If your family is paying for vet school, you can stop reading this and head over to the How to Be Successful series. For the rest of you, read on!
I was working on a lecture I was planning to present at SAVMA Symposium 2020 about personal finance. The title is “From $250,000 in Debt to Millionaire.” In part of it, I work out an illustration of how the math works to get from $250k in debt to having $1M in assets for an average new graduate. I imagined myself giving this presentation and railing to the attendees that if any of them went to Ross or Midwestern or other non-state schools without their family paying for vet school, that decision is going to affect the entire rest of their life.
So many pre-vet students have the goal of “get to vet school”. But not enough think about after vet school. Do you want to practice in a rural mixed animal practice? Do you want to own a nice house? Do you want to buy new cars? Do you want to have kids and send them to private school or college? Do you want to not have roommates? Guess what? It’s much harder to do ANY of these things if you have more than twice your yearly gross income in debt.
I urge you, sincerely and passionately, to think about what you want from your life. You may not be materialistic- that’s great, neither am I. I’m not talking about you being able to buy a BMW or live in Los Angeles. I’m talking about you being able to buy a new Honda Civic and live anywhere other than rural Iowa. I’m talking about you being able to buy a house less than 10 years after graduation. I’m talking about you being able to go on a trip once a year. I am talking about relatively basic assumptions most people make about their life after getting a professional degree. You won’t be able to have any of these if you go into so much debt because of vet school.
The numbers work out something like this. A debt of $250k paid off over 20 years at a rate of 6% will be a payment of $1,800 (assuming no income-based repayment, because who knows how long that program will be around). Aiming for a $10k contribution to retirement, as well as taxes and saving for a house down payment, provides a budget of around $30k a year for an average new graduate. That’s not a lot of money for life. This amount has to cover insurance, groceries, travel, clothes, utilities, entertainment, and everything else. That’s difficult to do, particularly if you’ve been putting off making any purchases throughout your many years of schooling.
Now, if you’re willing (or eager) to work small animal ER in Phoenix and take extra shifts, or do 4 more years of training to get a specialty, you can earn enough of a salary that the large debt is less of a problem. If you can make $130k, your debt to income ratio is less than 2, which isn’t catastrophic. But not everyone wants that kind of life.
So, before you go to a school which is going to put you massively in debt, please consider the lifetime repercussions. Maybe it would be better to work for another year, get more experience, and re-apply to your state school next year. Maybe it would be better to do a PhD, where you actually get a small stipend during school, rather than a DVM. There are so many paths to a happy, successful life. Don’t paint yourself into a corner obsessing over the DVM at all costs.
Appreciate this post! This is such an important conversation to have with those considering vet school! It’s critical to get this information out to incoming students who aren’t fully aware of the costs associated with vet school. Just wanted to gently point out that a lot of the language around income-based repayment programs (and statements like “assuming no income-based repayment, because who knows how long that program will be around”) makes these discussions incredibly and in my opinion unnecessarily hard on current vet students and recent grads, even if they’re not the intended audience (although since this was for SAVMA, I believe they were). The likelihood of income based repayment being taken away for current borrowers is far more unlikely than most people realize; these programs are written into legally binding promissory notes for every loan we have. I’ve seen too many current students lose sleep or drink themselves into oblivion because of the advice they got from a mentor who graduated in a very different time with respect to student loans and income based repayment. There is no shame in choosing income driven repayment programs. The Student Loan Planner blog and podcast does an incredible job of covering this material for current students and recent grads, and in the spirit of the original post, also emphasizes financial independence and goal setting. I would highly recommend it as a resource for anyone with student loans.
I don’t disagree with anything stated here, but I do think the conversation needs to be a little more nuanced for those who have already taken the plunge. Thanks for keeping personal finance a part of the discussion around vet med; I think we’re all better off for it!
Thank you, I agree with you completely! I didn’t do the math for IBR because it, obviously, depends on your income. So each equation would be unique to each individual. Also, these calculators are not intuitive… I just ran a scenario on $250k with $80k income on studentaid.gov and got a monthly payment of $2,454 for 10 years with IBR. That makes an even worse scenario than my projection! And you’re right, if you’re IN SCHOOL right now, you can’t change the school you go to. But you CAN change your lifestyle so you can borrow less. Get roommates, walk/bike to school, don’t eat out, etc. etc. Thanks for the Student Loan Planner resource! I try not to talk too much about personal finance on this blog- I could go on and on. 🙂 But when it affects your professional decisions and path, I think it is important to bring up. Thank you for the comment!