Increasingly I am meeting JD’s, MBAs and Pharm D.’s with $200,000 in student loan debt. It’s not just them. If you’ve borrowed money to invest in your education, you know that paying interest on that student loan debt is simply part of the deal. But while “interest” can seem like an abstract notion when you first take out loans, over time it becomes a force to be reckoned with – particularly for those with professional and graduate student loans including MBA, law and medical school graduates, who often have six figures worth of student loan debt to repay.
Increasing the return on student loan debt
Fortunately, as the student loan market has grown, new options have come online to address borrower needs – in particular, student loan refinancing. Similar to the mortgage version, refinancing student loans at a lower interest rate can potentially allow you to:
- Save money on total interest
- Make lower monthly payments
- Shorten loan term
- Switch from a fixed rate loan to a variable rate loan, or vice versa
- Simplify your monthly bill through consolidation
Hidden dangers in student loan debt repayment plans
As a CERTIFIED FINANCIAL PLANNER™ professional, I quickly learned that there was more to know. I also learned that there was much misunderstanding by attorneys and pharmacists on their options. Federal loans offer a few different repayment options that are not available with private lenders, including a graduated repayment plan in which payments start out low and increase over time. Some were counting on income-driven repayment plans to reduce the burden. These programs allow borrowers with high debt-to-income ratios to make lower monthly payments, with the remaining principal eligible for forgiveness after 20 to 25 years. These plans are based on current rules. what if the rules change across potentially 6 different US Presidents with untold Congressional turnovers.
The wisdom of professional help
It’s confusing, complicated and time-consuming to get your education level up to sort through the options. You spent years to learn the law, medicine and business, not all the federal regulations for loans and the consequences of a misstep. That is why we sought out to find our own specialist.
No matter how confusing you feel like your student loan debt is, we will be able to develop a detailed, customized plan for you. Dollars saved can be reallocated to improving your standard of living, buying a house, buying a business or growing your wealth.
Connect with us so we can learn more about your situation to see how our team might reduce your burden.