Public Sector Loan Forgiveness (PSLF) Changes That Should Scare You

There are some proposed changes to the law as part of the new budget that have the potential to save many tax dollars while at the same time crippling students who have been counting on loan forgiveness through public service.

While most articles that I’ve read do not address the direct impact on the veterinary community, I wanted to bring the veterinary community into the equation. With veterinary debt loads that are $150,000-$200,000 from “debt” school alone, we have the highest debt compared to the meager salaries we make. For those of us (such as myself) who elect to become public servants, there is a small amount of comfort that can be gained from knowing that there is a program in place that, as long as I work for a non-profit or governmental organization for 10 years while paying my student loans back, that all of my remaining debt after 10 years will be forgiven.

That may not seem like much money forgiven after 10 years of payments, but if you are making income-based-repayment at the fixed 10% of your income, and you are making the average veterinary salary of $60,000/year to start with 3% cost of living increase per year, your debt will actually increase over time given the 6.8% interest rates. See the chart below for a demonstration of how this would work out over the 10 years you work for the government or a non-profit organization:

Debt Salary
150,000 60,000
154,200 61,800
158,506 63,654
162,919 65,564
167,441 67,531
172,074 69,556
176,819 71,643
181,678 73,792
186,653 76,006
191,745 78,286
196,955 80,635

So big deal. You’re paying back your debt slowly but surely, yet your debt isn’t even starting to decrease — the interest is still accumulating! The only saving grace is that after those 10 years, when you’ve gone from $150,000 in debt to almost $200,000 in debt, your $200,000 in debt is now forgiven so long as you are a public servant. You don’t even have to pay taxes on the amount that is forgiven!

What if that policy were to disappear and the new proposed policy were to be instated? Then loan forgiveness via income-based repayment would virtually never make sense. Instead of having $200,000 forgiven, you’d have $57,500 forgiven after 10 years — which happens to be precisely the amount that you had accrued in interest over the past 10 years doing income-based repayment of your loan and you are back to exactly where you started the day you graduated from veterinary school. $150,000 in debt and no help.

Please consider the ramifications of this program and read more here — and better yet, sign a petition and spread awareness of the importance of this program!

Shelter veterinarians, such as myself, need this program in place. Most of us will never be business owners and are often stretched beyond our capacity to serve animals, animals that often belong to taxpayers or become adopted family members in taxpayer households. At the animal shelter I proudly serve, there are two veterinarians and 18,000 animals that enter the shelter every year. Even if we took no vacation and worked 5 days per week for every week of the year, we would be treating approximately 35 animals per day. The average private practice veterinarian doesn’t come close to that.

Once again, please read more about the potential changes here, then sign a petition and spread awareness of the importance of the Public Sector Loan Forgiveness (PSLF) program!