Where do you get your student loan advice? From blogs? Podcasts? Friends and neighbors?It’s an important question because bad advice can cost you tens of thousands of dollars in unnecessary interest. Refinancing privately when you could have qualified for PSLF could cost you hundreds of thousands of dollars in lost loan forgiveness.
Be sure to get good advice when it comes to your student loan strategy. Dr. Jimmy Turner doles out some quality advice below.This post originally appeared on The Physician Philosopher.
In a survey conducted by the American Psychological Association, it was determined that the number 1 cause of stress for most Americans is money. With the ever-burgeoning student loan crisis that is taking shape in this country, it is unsurprising that this is also true in the medical community.
As of this writing, the average debt for a graduating medical student is around $200,000. In private institutions, the average debt is even higher.Making a plan to deal with those pesky loans is one way to dramatically decrease the financial stress that this debt burden can cause. Here are several guiding principles to help you sort out your student loan situation.
1. Make a Student Loan PlanThe first piece of student loan advice I can give you is the simplest. Yet, it is also the most important: Your loans are not going to magically disappear. Despite this being self-evident, physicians frequently stick their heads in the sand when it comes to student loan management. Unless you die, your student loans are likely to follow you wherever you go. Ignoring them won’t help you out.
It’s not all bad news, though. Believe it or not, simply making a solid plan for your student loan debt can dramatically lower your financial stress often caused by your debt burden.
2. Focus on Your Debt to Income RatioThe most common question I get from my residents is whether they should refinance their loans or pursue public service loan forgiveness. The best rule of thumb that I’ve found to help sort through this problem is the Debt to Income Ratio (DIR). As a general guide, if your DIR is less than 1, then you should likely refinance your student loans (and get a cashback bonus by refinancing your loans here).