My Strategy for Paying Off My Student Loans

One of the reasons I started this blog was to have some personal accountability in paying of my students loans. I currently have over $126,000 dollars in student loans, most of which came from PA school. I had a small amount that I had left over from undergraduate student loans. At times this feels like an insurmountable amount of money to ever repay. I know I’m not the only one struggling with paying back student loans and hope that this can help others who are trying to navigate their student loan journey.

Plan #1

My first job out of PA school was working for a non-profit hospital in general surgery. With this being a qualifying organization for student loan forgiveness my original plan was to work for 10 years for a non-profit organization and have my student loans forgiven. I signed up for an income based repayment plan to help lower my payments so that in the end I’d have the maximal amount forgiven. Things in life are always changing; marriage, babies, deaths, sickness, layoffs and we can’t always plan for the unknown so it is important to reevaluate your strategy on a regular basis. I personally like to look at things at the end of the year so I can adjust what I’m doing the following year. Whether it be once a year, twice a year, quarterly, every other year you should be looking at what you’re doing and adjusting your financial strategy on a regular basis.

Plan #2 – The Need to Reevaluate Your Plan on a Regular Basis

After moving to a new city and changing jobs to be closer to family I am now working for a multi-specialty private practice and the organization no longer qualifies for student loan forgiveness.

My Goal

I have re-evaluated my strategy for paying off my loans with my current goal to pay off my student loans in the next 5 years by paying $20,000 – $25,000 per year.

The Plan

I will continue to enroll in the REPAY program, one of the options for income based repayment that was brought on by President Obama. The advantage of this program is that it will cap your monthly payments at 10% of your discretionary income. Another advantage to this program is that it will subsidize up to 100% of the interest on subsidized loans for 3 years and then 50% of the interest from then on and it will subsidize 50% of all your unsubsidized loans not covered by your monthly payment. This allows me to pay more to the higher interest rate loans first and leave the lower interest loans for later and get a little break on the amount of interest I end up paying.

When I was originally planning on working towards the student loan forgiveness plan I was putting more money towards my retirement, but since changing jobs and not qualifying for student loan forgiveness I have decreased the amount of money I’m putting towards my retirement accounts. The company I work for will match the first 5% of what I contribute to my 401k, so currently I am only contributing the amount that will get me to my full match and the rest I plan to put towards my student loan debt. This does bring up an interesting question of whether it is better to pay off debt or put money towards retirement, which I will explore in a future post. This is my current plan to dig myself out of my student loan debt, for more advice on student loans and Physician Assistant personal finances follow us on pacents.com

The following charts show estimates of my student loan payments on the various loan repayment plans. Total amount for my loans is $126,000 and this based on the average PA salary of $104,000 for 2017 for a family of 4, in Oregon. The first chart has estimates without Public Service Loan Forgiveness and the second chart has estimates with the Public Service Loan Forgiveness. If you have student loans you can use the student loan calculator at https://studentloans.gov/myDirectLoan/mobile/repayment/repaymentEstimator.action#view-repayment-plans to find what the estimates would be for yourself.