Helping RNs Get Out of Student Debt Early in Their Career

By Lauren Davidson – Guest Blogger and Freelance Writer Specializing in Personal Finance

Research done with new graduating nurses indicates that almost 70% graduate with some student loan debt. Their average loan debt is $30,000, similar to other university graduates.

Unfortunately, many students enter college and are presented with student loan options and all they see is “free money”. They do not understand the ramifications that a student loan can have on their financial future. They spend the loan money without realizing they will owe the amount they borrowed plus more. Over time, these loans can easily spiral out of control.

In fact, some students end up owing double or triple the amount the initially borrowed by the time they pay it off. This debt can lead to a delay in being able to start a family or buy a home. It can also lead to nurses working an unsafe amount of overtime and the stress can cause burnout. That is why nurse leaders should take an interest in this growing problem.

Steps to Ensure Future Financial Success

Step 1 – Plan a strict budget and timeline to pay off your loans

Nurses are fortunate in that they are in high demand and earn a good income relative to other undergraduates. They also have the ability to work additional hours of overtime. Paying off student loans should be a top priority after graduation. This means that living expenses should be reduced as much as possible and items like new expensive cars should be avoided. Many younger graduate may decide to live with their parents until they pay off their debt. Graphic reminders of progress in paying debt can be very inspiring.

Step 2 – Look at organizations that offer loan repayment assistance

Student loan repayment assistance is a wonderful benefit offered by some health systems and other healthcare organizations. What happens with this program is that you work for a company for a certain agreed amount of years and then you are reimbursed with money to apply to your loan. A great example is the Department of Veterans Affairs Educational Debt Reduction Program (EDRP) designed to help staff the nation’s VA hospitals. The program which is offered at many VA medical centers nationwide will provide Registered Nurses $120,000 towards a qualified loan over a 5 year period of time or $24,000 per year.

Before you agree to take part in a loan repayment program, you will want to check the terms of the agreement so the payoff makes sense financially and you can meet the commitment timeframe (often 5 years). The health system may also offer add-on features where once you work the five years, if you work an additional two to five years, you earn more money to pay off your student loans. It is important to weigh your options before you choose an employer who offers this program. It may make more sense to do the five-year option with add-on-benefits instead of one requiring 10 years because you never know what will happen in the future.

Step 3 – Consider refinancing loans for a lower interest rate

Refinancing student loans can help to save you a lot of money in the long run. The average individual who refinances student debt can save an astounding $53,000 or more. The main point of refinancing is to lower the interest rate and keep the loan from spiraling out of control. To refinance your student loan for a lower interest rate, you will need to be current in payments on your student loans. Federal student loans are the most flexible in their terms so avoid refinancing these into private loans.

Final Thoughts on Getting Out of Student Debt

You want to try to minimize how much student loan debt you have early in your career, so that you don’t have to live with this debt looming over your head for years to come. Fortunately, there are options to help you pay down your debt and many are achievable. You should look for organizations that offer benefits that allow you to pay off the debt quickly or ones that will help you do so.