Is Repayment Plan the only reason we can pay off the loan?

[Hawky22]

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Okay so, about $280,000 of federal loan borrowed, you start out the first few years with $65,000 before eventually making $90,000 and interest is 6-7% accruing at the very beginning of school. So, that will take you at least 20 years to pay it off while living in poor financial level (~$2000 monthly payment). If we were forced to pay the debt in WHOLE, typically it is as if we are earning a $28,000 salary for 20 years. (that would be impossible- we'll have children eventually.)

($80000 - tax(35%)= 52000 - (2000*12)=$ 28000 left)

Now, most of our plan is really to just do the IBR, make 25 years of monthly payment which is adjusted to your income level and at the end of the 25 years, the total remaining debt serves as a taxable income. Now this is a more humane way. You pay a reasonable monthly payment while saving up for the large tax you have to give at the end.

If this is true, I actually don't believe people when they say that they are willing to take on a crippling amount of debt just to be vet.
This is not crippling, this is impossible, nobody can live with only having ~$28,000 as spendable income for 20 years while maintaining a family. It is the IBR Plan that is allowing people to even think about enter the veterinary field.

Can anyone confirm or if anyone have a different viewpoint? Thank you. My apologize for the ranty-ness.

 

[JJ1019]

I kept getting told 65k too, until last week when I was corrected to 50-55k to start. I understand its regional...but sheesh.

Sadly 2015 poverty rates (on a quick search) said for a family of 4, the poverty rate per household was ~$24k. That's gross, not net.
There are people, and families, living on less than 28k. There are noble professions out there that pay about that gross (like teachers), but I agree that for the debt and the work put in for a professional degree, the numbers should be more favorable, MUCH more favorable. Most professionals don't have kids solo. So you have to remember too if you have a kid(s), you hopefully have a SO making some money also. So don't marry another vet 😛

Another important thing to look for in a job is what the benefits are. How much outside the salary # that they give you are you paying for health, dental, vision, professional dues. Do they pay you to stay current or just expect you to and you have to come up with the cash to make it happen.

Doesn't payment toward a loan affect your taxes in some way? Tax deduction for interest paid? That would affect your bottom line take-home pay right?

I can't help but be curious amongst the increasing tuition and decreasing vet salaries, and the field flip-flopping from mostly male to mostly female, if gender plays a small part in this disaster as well. Has there been less push to make sure numbers stay favorable because women historically haven't been then bread winner in the family and the system just hasn't caught up? I've been told also to expect to make thousands less than my male counterpart upon graduation because I'm female.

I'd love to see someone post some real life loan repayment numbers. I know they are really bad, but its hard to even grasp how bad.

 

[DVMDream]

Federal income tax on $80,000 per year salary is 25%, not 35%. Also it isn't 25% on the full 80k.

So they tax the first 9ish thousand at that tax bracket which iirc is 10%. Then the next few thousand up to 35ish thousand, iirc, at 15%, then the remainder is at 25%. You'll end up having ~17-20k in income tax. This is with no deductions. And no other taxes figured in such as state or payroll taxes or whatever.

 

[last_rnd]

I've been working these numbers all week. According to the graph on my spreadsheet it's impossible?? If I start out with $240k in debt the payments never put a dent in the interest to start to hit the principle. By the time loan forgiveness hits the balance is somewhere in the $300k range and the takes owed that year are over $125k?!

 

[last_rnd]

Sorry my I phone likes to edit things as I type...
I'm getting this template info from the VIN Foundation repayment website.

 

[epivetlove]

This is why it is advised, if you have loan amounts that you are unlikely/unable to pay off in time, to make the minimum monthly loan payment and then to put away a certain amount into a high yield savings account to pay for the taxed forgiven portion at the end.

 

[HowConfusing]

Doesn't payment toward a loan affect your taxes in some way? Tax deduction for interest paid? That would affect your bottom line take-home pay right?

FYI, I'm not a veterinarian, or even a vet student, but I can tell you that the IRS only allows you to claim I think $2500 in interest from student loans (or at least that's what happened for me last year, feel free to correct me if I'm wrong). Pretty disappointing from the $6000 I paid in interest that year, which is from only about $53k in federal student loans.

 

[JJ1019]

FYI, I'm not a veterinarian, or even a vet student, but I can tell you that the IRS only allows you to claim I think $2500 in interest from student loans (or at least that's what happened for me last year, feel free to correct me if I'm wrong). Pretty disappointing from the $6000 I paid in interest that year, which is from only about $53k in federal student loans.

I wasn't sure, that's why I was asking. Seems like such a low amount!

I poked around in the similar threads stuff and stumbled on one of the pharmacy pages. It was interesting to hear such negativity toward people taking out 150k+ in loans for school. I thought it was odd given most vet schools are >90k so it was odd to see such a glaring difference in the attitudes toward loans.

 

[Minnerbelle]

FYI, I'm not a veterinarian, or even a vet student, but I can tell you that the IRS only allows you to claim I think $2500 in interest from student loans (or at least that's what happened for me last year, feel free to correct me if I'm wrong). Pretty disappointing from the $6000 I paid in interest that year, which is from only about $53k in federal student loans.

Yup.

https://www.irs.gov/publications/p970/ch04.html


But gahhhhhh!!!!! I just looked at the fine print. If modified adjusted gross income is > $80,000, then you're not eligible.

Someone help me out here understanding this. So MAGI is the AGI with deductions like student loan interest added back in... So for most of is it'll be higher than the AGI and closer to our actual salary... Right?

 

[DVMDream]

Yup.

https://www.irs.gov/publications/p970/ch04.html


But gahhhhhh!!!!! I just looked at the fine print. If modified adjusted gross income is > $80,000, then you're not eligible.

Someone help me out here understanding this. So MAGI is the AGI with deductions like student loan interest added back in... So for most of is it'll be higher than the AGI and closer to our actual salary... Right?

Seems like it will be higher than AGI but will depend on various other things whether it is close to your actual salary or not. Some brief reading makes it sound like some deductions still count for the MAGI and others don't.

I dunno, why are taxes so complicated.😡

 

[Minnerbelle]

Thankfully I now have an accountant sister so I will have her figure this one out for me.

 

[CalliopeDVM]

Okay so, about $280,000 of federal loan borrowed, you start out the first few years with $65,000 before eventually making $90,000 and interest is 6-7% accruing at the very beginning of school. So, that will take you at least 20 years to pay it off while living in poor financial level (~$2000 monthly payment). If we were forced to pay the debt in WHOLE, typically it is as if we are earning a $28,000 salary for 20 years. (that would be impossible- we'll have children eventually.)

($80000 - tax(35%)= 52000 - (2000*12)=$ 28000 left)

Now, most of our plan is really to just do the IBR, make 25 years of monthly payment which is adjusted to your income level and at the end of the 25 years, the total remaining debt serves as a taxable income. Now this is a more humane way. You pay a reasonable monthly payment while saving up for the large tax you have to give at the end.

If this is true, I actually don't believe people when they say that they are willing to take on a crippling amount of debt just to be vet.
This is not crippling, this is impossible, nobody can live with only having ~$28,000 as spendable income for 20 years while maintaining a family. It is the IBR Plan that is allowing people to even think about enter the veterinary field.

Can anyone confirm or if anyone have a different viewpoint? Thank you. My apologize for the ranty-ness.

I honestly can't understand it either. If I had faced that level of debt, I never would have gone to vet school (I'm not in the US, so my education cost much, much less). I have run the VIN Foundation repayment calculator, and I can't believe it.

I can't help but be curious amongst the increasing tuition and decreasing vet salaries, and the field flip-flopping from mostly male to mostly female, if gender plays a small part in this disaster as well. Has there been less push to make sure numbers stay favorable because women historically haven't been then bread winner in the family and the system just hasn't caught up? I've been told also to expect to make thousands less than my male counterpart upon graduation because I'm female.

I've read some interesting and conflicting studies about the gender and payment issue within an industry or profession.......does the average pay for a profession decrease, and therefore shift to be more female dominated (as men look to more profitable jobs), or does the gender shift in the profession begin a decrease in the average salary (for various reasons, ranging from women demanding less to society valuing it less).

 

[JJ1019]

I've read some interesting and conflicting studies about the gender and payment issue within an industry or profession.......does the average pay for a profession decrease, and therefore shift to be more female dominated (as men look to more profitable jobs), or does the gender shift in the profession begin a decrease in the average salary (for various reasons, ranging from women demanding less to society valuing it less).

Agreed. There's lots of data and what it says seems to be tailored to the agenda of whoever paid for the study in the first place. I have 1st hand experience where I've been paid less than my male counterpart in a male dominated field. I couldn't understand why the same gap existed in a female dominated field. Interesting though implying the gender shift led to the decline. I wonder if there's data to show which went first, the male #s or the money.

 

[Hawky22]

My biggest question is how before the Loan Forgiveness Program is installed (fairly recent, I believe), how the **** do people actually pay it off in full? It is not possible with a $80000 average salary and a $280000 loan growing at 7% loan. Do people just not pay it back or do they just not have children or house until they are 45? How can a vet even seen as a good job when you are basically earn less than a receptionist? BUT there must be something off, right because if not, veterinarian should be living in a small apartment, not having kids or chance of saving for a house. But the vets I met seems to have children and not struggling financially. So there must be a way to pay it off right?

 

[Minnerbelle]

280,000 loans weren't common until fairly recently. IBR started in 2007 just as people really were starting to not be able to pay their loans. Since then there has been nothing stopping schools from jacking up tuition because I mean... Why the hell not? Unlimited loans from the government and seemingly a doable way to pay it back with IBR. If you compare between students graduating in the classes of early to mid 2000a and now, average debt has essentiall doubled.

See below for average debt over the years.

https://www.avma.org/news/journals/collections/pages/avma-collections-senior-surveys.aspx

 

[HowConfusing]

I wasn't sure, that's why I was asking. Seems like such a low amount!

I poked around in the similar threads stuff and stumbled on one of the pharmacy pages. It was interesting to hear such negativity toward people taking out 150k+ in loans for school. I thought it was odd given most vet schools are >90k so it was odd to see such a glaring difference in the attitudes toward loans.

Here! Have a seat and let me tell you more than you ever wanted to know about it!
In my opinion (let me emphasize that, opinion), for an unmarried student with no children, I don't see how a PharmD is worth 150k in loans, but I know many students will pay it. Pharmacy schools are seeing a similar situation to the vet schools of more pharmacy schools opening when there may not necessarily be enough demand for pharmacists, although I would say on a grander scale (only because there are sooo many more pharmacy schools). Many universities are realizing that it's not all that difficult to open a pharmacy school, the labs don't require much when compared to a med or vet school (anatomy? What anatomy?), a pharmacist's career has potential for a nice income, the rotations can be set up at surrounding hospitals/pharmacies, and most importantly, they make for a nice little cash cow when you can charge crazy professional-school tuition. They can charge it because there's always a student that wants the spot, willing to pay. What the student doesn't realize is the market isn't what it was ten or fifteen years ago, especially if you live on the coasts. My summa cum laude roommate (with a PharmD) waited tables for several months after moving to the coast due to lack of pharmacist positions.
I went to a regional state university and came out pretty darn good in the student loan department. The much larger state university's PharmD program is only $7k less than their MD program, which makes no sense to me. I have an intern who is going to pay for just her 4th year tuition/fees what I took out for all six years of college. Overall, I would think the average pharmacy graduate's situation is better than a vet graduate. The starting pay is pretty darn nice, not gonna lie. I could see a DVM costing more due to just the costs involved for the many labs, equipment, etc. I also think there's a lot more to learn for a DVM.
I apologize, I know this is posting a bunch of stuff about pharmacy in the veterinary forum which probably isn't appropriate. I'll get off my soapbox now...

 

[HowConfusing]

[QUOTE="Minnerbelle, post: 17371379, member: 257]But gahhhhhh!!!!! I just looked at the fine print. If modified adjusted gross income is > $80,000, then you're not eligible.

Someone help me out here understanding this. So MAGI is the AGI with deductions like student loan interest added back in... So for most of is it'll be higher than the AGI and closer to our actual salary... Right?[/QUOTE]

Huh. This wasn't mentioned last year... but then again, I could always get audited

 

[JJ1019]

Here! Have a seat and let me tell you more than you ever wanted to know about it!
In my opinion (let me emphasize that, opinion), for an unmarried student with no children, I don't see how a PharmD is worth 150k in loans, but I know many students will pay it. Pharmacy schools are seeing a similar situation to the vet schools of more pharmacy schools opening when there may not necessarily be enough demand for pharmacists, although I would say on a grander scale (only because there are sooo many more pharmacy schools). Many universities are realizing that it's not all that difficult to open a pharmacy school, the labs don't require much when compared to a med or vet school (anatomy? What anatomy?), a pharmacist's career has potential for a nice income, the rotations can be set up at surrounding hospitals/pharmacies, and most importantly, they make for a nice little cash cow when you can charge crazy professional-school tuition. They can charge it because there's always a student that wants the spot, willing to pay. What the student doesn't realize is the market isn't what it was ten or fifteen years ago, especially if you live on the coasts. My summa cum laude roommate (with a PharmD) waited tables for several months after moving to the coast due to lack of pharmacist positions.
I went to a regional state university and came out pretty darn good in the student loan department. The much larger state university's PharmD program is only $7k less than their MD program, which makes no sense to me. I have an intern who is going to pay for just her 4th year tuition/fees what I took out for all six years of college. Overall, I would think the average pharmacy graduate's situation is better than a vet graduate. The starting pay is pretty darn nice, not gonna lie. I could see a DVM costing more due to just the costs involved for the many labs, equipment, etc. I also think there's a lot more to learn for a DVM.
I apologize, I know this is posting a bunch of stuff about pharmacy in the veterinary forum which probably isn't appropriate. I'll get off my soapbox now...

I think it's important to realize what's going on in other professional degrees. If tuition is sky high across all degrees but one or two doesn't pay out on graduation, you have issues. Med school tuition may be worth it, you get a high salary when you finally finish residency. Pharm I'm not sure, as I'm not as familiar with it. Dentists must do fine because I swear they work max of 4 days a week and bankers hours.
I do think vet tuition keeps going up because of what was mentioned above, unlimited loans so schools say why not...after all we are doctors too and med school tuition is that high. If anything it's more complicated than med school in some aspects because there's not just one body to learn. I think there are people still entering the vet field after shadowing someone who graduated 15+ years ago so these problems were much much less significant. We hear the problems but we don't see them. That's what scares me...

 

[chickenlittle]

I think this is a better way to look at it.

If we assume $2k/month for twenty years (I didn't check that number... I'm one of those lucky fools who graduated without student loans thanks to generous parents and PT work, so I'm somewhat out-of-the-loop on this)... you'll need about $3000/month in pretax income just to make your loan payment.
taxes @ 25% = $750, FICA @ 7.7% = $231
$3000 - $750 - $231 = $2019 (so roughly $2k/mo)

If you're in a state with income tax (like mine), that number goes even higher.
$3200 - $750 - $231 - $192 (6% state income tax) = $2027 (roughly $2k)

So, $3200/month is $38,400/year. That means you need to earn about $38.4k of 'extra money' per year to pay your loans.

That means that when you first graduate, even one of those $60k new grad jobs will mean that you'll basically be living like someone making $21.6k/yr. Significantly less than a starting teacher.

I'm 9 years in to this career and making $90k, which sounds great, but even then you'll still only be making about $51.6k/yr using this perspective. (I live in a low-cost-of-living area, work for a corporate practice because it's the best-paying gig in town, and my pay is pretty much maxed out right now.... unless I want to own a practice or go from working 40-50 hrs/wk to 50-60 hrs/wk. That's not really an option, because I have a kid that I'd like to see every now and then.)

Obviously, minimizing your debt is a big deal. Cutting your debt in half would mean that only $18-20k/yr of your salary is going towards debt repayment. Still stinky, but much more sustainable. (You'd then be making ~$40k as a new grad and $70k once you're more experienced.)