Tailoring Your Student Loan Repayment Strategy

Ninety-five percent of optometrists graduated with student loan debt, according to a 2023 Women In Optometry/Review of Optometric Business Pop-up Poll that garnered nearly 300 responses from ODs of all ages. Looking just at those who graduated in 2017 or later, 65% of these new grads said that their current student loan debt is more than $200,000. Nearly half of the respondents, 49%, said their student loan debt at graduation was between $200K and $300K, and 17% said it topped $300K.

Those numbers align with other groups tracking student loan debt. According to ODs on Finance, “the average optometry student takes out a whooping average of $200,000 for optometry school and will likely be in debt for the next 20 years.”

Notably, these debts can take years to pay off. Among 2017 and later graduates, here’s the student debt load those respondents said they were carrying in the summer of 2023. Nearly half were carrying student loan debt of more than $200,000.

COST OF EDUCATION

Optometry students are not the only ones with student loan debt, of course. The student loan debt equals about $1.54 trillion in the U.S., according to the American Association of University Women (AAUW). Women hold almost two-thirds of the country’s student debt. Forty-one percent of female undergraduates take on student debt, while 35% of male undergrads do. That extends into graduate school.

According to the American Schools and Colleges of Optometry, the annual cost of optometry schools has risen dramatically over the past 20 years. An in-state graduate of a public school might have spent less about $80,000 in 2007, but that same education would cost about $140,000 more recently. Private optometry school grads might be borrowing to pay for their roughly $180,000 education now, compared to about $100,000 then. Many students also take out loans to fund their undergraduate studies.

Average Direct Expenses for Optometry School

Source: American Schools and Colleges of Optometry

In addition to this disparity of women taking on more debt on average, issues of pay parity and decisions about starting a family and taking time off could impact a woman’s ability to repay debt. That’s why debt planning is so important.

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FACTORS IN YOUR PAYMENT PLAN

The payback calculations on student loan debt can be weighed against several other considerations, showing that there is not one best answer for every new graduate. For example, how much financial flexibility the student needs immediately can help someone decide whether to pay down debt aggressively or apply just the minimum for a while.

Are you considering an MBA or MPH degree soon? That could mean a longer deferral.

Do you have outstanding unsecured debt that carries a higher interest charge than your student loan debt? If so, you might want to throw the extra money at those credit cards first.

Or do you need to build up your savings for an emergency fund or for a big life event or a down payment on a house or practice purchase?

Even before you sit down with the calculators, it’s important to evaluate your other debts and where you’re going to need money. Two people can approach the same loan amount from two vastly different perspectives—and they can both be right. One OD may choose to pay down debt aggressively in case she wants to open a practice when the balance is zeroed out. Another may choose to pay the minimum on the student loan debt and take out business loans to start a practice right away.

PAY IT OFF FAST?

In a nutshell, good reasons to pay down debt aggressively are that you’ll pay less in interest over the life of the loans, you’ll look better to bankers or lenders with a lower debt load and you’ll be free of the debt burden sooner. Making that last loan payment is a happy and memorable day for nearly everyone who has taken out student loans.

Some couples have tackled the issue together, with them living on one income and using the other to pay off one or the other person’s debts.

ODs who have used the aggressive paydown strategy say that continuing to live on a student budget for some years and being willing to compromise (think Honda, not Tesla) and even sacrifice was worthwhile.

Want to hear from ODs who accelerated their student loan debt payoff?

Here’s an 8-minute video with Monica Johnsonbaugh, OD, of Grosse Pointe, Michigan, who paid off her 25-year loan in less than 10 years. 

A podcast offers a more detailed explanation of what Dr. Johnsonbaugh did to shave 15 years off her loan repayment schedule.

Emily Bjore, OD, of Eagen, Minnesota, and her husband had combined student loan debt that reached nearly $400K. Hear how they decided to scrap the 30-year-repayment plan and accelerate the payment—and stuck with it, even after a serious illness. 

Listen to both podcasts here.

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USE THE MONEY WHERE YOU NEED IT MOST

However, that strategy doesn’t appeal to or work for everyone. If your first employment position isn’t your dream job, being tied into large loan payments may make it feel like you don’t have the flexibility to look for something else. Or maybe your living or other expenses are high and not negotiable.

There’s the option of committing to the minimum payments and paying extra interest payments whenever possible to reduce the length of the loan and the interest paid. Some loan repayment schedules are structured to start lower and increase payments as you advance in your career.

There is often help for hardship cases, but hoping that legislators pass some kind of broad relief for student loan borrowers is not a solid financial plan.

TIPS FROM WO READERS

Illustrating that student loan debt and how to tackle it is a personal choice, here is advice from WO readers.

Note that there are contradictions, demonstrating that these advice-givers found their own comfort zone.

No matter how you choose to approach your debt, you’re not the only one using that strategy. Here are some findings from a January 2024 WO Pop Up Poll:

• 38% of the respondents said they’re using the calculated monthly payments and adding extra when they can
• 30% said they are paying the minimum monthly payment, and that’s all they can do right now
• 23% said that their monthly payments are stressful
• 12% said they are confident in their aggressive payoff plan

Some ODs mentioned living like a student, picking up a part-time job, living with your parents and other money-saving or money-earning tips that would allow you to accelerate payments; other ODs suggest a deep, cleansing breath.

“Pick a position that makes you happy, allows you to pay what is needed and hopefully has a good work-life balance. Don’t stress too much.”

RESOURCES

• ODs on Finance dives deeply into financial issues that affect students and recent grads, as well as those at any stage of employment or considering starting or buying a practice. Here are some resources ODs on Finance provides:

The Optometrist’s Guide to Student Loans

The Optometrist’s Guide to Student Loan Refinancing 

• Calculate the different loan and repayment scenarios with this interactive tool from studentdoctor.net.
• Read the results of the WO/ROB student loan debt poll for 2023 here.
• Read the results of the WO/ROB student loan debt poll from early 2024 here.

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Featured image: Getty Images/Ericsphotography

 This article was created using several editorial tools, including AI, as part of the process. Human editors reviewed this content before publication.