment programs. Loan forgiveness programs are special opportunities to forgo student loan debt in exchange for working a certain amount of time in critical shortage areas.
Are nurses getting their student loans forgiven?
In special circumstances, such as working in areas where there is a critical shortage for specific time spans (usually 2-4 years), nurse graduates may be eligible for partial or total student loan forgiveness.
- Should I consolidate or refinance my student loans? (n.d.).
- Student loan refinancing 101. (n.d.).
Page last reviewed April 27, 2022
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