The Best Way To Pay Off Student Loans Early
Student loan debt should be a priority for every medical professional transitioning from education to practice. Organizing your financial situation and creating a solid strategy to pay off your student loans fast can free you to pursue other vital financial matters like disability insurance and tax planning.
Using extra money to pay off your loans can fortify your personal finance and set you up for long-term success. Keep reading to learn the benefits of paying off student loans early and how to settle your accounts effectively.
Why You Should Pay Off Your Student Loans Early
Medical professionals are in high demand, but job availability doesn’t necessarily translate to positive cash flow. Completing medical school is a significant investment that can impact your financial situation well after you’ve graduated. Federal student loans restrict your cash flow and prevent you from establishing the financial foundation you need to achieve your short- and long-term personal and professional goals.
The more you understand about your federal student loans and your options for repayment, the better you can manage your debt and chart a path to a debt-free post-graduate life. Your first mission after graduating should be to gain financial literacy and source the tools and resources to address your debt and pay off your student loans faster. If you aren’t quite sure where to start, we have a few tips that can help.
How To Pay Off Your Student Loans Fast
Pay More Than the Minimum
Paying more than the minimum is a simple and effective strategy for tackling your student loan balance. However, ensuring those extra payments work for you requires careful planning. Every loan servicer handles additional payments differently. Lenders may push your extra cash to the next payment or contribute it to the interest.
If you can, communicate to your lender where you want your extra payments to land. A good idea is to put as much as possible towards the principal balance or the loan with the highest interest rate.
Explore Options for Refinancing
Refinancing your student loans helps you pay off loans faster without extra payments. This approach can secure you a lower interest rate and potentially save you money over the life of a loan. Refinancing also allows you to consolidate multiple student loans into a single private loan.
You can select a shorter loan term that may increase your monthly payment but save you more money on interest. For the best term, ensure your credit score is in good shape or apply with an impressive cosigner.
The stress of student loan debt can weigh you down. Physician’s Resource Services recommends strategies to pursue your financial goals.
Revise Your Repayment Plan To Shorten or Extend Student Loan Payments
A shorter payment term can help you pay off student loans faster, albeit at a higher monthly payment. Borrowers with federal student loans can change their repayment timeline by contacting the lender or adjusting their accounts through the portal.
Private student loans typically lock payment plans once the loan is finalized. You may have to refinance with a new lender to adjust your repayment timeline. Private lenders offer terms between 5 and 20 years. The shorter the term, the higher the monthly payment, but keep in mind that the interest rate is often lower than longer terms.
Don’t Let Capitalized Interest Overwhelm You
Interest can accrue while you attend medical school, throughout your grace period, and during periods of forbearance or deferment. Once repayment begins, the interest is added to your student loan balance, and you pay interest on a larger amount.
Make monthly interest payments to address interest and prevent capitalization. Offering a lump-sum payment or contributing extra money like your tax refund is also a solid strategy for repayment. While interest payments don’t shorten your repayment timeline directly, they lessen the impact of deferment and forbearance.
Sign Up for Automatic Payments
Autopay can potentially lower your student loan interest rate. Some federal student loan lenders offer a quarter-point interest rate discount if you allow them direct access to your bank account. The savings are minimal, but you’ll make payments on time and save a little extra money for other endeavors.
Leverage Your Windfalls
Windfalls like tax refunds, work bonuses, and other unexpected extra cash are excellent for student loan payments. You don’t need to allocate all your extra money to your student loan balance, but diverting a little can make your debt more manageable. After you’ve covered your immediate needs and reinforced your emergency fund, apply what’s left to your student loan debt.
Benefits of Paying Off Student Loans Early
Paying off your private and federal student loans is an excellent way to save money and give yourself the flexibility to focus on other financial matters. You can save hundreds or thousands of dollars and invest in your retirement plan or investment management strategy.
With less financial stress, you also can enjoy post-graduate life to the fullest and confidently invest in your medical practice. Excessive student loan debt can severely impact your cash flow and positivity. Finding the resources to repay over $200,000 in debt after paying insurance, taxes, mortgages, and living expenses can take a material and emotional toll that may worsen with time. Timely repayment increases your mobility and keeps you on track for sustained financial success.
Define Your Debt Management Plan With Physician’s Resource Services
The specter of medical school loans can hang over your head and prevent you from feeling accomplished after graduation. It’s a major source of stress that requires careful planning and the right resources to handle successfully. Physician’s Resource Services is your guide to student loans and debt management strategy.
We help you assess your financial state and repay your student loans quickly, tailoring our debt management program to your unique situation. Are you ready to set your student loan balance straight? Reach out to our professional team.
“You dedicate your life to helping patients with their physical health; Let us help you with your financial health.”
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