Healthcare professionals and students, learn the best way to pay off student loans here.
Becoming a healthcare professional is a rewarding career, but requires obtaining a Bachelor’s, Master’s, or Doctoral degree. And let’s face it – going to college is expensive! Research shows that nearly 70 percent of people who go to college take out loans. But unfortunately, new grads rarely have any idea about the huge amount of loan debt they accumulated during college until they graduate and start receiving their first bills. And, according to an article on CNBC, that debt can take as long as 20 years to pay off! If you’re a healthcare student or a newly graduated medical professional, discover the best way to pay off student loans here.
Increase in College Tuitions
There is a huge gap between the rate of increase in school tuition and the increase in salary, especially for new graduates in the healthcare field. Consider these facts:
- In 1980, the average cost of tuition, room and board, and fees at a four-year undergraduate institution was $9,438, according to the Department of Education.
- In 2014, the average cost for undergraduate tuition, fees, room, and board were estimated to be $16,757 at public institutions, $43,065 at private non-profit institutions, and $23,776 at private for-profit institutions.
- In 1990, the typical college student graduated with debt equivalent to 28.6 percent of annual earnings. By 2015, that number had ballooned to 74.3 percent.
If you’re currently in college or you’re a post-grad struggling to pay off your student loans, here are 6 starter tips to get a good handle on your financial planning.
The Best Way to Pay Off Student Loans
1. Know your loan provider.
This is important. First, find out if your loan is private or federal. These are different types of loans with different policies and benefits. Federal loans often provide forbearance, deferment, consolidation options, loan forgiveness programs, and many other benefits over private loans. Also, find out if your interest rate is fixed or variable – regardless if you have a federal or private loan.
Additionally, note whether your federal loan is subsidized or unsubsidized. The U.S. Department of Education offers eligible students at participating schools Direct Subsidized Loans and Direct Unsubsidized Loans. Direct Subsidized Loans are available to undergraduate students with financial need. The federal government pays the interest for Direct Subsidized Loans while the student is in college or while the loan is in deferment. Direct Unsubsidized Loans are available to undergraduate and graduate students with no requirement to demonstrate financial need. Interest begins accruing for Direct Unsubsidized Loans as soon as the loan is taken out.
2. Get ahead on your payments.
Don’t wait until you get a job (and your first paycheck) to make the first payment towards a huge student loan. If possible and allowed by your loan provider, start making payments as early as you can while you are still a student. At this stage, try to make small payments bi-monthly. Every small amount ranging from $10 to $100 on a bi-monthly basis will add up and help lower that giant student loan.
If you have already graduated college, try to make larger monthly payments to cut the loan principal. By decreasing the principal balance, you will minimize the duration of the loan period and the interest accrued. Even paying an extra $10 per payment will help. Also, you might consider making two smaller bi-monthly payments instead of one large monthly payment. This will help you pay down your debt faster.
3. Work, work, and work!
If you are still a student, look for summer jobs or apply for on-campus jobs. One common option is having a teaching assistant job on campus. This will help develop your educating and listening skills as you begin your healthcare career. Some schools also provide benefits such as full, half, or some percentage of tuition waivers or different incentives like free housing or insurance. Any savings help when you are a student!
4. Apply for scholarships.
Search and apply for as many scholarships as you can. When applying, make sure you write about your honors, volunteer time, and community participation. Also, write a paragraph or two to explain your career goals. Taking the time to write a well thought-out paragraph may give you a reward of a few thousand dollars that you can use towards your loan payments.
5. Establish a college fund.
Whether you are a student or graduate, you have the option to open a bank account that you cannot draw from using a debit card. Then, have a percentage of your check automatically deposited into this account. Use this account strictly for paying off college loan debt.
6. Refinance your loans.
If your loan has a high interest rate, consider refinancing. A lower student loan rate will save you money as it charges less interest and will reduce monthly payments. Before refinancing, figure out how much you can afford to pay each month. Also, keep in mind that you may not be able to consolidate federal and private student loans together.
There you have it – the best way to pay off student loans. Stay tuned for additional blogs to learn more tips for healthcare professionals.