Loan payment pause offers reprieve
During the federal pause in student loan payments and interest accrual, Dr. Stephanie Willney felt for the first time she was making progress against her educational debt.
“It made me feel like the payments that I was making towards my student loans were actually making an impact,” Dr. Willney said. “We get interest on interest, and it feels like it just digs us deeper and deeper into debt.”
Federal officials have paused payments on federal educational loans, reduced interest on that debt to zero, and suspended collections on defaulted loans since March 2020 through the Coronavirus Aid, Relief, and Economic Security Act and subsequent extensions. On Dec. 22, 2021, the Biden Administration extended the relief package through May 1.
Dr. Willney finished her veterinary degree in 2017 at the University of Illinois and spent the following year living with her parents so she could pay off the $30,000 she owed for her undergraduate education. She continued working full time and making payments on her loans while she earned her master’s in public health, completing that degree in 2019.
Dr. Willney was able to make regular payments and even some extra payments before 2020, but she and her husband felt more comfortable with their finances after the pause took effect.
“We were able to have a baby during this time, when it felt like we were financially stable enough to afford day care, pay our mortgage, and pay extra on my student loans,” she said.
As of January, Dr. Willney owed about $238,000.
In an announcement, U.S. Department of Education officials indicated the ongoing relief effort would affect about 141 million people. They also stated that the most recent extension would let the administration assess the impact of the SARS-CoV-2 omicron variant on those with educational debt, give those borrowers more time to plan for resumed payments, and reduce delinquency and defaults when payments resume.
“The Department will continue its work to transition borrowers smoothly back into repayment, including by improving student loan servicing,” the announcement states.
Paying down the principal
In messages and interviews, veterinarians indicated they continued paying back their educational debt during the pause and were able to make thousands of dollars in extra payments toward their loan principal rather than the regular monthly payments that mostly would have applied to interest.
Dr. Lauren Stuekerjuergen graduated in 2018 from Ross University School of Veterinary Medicine with about $380,000 in educational debt and, soon after, entered the Pay As You Earn loan repayment plan. At first, she moved back in with her parents in Virginia to save money, and she felt unable to pick up extra shifts because temporarily increasing her income would raise her future monthly loan payments.
As the COVID-19 pandemic began, the pause in loan payments let her invest what she would have paid each month into the stock market. Combined with savings she had built up, she was able to invest about $140,000 since the pause began and cash out in December 2021 with more than $200,000 toward her debt. Dr. Stuekerjuergen, who works at a private practice in Northern Virginia, also refinanced and left the PAYE plan. She is no longer hesitant to pick up extra shifts, and she hopes to pay off the remaining balance within the next three years.
Dr. Kelsey Deaver graduated from Iowa State University in May 2021 with about $245,000 in educational debt. Although she had to start payments in December on her nonfederal loans, delaying the start of her federal payments has already allowed her to build an emergency fund and pay a deposit on a truck to replace the 2001 Honda Accord she’s had since she was 16. She also plans to consolidate her other debt into her federal loans.
Barring another extension of the pause, Dr. Deaver will start making payments through an income-based repayment plan in May. Between saving for retirement and paying for her education, “I’m going to have to be a lot stricter with my budget,” she said.
Dr. Deaver works at a mixed animal practice in Granbury, Texas, where a co-worker who graduated a few years earlier has been considering taking out a business loan to pursue a partnership at the clinic. Dr. Deaver said the break in payments and interest made that possibility less intimidating for her co-worker.
For students, too, the pause in interest accrual has slowed the expansion of their existing debt.
Ilissa Chasnick, who is a fourth-year veterinary student at Michigan State University, has more than $100,000 in federal loan debt, and she noted that she is paying in-state tuition. She expressed happiness about the pause in interest accrual, but she is concerned that she may face a high interest rate when the pause ends.
Chasnick plans to enter an internship followed by a residency. She wants to pursue a career in emergency and critical care, hopefully as a resident and then faculty member at Michigan State.
But Chasnick sees disinterest among fellow students in pursuing specialty training because of the lower pay during those first years following graduation.
“A lot of my classmates are uninterested in pursuing those specialties knowing that, for the next four years, they have to endure a huge pay cut,” compared with the pay in private practice, she said.
Chasnick thinks the high debt load and low wages—among veterinarians and veterinary technicians—also discourage people from entering veterinary medicine.
Debt burden remains
AVMA leaders have also advocated that Department of Education officials be responsive to veterinarians and veterinary students with educational debt. In July 2021, AVMA leaders noted in a letter to DOE officials that earning a four-year veterinary degree in the U.S. costs $160,000-$290,000. They called for protection of the Public Service Loan Forgiveness Program, expressed opposition to caps on amounts forgiven through that program, advocated for a federal refinancing option, and recommended an automatic pause in student loan repayments and interest for veterinarians seeking advanced education and training.
Results from the 2020 AVMA Senior Survey separately indicate the respondents had a mean of $160,000 in educational debt. An article in the April 15, 2021, issue of JAVMA describes findings from that survey, including the mean starting salary of $93,000 among respondents entering private practice.
Dr. Willney said resuming payments in May will add stress, and veterinarians are already dealing with stresses related to adoption of curbside practice and the increased number of patients.
“We are working and working and working, so to add the stress of the zero percent going away—that definitely I think will affect just mental health and overall well-being,” Dr. Willney said.
Dr. Willney also wants more scrutiny of tuition rates, how that cost is portrayed to potential students as accessible, and how well educational loans and debt are discussed with students.
Learn more about educational loan forgiveness and repayment programs as well as how the AVMA works to support and protect these programs.
A version of this article appears in the March 1, 2022, print issue of JAVMA.