Dealing With Burdening Loans

Evan asked this question...

My sister is currently in vet school and is very worried about paying off her student loans once she is finished.  The minimum payments appear to be close to $900/month, which a resident making $28,000/year would not be able to afford.  Do you have any advice for young veterinarians like my sister as they try to start their careers? 

Evan, this is a very common and very real problem that is changing how students live and practice after graduating. Currently in the US average starting salaries for a newly graduated vet are around $55,000-60,000.  The average student loan debt is around $80,000-100,000.  Veterinarians have the highest debt-to-income ration of any other medical profession.  That means that proportionally we go into more debt to get our education than any doctor, dentist, surgeon, or other professional.  Veterinary school really isn't horribly expensive; it's the very low comparative salaries we make that get us into trouble.

The situation is bad enough when you go straight into practice after graduation.  It's so much worse when you want to consider a residency like Evan's sister.  Since interns and residents get paid about 1/3 of what a practicing vet makes, the debt becomes untenable.  It's actually making advanced training difficult to acquire, purely because of finances.

The extreme debt is becoming a bit of a crisis in veterinary medicine here in America.  Starting salaries aren't keeping up with increasing tuition and other debt.  Eventually this reaches to the point where many younger vets can't purchase a practice because they don't have the financial resources or are too burdened by debt.  And because fewer veterinary practices are being purchased, retiring vets are having a hard time selling their clinics and leaving practice.

So what to aspiring vets do?  First, lower your expectations.  Unfortunately salaries aren't going to increase quickly, so you'll have to learn to live frugally.  You'd think that a doctor would be able to live very well, but that's not the case with new vets.  Second, get as much training as you can in personal and business finances.  Learn what it will take for you to be productive and profitable in practice, as this is the way to increase your personal salary.  By making sound financial decisions you can make your money go farther.  Third, you may have to re-think the decision to go straight into a residency program.  It may be better to work for several years and then go into a residency, simply to get yourself on more firm financial footing.  It's tempting to take out even more personal loans, but they you have to add them on top of what you already have, and this can mean that a specialist's salary is mostly going to repay the debt.

Evan, there isn't an easy answer for your sister.  Her situation is all too common, and nobody has come up with a good solution yet.  In my opinion it would be worthwhile for her to sit down with a professional financial adviser and take a hard look at her situation.  Good luck to her!