Physician assistant school ain’t cheap. I spent over 130k on physician assistant student loans to earn my degree. The price of school certainly wasn’t something I was contemplating when I made the decision to go to an out-of-state private school. I believe pre-PA students should be counseled more on the importance of tuition costs. The one saving grace was due to the school being located in a rural area, the cost of living was relatively inexpensive.
If I had known what I know now I would have possibly made a different decision when applying and choosing which PA school I wanted to attend. I don’t like to fret about past decisions, there’s nothing I can do about it now. What I can do now is come up with a plan on how to pay this debt off quickly. I don’t want compound interest doesn’t work against me.
Recommended: 12 Ways to Save Money During Physician Assistant School
Pay off student loans aggressively or invest?
Now a lot of financial advisors may suggest that instead of paying off your loans quickly you should instead pay the bare minimum and invest the rest. That’s all great advice but what if the interest rate is about the same as the average return on the stock market? Wouldn’t you then want to put your money into the most assured basket (physician assistant student loans)? Instead of the possibly volatile stock market that may only pay 4% or less? I would.
Other people may say well you could just refinance and lower your interest for your student loans. Also, a good point. However, I am in the lucky camp that my physician assistant student loans have essentially been at 0% for the entire time I have had them. All thanks to good ol’ COVID-19 and the pause on student loan interest. 10k off student loans would have been nice too, but I’ll take what I can get.
Since I was at a 0% interest rate, it didn’t make much sense to refinance to an interest rate of even 2%. Especially, because that would have also taken away the possibility of student loan forgiveness if the government had been able to pull it off. As of the time of writing this, Interest on student loans restarts in approximately 1.5 months. Payments on student loans are required again in 2.5 months. At this point, I have paid off over half of my student loans and plan to have the rest taken care of by the latest November 2023.
How I am going to pay off my physician assistant student loans
How is this going to be possible you may ask? A combination of a few things. One is a very helpful inherited IRA from my grandmother that passed away a few years ago totaling around $25k. Combine that with a high savings rate of 75% and a low cost of living over the past 8 months.
On a side note, I also got married 9 months ago. I paid for a good chunk of the wedding with my own money. We also spent a small fortune on our honeymoon in Saint Lucia. The REST of the time has been spent focused on frugal living. There just happened to be 2 major life events that occurred in this time period as well.
Back to how I am paying off the loans in less than 12 months. As soon as the wedding was over and the honeymoon was paid for, it was time to start tackling this giant pile of student loans. From the start, I had 6 different federal student loans at different price points and interest rates. The interest rates ranged from 6% to 7.6% with (of course) the 7.6% being the largest loan coming in at a whopping $35k. Since all of the interest rates went to zero, I started with Dave Ramsey’s method of paying off the smallest first and snowballing it from there.
An actual look at what my physician assistant student loans started at:
Student loan #1: $2,515.00. Paid this off in December 2022 with a portion of a bonus I received from work.
Student loan #2: $7,574.94. This loan was paid off in January 2022 using the remainder of the bonus from work, as well as some cash gifts from our wedding.
Student loan #3: $20,799.14. Paid off in March 2023 by saving money and living frugally
Student loan #4: $22,092.82. Paid off in June 2023 by saving money and living frugally
Student loan #5: $32,491.89. Currently working on it.
Student loan #6: $35,787.74. I plan on using my inherited IRA (which has to be withdrawn within 10 years of receiving it no matter what). In addition, I will use my tax return from the state of Maine when I lived there at the beginning of 2022, plus a couple of thousand dollars I had been playing around with in Robinhood a few years ago that I never sold.
Since loan number 6 has a higher interest rate (7.6%) than loan number 5 (7.0%) I plan to pay off 6 first before interest restarts in September 2023. Even though the difference is minimal it will save me a few hundred dollars when I finally am able to completely pay everything off.
Living “frugally”
Okay so now you know my timeline and know that I have a high enough income to pay for these loans. (I hope anyone taking out this amount of student loan debt can justify it with a higher income after they receive the degree they paid for). Let’s talk about the “living frugal” aspect of all this and the numbers.
The wedding and honeymoon were paid for before I started paying off my loans in December 2022. Let’s focus on spending since then. I have kept a strict-ish budget of $3,000 a month. My husband and I currently split mostly everything 50/50. So if you think about it $3,000 a month really isn’t that frugal. Some people spend that much per month on a family of 4. I spend roughly $2,000 on all “fixed” expenses which include: my half of the mortgage, utilities, car payment, car insurance, and my phone bill. I spend roughly $400-$500 on food every month and $150 on gas so let’s call that an average of $600. My major splurge every month is on my CrossFit gym membership which is $166. Ouch, I know. So that leaves me with approximately $230 to spend on any miscellaneous items.
The rest of my income has been put into savings until I have had enough to pay off the entirety of a student loan. (It just feels good to wipe it all out at once). This also allowed me to keep money easily accessible in case of emergencies while I was saving. I always make sure to leave $1,000-$2,000 in my savings account at all times for peace of mind.
What are your thoughts on paying off student loans quickly versus paying the minimum for 25 years or more? Let me know in the comments!
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