It’s no secret that pursuing a career in the medical field sends most people into debt before it starts to pay off financially. In 2016, the median debt for U.S. medical student graduates was nearly $200,000 upon graduation. The cost of education can grow as a given field of study narrows in scope, which makes specialized programs with additional years of study like podiatry pricey to complete.
To become a podiatrist you’ll complete an undergraduate program at a university and then a four-year Doctorate of Podiatric Medicine program. These eight years of study are typically followed by two or three years of residency.
All in all, you’re going to need to foot a large bill if you want to become a podiatrist. For example, Western University’s 2018 podiatry class graduated with an average debt of $237,629.
Student loan refinancing for podiatrists
Though pursuing a career in podiatry can come with crippling student debt, finding the right option for loan repayment can make all the difference. Although Public Service Loan Forgiveness could be a more financially desirable repayment option, podiatrists who want to work in private clinics might want to consider podiatry student loan refinancing.
Refinancing medical school loans
When you first take out student loans, the odds that you have established credit, a positive history of payments and proof of income are probably lower than they are after you graduate. Refinancing loans with a better credit score and credit history gives podiatrists the chance to secure a better interest rate. Lowering the interest rate can result in lower monthly payments and total cost of the loan over time.
While the prospect of lower monthly payments and other benefits of podiatry student loan refinancing can be attractive, there are downsides to changing your loan. Be sure to weigh the pros and cons of refinancing before making the decision to refinance:
- Lower monthly payments means you could free up more of your budget to pay off the principle of the loan.
- You can modify your repayment term to better suit your current needs.
- You have the ability to work with a lender you choose instead of the student loan servicer you were assigned.
- Your interest rate might not always be lower as changes to variable rates could actually mean your interest rate goes higher than what you’re already paying.
- If you refinance a federal student loan as a private loan, you will no longer be eligible for federal programs like Public Student Loan Forgiveness (PSLF).
- The fees associated with refinancing could add unexpected costs to your loan.
- Refinancing is hard to justify if your debt to income ratio is above 2:1, which can be the case for many podiatrists as the specialty often requires a three-year residency program, and the median pay is $129,550 per year.
For podiatrists who have a high debt-to-income ratio, student loan forgiveness will likely be more advantageous. For those who want to refinance, doing so after you become a practice owner likely means supplying one to two years of income statements, which is why it could be savvy to refinance immediately after residency.
Alternative student loan repayment strategies for podiatrists
If you would prefer not to refinance, there are alternatives that can get you started repaying your debt on the right foot. You could be eligible for student loan forgiveness, opt for an income-driven repayment plan or consolidate your debts. Here’s how:
1. Public Service Loan Forgiveness
PSLF is the federal government’s way of offering financial aid for those working in public service after making 120 qualifying payments toward their debt. If you make steady, monthly payments, this translates to 10 years of payments.
To qualify for PSLF, the following must apply to you:
- Employer must be a government agency or specific type of nonprofit organization
- Work full-time for said employer
- Have Direct Loans or consolidate other federal loans
- Repay loans using an income-driven repayment plan
- Make at least 120 monthly qualifying payments toward your debt
If you work in a private practice, you won’t be eligible for PSLF.
2. Income-driven repayment plan
When you’re fresh out of medical school, being able to afford monthly payments can be difficult. Income-driven repayment (IDR) plans determine your monthly payments using a percentage of your discretionary income, eliminating the burden of astronomical payment expectations you can’t meet.
Here are the requirements for qualifying:
- You must have an outstanding federal student loan balance.
- Calculated monthly payments must be less than what you were paying with the Standard repayment plan.
- You must update your reported income, family size and personal information annually.
Also, an IDR plan opens you up to the potential of having part of your loan forgiven. PSLF isn’t the only way to have your student loans forgiven. You can potentially have the remaining balance of your federal student loans forgiven through on-time payments on an IDR plan. Through this method, your outstanding balance can be forgiven after 20 to 25 years, depending on the plan.
Make sure you pay attention to the potential ramifications of student loan forgiveness, however. Your forgiven loans could be considered taxable income. Make sure you fully understand the various IDR plans before moving forward.
The different plans take a percentage of your discretionary income to determine your payments. This arrangement is beneficial if you’re working a low-wage job but might not be the best option if you have a lot of outstanding debt and a high-paying job. Repayment plans typically span 20 to 25 years.
3. Student loan consolidation
If you have different student loans, consolidation means combining them to get one fixed interest rate. A Direct consolidation loan, offered by the Department of Education, allows student debtors to consolidate their loans at no addition cost.
Here are the requirements for consolidating a student loan:
- Must be in repayment or grace period
- Additional loans must be eligible for consolidation
- Might have to agree to repay the new loan under a federal repayment plan if consolidating a defaulted loan
Making one monthly payment at a fixed rate eliminates the hassle of juggling multiple loans and could mean paying lower interest overall. You can apply for a Direct consolidation loan here.
Should podiatrists refinance student loans?
The decision to refinance your student loans as a podiatrist will likely come down to what your debt-to-income ratio is. If you’re earning a lot of money and would get better rates through refinancing, choosing that option could make sense. Be sure to properly review federal student loan forgiveness programs too, however.