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Student Loan Strategies

Student Loan Strategies

Do you have student loans?  Are you thinking about how you are going to pay them back?  Should you pay them off ASAP or try and save along the way?  What is the right balance?  Is refinancing the best option for you, or should you take advantage of loan forgiveness programs?  Should I be on Income-Based Repayment, or are there other income driven options that qualify for Public Service Loan Forgiveness (PSLF)? How do all of those work?

If you have ever asked yourself any of those questions, you are not alone.  Every day we work with clients on the right strategy for based on their unique situation, not based on what everyone else does.  

By thinking a little different, we are often able to help clients save tens of thousands, and sometimes hundreds of thousands, of dollars on their student loans over time.  

Guardian and its subsidiaries do not issue or advise with regard to student loans.

Common Student Loan Mistakes

Picking the Wrong Repayment Plan

Often, I have clients tell me they are on the Income Based Repayment plan because that is what a colleague or co-resident told them to do in order to qualify for Public Service Loan Forgiveness.  That is true, however, very rarely do they realize that may be the THIRD HIGHEST monthly payment.  If the goal is to have loans forgiven after 10, 20, or 25 years, do you really want to be on one of the highest payment plans that qualify?

Consolidating ALL Loans or Consolidating Too Late

You may have already realized that there are many individual loans that make up your total loan balance.  When that is the case, it can be a great idea to consider consolidating your loans (combining them into a single loan), however, there are many things to consider.  Do you really want to consolidate a 4.5% or 5% interest rate loan into the rest of your loans at 6%-7.8+%?  If you consolidate after you are already a few years into the 10 year loan forgiveness program, does that restart the clock after you consolidate?  

Deferring Payments Until After Residency

When you are just getting started in residency, working 80 hour weeks, learning a new area, meeting new friends, trying to figure out life, the last thing you want to think about is your student loans.  However, this can be one of the most costly mistakes residents make early in their careers.  Do you know how income driven repayment plans are calculated?  In your last year of medical, pharmacy, dental, or doctorate degree program, what was your income?  Is it possible to have a $0 monthly payment qualify towards loan forgiveness?

Not Verifying Employment for Public Service Loan Forgiveness (PSLF)

As people get closer and closer to the end of their 10 year forgiveness track, they begin to check how many months of payments they have that qualify towards loan forgiveness.  Rarely do they find what they are hoping for and it is often that they are 5, 6, 7+ years into their plan, yet the number of qualifying months is much different.  If you haven't had a form signed that acknowledges you worked for a non-profit 501(c)3 qualifying organization while making qualified income driven payments, you may be in for a rude awakening.