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Dealing with debt

How is everyone else dealing with all the student loan debt? When I get out of PT school I will be looking at $100,000 in debt. While I will be loving what I do, that number gives me anxiety. How is everyone paying off their student loan debt? #debt #personal-finance #student-loans #anxiety

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Johannes’s Answer

Hi Samantha,


Student loan debt can be very intimidating. I majored in financial management, and even with the skills I learned from my courses, it was still very anxiety-inducing! Unfortunately, people are not taught enough about how to manage their money, which is a crucial skill for every adult, regardless of their profession. Here's are some tips for paying down your student debt:

  1. Figure out the terms of your different loans. Specifically, there are 2 things you should find out about each of the loans you have taken out. First, which loans, if any are deferred? Some government loans do not begin charging interest until 6 months or longer after your graduation date. Do not make payments on those loans until after the "grace period" has ended. Second, figure out the interest rate on each loan. Government-issued loans, at least when I was in school, had interest rates somewhere between 4% and 6% (roughly). You should pay off the loans with the highest interest rates first, and the loans with the lowest interest rates last. NOTE: at a minimum, you should make the interest payments on all of your loans every month. This will prevent the loan amounts from growing over time.
  2. Live below your means until your loans are paid off. Once you get out of school and start earning a full salary, it's tempting to go and spend all your hard-earned money. Your future self will thank you if you resist that urge. When I started working full-time, I lived in a small apartment and drove the same car I bought in college for 3+ years. During that time, I was able to pay $1,200 per month to my student loans, which helped me pay them off very quickly. The more you can pay to your student loans now, the better.
  3. Create a budget and stick to it! There are many ways to budget your money, but it's important to find one that works for you. Make sure you're planning out how you will spend your money, and keep to the plan.


Best of luck!

Johannes
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Joshua’s Answer

I second most of what Johannes said in his comments. My answer is going to be really big picture rather than addressing how to pay off your student loans, specifically.

I am a financial coach and full-heartedly believe everyone should live below their means.

This means figuring out how much your life costs. Aggregate how much your monthly student loan payments will be, as well as other recurring living expenses (rent/utilities/phone/food/car payments/etc.). This will identify how much money you need monthly to live your life comfortably. Ideally, your income should be higher than this amount.

IF your income does NOT cover these basic life costs, you'll need to get creative (do research!) to lower these costs. I guarantee there are always options.

IF your income IS higher than your basic life costs, then this is a critical inflection point! Most Americans experience lifestyle creep and the costs of their monthly expenses increase b/c they do not know better. However, I stress the need to save. Having savings (both investments and a large savings account) allows you TIME. Time buys you comfort and patience to make good decisions to improve your life.

I hope this general guidance is helpful!

-Josh
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John’s Answer

If you have amassed a large amount of student loan (SL) debt then the first thing you should do once you get out of college is look to see what available options there are for refinancing your debt, since you have been in schools for 3-4 years the interest rate may have gone down putting you in a good position to take advantage of a lower interest rate. It is also smart to double up on your payments if you have the capacity to do so. SL's are simple interest loans, That means the extra amount, over and above your payment, is going to be applied to your principal balance reducing the principle amount your interest rate is applied to. There are also options to extend the term of your loan, but I cant recommend that since it also increases the amount you will eventually pay back.
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Ibraheem’s Answer

HI Samantha,
Sorry for a late response here but I am new to this site and saw your question.
Hopefully you are done with PT school and paying off your debt.
• Understand your student loan.
o Which loans do you have and how much interests do you have to pay on each loan.
o Governments will sometimes pay for the interest 6 months or longer after you graduate. (Basically they will pay the minimum amount of your balance)
o Start setting a budget for yourself and have realistic goals of when you want to pay off the loans.
o Once you start getting your first paycheck, be sure to pay more than just the minimum amount. The minimum amount is just the interest on the loan, and it will be years and years before the loan is eventually paid off.
o If you have any extra income, be sure to make the extra payments on the loan.
o The quicker you pay off the student loans, the more financial freedom you will have.
Good luck!
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