Veterinarians Are Treated Horribly Under Student Loan Rules | Student Loan Planner


Veterinarians are treated horribly under
student loan policy. The reason that I know this is because I’ve consulted on over a thousand student loan borrowers with an average loan balance of $280,000. Whoever was writing the student loan rules back in 2007 with the last major
authorization of the Higher Education Act totally screwed over veterinarians.
Let me explain why. Let’s compare veterinarians to human
doctors (physicians) and look at the differences in student loan policy. If
you’re a physician you can work for 10 years at a hospital, and typically most
hospitals are not for profit so most physicians qualify, and you can pay based
on your income for 10 years. At the end of those 10 years the loans are forgiven
tax-free under the public service loan forgiveness program. Physicians tend to
make fifty to sixty thousand dollars during their years of training and they
work their tails off, of course my wife is a physician so I know, and I’m not
saying that they don’t necessarily deserve this, but veterinarians work
their tails off too, and veterinarians might make maybe thirty or forty
thousand as an intern and maybe 70,000 or 80,000 as a full earning veterinarian. And then you compare that to an attending physician that’s making two or
three hundred thousand dollars, and obviously there’s a vast difference, but
the issue is you would think that the lower earning profession would get
treated at least the same under student loan policy as the higher earning
profession would be, but instead the higher earning profession of human
medicine gets vastly more advantaged than the veterinarian profession because
veterinarians typically have two or three hundred thousand of student loans
which is very similar amount of debt that the human doctors have, except that
veterinarians don’t have easy access to the public service loan forgiveness
program because their employers tend to be private small practices rather than
big giant hospital systems that just happened to file not-for-profit returns
with the IRS and qualify for this loan forgiveness program with this loophole
that Congress enacted. So that means that veterinarians are paying way way more
than most physicians for their student loans. That doesn’t seem quite right. To
give you an example let’s look at this calculator. Let’s assume that we have a
veterinarian that has 250,000 of student loans with a 7%
interest rate and that she’s a brand new recent graduate. If we look at what her
income would be, then we can see that it probably would start at about $70,000
and let’s say that it grows for inflation. If we look at the cost of this,
she’ll have access to the revised pay as you earn program, she’d have a remaining
balance of three hundred seventy three thousand dollars after she pays for
twenty five years, and then she would owe taxes to the IRS of a hundred forty nine
thousand. The total cost would be three hundred and thirty nine thousand if you
sum up the payments in column B plus the taxes in column D, and that total
cost would be three hundred thirty nine thousand, but in today’s dollars I would
estimate that it would be a hundred and forty eight thousand based off of a cost
that’s discounted to the present value. If you look at private refinancing (and
that should just say refinancing) then three hundred twenty-five thousand
dollars would be the cost over ten years and the monthly payment would be
twenty-six hundred dollars a month. That’s quite a bit. Let’s look at a
physician. Let’s say a physician has the same amount of debt, but we’ll assume
that they’re making fifty five thousand for about four years and then suddenly
they get a two hundred thousand dollar income for the remaining years that goes
up with inflation. We’ll assume that they are eligible for the public service loan
forgiveness program. So if I go to the main page you’ll see that the cost of
the PSLF program is one hundred thirty one thousand. The remaining balance is
two hundred ninety three thousand, but the amount forgiven is two hundred
ninety three thousand because there’s no tax bomb on the public service loan
forgiveness program. That means the total cost is one hundred and thirty one
thousand and then the cost in today’s dollars, present value, is ninety nine
thousand. I could run more examples than that, but this is a stark illustration
how a physician making two hundred thousand could pay as much as fifty
thousand dollars less in today’s dollars on their student loans. If you just
wanted to look at the absolute dollars, recall that the physician was paying
about one hundred thirty something thousand; the veterinarian was paying
about three hundred something thousand. So the difference in absolute dollars is
even greater. It’s almost two hundred thousand dollars more,
but the veterinarians are paying on their student loans instead of
physicians. Congress is doing a reauthorization of the Higher Education
Act right now as we speak and if you want to make sure that veterinarians are
treated more fairly than they did in the last reauthorization of the Higher
Education Act, contact your congressman and explain what you’re going through as
a veterinarian dealing with big student loans. If you’re really stressed out and
you have big student debt and want help, we offer that. Feel free to use our
website to contact us and reach out because we’ve made custom student loan
plans for hundreds and hundreds of DVMs.

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