The elephant in the room….Veterinary Student Loan Debt
We’ve all been there. Stalking the post man on a daily basis. Waiting for THE letter. You know which one. Acceptance to that program of your dreams or the OTHER letter. ‘We are sorry to inform you that you have not been selected for admission for the Class of 2001.’ And the Class of 2002, 2003, 2004, 2005. (Yeah, I was persistent.)
I attended the University College Dublin in Ireland in 2001 and then transferred (essentially started over) at the University of Illinois in Champaign-Urbana in 2002. I was already in the hole for a 10K private loan from my year in Ireland. (There had been some type of error in issuing international student loans. While US subsidized and unsubsidized loans had previously been available to international schools, this was no longer the case.)
I was grateful to the University College Dublin and had an amazing year. However, the financial advantages of attending a US school were many. These included:
Access to US subsidized and unsubsidized student loans
Tuition that was approximately $5K less/year (Although out of state tuition was approximately $20K more/year)
Access to very inexpensive housing.
Greatly decreased travel expenses ($15 in gas to get to my parent’s house if needed vs $800 round trip flight from Chicago to Dublin).
I couldn’t really complain about these benefits but, again, the actual thought of paying back student loans was in the far, far future. I had some idea of what I was taking out every year but no one had ever sat me down and made sure I understood the details of my repayment. If you had asked me at any point in my years 1 through 5 of veterinary training what my student loan payment would be…I would have had no idea whatsoever.
Despite this complete lack of knowledge in regard to my student loans, I DID know it was better to have LESS of these loans. So I made several steps to try to decrease how much total debt I would end up with. This included:
Moving to a cheaper house after my first year. This decreased my monthly housing expense from $475/month to approximately $135/month.
Always keeping an ear out for available scholarships. Every year, the veterinary school had its own set of scholarships that were sponsored by various alumni organizations. Anything I even THOUGHT I was eligible for….I applied for it. Most of the time, I didn’t get it. However, a friend of mine did turn me on to the Illinois General Assembly Scholarship, which covered full tuition for that year. This was a scholarship that was available to graduate AND undergraduate students. It involved an essay and an interview with the state congressman or senator. This is where I hit the jackpot. I applied for and was selected for this scholarship on two different years (my 2nd and 3rd)! I couldn’t believe my luck! ALWAYS be on your toes for decreasing expenses and obtaining scholarships (before starting and during your educational program).
Any student related conferences or programs often had available funding that students could apply for. I did this many times during my 4 years at Illinois.
Fast forward 5 years. It’s 2006. We were finally Doctors! My first job was located in a small town about 60 miles outside of Chicago. I was offered a 57K salary for the first year. At the time, I thought I had struck gold! I had NEVER made this much money in my entire life. I took a picture of myself and my first ‘big girl’ paycheck. I think it was about $1800. Time to figure out adulting.
I had decided to live in my parent’s basement until I had figured out my finances/expenses. I would spend more in gas but way less in housing and my parents didn’t mind me staying there. I would pay some sort of monthly rent that we agreed on. I knew I had some sort of leeway/time lapse before the student loan payment had to start but I had not figured any of this out yet. To be completely honest, I had NO idea how much my monthly payments even would be. I needed to total up my debts and plan how I would pay this off. These were possible pay off plans:
Joining the Army for some sort of predetermined loan payoff amount
Practicing in a rural or underserved area for loan forgiveness.
Living in my parents basement until I was 60. Wait, no. Please, no.
I finally totaled up the entirety of my student loans. I knew I had $10K from Ireland and this was a private loan. I had an additional approximately $90K from University of Illinois. Wait. I got TWO years of tuition covered and I STILL had almost $100K in student loans?! How was that even possible?! Ugh. The truth was ugly but it was still the truth.
My loan payments would officially start in November of 2006. I knew that my private loan had the highest interest rate and so decided to start attacking that first. My first month’s net income was about $3400. I was going to smack this thing as hard and as fast as I could. I made a $2K payment and patted myself on the back. The day after the payment posted I checked my private student loan balance. It was $10,500. Hmmm. How can THAT be? I started with $10K. I just paid $2K. How can the balance be MORE than I even started with? I was so very confused and called in to the student loan company. This was our conversation.
Operator: Hello and thank you for calling private loan company. How may I assist you?
Me: Yes, thank you. I had a few questions about my student loan balance.
Operator: Yes, of course, Miss. Let me verify your account, please.
(Account verification occurs.)
Me: Yes, so I started with a student loan balance of $10K and just made a $2K payment on this loan.
Operator: Yes, Miss, I see your payment in the amount of $2K right here.
Me: Good, yes. I’m confused as to why I have a balance of $10,500 if I just made a $2K payment.
Operator: Yes, Miss, I can certainly assist you with that. The initial loan was in the amount of $10,000. Over the last 5 years, this loan has had interest accruing. Before you made your payment, the loan balance was $12,500. You then made the $2,000 payment. Now your balance is $10,500.
Me: (silence)
Operator: Miss? Are you there?
Me: (feeling utterly stupid) Yes, thank you so much. I do understand.
After this call, I felt like I had been punched in the gut. OF COURSE the loan had been accruing interest. I felt stupid and quite defeated. Was I going to be a rat in a wheel? How was I going to pay off this first private loan, not to mention the $90K of additional loans?
I continued to attack the now $10,500 private student loan. My pay was consistent….about $1800 every 2 weeks with few expenses other than paying a small amount of rent to my parents, car insurance, cell phone. I don’t remember the exact payoff date, but I believe I was ‘private loan free’ around November 2006.
My federal loans had been consolidated around the time of graduation (May 2006) and, for some reason, our interest rate was really, really low (around 2.5%). I discovered that if I signed up for an automatic debit monthly, I could save another percentage point, making the overall interest near 1.5%!
My federal loans entered repayment in 2006 and my approximate loan balance was $90,000. Dealing with the private student loan was one thing….but 90K?! A good friend echoed my frustration when she asked about my student loan balance. I told her it was about $90K. “Wow, that’s like a mortgage payment,” she said. Yes, that was almost was like a mortgage payment. Imagine if I DID have an actual mortgage payment. My debt payoff would be EVEN slower.
Joining the military was still something that I was seriously considering. I had even briefly talked to someone about going active duty shortly after graduation. I quickly squelched that idea as the thought of becoming a practicing veterinarian and joining the US Army full time was a little more than my brain could handle. About 1 year into practice, I began to hear about some of the new benefits that the Army was offering to veterinarians. I began to talk to a recruiter, who was extremely persistent. After a few months, I visited the veterinary reserve unit that I would likely be joining. Shortly after, I signed on the dotted line and was sworn in to the US Army. I served in the military for 11 years and they paid off 67K of the 90K in student loans. After about 9 years of making the minimum payments, I had a total of 17K left. The interest rate was extremely low but I had the cash and just wanted them gone. So I paid them off! (NOTE - There are many different payoff strategies available, some of which were not offered when I graduated. Visit the vinfoundation.org as a starting point to determine which payoff strategy is best for you.)
Takeaways:
1. Think carefully about obtaining new debts (like mortgage or car payments), while you are still in student loan debt. Pretend your hair is on fire until you clear this debt OR determine which payoff strategy is best for you.
2. Make sure you know what your payments will be when you get out. I understand your passion for this field may cloud your vision, but don’t ignore this part of the process!
3. If your loan servicing company offers a discount for automatic debits monthly, do it! It not only saves you from the hassle of having to remember when your payment is due, etc…It saves you money in the long run.
4. Choose the most inexpensive program that will give you the degree that you desire. Who really asks a Dr where they attended vet/med/etc school? If it’s a choice between the 25K state school and the 60K out of state or private school…please, please choose the state school.
5. Find the most inexpensive housing option possible for your living situation.
6. Apply for any and every scholarship that you can.
I realize that not everyone is in my situation when they graduate from their chosen professional school. You could be married, have kids, a mortgage payment, much higher interest rate on your loans, etc. I know that the average student loan debt now is anywhere between 150K and 183K. I have heard of graduates that have 300k (and even up to 500K.) I have also heard stories of couples that are both veterinarians and have over 500K student loan debt together.
Everyone’s situation is a little bit different and that’s ok. What I DON’T want people to do is look at my situation and think, ‘Yeah, easy for you!’, and then not listen to another word I say. Have you ever heard the saying, bloom where you are planted? Take inventory of your personal, unique situation and go from there. Not everything about my debt payoff story is going to work for you. However, there are still some things you can hopefully take away. We have all made mistakes and things that we wish we had done differently. Look at your situation. Take a deep breath. Start TODAY.
