What Percentage of Your Income Should Go Toward Student Loans?

Going back to nurse practitioner or physician assistant school is a major financial endeavor. Depending on the program in which you enroll, you’ll spend tens of thousands of dollars on your graduate education and in some cases upwards of the one hundred thousand dollar mark. Given the significance of the loans you’ll incur on your path to becoming an NP or PA, financial planning is in order. A good starting place is to determine what percentage of your projected income should go to paying off student loans.

The U.S. Department of Education recommends that students do not take on a student loan payment that exceeds 20 percent of total projected discretionary income, or 8 to 10 percent of total monthly income. So, if you’re a nurse practitioner earning $90,000/year ($7,500/month), you should aim to keep your monthly student loan payments at about $600 – $750 per month. Don’t forget to take into account any pre-existing student loan debt as part of this equation. 

How do you know if your monthly loan payments will fall within these guidelines? There are a few key steps to deciding if you can afford to become a nurse practitioner or physician assistant. 

Step 1: Accurately project your professional income 

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The key to determining affordability of student loan payments is to accurately project how much you’ll earn after you obtain your graduate degree. You hear plenty of stories of nurse practitioners and physician assistants that earn around the $150K mark, but that’s not the norm – especially not as a new grad. Don’t expect to be an outlier. I recommend using data from the U.S. Bureau of Labor Statistics as it’s unbiased. Check out NP/PA salaries in the location where you intend to practice to estimate your income. Making a conservative estimate is better than planning to be on the high end of the earning scale and ending up strapped for cash. 

Step 2: Draft two budgets

When you look at student loans and affordability, you need to draft two budgets: 

  1. Graduate program budget
  2. Post-graduation budget

The budget you create for your time as a graduate student shows how much you’ll need to take out in loans in addition to the cost of tuition to live while you’re in school. Your post-graduation budget shows how much you’ll have left after living expenses. 

Step 3: Calculate your estimated monthly loan payment 

Once you understand the amount you’ll need in student loans (living expenses + tuition costs), use an online loan repayment calculator to check your estimated monthly loan repayment.

Step 4: Crunch the numbers 

Compare your monthly student loan payment amount with your projected annual salary and post-graduation budget. Is your estimated monthly student loan payment within that 8 to 10 percent of monthly income window? Given the budget you created, does the loan repayment amount look like a number you can reasonably afford? 

Ultimately, the decision to take out student loans for your nurse practitioner or physician assistant education is a personal one. Some NPs are willing to live on tight budgets, others prefer more disposable income. Regardless of your budget preferences, intentional planning will prevent you from making long-term financial mistakes. 


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