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7 Ways to Tackle the Albatross of Medical Student Loans


Student loans can feel like an albatross to physicians just starting their careers. These seven tips will help physicians hasten the demise of their debt burden.

Student Loan Piggy Bank

If you’re in the early phases of your career as a healthcare professional, you probably have some lingering student loans. If that debt is substantial, you may think of it as an albatross, and it may be a significant impediment to future planning—including saving for your retirement years. How can you even think about planning for your nest egg when your career has just begun, and you have a ton of debt to pay? Let’s take a look at some strategies that may help you pay that debt down more quickly.

Biweekly (instead of monthly) payments. This is a “pay-it-off early” strategy borrowed from paying your mortgage early. It helps in two ways: you’ll make 26 payments a year instead of 24, and you’ll pay less interest over the course of your loan. This may not sound like much, but depending on the terms of your student loan, it can add up to thousands of dollars in savings.

Slightly larger payments each month. Same principle: getting to the principal faster. Again, even tightening the belt a little bit on current spending to save over the long-term, say, in an extra increment of $50 or $100 each payment, can pay off in big savings.

Keep good track of all your debt…and your interest rates. If you have multiple loans from multiple sources with different interest rates, keep good records and make sure your extra payments are going to the highest interest rate loan first. While paying off student loans early can be a great idea, it doesn’t make any sense if you’re doing it by paying the minimum payments on a credit card or other higher-interest loans. Always know what your rates are and prioritize your payments to tackle the ones with the highest rates first.

Keep a solid budget, and make adjustments as necessary. We’ve touted the benefits of a good budget previously here. The budget is a great all-purpose tool. Knowing where your money goes each month can help you determine whether you can make those extra payments or pay extra amounts each month.

Make good use of “found money.” Is there anything cooler than found money? We’re not just talking about that random, freshly-laundered sawbuck you unexpectedly discovered in your jeans pocket. Any unexpected income can be found money, such as a bonus, a side job with Uber, or even an unexpected tax refund. As always, little amounts over time can add up, so putting aside that “found money,” or using it to add to your loan payments, can make small amounts much larger.

Here’s a neat found money trick: the interest you pay on your student loan is tax deductible. If you end up with a tax refund, you can use it to pay off your loan faster!

Keep some savings and a contingency fund. What does having a savings account—or an emergency fund—have to do with paying off your loans early? Plenty. Let’s say you suddenly need $500 in car repairs, or a new water heater. Where is that extra money coming from? If you have a solid savings strategy or a contingency fund, the money can come out of that and not your student loan payments. Having a contingency fund is helpful beyond giving you a little wiggle room; it also gives you peace of mind and frees you up to make those extra payments.

Pay on time, and don’t miss payments. Even if you can’t pay off your loans early, make sure you stay current. Missing payments is bad on three levels. First, it can negatively impact your credit, which can ultimately lead to higher interest rates. Second, it has the opposite effect of paying off your loans early; it will make the long-term cost of your loan higher. Third, paying even a couple of days late can lead to late fees and other penalties.

An albatross is a big bird. Shed it a little bit at a time. Sometimes, just knowing you’re making progress can make the long road seem shorter.

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Victor J. Dzau, MD, gives expert advice
Victor J. Dzau, MD, gives expert advice