Pay Off Student Debt Faster
Student loans have become so prevalent among younger generations that they have become the first or second question I get when talking about financial planning. Whether you graduate with 300k or 50k in student loans, nobody wants to have that debt hanging over their heads as they start their careers. While student loans can get complicated quickly, there are definitely ways to hasten your exit from their reach. I wanted to share some of these methods for getting out of student loan debt faster, but if you ever have questions or want to work through a specific situation I’m here to help. With that said, let’s look at ways to pay off the debt faster.
Public Service Loan Forgiveness
I have written several times about Public Service Loan Forgiveness (PSLF) because of the ability to pay off even large amounts of federal loans in 120 monthly payments. Aside from being able to get out from under federal (not private) loans in 10 years, this program will forgive the remaining balance of the loans after you have hit the 120 payments. That means that unlike other programs, the remaining balance on your loans will not constitute a tax hit on the unpaid portion of your loans. PSLF is only available to those who work in certified 501(c)(3) non-profits or work for federal, state, or local government agencies. Luckily, most hospitals fall under the non-profit heading, so for doctors and nurses who take hospital jobs, you’ll be able to take advantage of this program.
Income-Driven Repayment Forgiveness
For those with federal loans who don’t qualify for Public Service Loan Forgiveness, there are a number of income driven repayment plans. There are four income driven plans that provide loan forgiveness after a number of on-time payments, ranging from 20-25 years. The four plans are as follows:
Income Based Repayment Plan (IBR)
Income Contingent Repayment Plan (ICR)
Pay As You Earn Plan (PAYE)
Revised Pay As You Earn Plan (REPAYE)
While these plans do provide loan forgiveness and you keep more of your paycheck, you will pay more in interest and will likely pay more overall. However, if there are periods of income shortages, these plans can be a great way to decrease the impact of student loan payments.
Nurse Corps Loan Repayment Program
I have also written about the Nurse Corps Repayment Program, but it bears repeating as it can be a great way to reduce your student loans. This program will pay off up to 85% of your student loans for RN’s and APRN’s who work in a Critical Shortage Facility or are in an accredited nursing school. If you get accepted into this program (which can be difficult as they are very selective) they will pay off 60% of your student loans for two years of service. They can also decide to accept another year of service for another 25% payment of your student loans. This is a great way for nurses to pay off their student loans quickly, as you likely won’t find ways to pay off 85% of your loans after only three years. However, as I mentioned earlier, this program is very selective so it can be unwise to pin all of your hopes on this program.
State Sponsored Student Loan Repayment
While federal assistance programs typically get most of the press, there are a number of states that have great student loan assistance programs. Because student loans have become such a factor in our decision making in terms of career paths and jobs, states have recognized that they can attract top talent by offering repayment programs in order to lighten the debt load on specialized careers. While the professions that qualify are somewhat limited these programs can be a great boost to paying off student loans sooner. Usually physicians, dentists, STEM professionals, and teachers are the careers that states target with the state of Michigan offering up to 200k in tax free student loan relief.
Student Loan Refinancing
Student loan refinancing is a huge topic that has been covered by hundreds of people in thousands of ways, so I’m not going to delve too deeply into this method of student loan repayment. However, refinancing your student loans can be a great way to pay off the loans a bit faster and pay less. When you take out student loans, your credit score is likely not as good as it will be when it comes time to pay due to a short credit history. However, as your credit score increases, you will be able to refinance your loans using much better interest rates and be able to pay off the debt faster. While this sounds great, there are definitely some things to remember as refinancing can also make your life far more difficult, so it is important to make sure you know what you’re doing beforehand. Refinancing private loans is almost always a good idea as there won’t be any special benefits attached to private loans. If you can get it at a better interest rate, then go ahead and refinance. The complications come into play when you’re talking about federal loans. There are many benefits that come with federal loans and those will be wiped away when you refinance those loans, so be careful when considering refinancing your federal student loans.
These are some of the paths you can take to reducing your student loan payments and get out from under that debt a bit faster. Hopefully one or more of these methods helps you tackle student loans, as more than one tactic may be best for you. Perhaps you work in a hospital and can take advantage of Public Service Loan Forgiveness for your federal loans and then refinance your private loans. Every person is unique and so is their situation, but with some concerted effort it can be a bit easier to be student loan debt free. If you are interested in working on your specific situation, please reach out to me and we can go through the options to find a path that makes sense.