Managing chiropractic student debt after graduation and beyond

Congratulations on finally graduating from chiropractic school and stepping into your first practice.

Or perhaps you should be congratulated for finally reaching a point in your established practice where you are ready to take your career to the next level by perhaps taking on other DCs, expanding the size of your office, or adding an entire other office to the one you already have. Either way, you should be proud of all the hard work you have put in to get you to this point in your career.

Unfortunately, you may find that there is one thing holding you back from taking the plunge. It should come as no surprise that student loan debt is at an all time high  in the U.S, and chiropractic is no exception. Such debt can stand in the way of starting your career as a DC or taking it to the next level.

Facts and figures of student loan debt

Just to put some of this in perspective, here are some general stats from the Federal Reserve Bank of New York on overall student loan debt for 2015:^1-2

• $1.23 trillion total US student loan debt
• 3 million Americans had some type of student loan debt
• The student loan delinquency rate was 11.6 percent

Furthermore, 40 percent of the more than $1 trillion in student loan debt went toward graduate school.^1-2 Of this, approximately 5 percent ($161,772) was for graduate school programs in medicine and the health sciences, which would be the most likely category covered by loans for chiropractic college programs. No matter how you look at it, that’s quite a heavy load for graduates to be carrying for up to a decade or more after getting their diplomas.

As bleak as this picture may look, you may be able to not only manage your student debt but also advance in your career. It will take some smart planning, but it can certainly be done. The key is to fully understand not only what type of loan you have, but all of the terms involved in it.

Federal vs. private loans

If you have federal loans, these are subsidized by the US government. You can check to see if the type of loan you have is a federal one by visiting the National Student Loan Data System, which lists all the types of federal loans that are available. You can also review the details of your federal loans.

The biggest advantages to federal loans is that they will provide you with more flexibility and repayment options than you will get from private loans. You may also be able to work off some of those loans if you choose to work for certain organizations, such as nonprofits, the government, or the armed services.

Private loans are held by private banks. While they do not provide anywhere near the flexibility and payment or debt forgiveness options as with government loans, they do provide a way for you to get student aid if you don’t qualify for one of the limited number of federal loans.

However, this will mean that you need to keep on top of not only your repayment terms, but also the amount of interest on the loan and how much of a grace period you might get in case you do get financially squeezed.

Keeping yourself afloat

Once you understand the types of loans you have, as well as their terms, you can now begin to sift through which ones to pay off first or pay toward more than the monthly premium. As a general rule, you should try to pay off your private loans first, as they often have higher interest rates than federal loans, are not as flexible with grace periods, and don’t offer debt forgiveness programs such as going into public service.

If your private lender will allow, try to negotiate such that a larger percentage of your monthly premiums goes toward the principle, rather than the interest. This will allow you to have more of your money go toward the actual loan rather than the interest upon it.

Although debt consolidation may sound like a good deal by combining all your loans into one payment with a fixed-rate interest, you need to be careful to not find yourself in hot water by not reading the fine print. First, try to shop around for the lowest fixed-rate interest possible. Also, don’t consolidate your federal loans into your private ones or you will lose all of the flexibility federal loan repayment offers you.

There is no reason you cannot be able to pay off your student debt and grow your career without turning into a workaholic. Just do as the old Latin phrase caveat emptor (buyer beware) says and know as much as possible about each of your loans.

References

1. Household debt grows modestly. Federal Reserve Bank of New York. Accessed 6/7/2016.
2. Student loan borrowing and repayment trends, 2015. Federal Reserve Bank of New York. Accessed 6/7/2016.