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Paying Off Student Loans

By Dr. Linda Marc-Clerisme

Ambassador, NIH Loan Repayment Program

News Americas, BOSTON, MA, Weds. July 2, 2014: First let me start by sharing that I incurred $110,000 in student loan debt following the completion of my undergraduate and graduate studies. However, through a loan repayment program $96,000 has been paid.

This article will highlight available loan repayment programs for individuals who pursue careers in the biomedical, behavioral and social sciences, as well as in education, dental, medical and veterinary medicine.

Prior to taking out loans it’s important for students to develop strategic financial solutions that will help them repay debt incurred.  Strategies might include gathering information about  loan repayment programs and/or developing long-term real estate investment strategies that might help pay debt upon graduation.

Loan Repayment Programs

The National Institutes of Health Loan Repayment Program (NIH LRP) for researchers in the biomedical, behavioral and social sciences may repay up to $35,000 of qualified student loan debt per year, including most undergraduate, graduate, and medical school loans.

NIH LRP repayments are taxable income to participants. Both loan and tax payments are reported after the end of the calendar year and a 1099-G form is mailed to participants.

I am a participant of this program and have been an Ambassador of the NIH LRP since 2011 recommending it to emerging researchers, to help ensure they benefit from this opportunity.

There is also the National Health Service Corps Loan Repayment Program for primary care medical, dental and mental health clinicians, which provides $50,000 tax free, in exchange for two years of service at an approved site in a Health Professional Shortage Area.

The Stafford Loan Forgiveness Program for Teachers is intended to encourage individuals to enter and remain in the teaching profession. Under this program, a teacher may receive loan forgiveness of up to $17,500 if they teach for five consecutive academic years in schools or educational service agencies that serve low-income families.

Also, in 2004 President Bush signed a bill which marks a legislative victory known as the National Veterinary Medical Service Act.  The House of Representatives unanimously passed the bill which authorizes the Department of Agriculture to provide student loan repayments to recent veterinary graduates who agree to work in underserved areas of the country.

 

My Personal Story

I think it always helps to share the personal story of how student’s become indebted and why they make decisions to take out such expensive loans. My personal story starts off following my acceptance to St. John’s University in New York for undergraduate studies.

I expressed to my parents a desire to pursue a bachelor’s degree in psychology.  My goal was to earn a PhD in Clinical Psychology.

My Haitian parents were not supportive of this field and were very clear they would not pay tuition for psychology classes.  They believed I would be better off taking pre-med courses to eventually apply to medical school. Naturally, I took their advice and realized after the first semester that I did not like biology labs, dissecting guinea pigs or chemistry.

I decided to officially change my major to Psychology.  With this said, I knew I was on my own without tuition support from my parents.  This is when I took out my first student loans.

Within a year of changing my major to Psychology I was excelling in my classes then stumbled upon experimental psychology and courses in statistics.  This was the awakening moment that would shape my career.

I was amongst the best in my class in statistics and experimental design.  My professors strongly suggested I pursue a career in experimental psychology and/or public health where statistics was essential.   In my sophomore year at St. John’s I found a part-time job at Columbia University where I became a Research Assistant/Data Clerk and stayed in this position through college.  I graduated with student loan debt and started paying the minimum monthly amount.

In my second job following undergrad I was recruited as a Public Health Advisor in the AIDS Surveillance Unit of the New York City Department of Health.  By my second year I was promoted to Senior Public Health Advisor, then my Director suggested that I pursue a Master’s of Public Health.

I applied to Yale University and was accepted.  However, my parents expressed concern about my choice of study, not understanding where this would lead me professionally.  They would not help with tuition.

When I arrived on the Yale campus I took out student loans and studied for the next two years.  Among 75 students in the class, with only 8% of African descent, I was 1 of 6 students who graduated with distinction.  Upon graduation I had incurred significant student loan debt.

My Yale advisor encouraged me to apply for the doctoral program.  I knew that loans were the only option but I was afraid of borrowing more money.  I went back to my parents and asked for help with tuition costs.  Once again, the answer was NO.

 

I have an older brother who left home without a college degree, entering the military.  He was married with children and in no position to help me. In contrast, my cousins have on average 6-10 siblings each who are able to help one another.  I had to develop my own life plan.

Instead of pursuing doctoral studies I accepted a position in the pharmaceutical industry, making a conscious decision to earn a high salary with the goal of saving money to apply for doctoral training at a later date.

I spent 6 years in industry  –  first working on the statistical surveillance of side effects for psychiatric drugs, then in a public health division focused on vaccine development, then in the development of computer-assisted applications for use by product safety and regulatory professionals.

During this period I developed short-term and long-term financial goals.

First, I paid the minimum of my student loans.  Second, I decided not to rent but invested in a small home in which my mortgage was paid with only 1 week salary.  Third, I purchased a modest second hand car, which allowed me to have a lower insurance policy.  Fourth, I purchased 20 suits and 20 dresses that I would mix and match for a few years (watching my weight of course).  Sounds frugal but  I wanted to save to return to graduate school. If you are wondering, most men I dated at the time had no short- or long-term financial goals, did not own real estate, had no plans to pursue graduate studies, and couldn’t see beyond their beautiful cars.

By the end of the 6th year of working my strategy had paid off!  I applied to the Harvard School of Public Health and was offered a full tuition scholarship for at least 3 years.  However, Harvard did not offer a living stipend to cover food, lodging or living expenses.

I spoke to other students who explained that a 3 year scholarship pays for coursework but the dissertation could take another 1 to 2 years, requiring additional funding to support my own research.

At the time rent in Boston was $1600/month for a 2 bedroom (I previously had a home and needed adult living space).  I estimated that over 5 years I would pay a landlord $96,000 (60 months at $1,600/mo).

Having saved much of my salary while working in pharma I decided to purchase a 2-bedroom condo (fixer-upper) in a brownstone, located in the historical section of downtown Boston.  The living space included an office, bedroom, combined living room-dining area, kitchen, outdoor garden and deeded parking space.

My mortgage payment was $1,100/month (lower than the rental market rate). The inside of the condo apartment was a dismal, frightful wreck however, the inspection report showed that the building was structurally sound, the exterior brownstone had been recently completed, and the Condo Association had a strong financial record.  I had planned to purchase new appliances, flooring and paint.

 

My father asked me if I was CRAZY when he saw the inside of the unit, yet he still offered no financial support.  My mother asked me what was I going to do with so many graduate degrees?  She continued to laugh at me and shook her head.

What I learned 5-years later is that the Boston condo gained 255% in equity.  After graduation from Harvard I was now the one grinning all the way to the bank after the condo had sold on the market.

In addition to the long-term real-estate investment I made during my doctoral studies I also made short-term goals to help with monthly bills.

The Harvard curriculum was a professional program with courses starting from 8am to 5pm – I needed time to do my homework in the evenings, so working was not an option.

I decided to take more student loans to offset some of my living expenses and the costs of doctoral research.

For additional monthly income to pay heating and electrical expenses, I decided to rent my first home earning a profit from rental income.  I also gave up my car after moving to Boston so I would not have to pay insurance (besides Boston has a great transportation system, I did not need a car).  A second benefit of giving up my car was that I rented my deeded parking space in downtown Boston, which consistently paid for my groceries over the next 5 years.

Upon earning my doctoral degree I had incurred a total lifetime student loan debt of $110,000, which combines undergraduate, master’s and doctoral expenses.   I had three options to pay this off.

1.            Equity in my first home had risen 30% over the 5 years.  I decided not to sell because this would not have paid off my student loan debt.

2.            Equity in my Boston condo had risen 255% over the 5 years.  This could have paid off my student loan debt, but I decided not to use these funds.

3.            I applied to the NIH Loan Repayment Program and committed to conducting public health research on vulnerable populations.  To date, the NIH LRP has paid $96,000 of my student loan debt that was initially $110,000.

In summary, students should develop financial strategies to help repay student loan debt.  Options include investigating repayment programs prior to studies, considering long-term real estate investments, or working a few years to save money.  One more thing, keeping your grades up also helps to get tuition scholarships.

 About the author:  Dr. Linda Marc-Clerisme is currently the Education and Curriculum Development Director within the Preparedness and Emergency Response Learning Center (PERLC) at the Harvard School of Public Health. On the PERLC Core Curriculum Committee, she is the lead faculty member for ensuring that cultural issues relevant to vulnerable populations are addressed when developing instructional models for PERLC.  Following the 2010 Haiti earthquake, Dr. Marc-Clerisme received a research award to examine mental health literacy amongst persons of Haitian ancestry in the context of disasters. Her ongoing research focuses on post-disaster sexual violence in Haiti, with emphasis on mental illness and access to HIV treatments. Her master’s thesis from Yale published on the use of epidemiological methods to evaluate the safety of psychiatric drugs, and her doctoral work from Harvard focused on social determinants of HIV treatment effectiveness.