|
There is a figure that comes from the APMAs most recent practice survey which states that DPMs in their first two years of practice graduate with an "average" of $105,000 in loans. I would like to challenge this figure and suggest that, in truth, it is quite a bit more. The APMA, in long standing tradition, has released generalized numbers that they can fudge which, in reality, represent nothing.
What is wrong with the $105,000 figure?
Let us first keep in mind that the respondents for this survey amounted to only 40% of the APMA members who were sent surveys. The APMA, by its own admission, counts less than 4,000 podiatrists as its members, so right there you have a pretty weak representation of all podiatrists who have taken loans. Secondly, by their own admission, they state that the response rate was lowest for members in their first couple years of practice. So, a number which is USED by the APMA to represent "DPMs in their first two years of practice" is actually a very small fraction of a survey response that, in itself, would only represent a small fraction of the profession. Even if all APMA members (fewer than 4,000) were practitioners and returned a survey, you would still be surveying less than 50% of practicing podiatrists - and only a small portion of them would be DPMs within their first few years of practice.
Now let's look at the sentence, "DPMs in their first two years of practice graduate with an average of 105,000 in loans." How exactly did they arrive at this figure? They took the handful of respondents in this age group and averaged their loans? Was this an average of all respondents within the first two years or practice, or just the average of those taking loans? All you have to do is think back to Gross Anatomy and remember how much that ONE bad grade brought your 90 average down to know that if they included even a FEW podiatrists in this age group that had NO loans the average will come down considerably. How much is a podiatry education costing students these days? I want to know...
How many respondents were in their first two years of practice?
Of those respondents WHO TOOK PODIATRY SCHOOL LOANS, what is the average amount of loans taken?
Also, what amount of loans was taken most frequently?
So how do we find out what the average amount of loans is?
You know it isn't even worth asking the APMA to represent a number fairly. Why do we even have to ask them? Every school conducts exit interviews with students who have taken educational loans. Every school knows how many students graduate with loans and for how much loan money each of them is responsible. Why don't the schools release these figures? Legitimate figures such as the number of students who graduated with loans, the average amount of loan money they took, and the MODE - most frequent amount of loan money disbursed. These are the numbers I want to see, and they would be truly representative of the thousands who have graduated over the last couple years. Then, and only then, will I believe the fictitious $105,000 figure. The schools know darn well that students would be shocked by these numbers, so they leave it up to the APMA to conduct some bogus mail in survey to find out how much loan money they have taken. This is yet another ridiculous backhanded attempt to veil the truth.
Let me explain why I think this figure is fallacious. Keep in mind that most students who go to podiatry school finance their education through government or private loans. Take any school website and look at their projected budget (I like the SCPM one the best because they actually approach HONESTY with theirs). They state that they project that you will spend $34K the first year, $35K the second year, $39.5K the third year, and $41.5K the fourth year. If a student had to completely finance their education with loans, this would be a total of $150,000 (which, once again, kudos to the SCPM for displaying more honest information, is probably close to the truth)!!! If it was true that the average amount of educational loan among podiatry graduates with loans was $105K, that would mean that the "average" loan taking student was also getting $45,000 in non-loan assistance over the course of their education, which I simply refuse to believe. Certain colleges like SCPM have a long history of providing more than the usual amount of financial aid, but even they admit that the "majority" of your professional school tuition will be paid by loan money.
What do you care Dr. Bytes? I mean...
what's the big deal?
Let me give you a hypothetical. What would happen if some run of the mill kid right out of college, with no income - and disputable evidence of probable income, walked in to a bank and asked for a $150,000 loan to buy a house that MIGHT be worth it? He'd be laughed right out of the bank! Yet if you are courted by a podiatry school, they see to it that you are able to finance your education entirely with loans.
The big deal is, and has long been, that I think students that are considering this field should be allowed access to truthful information before making the decision to attend. I consider the amount of loan money necessary to finance this education a very important consideration. I also think a figure that could be off by as much as $45,000 to be misleading at best. This is $45,000 plus a number of years of interest by the time you pay it back ($45K at 7.46% (the going rate for unsubsidized Stafford Loans) for 10 years is $63K!).
Let's review a major concept. The schools run a business that is highly dependent on government and private loans. As in any business, the bottom line is the important thing. The bottom line for them is how many seats are filled and how much tuition money will they be getting this year. They obviously don't care if they are putting out thousands of extra doctors. They don't care about the competency of these doctors. They don't really care about anything except guaranteeing a constant flow of government cash into their school. They don't make money off of anything but the number of seats filled - and please don't try to tell me those clinics are making that much money.
Just step back and think for a moment about what a sweet business running a podiatry school is. You set up an institution. Your main attractant for students is being able to tell them that they will be doctors -- good bait if there ever was any. They come and sign promissory notes stating that the burden of repayment is COMPLETELY ON THEM - releasing the school from any type of obligation. You graduate into a field of questionable professional opportunity, and the school turns and says, "We can't be responsible for changes in the health care industry...sorry (laughing all the way to the bank)." And the next year they get ready to pump out 100 more.
Their tactics alone give away what they are after. If they don't get enough applicants off the bat, they go after those on whom the chant of "You too can be a doctor" will work the best. They lessen the standards for acceptance and they extend the deadline. To further help ensure that they will get their money (and to put more pressure on YOU) there appears to be an increased amount of available loan types that REQUIRE CO-SIGNING.
Do yourself and your relatives a favor...
DON'T EVER TAKE A LOAN THAT NEEDS TO BE
CO-SIGNED BY A PARENT OR SPONSOR.
It is bad enough that you will be dragged into the uncertainty of this profession, you shouldn't involve anyone else.
Okay, so it takes a lot of loans to go to podiatry school. Anything else I need to know?
I think the schools are very insidious in the way they market this to kids coming out of college. They know kids at this point don't really know anything about money. They haven't made much money yet, and they are confused as to the value of money. The schools portray the podiatry profession as valuable investment for the six figures in loans that are taken, and the students, who can't REALLY conceive of $100,000 swallow it whole. You students shouldn't be ashamed. You are being preyed on. Read through this next part carefully so you get a better idea of the amounts of money we are talking about here.
Let us say you go to school and have $140,000 in loans at graduation...
[This is the $35K/year the schools budget times 4 years and barely includes the money that will be gaining interest DURING school (I happen to think this figure is much closer to a real average)].
Now, $140K in loans at 7.5% (an average of interest rates for Stafford loans over the last few years) paid back in level repayment over 10 years comes out to a payment of $1661.82 a month according to the loan calculator at usaGroup.com.
BUT...you most likely will not be able to pay during your residency, and most likely will not be able to pay for your first couple years in practice. Let's say that you defer for 2 years in residency, and 4 years in practice while you are only making between $35-50K gross (it is really hard to pay $1,000-$1,500 a month on this salary, trust me). This means these loans will be in deferment/forbearance for a period of six years. At the end of six years, the $140,000 is now $202,664. Did you see that! Shazam! Interest of $62,000 before you could even start paying them -- and let's not even get into how much work it takes to keep these people off your back for 6 years.
If you start paying back at this time - your fifth year into practice (not unheard of by any stretch) - at level repayment over 10 years (for purposes of comparison) the monthly payment is now at $2405.66/month. That $2405/month comes out to $28,860 in loan payments per year. Remember the other doctor's estimates of salaries? At the 5th-6th year in practice you were only grossing $56K, which is only $43,608 net - which after you subtract out the $28,860 in loans you are paying leaves you with only $14,748 left for all of your other expenses. It is still improbable that you could make this work without a spouse to help you out.
SO...like so many other pods, you will have to put off paying for a couple more years. At a couple of months after the ten year mark, we reach the $250,000 point at which the doctor mentioned that the economic advantage OF PODIATRY is lost. At this point you have been "making a living" without paying on your loans for 10 years. Now you are faced with paying $250,000 in loans over the rest of your career. The economic advantage - the positive investment potential of your loans - has been lost, and you are really no better off than someone who had gotten any other $40,000 job...oh, except that you are a podiatrist.
This is where those people chime in with the "what about making people better" stuff. Well, it just isn't worth it to me to mortgage my entire life, to possibly put your spouse and children through your hardship, to pick them up and make them move one or more times, to make them feel the stress of your financial pressure, all for the sake of treating people's feet. If what you are selling is volunteer work, then call it that and give out a Masters in Social Work, but don't sell a "medical degree" for $140K and then tell me I should be happy with whatever little I make because all the people in the world, with their nails trimmed straight across, are better off for my suffering.
But Dr. Bytes, really, how often do people really have to put their loans off for ten years?!
Well look, we have already put them off for six and we still can't pay them, another 4 years or so is no big deal. Let's say you did 3 years in residency, then 3 in a practice as an associate where they didn't make you a partner. You leave after your third year to start over in another practice and have to work another 4 years to get back to the point we were at before and this time it has been a total of 10 years! There are thousands of these scenarios out there. How about if you did a preceptorship for 1 year, a residency for 2 years (there's 3), tried for 2 or 3 years to start your own practice but failed (there's 6), went to work for some guy at the common associate wage (to get to a wage where you can afford the payment, there's 10) - you could definitely end up 10 years down the line still making $50K or under - plus you would now be saddled with the debt of your failed practice. OUCH!
It can get really bad, can't it?
Yes, it can. Recently, the government started posting the names of those professionals who have defaulted on their government loans. If you ever get close to defaulting, you may get a letter, smack in the face that it is, from your school asking you to make good so you won't deny others such a "great opportunity." Well, the opportunity for some people has been ruined credit, payments to the department of justice, or suspension of Medicare and Medicaid privileges. According to the government's website (Department of Health and Human Services < http://defaulteddocs.dhhs.gov/cgi-bin/ddocs_counter.pl > ), 109 podiatrists have been published as defaulters as of January, 1998. Now, these are end of the line defaulters, not technical defaulters or late payers. If you somehow keep in contact with your loan institution they cannot really pass you back to the government for collection. So keep in mind that there a good number of other ones out there who are teetering on the edge of bankruptcy or default - maybe they are in technical default or under collection by a private collection agency - but keep doing the right thing and fill out the paperwork for another six months or a year.
The podiatrists listed on the website are the people who have gone full circle and are now asked by the Department of Justice (DOJ) to pay, have their tax refunds taken, have their Medicare or Medicaid privileges suspended or garnished, etc. If there are, depending on which figures you use, 10,000 practicing podiatrists in the USA, and 109 of them have defaulted, that means that a solid 1% of our profession has completely defaulted on student loans. Compare that rate to dentists, where, out of 152,000 practicing dentists 327 of them are listed as defaulters. This amounts to only .2% (there's a decimal point in front of that 2!) of the dental profession. And for all of those who are still trying to convince me that all other physicians are in the same boat, they show 227 defaulters (191 allopathic + 36 osteopathic) out of 560,000 practicing physicians for a combined .04% default rate for medical doctors.
I have been informed that, since these figures are not a solid 1% apart, these figures are not statistically significant, but they are statistically representative of the loan default picture. Sure Chiropractors have the poorest student loan payback record, but we are not talking about chiropractic medicine here. We are talking about podiatry, which doesn't exactly have a stellar record.
| Discipline |
Number |
Amount Due |
| Allopathic Medicine |
191 |
$19,228,083 |
| Chiropractic |
884 |
$68,113,582 |
| Clinical Psychology |
31 |
$2,172,516 |
| Dentistry |
327 |
$34,431,478 |
| Health Administration |
4 |
$254,498 |
| Optometry |
23 |
$1,740,095 |
| Osteopathy |
36 |
$4,136,001 |
| Pharmacy |
32 |
$933,553 |
| Podiatry |
109 |
$13,917,072 |
| Public Health |
7 |
$453,893 |
| Veterinary Medicine |
2 |
$40,328 |
|
1646 |
$145,421,099 |
|
|
|
Once again, I caution you to not look at defaulters with too critical an eye. As we have seen from the math above, it is not outrageous to think that you could try very hard for 10 years and still not be making enough to really pay off your loans. Sooner or later they will come due. When they do, if you can't pay the $2K a month, you may end up in a similar situation. Will I become one of these people? Maybe...I am not on track to pay them back at the rate they want (after a couple of unintended stops and starts), AND, moreover, I am sick of filling out the paperwork to constantly keep them in forbearance.
What about graduated repayment and consolidation or refinancing?
Yeah, these are great sales gimmicks used to alleviate your stress when you inquire about cost, but let me tell you the exorbitant cost ends up being the same - or more. The $140,000 doesn't get any lower because of this, and your salary probably won't increase because of it either. These are money jockeying programs through which one organization or another makes money off of the fact that you need to extend your payments BEYOND ten years.
What should I take away from this?
Be aware of how much money it takes to finance this education. Be aware of how much money $140,000 really is. Be aware of the fact that no matter how hard you try, things might just not work out in your favor and the penalties for default are REAL. They will follow you to whatever job you take after you leave podiatry, you may, in essence never be able to escape this decision. Be aware that, when you are applying to school, you are being fed lines to prevent you from looking closely at these figures because they don't want to dissuade you.
If you really want to become a podiatrist - first consult a psychiatrist to make sure there is nothing internally wrong - then come to terms with how much this is going to cost and what you will have to do prepare yourself for life in practice.
How much are you (and maybe your spouse) willing to sacrifice to become a podiatrist?
What is LIKELY to happen to you?
What will happen if things don't go according to that plan?
|
