Money Practices: Four tips for young professionals with student loan debt

Young professionals looking to build careers in cities from Seattle to San Diego face a conundrum: how to buy a home or commercial property while student loans beg to be paid down? Capable of earning six figures early on, many professionals including doctors, dentists and attorneys often face considerable student debt.

The average educational debt for all indebted dental school graduates in the class of 2020 was $304,824, while medical school graduates had an average of $207,000 in educational debt, not including pre-med school loans and costs associated with residencies and relocation. Law school grads face an average of $164,742 in student loan debt.

While a first-year practitioner may not be in a rush to buy a home, the idea of home ownership often gains sway. Competitive housing markets make it a challenge. In October 2021, the median price of a home in San Diego was $800,000, up 18.5 percent from the previous year. It’s part of the nationwide trend impacting potential homebuyers in cities like Boise, Los Angeles, Portland, Sacramento and Seattle as well as smaller markets.

Just as owning a home is part of the American dream, owning a practice or partnership is also a powerful ideal. For professionals who set up a business or buy an existing practice, the decision to lease or purchase commercial property adds to the puzzle.

Here are a few considerations:

Pay off student loans? Maintaining a repayment schedule is essential. For many, paying off student debt early is a priority. Crunch the numbers with a banker you trust to see how much you’d save paying off these loans in 10 years versus 20. Ask if refinancing is an option, and look into loan repayment assistance for your profession through your school or the federal government.

Rent or buy housing? If home ownership is important, some of the best advice is old school: build a budget and watch expenses. Holding on to your car longer, rather than buying a luxury vehicle, is the type of idea many can embrace to pay off debt or buy a home.

Purchase commercial property? This long-term investment gives you the option of selling or renting as part of your retirement succession plan. Be sure to analyze the numbers and your personal values. Not everyone is cut out to be a landlord.

Get sound advice. No one approach fits each situation, so you’ll want a team of experts—an accountant, attorney, banker and financial advisor—who’ll take time to understand your needs and provide solutions.

In addition to financing, your banker should offer free advice, recommend products and connect you to other experts at the bank to help you pursue your goals.