How do new veterinary graduates really feel about their student debt

To say the federal educational loan repayment landscape has changed recently is an understatement. Amid this turmoil, veterinarians still need to make repayment plan decisions. One of the most impacted groups are recently graduated veterinarians, who are deciding their plans for the first time.

Dr. Tony Bartels, the Veterinary Information Network (VIN) Foundation's student debt expert, says the traditional wisdom was to pay off debt as fast as you can.

"But if you're trying to do that with a really high student debt loan balance or a really high debt-to-income ratio, you could be missing out on a whole host of other things that are more important long term," he said.

Participants in a study by the AVMA and the Veterinary Information Network (VIN) Foundation were asked about the importance of various components of financial well-being; attitudes towards personal finance; self-reported personal finance proficiency and behaviors; utilization of existing financial resources; planned student loan repayment strategies; their anticipated student loan payments; and their likelihood to recommend the profession to a peer.

At the same time, given that 25 to 27 is the average age range of graduating veterinarians, they have personal obligations, such as buying homes, getting married, starting families, or buying into a practice. Dr. Annie Chavent, assistant director for early career initiatives in AVMA's Membership & Field Services Division, says all these things have demands on their cash flow in addition to student debt.

"It's all connected, and I think that's part of the reason why it can get so overwhelming," she said.

In 2021, the AVMA and the VIN Foundation created a study to not only better understand new graduates' experiences with student loans but also to explore the intersection between personal finances and wellbeing as they get started in their careers.

While the details of federal educational loan repayment plans have changed since the study was fielded, the authors say the insights gained transcend these fluctuations and the results can inform future efforts to support the financial wellbeing of early career veterinarians.

From concept to reality

A group of 235 veterinarians from the Class of 2021 voluntarily completed a survey a few weeks after graduation that assessed their attitudes and behaviors regarding student loans, personal finance, and wellbeing.

One group then received individualized educational debt counseling from Dr. Bartels via online message boards. The other group received no interventions. After about six months, both groups completed a follow-up survey that reassessed their attitudes and behaviors.

The study produced two papers. The first, "New veterinary graduates express stress and confusion regarding student loan management and hesitate to recommend the profession," focused on the data related to new graduates' attitudes towards financial wellbeing and student loans.

Several participants who received and rejected advice from the financial consultant said that they understood the cost and risk of their choices but were "emotionally unable to deal with high outstanding debt and wished to resolve this debt as soon as possible, even if it meant paying more and sacrificing other areas of financial wellness."

Respondents identified managing their student loans as a top financial priority. Yet even with this prioritization, they described their confidence in their repayment plans as neutral and demonstrated confusion regarding their payment amount. For example, expectations of their monthly payments did not match the payment requirements, regardless of repayment plan selected. Also, the second most frequent response to how they would pay off their student debt was "I haven't decided yet" or "I don't know" (22%).

"So, it's that idea of taking these broad concepts of financial wellbeing and trying to apply these to what their specific circumstances are, whether that's school tuition or budgeting," Dr. Chavent said. "It's taking that ideation to reality that seems to be a gap that we're seeing."

The majority of participants (60%) had also not sought the advice of a financial counselor, citing not knowing who to trust and not having enough time as the most common reasons.

Finally, given that job satisfaction is an important component of wellbeing, study participants were asked about their likelihood of recommending the veterinary profession to a friend. For the profession, they were not enthusiastic, with a median score of 4 on a scale of 1 to 7, and an overall negative Net Promoter Score.

Dr. Paul Pion, founder of VIN, said respondents' reaction to this question was discouraging to see, and that he hoped it was better now, given that the study occurred during the COVID-19 pandemic.

Financial counseling impact

The second paper, "Individualized, online educational debt counseling increases confidence in new graduates' student loan management," analyzed the impact of educational debt counseling provided by the VIN Foundation on the participants' attitudes established in the first paper and their behaviors regarding their student loans. The participants who received counseling reported gaining confidence in their student loan repayment plans and indicated high levels of satisfaction with the service.

About half of all participants elected to use income-driven repayment (IDR) plans to manage their loans. These plans, available only for individuals with U.S. federal loans, set minimum monthly payments based on the borrower's income and family size-not the total loan amount outstanding. IDR plans tend to have a lower financial risk for those with student debt balances exceeding their annual income, Dr. Bartels said. This can be especially helpful for early career veterinarians who tend to have lower incomes and higher job volatility, he added.

However, the study demonstrated that nonfinancial factors also impact the choice of repayment plan. Some participants chose to remain with time-driven repayment plans even after the counselor identified them as higher risk based on their individual situation.

Dr. Bartels said people are more willing to seek or accept help when they're ready for it, regardless of what the risk profile says or what their options are.

"That's not uncommon-we've seen that for years, but usually, when life steps in the way of that certainty around their repayment strategy, that's when they come back and say, 'Now I'm ready to talk about this or what my options are,'" he said.

Dr. Chavent added that this is a strong argument for individualized counseling, because there isn't an algorithm or formula that can truly help with figuring out loan repayment strategies.

"There are these X factors that we can't easily put into a spreadsheet, and we can't convince people to take advice, but even offering individualized advice is an advantage over trying to create a formula for what the 'best plan' is," she said.

The counseling did not affect participants' hesitance to recommend the profession to a friend.

Getting a solid start

Regardless of what the federal courts decide, who holds offices in the White House or Congress, or which specific student loan repayment plans are available in the future, based on these findings, the study's authors say those interested in supporting the financial wellbeing of early career veterinarians should focus on providing trusted resources and consider an individualized approach.

While financial wellbeing is just one component of overall wellbeing, the fact remains that the new graduates in this study were not enthusiastic in recommending the profession. This study emphasizes the importance of focusing on the wellbeing of new graduates for the sustainability of the profession and provides insight into alleviating a source of their stress.

Dr. Bartels said some of the participants continue to provide updates in the message boards. Those who followed the recommendations seem to be doing well, he said. Ideally, they would be able to follow up with participants and help provide more advice or increase awareness of the resources available.

For example, many new graduates receive signing bonuses. He advises that they resist the temptation to put that money toward paying off their student loans.

"A lot of times those sign-on bonuses are actually retention bonuses. And if they have to switch jobs for any reason in that short term, you're kind of stuck there until you satisfy that timeframe," he said.

In the case of those with IDR plans, using that bonus money to start an emergency fund, put toward a home down payment, or set aside for tax-advantaged retirement contributions may be better options, according to Dr. Bartels.

Dr. Chavent emphasized that plans and priorities can change, so regular adjustments or check ins are needed.

"What might be the best plan immediately after graduation might not be the best plan five years or even three years out, given all these dynamics that we've been talking about," she said.

She continued, "Even though the student loan landscape is going to change, and we do have a lot of uncertainty now, it's just one component of wellbeing. We not only want to make sure that we're supporting new veterinarians as they are making these (repayment) decisions, but also taking a holistic view of how to improve wellbeing. Recommending the profession is one aspect of it, so what are we doing to support our new grads to get that number up in the future?"

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