Tag Archives: finances

How to Manage Student Loans

The Vetducator - CPI vs home prices vs. tuition costs graph.

Higher education has become incredibly expensive.  There are many reasons for this, including expanding administrator numbers and salaries, declining state support, schools expanding offerings to compete for paying clients (students), and a bubble for student loans.  Regardless, you want to go to vet school (or are in vet school) and need to figure out how to pay for it.  Assuming you do not have sufficient funds on your own or from your family, you may need to borrow money. Here are some considerations and strategies to minimize the amount you have to borrow, so you can be as free as possible once you graduate.

School Choice.  You want to attend your local state school if at all possible.  Don’t go in for expensive out-of-state, out-of-country, or private schools.  This is one of the most important decisions you can make with respect to your financial future.  Attend the least expensive school you can.

Frugal Living.  I know one vet who bought a brand new car during vet school and just added it to his student loans, which totaled more than $200k by graduation.  That is unacceptable.  You need to live a frugal life- which does not mean a life devoid of all pleasures.  Believe it or not, you can have a great life without spending more than all the money you have.  And you can get a great education at a fair price.

Avoid Interest.  When it is working for you, compound interest is amazing.  However, if you are taking out a loan you have to pay back, compound interest is the worst.  You need to make sure loans you take minimize your interest as much as possible. Ideally, you should find loans which have the interest taken care of.  If you take loans which immediately begin to accumulate interest, you will be much worse off after four years in vet school. Maybe even family can give you low-interest loans.  Whatever you can do to minimize accruing interest you should do.

Is it still worth it, economically, to go to vet school?  It depends a lot on where you go to school, how you live, and what types of loans you take out.  If you go to a private school or out-of-state school, live high on the hog and take out interest-bearing loans, you could find yourself $300k in debt with poor prospects- especially if the economy turns south.  Maybe you could be just as happy doing a Ph.D. in Biochemistry?  If you insist on going to vet school, be mindful of your decisions and how they affect your future freedom.  And for god’s sake don’t buy a new car in vet school.

You Can Live a Lavish Life on an Academic Salary

No, you can’t buy this ridiculous vehicle. You shouldn’t on ANY salary.

One of the most common complaints I hear about academia is that the salary is lower than private practice, sometimes substantially lower.  While this is factually correct, I have never understood this argument. Most academic specialists make at least $100k a year, sometimes quite a bit more, which is way more than you need.  Then there are the benefits, which are almost always better in academia than in private practice.  The opportunity to earn a PENSION? This is guaranteed money for the rest of your life once you retire.  I have never heard of anyone getting a pension from private practice, no matter how large the company.

If you calculate the value of the benefits, academia pays much more than the cash salary you earn.  I’ve heard some practices don’t chip in for health insurance or retirement- that is HUGE! So it’s hard to compare private practice apples to academia oranges. In addition, many academic institutions give you consulting time, which is time off during which you can go locum elsewhere and make more money.  Unless you have a chronic illness which continually drains your resources, academia pays enough. Even if you have huge student loans. Let’s look at how.

Let’s assume you make $100k a year as an academic- a pretty low salary for any specialist.  This puts you in the 24% marginal tax rate. With social security, health insurance, and other cuts taken out, let’s say this leaves you with $5000 a month in take-home after-tax after-benefit pay.  Now let’s break down expenses for a single person without roommates. This is a pretty free-wheeling estimate since this isn’t a personal finance blog, but it will serve as an illustration.

ExpenseAmount/Month
Mortgage ($200k house @ 4%)$950
Property taxes & insurance$200
Groceries$500
Transportation (gas, taxes, etc.)$400
Eating Out$100
Utilities (power, internet, etc.)$150
Cell Phone$50
Clothes, household items$100
Misc$200
TOTAL$2,650
SAVINGS$2,350

There are several assumptions made in these calculations.  Houses in most college towns are inexpensive (apologies if you decided to take a job at UC Davis).  Transportation is based off a 10-minute commute- college towns are usually small. You could dramatically cut your transportation costs by living in biking or walking distance to work.  You can increase your income by getting a roommate, dramatically offsetting your housing costs. Even if you have high student loans, you can pay them off in a few years and begin saving for retirement with this salary.

Maybe all of this sounds like deprivation to you.  Maybe you want to buy a huge house, drive an expensive car, and eat out every night.  But… do you really? Is that what will make you happy? Because the science for this is NOT on your side.  The science says the paths to real, meaningful happiness are through the purposeful life and the meaningful life, not the hedonic life.  And this is NOT a deprivation lifestyle. If you need more evidence, check out this blog which explains how you can have a great life without wasting tons of money.

So, there, if you want to have a nice quality of life as an educator or researcher or academic clinician, you can do so.  You have a flexible schedule, intellectual engagement, meaningful engagement (helping students AND animals AND clients), purposeful engagement (great flow during clinics or research or teaching), and you will make PLENTY OF MONEY.  OK, bring on the arguments in favor of making tons of money in private practice.

How to Choose a Veterinary School

The Vetducator image of vet school debt and satisfaction with value.

It’s the culmination of your lifelong dream- you are finally applying to vet school!  Congratulations! It is an exciting and scary time. You are starting to make substantial decisions which will affect your life and career.  Some people may fret over where to apply to vet school. Fortunately, it’s a surprisingly simple decision-making matrix.

Is there a state school where you live?  If yes, apply there. You do not want to pay more for your educational than absolutely necessary.  Your in-state school is probably the least expensive option.

If there is not a state school, does your state participate in a cooperative program with another vet school, such as Delaware with Georgia or WICHE (Western Interstate Commission for Higher education) with several western schools?  If yes, apply to the associated school.

Is there something odd about your application that may make it difficult to get into your state school?  If yes, you may apply to out-of-state schools, private schools, and overseas schools. Realize that the tremendous financial cost of these options may be a monkey on your back for most of your life.

That’s it.  There’s no consideration of ranking.  You know what they call the person who graduated from the bottom-ranked school in the country?  “Doctor”. You can get a good education anywhere and you can get a bad education anywhere- it is up to the individual student.  This isn’t law or politics. Your employer will not care from where you graduated. Keep your costs down. Graduate debt-free if possible.  Then enjoy your full, free life.