making school more affordable

[katelly]

HI!
I'm new here! I have been reading some threads here, and figured I should sign up. I thought this would be a good place to ask a couple of questions of some folks who have been doing a lot of research about DPT programs.

Two of my biggest requirements for choosing schools that I want to apply to are affordability and that it be in a place I would want to live for 3 years. I have found several schools that I want to apply to based on these requirements, mostly state schools in the West. Before I get so far along that I miss requirements for other options I figured I should look into how other schools could be affordable for me.

So my questions are-
1) Does anybody know about schools that allows students to change residency status after living in the state for a year or so, even while going to school full time? I have heard that some schools will extend this to graduate students but I know in my undergrad you pretty much had to take a year off from school to establish residency- obviously not really an option when you're in the middle of a DPT program.

2) I am trying to decide if I want to apply to any private schools- but it would pretty much be dependent on getting good financial support (more then just loans). Does anybody know of schools with good endowments that can be extended to DPT students? Or maybe good resources to look for outside scholarship? I have heard it is very hard to get help paying for school in this field.

I am definitely trying to minimize the number of loans I am going to end up taking out, I don't want to feel overwhelmed by them no matter how great my job prospects are after I graduate. Any advice you all have about schools you've looked into, I would love to hear it!

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[engmedpt]

This will be everyones struggle. Its unavoidable for the most part.

I am definitely trying to minimize the number of loans I am going to end up taking out, I don't want to feel overwhelmed by them no matter how great my job prospects are after I graduate. Any advice you all have about schools you've looked into, I would love to hear it!

Do your parents or family members have residence in a different state? If youre dependent on your parents then you can get the in state Im pretty certain. Someone about to start the program with me did undergrad in Utah on full scholarship and has IS at my institution since his parents are here and he moves back at the end of this month.

If youre competitive, Id be cautious in even applying to any private schools whatsoever.

The only financial support youre going to get are your savings, maybe some part time work for groceries, possible scholarships here and there, and loans. That's it.

 

[engmedpt]

^Military may help as well. Recruiter I talked to said they pay 40k per year for post grad school service for 3 years

 

[engmedpt]

^Military may help as well. Recruiter I talked to said they pay 40k per year for post grad school service for 3 years

^40k directly to your loans that is. Not a salary.

 

[katelly]

I'm still curious if anyone here has changed their residency status partway through their program, what school you did that at, and what was involved in making that happen?

Unfortunately I am an independent student and have never been in the military, so these aren't really things for me to consider.

If youre competitive, Id be cautious in even applying to any private schools whatsoever.

What do you mean by that? Like don't get my hopes up if I am competitive and will feel let down by not getting in?

 

[DesertPT]

Whether you can change your residency status after first year depends on the school and the state. States vary widely on their laws regarding this, what kind of hoops you have to jump through, etc.

 

[okramango]

I was able to change my residency in Texas for my last year, only because my husband is working here full time, so he was considered a resident and I became one by association. All of my out of state classmates who are married to spouses working full time were able to do this. Before becoming a resident, my school offered me out of state tuition waivers as scholarships, so I've paid instate tuition for the entire three years of PT school. I go to TWU, but I know other schools offer these too. They usually don't advertise it so you just need to contact schools and ask them.

 

[DesertPT]

^^^My school offers OOS tuition wavers for 2nd and 3rd year to all students, so OOS students just pay OOS tuition first year and then after that they just charge everyone the same and don't worry about residency status. Which is nice because establishing residency as a student in another state can be a real pain.

Like I said, schools vary really widely on how they address this so I agree that you should just contact an OOS public schools you are planning to apply to and ask how it works.

 

[katelly]

DesertPT is your school Northern Az U? NAU Flagstaff is on my short list for sure.

Okramango was your tuition waiver a part of the financial aid package TWU offered you? Is that something that they do for a lot of out of state students or something that you got as a highly qualified student?
I don't know much about tuition waivers- but I will add this to the list of questions I have for schools I am looking at.
I don't know about getting married though.. haha!

 

[DesertPT]

DesertPT is your school Northern Az U? NAU Flagstaff is on my short list for sure.

No, I'm not really sure if NAU follows that policy or not. Be warned that they are a very competitive school to get in to, especially for OOS students, and their selection process is based mostly off of interview scores so don't think your sittin' pretty if you have good stats.

 

[katelly]

I don't feel like my stats are what sets me apart- I'm crossing my fingers they pass the test so that I can get to the interview stage at all.

 

[engmedpt]

No. Like don't waste your time applying to schools that charge absurd amounts or have terrible quality and low npte pass rates if you can hit good state schools.

I'm still curious if anyone here has changed their residency status partway through their program, what school you did that at, and what was involved in making that happen?

Unfortunately I am an independent student and have never been in the military, so these aren't really things for me to consider.



What do you mean by that? Like don't get my hopes up if I am competitive and will feel let down by not getting in?

 

[okramango]

DesertPT is your school Northern Az U? NAU Flagstaff is on my short list for sure.

Okramango was your tuition waiver a part of the financial aid package TWU offered you? Is that something that they do for a lot of out of state students or something that you got as a highly qualified student?
I don't know much about tuition waivers- but I will add this to the list of questions I have for schools I am looking at.
I don't know about getting married though.. haha!

The tuition waiver was part of a scholarship that TWU offered to me as part of my financial aid package. Most of the out of state students in my class got the waiver, but they're always telling us that they can't guarantee it from one year to the next since they get less funds for it every year.

A couple of years ago I was admitted to NAU, and they also offered me an out of state tuition waiver for the first year. They let me know about it the same day they offered me admission. I've heard they offer this to 2 or 3 students. Arizona is one of the very few states to allow out of state students to gain residency after the first year, though this can change anytime so you shouldn't count on it.

 

[katelly]

Thanks for all your thoughts guys. I appreciate it a lot! I will have to make this one of those questions that I ask schools as I gather information about each.

 

[topher031888]

I see you already have some great advice but I thought I would add one more school to the list. The University of Utah allows students to become residents after the first year. There is certain criteria that has to be met. You can't spend more than a certain number of days (I think it is 29) away from the state, and then there are things you have to do to establish ties like change your drivers license, register to vote, and maybe a few more. Just make sure you are aware of the requirements when you start school so that your change of residency application doesn't get denied because of something stupid and you have to pay out of state tuition for an extra semester.

 

[katelly]

Topher thanks for the heads up, U of U is also on my list of schools that appeal to me. Do you know if they do tuition waivers to make it more affordable for out of state students?

I just looked up their pre-reqs- I knew there was a reason that U of U wasn't on my radar this year, even though it is a school that I am interested in. I will be taking physics and and A&P when I apply, which must be competed before the application is due. I imagine this won't help me at a lot of schools, but its pretty explicit in the U of U prereqs that that won't work.

 

[foodislife]

@katelly I've personally talked with University of Colorado and I know they give a tuition wavier for 2nd and 3rd year of PT school. They also pay you for your last clinical rotation FYI. It seems like the tuition wavier is a fairly common thing at public universities U of U, UW, Eastern Washington also do it I believe, so don't automatically assume you will pay 3x the first year tuition.

Also, read up on exactly how the Public Service Loan Forgiveness and Pay As You Earn repayment works for federal loans because this will potentially change your persepective on the affordability. You can't completely apply the rules of normal finance to Federal loans because the repayment rules are very forgiving. IMO no person should ever pay a dollar or their own money for tuition because federal loans are so much better.

 

[DesertPT]

@katelly IMO no person should ever pay a dollar or their own money for tuition because federal loans are so much better.

What?? If you had your own money available to help pay for PT School, why on earth would you borrow more anyway? The 7-8% interest rates carried by federal student loans is a ridiculous price to pay if it's money you already have or are capable of earning. That's just common sense.

Clarification of your statement definitely needed.

 

[engmedpt]

IMO no person should ever pay a dollar or their own money for tuition because federal loans are so much better.

WUT?

 

[foodislife]

What?? If you had your own money available to help pay for PT School, why on earth would you borrow more anyway? The 7-8% interest rates carried by federal student loans is a ridiculous price to pay if it's money you already have or are capable of earning. That's just common sense.

Clarification of your statement definitely needed.

First off, I want to say that the choice to finance something vs. paying in cash is not a simple one at all, that's why there is an entire profession of Finance devoted entirely to this dilemma. Companies and people very often take out loans even when not 100% necessary because of the "time value" of money and the value of liquid assets.

I'd encourage you to read about the time value of money because it directly answers the question "why take a loan when I could pay myself now": http://www.investopedia.com/articles/03/082703.asp

The reason that Federal loans are so valuable has nothing to do with the interest rate. As far as interest rates are concerned they are competitive with other loans, but by no means a super deal. The fact that you can write-off the loan interest is nice but, the real value is in how federal loans are repaid. Monthly federal loan repayments are now capped at 10% of your discretionary income (your adjusted gross income minus the poverty level) , which means at some point your payments hit an upper limit (see PAYE for more info). Let me give you an example using my own financial situation so you can see real numbers:

I have $30,000 saved up right now that could be used to pay for my DPT. I rent, no kids, no debt.

I really have two basic options, though it's possible to blend the two:

Option 1: Finance it all
For simplicity's sake let's say I walk out with my DPT with 100K in debt, which for me is very likely.
If I get a job that pays 70K a year my yearly payments are calculated by first calculating my "discretionary income":
$70k - Poverty level (15k) = 55k
Since payments are capped at 10 percent of discretionary income my payments could be no larger than $5,500 per year or $459 per month.
The important implication is that this 10% cap means that my payments are not determined by the tuition, but rather they are determined by my income. You federal loans are basically a 10% tax on your discretionary income.

The last thing that leaves us with is how long will it take to pay back? if you plug your personal numbers in at student loans.gov you can get a personalized answer that depends on how much you and your husband/wife makes a year and whether you file a joint tax return, but.... lets assume you always file an individual tax return. In this case your payments would move up from $450 to $1160 per month over the course of 20 years (assuming 5% ave salary increases each year). At the end of 20 years you would qualify for a modest loan forgiveness. Also, the payments would only last 10 years if you work 10 years for a non-profit (vast majority of school and inpatient settings) because you would qualify for public service loan forgiveness (PSLF).

Remember that payment goes up as your income rises, but it still never exceeds 10% of your discretionary income.

Total payed: 185,000K over 20 years or about $80k over 10 years with PSLF.

Pro: I still have at least $30,000 in the bank when I graduate, and if I qualify for PSLF the debt is gone at 10 years.
Con:If I don't ever qualify for PSLF I have to pay for 20 years.

Option 2: Use my 30,000k towards tuition
Using all of the same numbers as above except now I own 70K in loans rather than 100k.
$70k - Poverty level (15k) = 55k
Since payments are capped at 10 percent of discretionary income my payments could be no larger than $5,500 per year or $459 per month. Notice that nothing actually changes.

Again, lets assume you always file a individual tax return. In this case your payments would move up from $450 to $813 per month over the course of 15.6 years (assuming 5% ave salary increases). Also, the payments would only last 10 years if you work 10 years for a non-profit (like most hospitals) because you would qualify for public service loan forgiveness (PSLF).

Total payed: 123,000K over 20 years or about $80k over 10 years with PSLF.

Pro: shorter repayment time and less payed over 20 years.
Cons: No money in the bank at graduation and I still have $459-$813 payment each month.


In summary:
I basically have to decide if $30,000 dollars today is worth 4.4 years of extra payments 15.6 years from now. This is not an easy choice, but when I factor in my chances of qualifying for PSLF and the value of having 30,000 to invest in my retirement and/or a home immediately I think there's a compelling argument for financing.

And if you are planning on working in an inpatient setting it's pretty much a no-brainer to finance the whole thing because you will quality for PSLF after 10 years unless your school's tuition is very very cheap.

I obviously know that this example does not apply to everyone, but I really encourage everyone to consider the value of cash in the bank. Think about the increased security, bigger downpayment on your first house, and bigger retirement contributions it can provide before you just give it all to your university.

I'm sure many people reading this either did not know about the 10% cap or PSLF so I think it was worth posting this if for no other reason than to make sure everyone runs the numbers and gets educated on the ever changing world of federal loans.

Just to be clear, everything I've been talking about is in reference to federal loans (including Grad Plus ), not private loans.

Best of luck to everyone!

 

[engmedpt]

^Thank you for your analysis but I must disagree and this is why. Being respectful in my disagreement.


The grad plus loan has a massive interest. 7.2% That's absurd.

That is usually taken out for living. I'm in a different situation here, but if you were to room a 4/4 and possibly a 3/3 with other students in my university's town, then that 30k would last ALL THREE YEARS.....not kidding. You can pull 400 rent down here and ride the bus system literally everywhere.

If your situation is not like the above, then using a large amount of your money til year three and then taking a grad plus with a savings of 10k for future car down payment or some serious rainy day fund then your debt would be significantly decreased.

I understand your PAYE option as well as PSLF (these have been brought up a lot but thanks for placing it here for others to see if they need to), but as people will say...DON'T BANK ON IT. It's there, but if you have other means then minimize the debt. You don't know how long these programs will be around.

We're about to get a new president.

 

[engmedpt]

^Don't take that as fear mongering. Just as some wise caution.

 

[foodislife]

^Thank you for your analysis but I must disagree and this is why. Being respectful in my disagreement.


The grad plus loan has a massive interest. 7.2% That's absurd.

That is usually taken out for living. I'm in a different situation here, but if you were to room a 4/4 and possibly a 3/3 with other students in my university's town, then that 30k would last ALL THREE YEARS.....not kidding. You can pull 400 rent down here and ride the bus system literally everywhere.

If your situation is not like the above, then using a large amount of your money til year three and then taking a grad plus with a savings of 10k for future car down payment or some serious rainy day fund then your debt would be significantly decreased.

I understand your PAYE option as well as PSLF (these have been brought up a lot but thanks for placing it here for others to see if they need to), but as people will say...DON'T BANK ON IT. It's there, but if you have other means then minimize the debt. You don't know how long these programs will be around.

We're about to get a new president.

 

[foodislife]

7.2% is not that absurd. It's about equal to average return for your retirement investments, plus it's tax deductible.

An additional $5,000 taken as a federal loan may cost you 7.2% a year, but if it allows you to contribute an additional $5000 to your 401K the tax deduction for that 5000 will earn you at least $1,250 (5000x .25) immediately on your next tax return. Any investment gain would be in addition to that tax deduction. And this is not even taking into account the state tax break for 401k contributions (which for me adds another 9%). Oh yeah, and the additional $500o dollars towards your 401k will reduce your discretionary income and there fore lower your yearly loan payments by $500.

So when you start adding up the value of that additional cash you can fairly easily exceed that 7.2% you are paying.

The uncertainty of loan forgiveness is a very valid concern, but usually changes that increase cost are not retroactive. I'm willing to risk that I guess.

 

[DesertPT]

@foodislife, thank you for your analysis. I want to point out however that above you said: "IMO no person should ever pay a dollar of their own money for tuition because federal loans are so much better." Yet in your detailed response your basic thesis is: "Some people might be better of under some circumstances by not devoting the cash they have to school because, depending on how you look at it, federal loans can in some ways be a bit better.

Thank you for your detailed post. It is much more believable than your first statement, which was extreme to say the least. The extremity of your statement is what I was intending to call into question.

 

[starrsgirl]

I'm going to ask a dumb question here because I'm really not a finance person and don't understand this.....IF a person qualifies for the Public Service Loan Forgiveness at the 10 year mark, don't they then owe a heck of a lot of taxes on the amount forgiven? And how would the average joe possibly have enough cash sitting around to do that?

 

[DesertPT]

^^^Loans forgiven after 120 qualifying PSLF payments are not considered taxable income. Loans forgiven after 20-25 years on the standard extended-term repayment plan are considered taxable income.

 

[starrsgirl]

^^good to know, thanks! (Not using these myself but it comes up a lot so I want to understand it better).

 

[engmedpt]

7.2% is not that absurd. It's about equal to average return for your retirement investments, plus it's tax deductible.

An additional $5,000 taken as a federal loan may cost you 7.2% a year, but if it allows you to contribute an additional $5000 to your 401K the tax deduction for that 5000 will earn you at least $1,250 (5000x .25) immediately on your next tax return. Any investment gain would be in addition to that tax deduction. And this is not even taking into account the state tax break for 401k contributions (which for me adds another 9%). Oh yeah, and the additional $500o dollars towards your 401k will reduce your discretionary income and there fore lower your yearly loan payments by $500.

So when you start adding up the value of that additional cash you can fairly easily exceed that 7.2% you are paying.

The uncertainty of loan forgiveness is a very valid concern, but usually changes that increase cost are not retroactive. I'm willing to risk that I guess.

Its like you majored in finance and I just got the minor. I'm confused.

 

[topher031888]

Topher thanks for the heads up, U of U is also on my list of schools that appeal to me. Do you know if they do tuition waivers to make it more affordable for out of state students?

I just looked up their pre-reqs- I knew there was a reason that U of U wasn't on my radar this year, even though it is a school that I am interested in. I will be taking physics and and A&P when I apply, which must be competed before the application is due. I imagine this won't help me at a lot of schools, but its pretty explicit in the U of U prereqs that that won't work.

Sorry I am slow in getting back to you. As far as making school affordable I don't know about any tuition waivers but the department does offer annual scholarships. There are a ton of them available and they aren't very big (it varies by year but this year they ranged form $800-$2500) but it is something. A lot of students didn't bother applying for them because the applications were due during a busy time of the semester and many figured they wouldn't get them anyway. Because of this it isn't too difficult to get one. Also, this may be common in other states but in Utah during summer semesters everyone pays instate tuition.

Also, your are right in saying that the U of U is pretty firm about having certain prerequisites done before application. I assume they use it as a means to keep the number of applications more manageable when compared to other programs that get a thousand plus applications (they also just added a prerequisite but I am sure you noticed that). I assume you probably won't be applying to the U of U but if you don't get in this coming cycle it is worth looking into for the next.