Student Loan Debt Can Derail Financial Goals

From Juan’s earliest recollection, he knew he wanted to work in a field that helped people.  The oldest son of El Salvadoran immigrants, he often spent summers with his grandparents in Nejapa, a small town just outside of San Salvador.  There he witnessed a population living in extreme poverty.  This was a stark contrast to the life of plenty he lived in the United States.  It was this experience that led Juan to pursue a degree in Nursing.  He wanted to help hurting people and bring hope and comfort to them.  But now he finds himself in need of assistance, stating: Student loan debt is derailing my financial goals.

Juan’s situation is not unique.  In fact, you may be in the same situation now, or will soon be graduating from college with student loan debt.  Today, more than 44 million Americans have outstanding student loan debt totaling $1.6 trillion dollars.  The average graduate is beginning their career with over $32 thousand dollars in student loan debt.  The good news is that there are options to help you manage the burden of student loan debt enabling you to make progress towards your other financial goals.

Juan was admitted to a top-tier university.  He graduated with a nursing degree and $77,000 in Student Loan Debt.  Graduate nursing students expect to finish school with a median debt between $40,000 and $54,999, according to a 2017 report by the American Association of Colleges of Nursing. This aligns with the $47,321 average nursing student debt found via College Scorecard data.  But MSN students can expect to owe much more if they attend a top-tier institution. For example, students in Duke University’s MSN program finish school with an average debt of $74,781. At Johns Hopkins University, average MSN debt is $80,545.

Juan’s current Student Loan Payment is $800 per month on the Standard Repayment Plan.  He states, “Student loan debt is derailing my financial goals.  I feel like I’ll never be able to save for retirement or purchase a home.”

Nursing Pro Tip:
I was initially surprised that the most common vocation of my financially distressed clients is nursing. These clients are intelligent, responsible and driven. But it makes sense. The physical, mental, and emotional toll of 12-hour nursing shifts is exhausting! They don’t have any energy left to make MORE decisions. The solution? Automate everything! Take a long weekend to rest up and put everything on autopilot. Set up auto-pay for utilities, credit cards, auto payments, mortgages, savings, etc. Think about it ONCE and then never again. Save your mental energy for self-care and loved ones.

The Standard Repayment Plan is the default option for student loan repayment.  But it may not be the best choice.  As mentioned before, Juan’s monthly payment on the standard repayment plan is $800.

Nursing Pro Tip:

Consider one of these payment programs to help reduce your monthly payment and full repayment amount: Public Service Loan Forgiveness, Income-Driven Repayment Plan, or Nurse Corps Repayment Program.

The Public Service Loan Forgiveness (PSLF) could be the ideal solution for you, and Juan.  If you work for a not-for-profit or qualifying government agency, you may be eligible for loan forgiveness after 120 qualified payments.

The Income-Driven Repayment Plan (IDR) is a great option for some borrowers.  An income-driven repayment plan can make your payments more affordable because they are based on your income. Under an IDR plan, payments may be as low as $0 per month.  This is the perfect option to pair with the PSLF program as it will minimize your monthly payments and maximize the total amount of loan forgiveness you receive.  Under the IDR, Juan’s monthly payment would drop from $800 to $382 per month.

Another repayment option is the Nurse Corps Repayment Program.  The Nurse Corps Loan Repayment Program repays 60% of your unpaid nursing student loans — whether they’re federal or private — in return for two years of full-time employment. Nurses who work a third year may be able to get an extra 25% of their original balance paid off.

Juan will save $412 per month under his new student loan repayment plan.  His loan forgiveness amount will increase from $0 to $58,656 if he successfully completes the PSLF program.  With his monthly savings, Juan is now able to put aside money for retirement and begin saving for a down payment on a home.  He is also able to prioritize repayment of his high interest unsecured debt.  Once his credit cards are paid off, he will have even more money to apply towards his goal of home ownership.

NURSING PRO TIP:
Nurses.com “For some people, financial decisions are based on emotions. To take emotions out of the equation, put a financial plan in place so you have a guide to follow. Be sure to pay yourself first by setting aside money for an emergency savings fund or for retirement. Finally, write down what you’re spending — make a budget. Running your household should be like running a business.”

To learn more about Student Loan Repayment Options, schedule an appointment with a certified non-profit agency like Apprisen.  We offer complimentary Student Loan Educations Sessions to help you determine the best repayment option for your unique situation.  A member agency can also help you develop a feasible debt management plan to repay your debt and lower your monthly debt payments.  This may free up money to help you achieve your financial goals.

Don’t let student loan debt derail your financial goals.  Act today!