RESPONSE TO: I paid off my student loans in five years

I was at work when a colleague asked me if I had seen a new article that was floating around the internet about a newish veterinary grad who paid off her student loans in five years. I had not. The colleague who inquired had been out of vet school for over a decade and knew very well that what I, along with other younger generation vets, am experiencing with debt is not something that the older generations of vets can relate to.

Yet, even she commented that the article was very unrealistic and thought it was giving younger generations some false hope about their financial situation. She commented that she expected the author to be explaining how she was eating ramen noodles for every meal, living with roommates and doing anything and everything to keep her expenses down, yet that was completely not the case! At the same time she was paying off her debt, she bought a house, a newish car, dined out regularly, enjoyed that morning latte and her husband wasn’t even working the whole time.

My colleague ended by saying, “I suspect the article is going to make some younger vets very upset.”

When I arrived home, I found the article online and began to read. (LINK HERE).

Student Debt

Here’s the breakdown of this author’s story along with my response…

1. Total amount of debt at her 2005 graduation was $123,000 (which included 100k from vet school, 20k from undergrad, and 3k from her parents)Right off the bat, this is not on the same level as students graduating from vet schools now (almost 10 years later), when average debt for students with debt is over 150k. As much as 100k is not something to laugh about when it comes to debt, it is becoming a very manageable number compared to the 200-300+k that current students are encountering. Sure, she may have worked some during school and received scholarships, but it’s not likely that either of these contributions would have drastically altered her total debt at the end of school. Likewise, she claimed to have chosen her in-state school and lived in an area where rent was less expensive so as to reduce her debt load during school. I doubt that is a gound-breaking strategy for any of us.

2. Pre-debt counseling at entry to vet school. The author indicated that upon starting vet school, she “received financial counseling, along with stacks of papers outlining the debt [she] was incurring and how long it would take [her] to pay the loans off.” It’s great to hear that she received such counseling. Not all of us did. I have spoken to many other vets or vet students who indicated they were given no education or counseling on the loans they were taking out, but the money was given to them very easily. My experience was the same. At graduation, however, they made sure to sit us down and provided extensive counseling on the debt we had incurred and what that meant for us, how long we had to pay it back, our options for paying it back, and what would happen if we didn’t pay. I found it perplexing that there was no education up front, but that once the clock was starting to tick (6 months after graduation, payments start coming due!), we needed to know what we had gotten ourselves into.

3. For her first job, she took “an above-average salary for a new graduate” with a 401k. The funny thing about averages is that the better than average paying jobs are balanced out by the worse than average paying jobs. So the author should consider herself lucky to have landed a better than average paying job as it may have made it that much more possible for her to get out of debt in five years. Clearly the job she accepted was also at a progressive practice because 401k (retirement savings accounts) are not the norm as far as employment benefits go in private practice in the veterinary world. In California, the CVMA Economic Survey found that only 38% of veterinarians in California, a generally progressive state, received a 401k as part of their benefits package.

4. Moved to Austin, Texas. Most people know that living in Texas is very affordable, especially compared to places like California. Moving there was clearly not a bad idea for the author, considering that it allowed her to have a lower cost of living. Some people have the flexibility when it comes to moving, others don’t. Her husband wasn’t working, it was just her, so they moved to where she found this great “above-average” paying job. For those of us who are not as fortunate to have that flexibility, making ends meet may be harder and we may have to compromise on our job or location. I know that what I pay for rent in the San Francisco Bay Area for my humble abode is far more than my family pays in the midwest for their brand new mansion’s mortgage. The choices we make are not always choices, but I know I personally wouldn’t move to the midwest or the south for a lower cost of living. Not only does the lower cost of living tend to coincide with lower salaries, but I personally am happier living on a coast, for many reasons that are not necessarily relevant to this post.

5. The first debt she paid back – her parents. This is where I have to wonder. Unless her parents were really hurting for the 3k she borrowed, this would likely be the last debt people should pay back as chances are it doesn’t have the high, compounding interest rate attached to it. She didn’t elaborate on why she chose to do that or what the agreement had been between her and her parents with respect to the loan, but that’s the choice she made.

6. Her husband wasn’t working, but had enough in savings to pay for his half of expenses. And later on, enough to place a down payment on a house from the same savings. This is where you have to pause and realize that they really didn’t have it that bad. I don’t know many people or couples my age who have debt and yet still have the down payment on a house ready to go.

7. Her income increased. She was paid salary plus production (a guaranteed minimum salary plus a percentage of the profits she brings in to the practice), making her total income higher as she became a better, more efficient clincian. Her husband also got a “great job,” bolstering her total income even more. Go figure, a higher income for her and added income from her husband meant she could pay off her debt that much faster. There is nothing surprising or earth shattering about this. This could be any of us, although our partners securing a “great job” may not necessarily be common. They may have a job, or a good job, but I have a feeling a “great job” is one that is paying big bucks. Either way, the advice offered might as well be “get higher paying job” or “marry rich.”

8. After paying her parents back, she paid off highest-interest rate loans first. Again, nothing earth-shattering about this approach. This is the most common piece of advice I’ve ever seen when it comes to debt repayment. Why the author is unique in this respect, I do not know…

9. She bought a house, a car, ate out, grabbed coffee… This is the one that should make you do a double take and then pause to wonder how she made this work. She even went so far as to say, “I never truly felt deprived. I could eat lunch out frequently or stop and grab a latte without worrying about the budget.” Then you will think back to #7 and recall that clearly if you’re bringing in a lot of money, these things really wouldn’t be issues. It’s clear that she was living very comfortably and not stretching herself that much to make ends meet while paying off her debt. But she didn’t go on vacations or buy new clothes unless she needed them. I will agree with her on the clothes. I don’t buy new clothes often – it has been over a year since I last purchased clothing for myself and I don’t truly care whether I have the latest fashion. After all, I spend over 80% of my waking hours in scrubs. I have, however, gone on multiple international vacations for under 1k, so I’m not sure what the big sacrifice was, but perhaps that’s a values difference between the two of us. I value the culture and adventure that comes from traveling whereas I don’t value dining out regularly or splurging on coffee. So I’ll hold the coffee and only eat at restaurants on special occasions, but I will travel. And I’ll probably end up spending less on the travel than most people do on coffee and dining out in a year.

10. She got married. Everyone knows weddings are not inexpensive. The average wedding is approximately 25k these days. She admitted receiving help from her family for the wedding expenses. Again, clearly she wasn’t struggling to make ends meet and pay off her debt.

~

In the end, it is clear that the author of this article had a sufficient financial cushion between her own income, her husband’s income/savings and her family, that she really didn’t need to pinch pennies to rid herself of debt in five years. This is not necessarily a story that younger veterinarians and vet students can relate to, however. While there are sound pieces of financial advice, there is nothing that is ground breaking within her story.

While I think that DVM360 published this piece to give vets and vet students in debt a glimmer of hope that they, too, can get themselves out of debt quickly, I fear that the author’s experience is misleading because of the financial cushion she had. All vet students present and future should be mindful of the debt they are getting themselves into and implement tactics to reduce the amount of debt they take on as well as have a plan for how to pay back the debt early on. The last thing I want is to continue seeing veterinarians’ perplexed posts on Facebook wondering why, despite making payments, their total debt keeps increasing. Take the time to plan early on so that you won’t find yourself in this position.

Also, while I do believe it is our job as veterinarians who took on this debt to pay it back, I do not believe that the answer is to convince us that it is not only possible, but easy, as this article suggests. I think the problem lies in the educational system and the loan companies. The veterinary schools continue to increase tuition despite the fact that our profession has the highest debt compared to expected salaries of all professions! To make it worse, the loan companies are perfectly willing to provide the loans. There needs to be a breaking point. Unless pre-vet students stop applying to vet schools and refuse to buy into this backwards system, the change must originate from the schools or the loan companies. However, as long as the loan companies are willing to give out the money, the schools have no reason to stop tuition increases. If the schools do not reduce their tuitions, then it is up to the loan companies to put a cap on how much debt the students can take on. Unfortunately, this is not in their best interest (no pun intended). The loan companies want you to make payments, but they don’t want you to pay off your debt quickly as it is far more lucrative for them to continue collecting interest.

It’s a Catch-22. I don’t necessarily see the answer, but I know the DVM360 article is not going to be the ground breaking news that the young generation of vets needs.

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