CNRAs have a lot to worry about many things more important than student loans

CRNA Student Loan Repayment Strategy

Michael Lux Blog 0 Comments

Becoming a Certified Registered Nurse Anesthesiologist (CRNA) requires a huge investment of both time and money.  Like many career paths in the healthcare field, the cost of education is high, but the work and future compensation can be very rewarding.

Many CRNAs find themselves making six figure salaries, but also deal with over $100,000 in student debt.  When facing a high salary, high debt situation, a smart repayment strategy is essential.  The good news is that a few simple steps can save thousands of dollars.

CRNA Student Debt Elimination Plans

Student loans usually are eliminated in one of two way: repayment or forgiveness.

Despite the large salary that many CRNAs receive, student loan forgiveness can be a viable path.

Before jumping into program specifics, it is important to draw a distinction between two types of student loans.  Federal student loans are issued by the government and have a variety of repayment plan options and forgiveness programs.  Private student loans are issued by banks and other lenders.  The private loans are usually much less flexible.  To determine the status of your student loans, visit the Department of Education Student Loan Database.  The DOE database tracks all federal loans and servicers and is the best way for borrowers to figure out whether their debt is federal or private.

Private Student Loans Management for CRNAs

Private student loans are usually more challenging to eliminate, but the strategy is straightforward: pay the debt off in full.

The repayment urgency will depend upon the interest rates on the private loans.  Loans charging 8-10% or more should be paid off as fast as possible.  High interest student loan debt is extremely expensive, and aggressive repayment is very valuable.  Loans with interest rates less than 3% are a much lower priority.  At the lower levels, borrowers may find it more valuable to just make minimum payments in order to save for retirement or a down payment for a home.

The best tool available for borrowers with private loans is student loan refinancing.  There are about 20 companies that will pay off old student loans and issue a new refinanced or consolidated loan.  These lenders target borrowers with high incomes and credit scores.  The targeted borrowers are highly likely to repay their debt, so they are able to qualify for lower interest rates.  Lenders like SoFi and ELFI have a reputation for offering the lowest rates to the general public, but CRNAs should also investigate Laurel Road due to their focus on healthcare providers.  Each lender evaluates applicants using slightly different underwriting criteria, so borrowers looking for the lowest rate possible would be wise to shop around.

The strategy for Federal Student Loans can get a little more complicated…

CRNA Federal Student Loan Repayment for Public Servants

The big federal perk for all CRNAs to understand is Public Service Loan Forgiveness (PSLF).  Those that work for  the government or a 501(c)(3) employer are likely eligible.  According to the National Institute of Health, approximately half the hospitals in the US are 501(c)(3) organizations.

PSLF has three basic requirements:

  1. Work full-time for an eligible public interest employer such as the government or a non-profit,
  2. Enroll in an eligible repayment plan, and;
  3. Make 120 payments.

Anyone considering this route should make sure they understand all of the rules associated with PSLF.  Though it is not technically required we also suggest that all borrowers pursuing PSLF submit employer certification forms on a yearly basis.  Submitting the employer certification form is the best way to track progress as it will trigger a review to make sure the borrower has an eligible employer and is on an eligible repayment plan.  It will also update the borrowers progress towards the required 120 monthly payments.

The problem with Public Service Loan Forgiveness is that many borrowers are afraid they won’t qualify.  The early numbers indicate a very low approval rate, but we expect things to gradually improve.  Others don’t want to bet on PSLF because they fear the program won’t exist by the time they would be eligible to qualify.  Here again, it is a valid concern, but odds are in favor of its continued existence.

The other issue with PSLF is that some borrowers might actually spend more money getting their loans forgiven.  Making minimum payments on a PSLF eligible plan can rack up a lot of interest over the years.  For CRNAs with larger salaries, its possible that aggressive repayment can get the loans eliminated faster and for less money.  This is an issue that can only be resolved by doing the math.

Federal Loan Elimination Without PSLF

The tricky part about federal loans is that the interest rates are not terrible, but they are not great either.  For many borrowers, there is definitely the temptation to go find lower interest rates via a refinance lender.  This strategy can work, but it is also very risky.

The income driven repayment (IDR) plans that come with federal student loans are an excellent borrower protection.  If the borrower looses their job or has a salary cut, IDR plans protect them from delinquencies and default.  For this reason, it make sense to pay a little extra in interest to have the repayment protection.

Ultimately, each borrower should evaluate this decision.  Compare the potential savings from refinancing against the security of a federal loan.  The best route will depend upon the borrower’s willingness to accept risk and their job security.

Final Thoughts

There isn’t a one size fits all approach for CRNA repayment.  High salaries can shift the strategy in one direction, while large debts might dictate another.  The key is to understand the options available and make the plan that best fits your individual circumstances.