Managing Debt

Debt may be a necessary part of building a practice. Managing it wisely can be a key factor in your success.

Money & Credit

Managing Debt

Debt is often a necessary strategy to attain your personal and professional goals. How you handle that debt will have an enormous impact on your life - including your practice's success. Responsibly paying off student loans, credit cards, auto and home loans may help you secure financing for your facility and practice equipment. In fact, payment history is the largest factor comprising your credit score.


Student Loan Repayment

Student loans can come from a variety of different sources and have different terms and details. But they all have one thing in common - they must be repaid. Repayment usually doesn't start until after graduation. Stay informed on the details of your loans so you will be prepared to begin repayment. The financial aid office will have the most up-to-date information on loan repayment options and planning resources available.

Know Your Payment Options

Depending on the source of your loan, there may be several options for repayment including:

  • Standard repayment – a fixed monthly amount usually over a 10-year period
  • Graduated repayment – lower monthly payments initially and increasing gradually over a 10-year period
  • Extended repayment – allows certain borrowers to extend the repayment period up to 25 years
  • Income-sensitive repayment – monthly payments based on the borrower's annual income
  • Deferment – allows eligible borrowers to postpone payments for a specific period of time
  • Consolidation – lowers monthly payments for borrowers with either high monthly payments or loans from multiple lenders

Know When Repayment Begins

Some student loans specify a grace period, which generally is six months following graduation. But the grace period may vary on different loan programs and should be specified in your promissory note. If you are unsure, call or e-mail the lender and ask for loan disclosure and a repayment schedule. The loan disclosure will tell how much you've borrowed and what the monthly payments will be under a standard repayment plan.

Remember: deferring student loan debt repayment will unnecessarily increases your interest expense. And student loan debt cannot be discharged in a bankruptcy.

Using Credit Cards Responsibly

Protect your future by protecting your credit standing. Use credit cards wisely and look for a card with the lowest annual fee and fixed interest rate.

There are many valid reasons for using a credit card. It can be helpful to use in emergencies, to track business expenditures, or to cover some expenses while you wait for payment from third-party insurers. But, the danger is using credit cards to pay for a lifestyle that is in excess of your income. Be wary - overuse of credit cards can get you in trouble if you are not able to pay off the balance each month or in a short period of time.

There are many resources available to help you become educated on credit card management, understand options for use and repayment, and help if you are in a bad situation with credit card debt. Being well educated will help you make sound decisions and deal with decisions you've made in the past.

Credit card issuers are required to disclose the cost and time it would take to pay off your credit card balance if only the minimum monthly payment is made which can be quite insightful.

If a business credit card makes sense for your practice, find out about NCMIC's MilesAway credit card. There's no annual fee and you can earn points with each purchase. Those points can be redeemed for a variety of items such as airline tickets, vacation, gift cards and merchandise. Click here to find out more.


The information in the NCMIC Learning Center is offered solely for general information and educational purposes. It is not offered as, nor does it represent, legal or professional advice. Neither does this information constitute a guideline, practice parameter or standard of care. You should not act or rely upon this information without seeking the advice of an attorney familiar with the specific legal requirements of the state(s) in which you practice. If there is a discrepancy between the site and an insurance policy you have with NCMIC, the policy will prevail.