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Early CareerInsights

Listen to Your Inner Voice

By December 1, 2022March 20th, 2023No Comments

This is the third blog in a series that reveals how Megan the associate gains confidence and peace of mind by getting crystal clear on how to manage her student loans.

Megan is the expert on her life. She went to vet school because she cares about something larger than herself. These values are rare and worth honoring. Megan’s inner voice says there is more to life than just money.

Staying true to her values is harder than ever with all the unfiltered noise saying the same old thing when it comes to student loan repayment. Many vets are stuck with conflicting thoughts about their debt because they’re flooded with information when what they really need is insight.

Here are a couple of places to start when it comes to tuning out the noise:

The landscape has changed but the thinking hasn’t.
We tend to overvalue the opinions of others and undervalue what we’re feeling inside. I paid back all my debt and you can too! This is a sentiment that still exists in the mind of some senior veterinarians.

VetMed is not human medicine. It’s natural for new vets to draw comparisons with other highly trained healthcare professionals when it comes to student loan repayment. Here’s the thing: Some highly paid physicians have access to more generous loan forgiveness options than a veterinarian with a fraction of the income. You can’t change the system. But there are plenty of opportunities for veterinarians to work the federal student loan rules to their advantage.

Myth: You have to pay back every penny of debt.

Let’s get something clear: Federal student debt isn’t like other debt so it shouldn’t be treated like other debt. Debt repayment is the focus of fixed payment loans such as mortgages. Debt management is the intent of an income-based student loan strategy – repaying all of the debt isn’t necessarily the goal. Many veterinarians, including Megan, struggle with this notion.

  • After all, can you think of any other form of consumer debt that allows the borrower to make payments based on their income? Image if you could pay for a new car based on your pay stub!
  • Student loan interest accrues in a separate account and is not automatically added to your principal balance. This matters because you are not paying interest on interest, better known as compound interest. Compound interest is what makes repaying credit card debt so challenging.
  • The truth is, unlike traditional debt, the total amount of debt you actually pay is more attributable to your income than your interest rate.
  • But wait, there’s more! federal student loans require the borrower to make payments for 20 years and the remaining balance, if any, is forgiven. Imagine if you signed up for a 30-yr mortgage and the bank let you off the hook after 20 years.

The point is that federal student loans are flexible! The Sabadoodle process identifies which repayment plans you’re eligible for and helps you weigh the pros and cons of each.

In the next post, we will tackle the myth that a tax bomb is waiting to explode your future finances.