Although they are not often categorized together, veterinarians have much in common with doctors and other medical community members. Like doctors and nurses, vets create treatment plans for their patients, prescribe essential life-changing medications, and can perform delicate and vital surgical procedures. Like doctors and nurses, they also have significant student loan debt.
How much is the average student loan debt for veterinarians? How long does it take veterinarians to pay back their student loans? How can veterinarians pay off their loans more quickly? How would employer student loan repayments as a benefit help? We'll dive into these questions and more below.
According to the AVMA, the average student debt for the entire graduating veterinary class of 2022 (including veterinary students without debt) was $147,258. Among the vet students who graduated with some amount of debt (~82% of students), the average debt balance was actually $179,505.
$179,505 is a lot.
The good news? The student debt burden on the latest graduating classes of vets is lighter than it has been in recent years; both the average debt burden and average debt-to-income ratio for the class of 2022 has significantly decreased relative to what both were at the peak in 2020-2021. The average debt per borrower for the class of 2022 is down 5% from 2020 and the debt-to-income ratio for new vets is currently 1.44 (vs 1.7 in 2021), meaning this class of vets will have a little more breathing room when it comes to paying off their loans.
The bad news? $179,505 is still a lot. At 2023-2024 federal interest rates (7.05% or 8.05% on graduate student loans), a vet who owes $179,505 would pay $2K per month on a standard 10 year repayment plan and end up paying roughly $362K over the lifetime of their student debt. And even though the average debt-to-income ratio for the entire class is 1.44, more than a quarter of the class has a debt-to-income ratio of 2+.
While the average student debt for graduating vets has returned to 2018 levels, student debt remains a heavy burden for veterinarians across the country–a Doctorate of Veterinary Medicine (DVM) remains one of the top degrees with the highest levels of student debt.
Depending on several factors, including the amount of outstanding student debt, other debt obligations, income levels, etc, it could take a veterinarian a decade or more to pay back their student loans.
The standard repayment term for student loans is 10 years but it’s possible for veterinarians to pay off their loans faster by paying more than their minimum each month and/or getting a portion of their loans paid off or forgiven through special incentive programs; it’s also possible for veterinarians to pay off their loans over a longer period of time by refinancing their loan, consolidating their loans, or switching to longer term repayment plans.
As previously mentioned, how long it takes for veterinarians to pay off their student loans will depend on their approach to their student loan debt repayments. Here are some different approaches to student loan repayment for vets who want to pay off their student debt quickly.
With this approach, veterinarians who want to pay off their debt as quickly as possible should apply every spare dollar they have towards paying down their vet student loan debt. Paying more than the required amount each month will reduce the loan principal faster* and save a vet-in-debt years of payments and thousands of dollars in accrued interest over time. This could be a good approach for veterinarians who have a debt-to-income ratio of 1.5 or less who may not qualify for government forgiveness or repayment programs.
*As long as overpayments are applied to the loan principal
Veterinarians who work for certain organizations (the government, the military, qualifying nonprofits, or academic institutions) may be able to take advantage of loan forgiveness programs to help pay off their student debt more quickly. These programs, such as the Public Service Loan Forgiveness (PSLF) program, will forgive some or all of a veterinarian’s debt at the end of a repayment period. The AVMA has a list of available loan forgiveness programs for vets available on their website.
Veterinarians who are willing to work in rural, underserved, or high-needs (designated shortage situation) areas may be able to have a portion of their loans paid off by the federal and/or state government through loan repayment programs, which could help them eliminate their student debt faster. For example, the Veterinary Medicine Loan Repayment Program (VMLRP), will pay off up to $25K per year if a veterinarian agrees to work in a designated area with a veterinarian shortage for at least three years. There are a few national programs that will pay off a capped yearly amount of debt in exchange for service in the army or approved academic institutions.
In addition to national programs, there are a number of state programs similar to the VMLRP, such as Maine’s Veterinary Medicine Loan Program or the North Dakota Veterinarian Loan Repayment Program, that will pay off a significant chunk of veterinarian student loans in exchange for working in a high-needs, rural area.
An excellent option for veterinarians to repay their student loans sooner, is to work for an employer that offers tax-free student loan repayments as a benefit. Employers who offer this benefit can contribute up to $5,250 tax-free to each employee’s student loan every year. When these contributions are made on top of an employee’s minimum monthly contributions and applied towards loan principal, they can help employees save thousands of dollars in interest and pay off their loans faster.
An employer student loan repayments benefit is a great benefit for employers to offer to any veterinarian (or anyone working in the field of veterinary medicine) with student debt. Not only does it tackle one of the biggest sources of financial stress for employees with student debt, but employer student loan repayments can also be a powerful, prescriptive tool for veterinary clinics, networks, hospitals, private practices, etc to attract and retain talent.
As the shortage of veterinarians reaches crisis-levels across the country, employers and state governments alike are looking for ways to attract vets to their areas. For private and non-profit employers, student loan repayments are one of the most powerful and prescriptive benefits that you can offer to:
If you are a veterinarian clinic, hospital, network, or practice and/or you employ veterinarians and credentialed vet techs and you are interested in learning more about how a student loan repayments benefit can help you and your team, Highway Benefits can help. Schedule a call with our team to learn more.