If you would have told me 10 years ago that I would take out a loan of over $150K for a piece of paper, I would say that you are crazy.  That’s exactly what I had to do to get the education that I wanted and I will be paying for it for the next couple of years and I do not regret it one bit.

You don’t realize when you are going to school how the loans actually work because the school just tells you that you will need to take out “said” amount in order to pay for school and living expenses.  When you sit down at exit counseling before graduation, you get a piece of paper indicating what you owe in school loans.  Now a six month grace period is granted to everyone with government backed loans, but you don’t think much about it because you feel that you are ready to go conquer the world and make the money back in no time.

The standard repayment plan is a 10 year plan but many people are suggesting that chiropractic student’s move towards income based repayment or pay as you earn plans, I will go into why this is such a bad idea in a little while.

Now maybe I graduated at just the wrong time, but I have talked to friends that have student loans with interest rates from 2-4%, but I graduated the rate was 6.8% and I believe that it is roughly the same since then.  The friends graduated from college roughly 5-10 years before I did.

I started on the standard repayment for the first year out of school, I was just trying to get my feet under me and grow a patient base.  When I decided to start my own practice, I switched to income based repayment because it would lower my payment in the short term and give me a little cash flow for the business, at the time this was great but in the long run this was a stupid decision as I did not really understand what the program all entailed.

About a year into practice by myself, two years out of school, I started to really look at the numbers and was wondering about the number that was my student loan.  It kept going up while I was on income based repayment, like I said I will get into this later, but we decided to get out of that program in order to really start attacking the loans as I did not want to be hampered with this loan forever.

Kristina and I really started to look at student loan refinancing.  I initially thought this was a bad idea for me but the more I looked into this it was a great idea for what I was trying to accomplish.  I would never qualify for forgiveness because I work for myself and I didn’t want to have student loans for the next 20-25 years. 

I started to search around Credible as it gave me the most options for refinancing my loans from numerous different lenders.  I investigated other options but the interest rates were by far the best with Credible.  Initially, the rate was at 3.14% but it was variable over ten years.  I stuck with this rate for about a year until the rates really started to creep up, as it is based on the Federal Reserve rate and if you haven’t noticed interest rates have started to increase.  Just recently I actually just refinanced again to a five year loan at roughly 3.75% but this time it is fixed.  We have been getting super aggressive with the loans recently and have a goal of paying them off significantly sooner than the term of the loan so the shorter term loan was okay in our minds.  It was tough to press the button initially but I think it will be good overall.

If you have any questions or advise on this topic I would appreciate the feedback.  If you ever consider refinancing your student loans feel free to use my name as a reference.  It really is worth looking into for people that have a stable income and a desire to pay your loans off sooner rather than later. 

Next week I would like to address why income based repayment and pay as you earn is such a terrible idea for professionals like chiropractors and how it will end up costing you more money in the long run.

When you really think about that, an entire generation is paying on student loans with interest rates that are nearly double the mortgage rates that you can take out at the same time.  I understand that this is an unsecured loan but the country is going to end up with a generation that is riddled with debt, with no real shot to pay them off in a timely manner while contributing to the economic growth of the country.

One final thought, I was once told by a friend that your student loans should be looked at as an opportunity cost, as you would not be able to make the kind of living without taking out the loans.  While I truly do believe this, it is really tough when you make the payment every month to think about it like this, but it will be worth it in the long run.

Use this link to explore your options with credible which is feel may be very much worth your time.  http://refer.credible.com/2C6pJM