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How to pay off professional student loans
Consider refinancing or applying for forgiveness to reduce the cost.
Getting a professional degree can leave you stuck with over $100,000 in student loan debt. There’s an upside, though: Professional student loans typically come with more opportunities to lower the cost. Refinancing might be your best bet if you’ve got a high-paying job. But if you’re going into public service, you’ll want to look into forgiveness programs first.
5 steps to repay debt from a professional degree
Follow these steps to ensure you’re saving as much money as you can on your professional student loans:
Step 1: Pick a repayment plan.
With private loans, you typically have a choice of making fixed repayments over five to 20 years. Choosing a shorter term gets you out of debt faster and costs less overall, while opting for a longer term will lower your monthly repayments.
With federal loans, you have a few more options:
- Standard repayments. Pay off your loans with the same fixed repayments over 10 years. This option costs the most up front, but the least overall.
- Graduated repayments. Start with low repayments that increase every two years — ideally with your income. Whether you receive a 10- or 30-year term depends on the type of loan you have.
- Extended repayments. Stretch your standard or graduated repayments over 25 years. This is one of the most expensive options, but costs the least up front.
- Income-driven repayments. Make monthly repayments based on your salary, rather than your total loan balance. After your 20- or 25-year term is up, your balance is forgiven. This is generally best if your debt is higher than your salary or if you’re interested in forgiveness.
Step 2: Consider forgiveness programs.
Having a professional degree opens you up to many loan forgiveness and repayment assistance programs for federal and private student loans. Typically, these are incentive programs to bring high-qualified professionals into underserved areas.
The downside of forgiveness is that you often have to make a work commitment of at least one year — and may have to move. But it could be worth it if you have a lot of debt or are already thinking about working in public service.
Step 3: Think about refinancing.
Don’t want to make a career change to qualify for forgiveness? You might want to look into refinancing. This involves taking out a loan with a private lender to pay off your current debt, ideally with lower rates and more favorable terms.
Refinancing companies sometimes have special deals if you have a professional degree, especially if you’re working a high-paying job. But refinancing federal loans means you’ll lose benefits like eligibility for federal forgiveness programs and deferment options.
Step 4: Make extra repayments when you can.
Once you’ve picked a repayment plan, put your bonuses and other windfall funds toward your student loan balance. This will help you get out of debt faster and save on interest while having a minimal impact on your budget and lifestyle.
Step 5: Consider refinancing again.
Every time you get promoted, get a raise or switch positions, consider prequalifying with a few refinancing providers. Having a higher salary can often get you a lower rate. And even if not, you might find you can afford a shorter term.
Compare student loan refinancing offers
Repayment options for different types of degrees
While the repayment plans available depend on the type of loans you have, your forgiveness and refinancing options can differ depending on the type of degree you have.
Business school debt
Refinancing is often the best bet when it comes to paying off MBA student loans — especially if you’ve got a high starting salary compared to your debt load.
If you’re thinking about working for a nonprofit or government agency and have federal loans, you might want to consider applying for Public Service Loan Forgiveness (PSLF). Some business schools also offer loan repayment assistance for both federal and private loans if you work in public service. Typically, you need to apply within a few years of getting your degree to qualify.
4 tips to pay off business school debt
Law school debt
The US Department of Justice and several other private organizations offer repayment assistance programs to lawyers who work in public service. The military also offers up to $65,000 in student loan forgiveness to lawyers working in the Air Force for at least three years.
While lenders typically don’t offer special refinancing programs for lawyers, your law degree can give your application an extra boost — especially if you have a high salary.
5 tips to pay off law school debt
Medical, dental and nursing school debt
Health professions degrees can be expensive, but they also come with the widest ranges of forgiveness and repayment assistance programs. With most programs, you have to work in a designated Health Professional Shortage Area (HSPA) for at least two years to become eligible. You can also qualify for forgiveness by taking on a research position, teaching at a medical school or joining the military.
Some refinancing providers offer the option to lower repayments while you’re in your residency and start full repayments once you’ve landed a real job. This might make your loans more manageable in the short term, but it can significantly increase the total cost of your loans.
9 tips to pay off medical school debt
Bottom line
Professional programs might cost more than other graduate degrees. But the forgiveness, repayment assistance and refinancing options might make your degree less expensive than you originally thought.
You can learn more about how it all works with our guide to student loan refinancing.
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