Occupational therapy school is stressful but having OT loans for the next 5, 10, 20 years is even more stressful.
When I was in OT school, I worked in the financial aid department and looked into every possible way to pay off my OT loans quicker.
I’ve found that the quickest way to pay off your OT loans is by finding a lower interest rate, making payments as soon as possible, minimizing your expenses, and maximizing your salary.
Here are 7 tips that helped me pay off $90,000 in 2 years.
Find an affordable school
If you havn’t started OT school, start saving by choosing a school that’s less expensive. Do you research and compare prices with your top picks.
One way to do this is by looking for a school that helps you graduate in less time. This might include choosing a 2 year program rather than 3.
For me, I decided to go with a more expensive school, because it was a year less than my other top choice.
Opt out of federal loans
1. Federal loans cost more
Have you ever wondered why it’s so easy to qualify for student loans? They’re federal loans, so they’re easy to get and harder to pay off.
That’s because federal loans have high interest rates. Most people pay higher interest rates on their student loans than their house.
That’s because private banks can offer far better interest rates.
2. Federal loans stay with you until you die
If you have federal loans, and you’re not in a loan forgiveness program, plan on paying them until they’re gone or until you die. Did you know if you file bankruptcy, you still have to pay off your federal loans?
I’m not encouraging anyone to go bankrupt, but if you become disabled and unable to work, it might be hard to continue paying off your federal loans.
Find a lower interest rate
After you finish OT School and you have a job, start applying for private bank loans that offer lower interest rates.
Do your due diligence by making sure there are no hidden fees or extra expenses. Try going with a reputable bank, but don’t be afraid to try online banks. Check out nerdwallet student loan programs.
I understand that private banks are not for everyone. Some people just feel more comfortable and confident leaving their money in a federal bank.
Most federal banks will allow you to lower your interest rate if you enable automatic payments. You may only save a fraction of a percent, but that fraction will be worth it in the future.
Ask a friend
If you have a family member or friend with extra cash, ask if you can borrow money and pay them back with half the interest of your student loan.
If you have a good track record, that’s an investment that will be hard to turn down.
I recommend asking after you’re working, so you can guarantee instant repayment.
Start repayment ASAP
I can’t stress this enough, and I wish I had started sooner.
Start paying your loans as soon as you receive them. If you have a part-time job in OT School, decide on a repayment percentage, even if it’s 5 or 10%.
If you don’t have a job, find one that lets you study. Some schools will have jobs on campus that will let you do homework during the slow hours. Here are a few ideas.
- Student Services
Remember, your loans don’t sleep at night. They’re constantly working to put you more and more in debt. The sooner you start developing a consistent pattern of repayment, the better.
Find a book to motivate you to save. Here’s one I recommend.
If you can, schedule automatic payment transfers to your loan every week or month.
Decide on a monthly goal that’s attainable. Make a yearly repayment goal. Stick with it, and don’t get sidetracked.
For me, I made a monthly goal of $2000 in payments. Every month I made sure I paid $2000 toward my loans, and if I had anything extra I paid more.
Minimize your expenses
The main reason I was able to pay off my student loans in two years was because I had minimal expenses and a high pay rate.
Your single highest expense is usually housing. If you can minimize this payment, you’ll pay your loans off so much faster.
If you’re single, find a couple roommates. If you’re married, choose to live in a more affordable place like an apartment instead of a house.
Spend only on what you need
Try to eliminate wants from your monthly expenses. This can include Amazon, Netflix, or any other subscription service.
Here are some other ideas that helped me.
- Make your own meals
- Budget phone plan (Visible, Mint)
- Lowest tier internet plan
- Travel less
- Thrift shop
- Delete all streaming accounts
- Ride your bike to work
Increase your pay
Read my article on maximizing OT salary to learn how to get the highest paying job in OT.
Move to a place that pays better until your loans are paid off. You might also work more hours. I worked 6 days per week twice a month.
Don’t go overboard with this, because you might get burned out.
Find a passion job
Do something on the side that you’re passionate about that can bring in extra income. This could include starting a blog, photography business, or dog sitting business.
Brainstorm and think of how you can turn your talents into a side hustle.
Loan Forgiveness programs
If you can’t see repayment as a viable option, look into government loan forgiveness.
To qualify, you must
- Be employed by a U.S. federal, state, local, or tribal government or not-for-profit organization
- Work Full time
- Pay loans based on your income
Check out the student loans help tool here.
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David is the lead editor of OT Focus. He has been practicing as an Occupational Therapist since 2013. He specializes in acute care, hand therapy, and ergonomics.