Got a mountain of student loan debt that feels like it’s never going to budge?
You’re not alone. Very few people come out of medical school or anesthesia training with very little debt. Most of us come out with well over $200,000.
But hey, don’t lose hope.
This guide is your ticket to paying off those pesky loans faster and saying goodbye to all that stress. You’ll learn about game-changers like paying more than the minimum each month, refinancing your loans for a better deal, signing up for autopay, and getting savvy with your budget.
We’re going to dive deep into each strategy, showing you how they can put you on the fast track to becoming debt-free and save you a pretty penny along the way. Whether you’ve just put scrubs on for your first job or have been battling with student loans for years, we’ve got something for you.
So, pull up a chair and let’s chat about how you can ditch your student loans faster.
Ready? Let’s get started!
Pay More Than the Minimum Each Month
Making the minimum payment on your student loans will ensure that you pay off your loan eventually, but it won’t help you make a significant dent in your balance. Any amount you pay above the minimum will be applied directly to your loan principal.
By reducing the principal, you’ll also reduce the amount of interest that accumulates, helping you to pay off your loan faster and save money in the long run. It’s essential, though, to communicate with your lender and ensure that the extra payment is applied to the principal, not future payments.
Make Biweekly Payments
Instead of making one monthly payment, consider splitting your payment into two and pay every two weeks. This strategy results in 26 half-payments, equivalent to 13 full payments per year – that’s one extra payment compared to a monthly schedule. This method will help to reduce your principal and the interest that accrues over time.
Refinance Your Student Loans
Refinancing is the process of obtaining a new loan at a lower interest rate to pay off existing loans. This can potentially save you thousands in interest, especially if you have a high-interest rate loan. However, refinancing is only beneficial if you are confident you won’t be pursuing the loan forgiveness programs.
Enroll in Autopay
Many lenders offer a small interest rate reduction (typically 0.25%) if you enroll in automatic payments. This not only ensures your payments are made on time, but it also means more of your payment goes towards reducing the principal. Every little bit helps when you’re trying to pay off student loans faster.
Pay Off Capitalized Interest
Interest on your student loans can capitalize, meaning it’s added to your principal balance, and you end up paying interest on your interest. This can happen after periods of deferment or forbearance or at the end of your grace period. Paying off this capitalized interest as soon as possible reduces your principal, which in turn reduces the amount of interest that accrues in the future.
Stick to the Standard Repayment Plan
Federal student loans come with a standard 10-year repayment plan, but there are other plans that can extend the loan term to up to 30 years. While these plans lower your monthly payment, they also mean you’ll pay more in interest over time. Sticking to the standard plan ensures you pay off your loans as quickly as possible.
Make Financial Sacrifices and Budget Wisely
Cutting down on discretionary expenses such as dining out, subscriptions, and unnecessary shopping can free up funds to put toward your student loan debt. Budgeting effectively can help you identify these areas where you can cut back. Moreover, consider big item purchases and if you really need to buy them. Maybe your car still gets you from point A to B and you don’t “really” need that Tesla everyone else in the department is driving.
Put Raises, Bonuses, and Tax Refunds Toward Loan Payments
Instead of using additional income or unexpected windfalls on lifestyle upgrades, apply them to your student loan balance. Just think of it as money you didn’t already have or needed. This strategy can significantly reduce your debt and the time it takes to pay off your loans.
Pick Up Extra Shifts
We’re fortunate in anesthesia that we have opportunities to make extra income. It can be as easy as picking up an extra shift or a call weekend. The chance to PRN at other facilities at higher rates is another great way to help pay off student loans. Lastly, locum tenen assignments on your week off has been used by many providers to crush student debt.