There’s a saying that if you don’t know where you’re going any road will take you there. It’s probably not a stretch to assume you’ve questioned your loan repayment strategy at one point or another. Now is a great time to reset and take a fresh look at where things stand. The best thing you can do is make an informed decision, pick a plan, and stick with it for the long haul. When picking a plan, most veterinarians make the mistake of only thinking about the beginning of repayment as if there is no middle and no end. You’ll eventually reach the end of loan repayment. Your income will be high enough to pay off your balance before reaching forgiveness, or it won’t. It’s OK either way.
Here are a couple of rules of thumb when it comes to loan forgiveness:
- The more your debt balance exceeds your income, the easier it is to reach forgiveness.
- If you are projected to reach forgiveness, pay the minimum required by your income and plan for the potential future tax consequences.
How do you know if you’re likely to reach forgiveness in the first place? We can’t know for sure but we can make educated guesses. This is the art of student loan planning and where we get to play with possibilities.
It’s common for veterinarians to get swept away by the old way of thinking about student debt and feel their options are limited. Vets are highly trained professionals skilled in solving complex problems. What I’ve learned through my work is that the options are only limited by your imagination.
Megan the associate envisions several scenarios that may come into play during repayment that all have manageable implications for her student loans:
- Leaving the workforce temporarily to raise kids.
- Transitioning to independent relief work.
- Relocating to lower-paying geographies.
- Shifting to a flexible work schedule.
- Switching to industry from practice.
- Buying or starting a practice.
Running financial simulations and testing various outcomes is the only way to gain the peace of mind that comes with visualizing the beginning, middle, and end of repayment.