Congratulations optometry student! You recently graduated after surviving 4 grueling years of optometry school, you had time to take a vacation this summer to reward yourself, you just signed a contract for a new job, and you will actually start making some money!
How exciting your new life as a doctor is! Until… your first student loan statement comes in the mail. This is going to be a wakeup call. It is going to seem overwhelming. And it will get you down. But… here at OptoPrep, we’ve come up with several tips to help optometry grads manage your student loan debt and keep on top of your payments.
1. Know Your Loans
Get your loan information organized. We recommend keeping a file with all of your important loan documents in one easily accessible place. Make a summary sheet that has the lender, balance, and repayment status for each of your loans as most students have multiple loans with multiple lenders when it is all said and done. If you aren’t exactly sure of this info, you can visit www.nslds.ed.gov, in which all of your loan amounts, lenders, and the loan status can be found for all of your federal loans. If some of your loans aren't listed, they are probably private (non-federal loans). For those, try to find the original paperwork that you signed, or contact your school if you can’t locate any of the records.
2. Know Your Grace Period
A grace period is the length of time you have between leaving school and making your first loan payment. Different loans may have different grace periods, so make sure that you know when your first payment is due for each loan. Federal Stafford loans have a 6 month grace period, and the Perkins loan grace period is 9 months. For federal PLUS loans, the grace period depends on when they were issued, and private loan grace periods can also vary, so consult your paperwork or your lender to be sure! You do not want to get off to a bad start and miss your first payment!
3. Keep in Touch with Your Lender
Make sure that your lender has your most updated contact information. Whenever you move, change your cell phone number, or change your email address, make sure to communicate this with your lenders. If they need to contact you for any reason and they are unable to reach you, this can end up costing you a bundle! We also recommend that you read all mail (both paper and electronic) that you receive in regards to your student loans. Some of it may not be of much importance, but be aware that some of it just might be!
4. Pick the Right Repayment Option
When your federal student loans become due, the will most likely automatically be based on a standard 10-year repayment plan. Most students graduating with debt from both their undergraduate and optometry schools will have difficulty covering that large of a payment so there are many other options to consider. You can extend your repayment beyond 10 years to lower your monthly payments, or change to a graduated repayment option in which you start off paying less and gradually increase the payment over time.
There are also income-driven repayment plans such as Income-Based Repayment (IBR) and Revised Pay As You Earn (REPAYE), in which your monthly payments are capped at 10% of your discretionary income. With these plans, if you haven’t fully payed off your loans after 20-25 years of payments, the remaining debt is forgiven. It is important to remember that there are disadvantages to all of these options as well. If you extend your payments, you are going to be paying much more in interest over the life of the loan, and if your loan is eventually forgiven, you may be responsible for paying taxes on the forgiven amount, which can also add up to a large chunk of change.
To find out more about your options, visit https://studentaid.ed.gov/sa/repay-loans/understand/plans. This site has calculators that can estimate your payments, interest, etc. so that you know exactly what to expect with each option. Unfortunately, private loans are not eligible for some of these income-driven repayment options.
5. Don’t Panic
If you are having trouble making your payments for a variety of reasons; residency, part-time work, health problems, or other unexpected financial challenges, remember that you always have options for managing your student loan debt. There are legitimate ways to temporarily postpone your federal loan payments, such as deferments and forbearance. But just be aware that the interest will still accrue on all loans in forbearance and some loans in deferment, increasing your total debt.
During that time you may want to consider making interest-only payments to keep the overall loan amount stable. If you are expecting financial hardship for more than a few months, this is when you may want to think about switching your repayment to an income-driven plan. But the most important thing here is to not just neglect your loan if you are struggling! Contact your lender and discuss options!
Watch out for more loan tips coming soon!
-Dr. Dexter