Strategies on and off paper for a student loan planner, prudent financial management and paying off student debt
One of the most daunting projects any chiropractor will ever take on will be an attempt to create a student loan planner and pay off student debt. If the roughly $200-240,000 worth of student debt weren’t bad enough, new chiropractors today are faced with a global pandemic and changes in student debt repayment.
Student loan planner: methods for success
As many chiropractors know, there are many favorable ways for medical practitioners to forgive student loans or reduce the debt — but this is not the case for chiropractors. To that end, here are six specific methods for a student loan planner to achieve success in reducing or paying off this incredible weight.
Make payments early
Many students, and even generally speaking, borrowers, believe that there is a silent period for loan repayment. This myth cannot be further from the truth. When lenders provide loans for anyone, two things coincide:a) the clock begins immediately with an expectation that repayment starts shortly, and;
b) interest immediately begins to accrue.
Repayment appears onerous to many because once the truth-in-lending statement arrives, there is an appearance that the loan cannot be repaid.
The aggregate amount seems unattainable.
Several years ago, this may have been truthful, however, with the positive effects of the global pandemic, interest rates are at the lowest levels in more than 30 years. The incredible single-digit interest rates can make it easier for students to begin repayment.
Take advantage of low rates
Low-interest rates enable students to begin repayment much earlier than graduation. There are some chiropractors who while attending university, have full- or part-time jobs. Being smart and allocating some of this employment money to loan repayment can quickly eliminate the tremendous burden after graduation.One might be surprised that as little as $50-100 every pay period can be enough to remove a few thousand dollars of future debt. Prepayment will also be an essential factor because we do know that at some particular point, the United States federal government will increase interest rates.
An unknown to many chiropractors is the opportunity to switch to an income-driven repayment plan. However, the average salary for most chiropractors is approximately $34,000 per year. Bear in mind this figure takes into consideration years of experience, economics and residential area. With that in mind, some chiropractors do very well while others struggle. I know that many chiropractors could hold down two jobs while trying to implement their new practice.There is no reason why chiropractors cannot request an income-driven student loan forgiveness. The only consideration for an income-driven plan is that interest rates will not change. As long as there is full disclosure from the lending institution to the chiropractor, a student loan income-driven plan may be an excellent opportunity to ensure that some of the loans are gathering repayment.
Loan forgiveness is not opportunistic for every chiropractic student. Yet, over the years of working with chiropractors, there is a microcosm whereby student loan forgiveness might help.Chiropractors come from all walks of life. Some have been former financial planners, some have been teachers, some have been professional athletes, while others have served as first responders and even in the United States military. Depending upon the type of student loan obtained, students should determine whether or not there are forgiveness programs for previous years of service.
Unfortunately, this means either reading the fine print or calling into the lending institution. However, saving several thousands of dollars will be worth the wait and the impatience, if not hundreds of thousands of dollars in savings.
Refinance the interest
Student loan debt, although somewhat tricky, is no different from a mortgage or automobile debt. There is always a principal amount and interest. With so many individuals having concerns and difficulty repaying loans today, there is a possibility that lending institutions may be able to renegotiate loan interest.There is no reason why chiropractors cannot call into the lending institution to determine if there is a method to refinance the loan. During the current financial crisis, with so many individuals defaulting on homes and automobiles, the last thing a lending institution wants to see is student loan default.
The most recent data according to the February 2020 U.S. Student Loans Statistics report indicates:
- $1.64 trillion in total U.S. student loan debt
- 44.7 million Americans with student loan debt
- 11.1% of student loans are 90 days or more delinquent or are in default
- Monthly student loan payments (among those not in deferment) usually range between $200-299 on average
Individual lending institutions are somewhat challenging, but which is more critical —receipt of $1,000 today with a different interest rate or zero dollars tomorrow?
Live like a pauper, act like a king or queen
I remember the first time I made a substantial amount of money, and all I wanted to do was spend it. We all enjoy the fruits of our labor. As long as those few fruits flourish, we want to enjoy it.During my coaching and counseling sessions and even my seminars with chiropractors, I regularly teach them the aspects of prudent financial management. Chiropractors, at some particular point after their training and development, will be running their own business. Unfortunately, entrepreneurship is not typically an aspect taught within most chiropractic universities. Terrific financial management and a student loan planner is crucial to the chiropractor establishing the business.
Pay yourself, pay your debts
Although there is much to go through here, a vital area of concentration for this particular article is to focus on two aspects in the early days:
a) pay yourself, and;
b) pay off debts and expenses quickly.
One of the best ways to do this is by establishing a budget and not living above your means. Know to the penny what your monthly expenses are and what you want to save. Once you begin, this simply takes a few hundred dollars every month or a few dollars every week to repay the loan. Repayment must be your priority, and living frugally for the first few years will create exceedingly long-term benefits.
Alternative investment vehicles
I mentioned earlier that some chiropractors begin their vocation after a stint at other employment. Some of these former employers used investment vehicles such as 401K plans, SIMPLE plans or different vehicles. Although there may be some penalties for early withdrawal, some of this money may be available for your student loans.Another possibility might be to ask your parents or review whether or not you have whole life insurance. Some policies, depending upon premiums and payment schedules, have a cash value attached to them that enables policyholders to obtain a cash loan with little interest and no penalties. Please note that using these products requires that you speak with a financial or legal professional for the best advice in using them for student loan repayment.
Adopt a good strategy and patience
Similar to homes and automobiles, student loan debt is some-thing that takes years to eliminate. There are ways to reduce the onerous task of repayment. It takes merely a good strategy or student loan planner, a tremendous amount of patience, and an early start, along with proper professional advice to reduce a task that can, if not handled correctly, produce a great weight on your shoulders.
Follow this information, along with additional financial consulting, to reduce stress and place more money in your pocket.
Drew Stevens, PhD, is an accomplished speaker, author, advisor and coach for chiropractors. He is also the author of the best-selling practice management book, “Practice Acceleration — Helping Chiropractors Maximize Patient Volume and Revenue.” He can be contacted at DrewsChiropracticMarketing.com. © 2020. Drew Stevens, all rights reserved.