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Student Loan Strategies for Physical Therapists, part 1

If you’re a physical therapy student or new grad, you likely have a decent chunk of student loans. It can be a sobering reality, and it makes smart financial management all the more important!
The Bureau of Labor Statistics says that the average Physical Therapist salary across the United States in May 2015 was $85,790. A new graduate will likely make significantly less than that, perhaps in the $60-70,000 range. Of course, this depends on your geographical area, type of practice, hours, negotiating skill, etc.
Tuition to complete a DPT degree can be fairly costly. The University of Illinois at Chicago lists their tuition and fees for  in state students for three semesters (fall, spring, summer) at $25,453. Three years of school, plus any undergraduate debt, plus living expenses, and the total cost could far exceed $100,000.
Or consider nearby Northwestern University, where tuition alone for the first year is $42,519, and the total estimated cost of attendance (including insurance, fees, and living expenses) is $195,501.
Each individual’s situation is different. Some may have significant family support available, or a low cost living situation, or grants or scholarships that reduce that cost. But it’s important to see those numbers as you plan. So consider a debt of $120,000 at an interest rate of 6%, with a starting salary of $65,000. This would require a monthly payment of $1,380.96  (around 25% of the gross starting salary) for 10 years to pay off the debt.
Regardless of your current debt load, you need to have a plan for how to deal with your loans. No, putting them on income based repayment and never looking at the statements does not count as a plan. Dealing with your loans is important because in the world that we live in, the debt that you have matters. It may limit the choices that you have when buying a house later. It may determine when you can retire. It may impact what job you can choose to take, or where you live.
In upcoming posts, I plan to outline multiple repayment options and things to consider when choosing the best strategy for your particular situation. But in this post, I want to cover the first and arguably most important step: minimizing the amount of debt you accrue.
First, let me speak to three audiences:

Pre-Physical Therapy Students:

  • Research, research, research! Look into the cost of attendance at all of the programs you are considering. Ask the hard questions at your interviews: do the students from the more expensive private schools make a higher salary than the ones at your state university?
  • Research the average salaries in the area of practice  and geographical location you are considering. Remember that as a new graduate, you will likely be offered a salary below the median or mean salary listed on websites like the BLS.
  • Calculate whether the financial investment makes sense for you. Everyone has a different situation, but make sure that you are informed going into the decision.
  • Think about board pass rates, clinical opportunities, and networking opportunities of course! For some schools, those opportunities might justify some extra cost, but think hard before signing up!
  • Think about your living situation. What is the average cost of housing near the school of your choice? Living like a student (while you actually are a student!) might mean a lot of freedom later.

Current PT Students

  • Minimize the debt you take on. Your financial aid package might include a large sum of money, but think long and hard about whether you actually need to borrow the maximum offered. This is a great time to make a budget and stick to it throughout the year, to minimize the amount of debt you incur.
  • Look into scholarships, especially those offered by local organizations or your own school. I was awarded several scholarships throughout my time in PT school. Some were small, but every $1000 helps! An hour or two to write an essay could end up being very rewarding.
  • Research options for being a teaching assistant or graduate assistant, including in other departments at your school.  Some may pay hourly, some may include a stipend or even a tuition waiver. In addition to saving lots of money, these opportunities can help sharpen your skills and offer networking opportunities that you could leverage later.
  • Live like a student! If you have and are continuing to accrue student debt, think about how long it will take for you to pay back the amount that you borrow to maintain your standard of living. It’s much easier to inflate your lifestyle later, once you have the salary and financial position to afford it. Even small choices can make a big difference: choosing to pack a lunch rather than purchase one every day, choosing to limit alcohol consumption, walking or biking to a destination rather than driving.
  • Start to think about your finances NOW. Start thinking about the jobs that you want. Learn about 401k options and debt repayment strategies.

New Grad Physical Therapists

  • If you haven’t yet, take a fine tooth comb to your finances. Find out how much you owe on each loan, and at what interest rate. Write out a budget, or at least start to track your spending!
  • Think carefully about your lifestyle choices, and try your hardest not to accrue any more consumer debt. Credit cards can be excellent tools for earning cashback or travel rewards, and they offer extra protection for your purchases. But be careful, as the high interest rates can make carrying debt month to month on a credit card very expensive. Making wise decisions about the big ticket items, like housing and transportation, can make a big difference in the speed at which you can pay down your loans! Think carefully: do you really need a new car (and car loan)? Holding on to your college car for a few extra years, or even buying a late model used car with cash can lead to big savings over time.
  • Choose which repayment strategy you will use. Options include refinancing, public service loan forgiveness, employer sponsored programs, or outright extra payments to reduce the amount that you owe. I will cover each of these options in an upcoming post, so stay tuned!

About Katie Chae

Katie Chae, PT DPT is a recent graduate and an outpatient physical therapist in a large hospital system. She completed her undergraduate degree in Applied Health Science at Wheaton College and her DPT at the University of Missouri. She specializes in outpatient orthopedics, vestibular rehabilitation, and treatment of chronic headaches in an interdisciplinary program.

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