When Dr. Robert Ormond, 36, graduated with his veterinary degree from St. Matthews University in 2011, he had over $175,000 in student loans.
That amount of debt might seem like a lot, but Ormond knew that his reliable income as a vet would make repayment easier for him than it might be for other borrowers.
“I am not stressed about the amount because my income covers the payments,” he said. “After the sale of my first home, I will have the rest paid off.”
Graduating with medical debt can be a mixed blessing. A medical professional, you are likely to have a significant amount of student debt. But you are also likely to have income that is higher than average, so you might be better able to afford your monthly payments.
Here are key strategies Ormond used to repay his loans:
Start Your Practice as Soon as You Can
While some medical professionals wait to pay off some of their debt before they start their own practice, Ormond took the opposite track to pay off his loans. Instead, he started his practice as soon as possible.
“Starting a practice that has been profitable has helped to put those extra profits into paying down the debt,” he said.
The income from his practice also allowed him to buy a home, with equity that has increased since he purchased it. He’s now planning on selling his home to lock-in gains and will use the surplus to pay down the rest of his student debt.
Ormond said he focused on maximizing his earning potential by starting his own practice rather than waiting. The trade-off was that he couldn’t take on any other debt after his student loans, his mortgage, and his practice loans.
“I had no trouble starting a practice with the debt. I just couldn't have a car payment or other monthly debt,” he said. “When banks look at your debt, they are more interested in what monthly burden there is to your income, not about the total burden.”
Automate Your Payments
If you’re a busy professional, you might find paying your student loans is just another item on your to-do list. To simplify his life, Ormond made his payments automatic.
“I just set all the payments on automatic withdrawal, so I didn't have to think much about it,” he said of a commonly used “set it and forget it” strategy.
By automating his payments, Ormond could then focus on growing his veterinary business rather than on managing his student loans.
Put Extra Cash Towards Your Principal
If you get a windfall of cash, like a bigger tax return than expected, or if you have a better-than-expected profits one month, consider applying that extra money toward the principal of your student loans.
“Have a plan, and when you get a little extra, put it towards the principal,” Ormond said. “It helps a lot to knock down the principle in extra payments.”
In fact, doing so could make a significant impact on how quickly you repay your student debt. It can also help reduce the cost of your overall interest.
Choose a Repayment Approach That Works for You
While some experts say that you should focus on repaying loans with the highest interest rates first, Ormond ignored that advice and focused on paying off his smaller loans so that there were fewer loans for him to track.
Typically, paying off loans with higher interest rates helps save money, but it can often feel like you are far from achieving your goal. Some people like Ormond, however, benefit from paying off the smaller amounts because they feel like their efforts have momentum. They are inspired to keep going.
Figuring out a strategy that works for you is likely better than following the advice of an expert if it is more efficient for paying off your student loans.
The End Result: Time to Pursue Other Goals
Now that Ormond has nearly fully repaid his loans, he’s focusing on his next major financial goals. They include expanding his practice into a specialty center and securing extra cash for his monthly budget.
“I never regretted the debt,” Ormond said. “I knew I would need loans, and made a plan to take care of them. You can never look at the money [paid] toward the debt as lost money. ... I am making more money doing what I love than I would have been able to without the debt.”