Tips for handling your student debt
I don't like being the bearer of bad news, but this is something new grads must hear: wherever you go, student loans will find you!
You may have been granted a grace period following graduation or, like me, deferred loans for a year, but at some point loan repayment will become your reality.
My advice, in retrospect, is this:
Better yet, be sure you are only borrowing the loan money that you NEED to cover your education!
You may be wondering how this pertains to business... I can promise that it does When you are applying for a business loan to start your practice (or applying for a mortgage to buy a house) you will need to account for your loan repayment.
The average chiropractic student leaves school with approximately $125,000 in loans. In a 10-year repayment, that works out to about $1,125 a month. It may be tempting for the curernt students or new grads to think "I will cross that bridge when I get there," but these thoughts can get you into financial trouble in the long run.
Loan repayment can be crippling if you don't realize your full financial commitments.
Although I'm far from conquering this debt, I do have a plan of attack and now I am attacking my plan. And my wife and I are already planning our "Student Loan Repayment Party" for 2019!
If you have any insight on this or wish to share your own battles with student loan repayment, please comment.
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Students are very worried about student loans. I know I was, but now that I'm in business for myself, it's low on my priority list of worries.
After my 6 month grace period following school and consolidating my loans, I deferred my loans for 2 years and paid the interest only during that time. This gave me one less bill to have to pay while getting my business started. I have heard of others who rushed to pay off their student loans right away, but you may need to step back and take a look at the big picture.
In my case, my student loan has the LOWEST percentage rate of any of my other debt (home mortgage, business loan, and a small amount of credit card debt). I pay my paments monthly and qualify for a 1% rate reduction. It makes most sense to pay off the HIGHEST interest loans first. My student loans are costing me the least amount of money and therefore are lowest on my priority list to pay off.
Creditors look at student loans as "good debt" and although the quantity may be large, it's still more favorable than credit card debt.
Don't freak out over student debt, but do use it responsible. Borrow as little as possible and live simply in order to save money while in school.
Posted by: Dr. Erika Mennerick | October 02, 2009 at 03:48 PM
I too realized after graduation that my student loan was the lowest percentage rate debt I had. In fact, a loan officer advised me to utilize the 'credit-friendly' deferrment for 1 year and pay off my automobile and credit card debt. I paid the interest only during this first year. Also, while a 10 year payoff period sounds great, that equals a montly payment that may not be feasible for some. Similar to a real estate mortgage, 30 year terms are available. You can always pay more on the principle each month. One last thing to consider: If you marry another professional with a hefty student loan, D.C. or otherwise, DO NOT consolidate your loans. In the unfortunate event of a death, disability, or divorce, one of you is left with the entire tab.
Posted by: Erin Palmer Combs, D.C. | October 11, 2009 at 09:59 AM
I have been out of school for almost three years now and I deferred my loans for a year after the 6 month grace period. I am still finding it difficult to make the loan payments and subsequently have been racking up some credit card debt. I know that this is not a good thing, but in this economy I'm not quite sure what to do. I am considering going back into deferrment for another 6 months to a year in an attempt to pay down some of the credit cards, but not sure if that would be wise either because of the intrest.
Posted by: Reno Chiropractor | November 03, 2009 at 11:43 AM
I graduated in December 2007. I practiced for a year and half and didn't make it. I had to jump ship and now I'm working back a desk job for 12 dollars an hour. I didn't consider failure as an option. People really need to do some serious thinking if they want to be a Chiropractor. when I did it, I figured a horrible chiropractor could make atleast 30-40 a year. I had no idea that I would not even make even 10k my first year. This is a decision that will haunt me for the rest of my life. I haven't given up on being a chiropractor because I enjoyed it while I was in, but I definitely would NOT do it again if I had the choice. It should NOT cost so much to be a chiro. We owe as much or more than MDs and dentist and most chiro's will never see the same earning potential.
I'm just being real. It is what it is.
Posted by: Marcelo | November 11, 2009 at 03:46 PM