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Repayment Strategies for Health Sciences Graduates

Some of our previous articles have focused on budgeting and responsible borrowing. However, now we ask you to look ahead and start thinking about a repayment strategy for your loans.

Know what you borrowed

You can’t craft together an effective repayment strategy unless you know what you’ve borrowed and how your loans work. This should help you choose which loans to target if you adopt an aggressive repayment strategy, which as a health sciences graduate you may well be able to do! Be sure you know not only what kind of loans you have, but also the terms and conditions of the loans, who services them (the organization who works with you in repayment), and when the loans are due.

HINT: Check the National Student Loan Data System (NSLDS at for a listing of your federal loans, and click on the number to the left of each loan for information on your loan servicer. Check your records, such as Disclosure Notices, for information on private loans, or contact your Financial Aid Office. Your credit report should also list your student loans.

Identify your repayment objectives

Some borrowers need to protect their income and maximize their monthly cash flow and thus choose a repayment plan with the lowest possible payment, at least initially. They might even choose to postpone payments for a short period. Other borrowers want to minimize the impact of the relatively high interest rates and interest capitalization (where unpaid interest is added back to the amount you initial borrowed). They might choose a Standard 10-year plan and make additional payments each month to pay the loan off early. Some borrowers have an objective to get help with their student loans in exchange for service through programs like the National Health Service Corps and the Public Service Loan Forgiveness program. Remember, there are no right or wrong repayment objectives!

HINT: Repayment objectives often change over time according to your circumstances, so when things like income and family size change, take a look at your repayment objectives again!

Identify a repayment plan to meet your repayment objectives

When your loans are due, you have options designed to help meet your particular needs and repayment objectives. Current options on your federal loans like Stafford and Grad PLUS include:

Standard 10-year plan
  • Same payment each month
  • Designed for borrowers with steady incomes who can handle relatively higher payments
Graduated plans
  • Payments start smaller and increase at designated times in designated amounts
  • Designed for borrowers with steady incomes who have other obligations that need immediate attention
Income-related plans
  • Payments are tied (in part) to income and can change each year
  • Multiple plans designed for borrowers with relatively high debt and low to moderate income for whom other plans do not work
  • Income-Based Repayment (IBR) and Pay-As-You-Earn (PAYE) plans are examples
Extended 25-year plan
  • Same payment each month, but spread out over 25 years
  • Designed for borrowers who cannot afford a Standard 10-year plan and need a lower monthly payment

HINT: Work with your loan servicer as, with few restrictions, you can switch repayment plans as your repayment objectives change!

Use all available resources to help craft your repayment strategy

It may be your repayment strategy, but you should have lots of help putting it together, from your financial aid office to your loan servicer to the Department of Education’s Student Aid site ( Note the calculators on this site and commit to running repayment estimates under the various programs each time you take out another loan.

HINT: Talk with any health sciences colleagues you know who are already in repayment regarding their repayment strategies, and ask them what they did.

Smart budgeting and responsible borrowing are only one part of being a successful borrower. Choosing a repayment strategy that works for you is important as well!

Paul S. Garrard, American Dental Education Association Financial Aid Consultant and a 32-year veteran of student financial aid and higher education, wrote this article.

Copyright 2012 American Dental Education Association