Healthcare Professionals

Nursing Student Loans: Refinance or Consolidate?


September 14, 2022

Is paying off your nursing student loan debt eating your paycheck?

You’ve graduated nursing school. Awesome! Nothing but patient care and advancing your career now, right? Well, except for those nursing school student loans that follow your healthcare journey like a ball and chain. Did you know there are other ways to reduce your student loan debt that do not involve working an extra 12 hour shift a week?

In partnership with the student loan experts at College Aid Direct, this post will provide education, resources and options for healthcare professionals who are looking to reduce their student loan debt as efficiently as possible.

Let’s face it. Nobody likes paying their nursing student loans. Taking out student loans is a fantastic way to get your dream education and land your dream career, but carrying the weight of the payments for years can be overwhelming. Luckily there are some things you can do to lighten the load.

And remember, it’s not just you. Eduction for healthcare professionals is just one contributor to the national student debt crisis.

First let’s take a look at student loan debt across the US with a couple of not-so-fun facts:

  • There are more than $1.76 trillion (yikes that’s 12 zeros) dollars in outstanding student loans.
  • There is more money in student loans than auto loans or credit cards.
  • 1 in 5 Americans have student loan debt.
  • The average loan amount is more than $37,000 with an average monthly payment of $400.
  • 92% of student debt is federal debt.

How do you know if you should make changes to your nursing school student loans?

Start by asking yourself a few simple questions.

  • Are you still stuck paying your loans from nursing school?
  • Are your student loans at different lenders or servicers?
  • Are you tired of making multiple payments?
  • Do you want a better interest rate?
  • Do you want a lower monthly payment?

If you answered yes to any of these questions, you should consider making some moves to refinance or consolidate your nursing student loan debt.

Think of it this way. If you refinance and only save $50 per month, that is $9,000 over a typical 15-year term. Would you like an extra $9,000 in your pocket?

While that example might feel like a no-brainer, consulting with a student finance veteran will help ensure you’re making the right move before you refinance or consolidate your loans. College Aid Direct specifically helps nurses and other healthcare professionals tackle their student debt. Click here to learn more about College Aid Direct and see if they can find the right solution for you.

Determine What Type of Student Loans You Have

Determining what type of student loans you have can be confusing, but is a crucial first step. It is important to know the balance, interest rate, loan term, and location of the loan. You might even have loans from many different Servicers or Lenders.

Once you know what loans you have, you can assess your best options to lower your payments and find out how much faster you’ll be able to pay off your student debt.

Federal Student Loans

These are loans directly from the federal government. These loans have names like Direct, Stafford, Subsidized and Unsubsidized, Perkins, PLUS and Consolidation.

If you aren’t sure if you have these types of loans, the government has a site where you can check for free here.

Private Student Loans

These are student loans from banks, credit unions and some states. These loans are typically used after exhausting the federal loan limits. Most private student loans do not have an origination fee like the federal loans and may have a lower interest rate, dependent on the credit score and history of the applicants.

If you aren’t sure if you have these types of loans, you can find out by checking your credit report for free here.

Federal Student Loan Repayment Options

Are you feeling overwhelmed by multiple federal student loans and looking for a way to simplify repayment? It’s important to understand your options and the potential tradeoffs.

Consolidating Your Federal Student Loans

If you have multiple federal student loans, you can consolidate them into a single Direct Consolidation Loan. This may simplify repayment if you are currently making separate loan payments to different loan holders or servicers, as you’ll only have one monthly payment to make. There may be tradeoffs, however, so you’ll want to learn about the advantages and possible disadvantages of loan consolidation before you consolidate.

  • Borrower Benefits: Some loans offer borrower benefits that may be lost when consolidating, such as deferment options. However, there’s no cost, prepayment penalties, or credit checks involved when consolidating nursing school loans.
  • Repayment Period: Consolidating loans can extend the repayment period, which can provide relief, but also result in paying more in interest over the life of the loan.
  • Interest Rate: The interest rate on a consolidated loan may be higher than the weighted average of the interest rates on the loans being consolidated.
  • Monthly Payments: If a borrower has a high income or a large loan balance, consolidating their loans may not lower their monthly payments.

Each situation is different and it’s important to weigh the pros and cons before consolidating your nursing school student loans and consult a financial advisor if you are unsure.

Federal Student Loan Programs

There are several Federal student loan programs available to help students finance their education, however, the programs are subject to change. You can check the current plans at:

Some of the most common include:

  • Standard Repayment – Payments are the same amount each month for ten years (up to 30 years with a federal consolidated loan).
  • Graduated Repayment – Monthly payments start lower and increase every two years with full payment in ten years up to 30 years with a federal consolidated loan).
  • Extended Repayment – Loan amounts must be more than $30,000 and borrowers need to meet certain qualifications but their payments could be the same each month or graduate and the loan must be paid within 25 years.
  • Revised Pay As You Earn (REPAYE) – Monthly payments will be 10% of discretionary income and the balances will be forgiven after 20 years (undergraduate) or 25 years (graduate). Amounts “forgiven” may be taxable. Income and Family size will be reviewed each year, regardless of changes.
  • Income-Based Repayment Plan (IBR) – Debt must be high in comparison to income. Payments each month will be 10% or 15% of discretionary income (based on when the loans were disbursed). Payment amount will be recalculated each year based on income and family size. Amounts still owed at the end of the 20- or 25-years repayment schedule will be forgiven. Amounts “forgiven” may be taxable.
  • Income-Contingent Repayment Plan (ICR) Payments each month will be the lower of two options. Either 20% of discretionary income or the amount of your payment with a fixed payment if the repayment schedule was 12 years. Payment amount will be recalculated each year based on your income and family size. Amounts still owed at the end of the 25-year repayment schedule will be forgiven. Amounts “forgiven” may be taxable.

It’s important to note that some of these programs have specific eligibility requirements and application deadlines, so it’s important to check with the school’s financial aid office or a financial advisor for more information.

Private Student Loan Repayment Options

Most Private Lenders offer flexible repayment options (immediate repayment, Interest Only, Partial Interest and full deferment) while a student is in school but require fixed monthly payments after graduation. Students typically choose a monthly payment and term (number of years to repay) during the acceptance of the Private Student Loan.

Payment management.
There are a few ways to reduce your monthly payment.  Be advised if you lower your payment for a longer term, you may pay more in interest over the life of the loan.  Do not be lured into a new loan on just a lower payment. Check out the term and total interest paid over the life of the loan.  If you are having a hard time making ends meet, the lower payment may be an option to balance your budget.

Refinancing Your Student Loans
Refinancing is when you combine all your loans with one private lender. Here you can potentially reduce your interest rate and payment amount with a new loan. Some benefits of refinancing nursing student loan debt may include:

  • You can get a lower rate or better terms. A longer term can help you better manage and lower your payments, while a shorter term can enable you to pay off your loans faster.
  • You aren’t as “risky” to a lender since you graduated, now that you have a job and established credit. Lower risk, lower rate.

You do not need to refinance all your loans.  You can refinance some of them or all of them.

While usually only done with private loans, many lenders now allow you to refinance private and federal loans into a single private loan. If you think you qualify for federal forgiveness, many just refinance their private loans since they are not eligible for forgiveness.

Tips to save money:

  • Rates can vary by lenders, so you should review all the lenders and compare rates.
  • If you can get a credit-worthy cosigner to cosign your loan, you will usually get a better interest rate which reduces your payment and the overall amount of interest paid back.
  • In many cases, you can refinance more than once.  So, if rates drop, you may be eligible to refinance again and take advantage of the lower rates.

There is not one solution for all borrowers, and there may be additional repayment options through your student loan provider. You should look at your situation and determine what is best for you.

Don’t be taken advantage of by a sketchy refinancing company.

Refinancing your nursing school student loans can be scary. We would be remiss if we ignored the fact that there are some sketchy players out there who are ruining the reputation of the honest companies trying to do good.

Our friends at College Aid Direct are in fact one of the honest companies out there working to help nurses across the country get out of student debt. They have over 30 years of experience in the industry and have helped thousands of students lower their payments and survive repayment after graduation.

If you have questions or concerns about how to navigate your student loan debt we recommend you reach out to College Aid Direct here. They’ll take good care of you.

WARNING: Before making the decision to refinance Private and Federal loans together, you’ll want to ensure that the new rate is lower than the federal rate(s), and that you are comfortable giving up federal benefits.

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