Becoming a pharma professional doesn’t happen overnight—and it doesn’t come cheap! Tuitions today are higher than ever, and most graduates enter their professional lives with more than just a degree.
On average, a pharma graduate leaves school with a debt of around $158,000, although it could be significantly more, depending on your specialty, where you studied, and the type of loan.
While you may have blissfully blocked out this detail while studying, the first payment due date is a sobering reminder.
Granted, jobs in the pharma industry pay well, but if you plan your repayment strategy well (or start while you’re still in school), you can pay it down faster and with significantly less stress. The sooner you can get a handle on your student loan debt, the sooner you can move on with the rest of your life.
Understanding Student Loans for Pharma Grads
There are two basic types of student loans: subsidized and unsubsidized. The federal government offers both types.
If you initiate your loan while you’re in school, it will likely be unsubsidized, meaning you will accrue interest while in school and during the grace period, which increases the total cost of borrowing by a considerable margin.
Subsidized loans do not accrue interest until after the grace period, usually six months after graduation.
Default terms are generally 10 years, but you may have a different structure. If you want to get ahead of it, plan to start paying into your loan before the grace period ends or even while you’re still in school, if you can.
Creating a Repayment Strategy
There are various repayment options to consider. Your employer may be able to help, either with student loan repayment programs or sign-on bonuses, which can be allocated directly to debt repayment.
Loan forgiveness may also be an option if you are willing to work in underserved areas, for the military, or after making a certain number of payments while working full-time at a government agency or non-profit (PLSF).
If none of these options are possible, there are a few other avenues to explore.
Budgeting for loan payments alongside living expenses is the most practical thing you can do. Continue to live like a student and put everything beyond the essentials into debt repayment.
You may also apply for an income-driven repayment plan (IDR), which can lower your payments to match your income. You would also do well to apply for this program if you plan to pursue PLSF.
Lastly, you might consider refinancing at a lower interest rate through a private or traditional lender.
Maximizing Financial Resources
If repaying your loan while still in school isn’t an option, there are myriad ways to maximize your financial resources once you start working.
Ask your employer if they offer loan assistance or tuition reimbursement programs, as that could be a way to pay down a good amount of your loan without thinking too much about it.
As mentioned in the previous section, public service roles may be eligible for PLSF loan forgiveness, meaning you would have to make 120 payments (that could be geared to your income under the IDR if you apply), whereafter the loan balance is forgiven.
You could also look at ways to boost your income, such as taking on a part-time or temp role through an agency.
Avoiding Common Pitfalls
While it may be tempting to inflate your lifestyle once you’re out of school and working for full pay, a conservative financial approach will serve you better in the long run.
Deferring payments doesn’t mean they go away; you will eventually have to pay, and getting a handle on it is better before the debt becomes unmanageable.
If you cannot pay, forbearance may be possible through your lender, but this is just a temporary measure designed to help you get back on your feet. The benefit of forbearance is that it may suspend your interest payments while you pay down your balance. Speak to your loan provider to see what they can offer. Essentially, forbearance is a temporary modification to your current loan agreement. Be sure you understand when the program ends so you don’t default.
Here are a few additional tips for conserving funds while you’re still paying down your student loan:
- Don’t take on too many unnecessary expenses.
- Apply for or pursue student debt relief programs when possible.
- Pretend you’re still a student and live as frugally as is practical.
- Use the snowball method: pay down debts you can eliminate quickly so you can cross them off your list.
- Use the avalanche method: pay down high-interest debt first to reduce debt with the highest cost of borrowing.
Building Financial Stability Alongside Repayment
In a perfect world, you’ve graduated, have a high-paying job, and have a little left over to save for emergencies and retirement. Speak to your financial advisor about low-risk accounts you can pay into to grow your savings while paying down your debt.
Establishing a credit history is also essential, as you may want to buy a house one day. As with most things in life, balance is key. An experienced pharma financial advisor can help you understand the unique investment opportunities available to you through your employer.
Final Thoughts
Student debt is a fact of life for most pharma professionals. While it may seem overwhelming when you’re just out of school and not working yet, there are strategies you can leverage to reduce your payments, access loan forgiveness programs, or simply defer interest until you’re on solid financial ground.
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