I graduated podiatry school at Kent State in 2017 and I am currently a second-year resident in Ohio. I had two children while I was in medical school and recently welcomed a third child.
I spent some time in the service during my undergraduate studies at Kent State, which forced me to extend my undergraduate time from four to six years before starting podiatry school. I had some financial assistance from the GI Bill during both aspects of my schooling. I had no financial assistance from family. I worked through undergrad studies both full and part-time, depending on my school schedule. I also worked weekends through my first year of podiatry school.
The point of this is to illustrate that I needed to rely on student loans not just for school tuition but also to live and help support my family.
My wife is an established veterinarian in the area so we did have some monthly income but not enough to support a family on its own. Once everything was said and done and I graduated podiatry school, I had a student loan bill for somewhere in the area of $300,000. That is for podiatry school with some (not a lot, trust me) assistance in podiatry school to help pay for child care expenses and about half of my undergrad degree that the Army did not pay for.
The current average starting resident salary in Ohio is in the area of $50,000. The cost of living in my area is very reasonable. My wife and I have been homeowners for seven years now. Accordingly, that salary is reasonable in my opinion. The issue arises with student loan repayment.
When we graduate, we get a six-month deferment grace period before repayment begins. Then we receive various repayment options. I will use my options as an example.
You are automatically enrolled in the standard repayment option, which is around $3,500 a month, which is essentially equal to the take-home amount of our salary. This option is set to pay off the loans in a 10-year timeframe but is clearly unreasonable for most people. There are other income-based options that take into account income as well as a spouse’s income and loans with some stipulations. The most common method of repayment is the Income-Based Repayment (IBR) plan.
The IBR calculates your payment based on residual income after taking into account salary, estimated living expenses and spouse’s income. For me, this amount ended up being about $400 a month. This is a much more reasonable number. However, interest accrues during any repayment period. For me, the interest is around $1,100 a month, provided my math is correct. If you are enrolled in the IBR plan, then the government will take off 50 percent of your interest, cutting that down to $550 a month. So, in the end, I am making a $400 payment but getting charged $550 in interest. Essentially my loan amount goes up every month even though I am making a payment.
There is an option to forbear the loans while in residency. This allows us not to make any payments but the full interest amount accrues. Essentially, it is a nice benefit with a hefty consequence. The government has set in place a couple of loan forgiveness programs. The first option will pay your loans off in 10 years if you work for a nonprofit organization. The second option will pay them off in 20 to 30 years (depending on the plan you choose) provided you don’t miss a payment in that 20 to 30 years.
What the government doesn’t tell us is when it pays off your loans, you have to claim that money it pays off as income. After 20 years of IBR payments, that can equate to $600,000. Claiming that on top of your normal salary can put you in a significant tax bracket that may require a significant tax payment that we likely won’t be able to afford based on our actual income.
What all of this is supposed to illustrate is how in debt we are as new physicians. When we are applying for jobs, we are not looking for high salaries to make a ton of money. We are just looking to pay off the debt that we acquired getting to this point, which, as you can see, is a huge burden. It is such a burden early on that just last week I bought a new car. Nothing fancy. I just bought a Hyundai to fit my family and get to work with good gas mileage. Due to my student loan debt, I was required to have a cosigner. A 33-year-old doctor with great credit, father of three, needed a cosigner for a car because he chose to go to medical school. This is a shame.
I realize there are no easy solutions to this problem. I felt though it was pertinent to make sure that everyone is aware of the amount of debt that new physicians are required to take on just to become podiatrists.