Repaying Student Loans: Is There An End In Sight?
The year was 1996. I had finally graduated podiatry school. It felt great except for the large sum of loans that had accumulated. Four years and $100,000-plus in debt, it seemed like a black hole with no end in sight. A few months before graduation, the student loan department gave each of us a crash course on our loans, teaching us terms such as deferment, consolidation and prime rate. Deferment sounded good, especially if the residency salary left much to be desired.
I still remember my residency interview. I was sitting at a very long rectangular table with several attending doctors including the program director. They fired questions at me from all directions. All of the doctors were looking serious as I answered the best I could. Then one of them asked, “Does it bother you that the program does not pay well for the first and second year?”
Being comfortable with the interview, I blurted out, “My fiancee says he will support me for the next few years if I support him for the rest of my life.” It took a second but everyone in the room started laughing. I am not sure but I think the questions were done after that.
Like most of us, I had several individual loans that needed repayment. I remember being very confused at my exit interview with the financial aid department. I have how many individual loans? What are the rates again? These two here are locked at 5 percent but this one is variable depending on prime, and these other ones are at 8.25 percent. The first one you start paying back in one year while the other ones can be deferred for two years. This is a 10-year loan while the HEAL loan is 25 years.
It seemed like a never-ending maze of debt. I could not keep the loans straight, let alone pay them off. Loan consolidation sounded tempting. However, I was told that for the first several years, the payments were going to be primarily interest and nothing on the principle. In addition, you may only be able to consolidate once. In other words, if the interest rates drop, you cannot refinance.
I needed to start repaying one of my loans during the second year of residency with repayment looming on the remaining four loans the next year after I completed my residency. At that time, my husband was also making payments on his college student loans. The patterns of payments did not seem clear probably until a year or two passed but we came up with a budget.
Things started falling into place. The lesser of our loans started shrinking and we started paying a few off. We then would take the old loan monthly payment and add it to the principle of another loan. For example, if the old loan payment was $200 a month and the second loan payment is $300 a month, you would now pay $500 a month on the second loan, stating to the lender in a note: “Please apply extra money to principle.” Paying toward the principle ahead of time can also allow you to miss a payment if needed since you will be well ahead of the game. You never know when an emergency car repair is needed or if you went overboard during Christmas. At one point, a loan statement listed my next payment date as 2008.
Besides making our loan payments, we lived at a comfortable level but not to extremes. We lived in a two-bedroom, one-floor, condo style apartment during residency. We continued to shop the bargain racks, took local weekend getaways (except for the honeymoon) and I drove my little green Ford Escort for several years even after I became a “big shot” in private practice.
The loans finally disappeared this past year and it feels great. There is hope for those who are just starting out. I actually did get that residency. I am happily married and I am grateful to my husband for helping keep things straight with our loans. Although he claims he is still supporting me and waiting for his day, I do not think he regrets anything and it feels good to have all our student loans paid off in less than 10 years. Now we can start saving for our daughter’s college tuition.
Dr. Allman is a Fellow of the American College of Foot and Ankle Surgeons. She has offices in Dubois, Ridgway and Clearfield, Pa.
Dr. McCord (pictured) is a Diplomate with the American Board of Podiatric Surgery. He practices at the Centralia Medical Center in Centralia, Wash.