Tune in as we have a conversation with student debt expert Dr. Lance Roasa and Dr. Tony Bartels about the COVID-19 Student Loan Repayment Relief Ending and strategies for re-entering repayment specifically veterinary students.
Normally, interest accrues on your veterinary school Direct Loans from the day you receive them. The interest suspension you received during 2020 has been an extremely beneficial form of financial relief. This will likely save you tens of thousands of dollars during repayment.
Unfortunately, the student loan interest suspension period will end and interest will begin to accrue on your loans at some point after January 31, 2021. For the 2020-2021 academic calendar year, the loans you received from July 1, 2020, through June 30, 2021, will accrue interest at a rate of 4.3% for Direct Unsubsidized and 5.3% for Direct Grad PLUS loans.
Listen in to learn best practices to help you renter student loan repayment as a veterinary student.
SPEAKER BIOS:
Dr. Lance Roasa
Dr. Lance Roasa is a 2008 graduate of Texas A&M where he was the first student to undertake a 4th-year business-track, spending the majority of his clinical training in veterinary business and industry. In 2016 He completed a law degree from the University of Nebraska and his training was centered on the law of small business, taxation, and the law of veterinary medicine. Dr. Roasa exclusively serves veterinarians from his law practice, teaches veterinary law and business at 14 veterinary schools, and co-founded drip.vet.
Dr. Tony Bartels
Tony Bartels graduated in 2012 from the Colorado State University combined MBA/DVM program and is an employee of the Veterinary Information Network (VIN). He and his wife, a small-animal internal medicine specialist practicing in Denver, have more than $400,000 in veterinary-school debt that they manage using federal income-driven repayment plans. By necessity (and now obsession), his professional activities include researching and speaking on veterinary-student debt, providing guidance to colleagues on loan-repayment strategies, and contributing to VIN Foundation resources. Beyond debt, his professional interests include small- and exotic-animal practice. When he’s not staring holes into his colleagues’ student-loan data, Tony enjoys fly fishing, ice hockey, camping, and exploring Colorado with his wife, Audra, and their two rescued canines, Addi and Maggie.
LINKS AND INFORMATION:
- Drip.vet FREE Personal Financial Course: https://drip.vet/vin
- Federal Student Aid: https://studentaid.gov
- Federal Student Aid COVID FAQ: https://studentaid.gov/announcements-events/coronavirus
- VIN Foundation Blog: https://vinfoundation.org/blog/
- VIN Foundation COVID-19 Repayment Restart blog post: https://vinfoundation.org/covid-19-veterinary-student-loan-repayment-restart/
- VIN Foundation Borrow Better Tools: https://vinfoundation.org/resources/borrow-better-veterinary-school-loan-debt/
- VIN Foundation New Veterinary Graduate Student Loan Playbook: https://vinfoundation.org/resources/class-2020-veterinary-student-loan-playbook/
- VIN Foundation Student Debt Center: https://vinfoundation.org/studentdebtcenter
- VIN Foundation My Student Loans tool: http://www.vinfoundation.org/mystudentloans
- VIN Foundation WikiDebt: https://vinfoundation.org/wikidebt
- VIN Foundation Webinars: https://vinfoundation.org/resources/webinars/
- Email help from VIN Foundation: studentdebt@vinfoundation.org
You may learn more about the VIN Foundation, on the website, or join the conversation on Facebook, Instagram, or Twitter.
If you like this podcast, we would appreciate it if you follow and share. As always, we welcome feedback. If you have an idea for a podcast episode, we’d love to hear it!
TRANSCRIPT
Intro
Jordan Benshea: Welcome to the Veterinary Pulse podcast. My name is Jordan Benshea. I’m the Executive Director of the VIN Foundation. Veterinary Pulse is the heartbeat of the profession. Join us as we talk with veterinary colleagues about critical topics, from student debt to mental health, and share stories. Stories connect us as humans, as animals, as a veterinary community. This podcast is made possible through individual donors like yourself, and our technology partnership with VIN, the Veterinary Information Network. Thank you for being here.
Meet the Guests: Lance Roasa, DVM, JD, MS and Tony Bartels, DVM, MBA
Jordan Benshea: This episode, we’re having a conversation with drip.vet co-founder, Dr. Lance Roasa, and VIN Foundation board member and student debt expert, Dr. Tony Bartels. Join us as we discuss COVID student loan repayment strategies specifically for veterinary students. Please check the Episode Notes for guest bios, links, and information mentioned. Thank you for listening. Welcome, Dr. Lance Roasa and Dr. Tony Bartels. Thanks so much for being with us today.
Lance Roasa, DVM, JD, MS: Thanks, Jordan. Great to be here.
Tony Bartels, DVM, MBA: Yeah, thanks, Jordan. Thanks for having us.
Jordan Benshea: Let’s just dive right in.
Current Status of Veterinary Student Loans
Jordan Benshea: Where are things currently in regards to veterinary student loans for those still right now in veterinary school?
Tony Bartels, DVM, MBA: The current status of federal student loans is that for those who are borrowing, so veterinary students, the interest rates have essentially been turned off, so there’s an interest waiver that’s been in place since March 13th of 2020. That was formally put into law through the CARES Act that expired at the end of September, but through various presidential actions, that has now been extended through January 31rst, of 2021. There will be no interest accruing on federally held student loans, the predominant loans that most students used to fund their veterinary education, through at least the end of January 2021.
Navigating Interest Waivers and Loan Servicers
Lance Roasa, DVM, JD, MS: And Tony, I’ll add in there that all of that was supposed to take place automatically, but I still recommend that students go in and actually check that their interest was turned off. That it should be representing zero when they do go to studentaid.gov. I haven’t had any indication that it wasn’t turned off automatically, but it’s always good to double check.
Tony Bartels, DVM, MBA: Yep, absolutely. No action is needed to be taken by students unless you find that for some reason your interest rates are not zero. We do see that there can be some confusion depending on the loan types you have, so if you have some older student loan types, specifically loans that you may have taken for higher education before July of 2010, some of those student loans, although they are federal student loans, if they’re not held by the Department of Education then those interest rates would not be zero. I have some of those. It does depend on when you started borrowing as to whether or not they actually qualify for the 0% interest waiver that is currently in place.
Jordan Benshea: If they go on and they see that they are being charged interest, what should they do?
Tony Bartels, DVM, MBA: They should reach out to their loan servicer. Their loan servicers should be listed in their studentaid.gov along with the loans that they have and whether or not the interest rates are set to zero. Reach out to a loan servicer and ask them why they would be accruing interest when they’re due to be in this interest waiver.
Jordan Benshea: If I’m a student in veterinary school right now and I’m about to graduate in 2021, this seems like a lot to handle along with trying to find a job or an internship. It seems like a lot on my plate if I’m a veterinary student right now.
Benefits of Interest-Free Loans During COVID
Tony Bartels, DVM, MBA: Yeah, I would look at it more as a really a huge benefit. We’re now almost in a throwback period where student loans used to be subsidized, where you used to not accrue interest during school and those days have since passed us. We are now looking at nearly a year of interest free student loans for graduate school for a veterinary program. Many students, particularly those third and fourth year students who tend to have the higher of the student loan balances at this point in their education, they’re really benefiting from this. You’re really graduating with much less student debt than you otherwise would have if this interest waiver was not in effect, so if anything, I would take some relief in that part of it. That you’re going to have less student loans that you’ll have to manage than you otherwise would have if the interest waiver was not in effect.
Jordan Benshea: That’s a good point. This is sort of a gift to the veterinary students currently, for sure. What do veterinary students need to know right now if they have student loans?
Financial Planning and Budgeting Tips
Tony Bartels, DVM, MBA: I would just reemphasize that I think they should really take a deep breath. I think that for most students, this is a huge benefit regardless of the amount that you borrow, but the more that you have, the more you’re benefiting from this interest waiver. I do think it’s still important to review your financial aid awards. Line that up with a budget. How much is it costing you to live while you’re obtaining your veterinary education? Most things have also changed, the pandemic has thrown that up in the air. If you end up with more student loans than you actually need, you may want to consider returning those. We’ve actually done some analyses for certain students this semester, where you can use some of that interest free student loan money to pay off some of the higher interest rate loans that you may already have, or credit card debt, or other things that may be costing you money now, but you really have to have a budget and know what your financial need is to know if you can actually make some of those types of numbers.
Jordan Benshea: If a veterinary student is thinking, oh, my gosh, I don’t know what’s going to happen, COVID, so much uncertainty right now on the job market. Would this be a time that you suggest since they are paying zero interest that they borrow more then, because there might be concerned about that?
Tony Bartels, DVM, MBA: I would say that that’s pretty risky. The reality is the interest rates will get turned on at some point here. They’re not going to be zero forever, so you have to be a little bit careful, but it does present a unique opportunity to potentially pay off some higher interest rate either student debt, credit card debt, medical debt, or other types of loans that you may have acquired along the way here. Taking advantage of some of this money that’s not charging you any interest at least through the end of January and potentially beyond, but that does require some pretty in depth numerical analysis. I find that comes up a lot. A lot of students are asking, “Well, what should I do with this? I feel like I’ve got literally free money.” But it’s not going to be free forever, and you can use it potentially to improve your overall finances in very specific ways, but again that requires some pretty deep dive in terms of what your situation is. What is your budget look like? What are the other types of debt you have? It really comes down to can you use that money to potentially hit the principal on higher cost debts. If you can’t do that, then it really doesn’t usually improve your situation. That’s why it’s so important to dive into those details and specifics of your circumstance to see if using that money that you might have in excess of what you need now might be helpful.
Lance Roasa, DVM, JD, MS: Tony, to follow up on that, or to add to that, my perception of this is it really highlights the need for veterinary students to have a plan and really understand their finances. To go out and look at their finances, look at their student loans, look at their job potentials, and really make those nuanced decisions for themselves. If they don’t, reach out to someone that does that can help them make those decisions. The things that Tony says to weigh, how much money do you currently need to live on, what is your current budget, and secondly, what are the opportunities out there that the Cares Act has given us? If you can understand all of those things, and then understand whether or not that becomes beneficial to you, there are some incredible opportunities right now, but unfortunately, there’s not stock advice that we can give to every single student because everyone’s financial situation is a little bit different and a little bit nuanced.
Tony Bartels, DVM, MBA: Yeah, absolutely. Having a plan is really the first the first step, and that really requires you to dive into your situation. Use this as the excuse that if you haven’t been building a budget previously, do so because that’s the only way you’re going to know if you have the ability to take some money that you think you have in excess and use it in other ways. Let’s say that you decide I’ve got $2,000 on hand more than I need, and you use that $2,000 to maybe pay off a different loan or pay off some credit card debt. Once you do that, you can’t get that money back, so you have to be pretty confident that you’re not going to need, or you don’t foresee a need to have those funds for any other purpose.
Emergency Funds and Overborrowing
Tony Bartels, DVM, MBA: That also highlights the need to have an emergency fund, even for students. That comes up quite frequently. I have students that reach out and say, “Well, I’ve exhausted my financial aid award. I had an unexpected dental emergency. Can I get more student loans?” The answer is no. You can only get up to the cost of attendance, so having an emergency fund is very valuable as well. You can’t predict when those are going to happen, so if you want to stash a little bit of that student loan money that’s not costing you any interest right now to use as the base for your emergency fund, I think that’s perfectly reasonable as well.
Jordan Benshea: Along those lines, if someone’s listening to this, they have a budget, and they’re realizing, shoot, I might have taken more money than I need. Is there a way that they can return that money from their financial aid award?
Tony Bartels, DVM, MBA: Absolutely, yeah, this is one of those little known factoids of your student loans is you always have 120 days from the time you receive your student loans to return them. I do find that, probably roughly from the surveys I’ve done, somewhere between 15 and 25% of students make payments towards their federal student loans while they’re in school, and usually that money is coming from their student loans. That’s usually not a great way to use that money, to take one loan and pay off the interest from another loan. A better move is if you find that you have extra in your budget, or you want to make payments to your interest on your student loans, you’re better off returning the funds that you have received in excess of what you need, because if you return the funds, you’re returning the principal and the interest that you accrue is based on the principle that you borrowed. If you can reduce the principal, you’ll reduce the interest that accrues long term, and you’ll make a bigger dent in the amount that you have to manage and the total that you’ll pay back over time, if you return the funds in that 120 day window versus just paying the interest.
Lance Roasa, DVM, JD, MS: Tony, what I find is the cost of attendance at the veterinary colleges, the cost of attendance that the veterinary schools set, and that’s what dictates how much students can borrow is artificially high. I find that a lot of students can live under that cost of attendance. The cost of tuition plus books, plus room, board, food, things like that, it’s actually too high, so I find that most students can return that money and end up paying less in the long run and have less principle. I use your line quite a bit when I’m talking to students. It’s always easier to handle less debt than more debt. I get that interest rates are at an all-time low 0%, the Cares Act, but just like Tony said, that interest rate is going to go back up, and that’s real money that we as veterinarians are going to have to pay back. It’s always easier to handle less debt than more.
Tony Bartels, DVM, MBA: Yes, and I think that, again, it really comes back to that budget. I would agree that I think that the amount that the schools offer you is more than most students usually need. I would say that I think the average living expenses, the amount that we’re talking about here, because it’s hard to influence the tuition unless you’re receiving some scholarships, or you have some other arrangement that helps you to reduce your overall tuition, but the living expenses, the amount that you’re actually able to affect, the schools, on average, offer you something along the lines of somewhere between 18 and $20,000 per year to live off of while you’re a veterinary student. I find that most students tell me that their average budget is somewhere between $1,000 to $1,500 per month, which is significantly less than that $20,000 per year that you’re offered, so there is some wiggle room there. You’re probably offered more than you need. You don’t have to try to get it down to the exact penny, you want to give yourself a little bit of buffer, but there’s probably a couple $1,000 per year there where you could potentially return those amounts, which would reduce your overall burden by eight to $10,000 plus the interest that would accrue from that. Again, it all comes back to that plan, your budget, knowing how much it costs you to live, how much you receive in student loans, and then how much you can potentially return during that 120 day window.
Jordan Benshea: You mentioned two things that I want to touch on. One, when you say you do want to leave yourself a little bit of buffer, what does that buffer look like to you? What would be an example of that?
Tony Bartels, DVM, MBA: Yeah, so that’s where the emergency fund comes in. Typically, the measure that is used for emergency funds is three to six months of expenses. As a student, if you have a budget, you’ll know what three to six months of your expenses look like, but, to me, usually I try to shoot for $1,000. Shoot to have at least $1,000 in an account that you don’t readily have access to but is only for emergencies. So, if that dental emergency pops up, or you have to fly home or drive home unexpectedly because a family member is sick, or one of the one-eyed or three-legged animals that all of the veterinary students are housing ends up in the emergency room, are you going to be able to cover that expense even with your student discount without having to pull out the credit card? Figure out what that number is for you, and you can use your student loans for that emergency fund. There’s nothing wrong with that, because it’s going to be a lot cheaper to use that than it is to use a credit card.
Jordan Benshea: Okay, that was going to be my next question. When you said you want to borrow not too much, but leave yourself a little buffer, you look at that little buffer, so maybe you want to overborrow from your budget maybe $1,000 is your suggestion?
Tony Bartels, DVM, MBA: Yes, that’s your target, and not every semester. You want to have an emergency fund that is sufficient to cover what you think a potential emergency might cost you, and work towards that. It doesn’t have to be all at once, but if you want to do it all at once, you can do that if you have that kind of room, or you can kind of chunk it. You get disbursements every semester, so if you want to do a couple 100 bucks this semester and a couple 100 bucks next semester and work up to that emergency, now that leaves you at risk if that emergency happens in the middle, before you have your emergency fund built up, then you may not have enough. It’s a balance. There are emergencies. We can’t predict when they’re going to happen, so, obviously, you want to be as prepared as you can, but reality sometimes gets in the way of that.
Jordan Benshea: Absolutely.
Resources for Veterinary Students
Jordan Benshea: What resources are available for veterinary students to help them make sense of all this information?
Tony Bartels, DVM, MBA: For student loans specifically, student aid.gov. That is the first place to start in terms of looking for the current pandemic relief status. They’ve done a really good job. They have a Frequently Asked Questions thing there for those who are borrowing, applying for financial aid, and for those of us who are in repayment, and it is really quite good. I’ve been impressed with their ability to stay on top of that information and answer a lot of the questions that get asked quite frequently. I would say VIN Foundation’s Student Debt Center and the blog posts and the podcast we’ve been doing here. As well as drip.vet, that’s a Personal Financial Success course that’s freely available for students. It gives you that boost to your financial knowledge that many veterinary students early on in that financial education, this is a way to really supplement all of this stuff around finances, of which student debt is only one small part.
Lance Roasa, DVM, JD, MS: Thanks for that, Tony. Personal Financial Success is a collaboration between drip.vet, VIN, and the VIN Foundation, again, totally free for veterinary students. It’s available at drip.vet/VIN. I want to highlight that we talk about all of these concepts that Tony and myself have been talking about, particularly around emergency funds, budgeting, so if that’s news to you, if you have questions associated about the hows, the whats, the details on those things, that’s exactly what we cover over in Personal Financial Success. It’s a short amount of material that you receive every other day, just about six to eight minutes, but over a long period of time as in over your entire veterinary school career. It adds up to a lot of knowledge that you can take home on personal finance, student loans, emergency funds, budgeting, etc.
Tony Bartels, DVM, MBA: What I like about it, too, is it’s really easy to get hyper focused on the student debt piece, because that seems to be what causes the most anxiety and rightfully so for most of us this is the biggest expense we’ve taken on to date in our career, but there’s so many other things that you can focus on and can learn about when it comes to personal financial success. Expanding the knowledge on those things that you can do now, while you’re even in school and beyond that can improve your overall financial wellness that doesn’t involve student debt, can pay some huge dividends in the long run.
Speculations and Future Updates on Student Loans
Jordan Benshea: With everything we’ve discussed, it is possible that this will probably change, that the dates might shift, the information might shift. Where would you both suggest that students keep a lookout for updates?
Tony Bartels, DVM, MBA: I think I’m going to go back to those same resources that I just mentioned. My own personal view, again, this is pure speculation. Congress is trying to come up with a new deal. To my knowledge, there isn’t a whole lot in the way of student loan relief in that deal, because it’s already in place, but I do anticipate from the things that I’ve been reading, from the statements that have come out from the new administration, I anticipate that we’re going to see an extended version of the current student loan repayment relief, even beyond that January 31rst. I don’t know how long that’s going to be or if it will even happen, but from the things that I’ve read, it’s potentially reasonable to see that relief extended at least through the academic year, so maybe May. Again, we’re going to have to wait and see what Congress or the new administration does in terms of that. That would be a huge relief for those students who are borrowing, have a significant student loan balance, to have those loans not accrue any additional interest for any length of time coming up here. Of course, there’s always the elephant in the room, whether or not they’re going to cancel any amount of student debt as well. I’m not counting on that, but we’ll see how that unfolds. You just have to stay tuned, keep looking at those resources that we outlined earlier for updates on that. As soon as we have some concrete information to share, we’ll make sure that we get that information to you.
Lance Roasa, DVM, JD, MS: We’ll certainly let folks know over in Personal Financial Success as soon as the information is published, and we highlight what that exactly means for veterinary students. This information does trickle out as new developments happen with the COVID pandemic, with the new Congress, with the new administration, etc. To summarize what Tony is saying, this only deals with federally owned student loans, so this is a really good time to draw a distinction between federal student loans and those that are privately held and/or consolidation or refinanced student loans. If you’re considering consolidation, now’s not the time to do it, because you’re getting a much better deal on the federal side.
Jordan Benshea: Is there any other information you think veterinary students with student loans need to know?
Final Thoughts and Advice
Tony Bartels, DVM, MBA: I would say the more you can be an active participant in your borrowing, budgeting, and understanding your needs, that’s going to go a long way. I know that veterinary school is overwhelming, you’ve got a lot on your plate, a lot of tests, a lot of material to cover, but these are things that if you take a little bit of time to review your financial aid awards, if you use some of the tools that are available at the VIN Foundation Student Debt Center, particularly the My Student Loans tool, as well as the In School Loan Estimator, you can set yourself up for repayment success by knowing how much you need to borrow for the remainder of your education, how much that’s going to cost you, and game planning what repayment looks like. That can translate to action steps that you can take between now and when you graduate to set yourself up for repayment success, and maybe take advantage of some other opportunities that will improve your overall personal financial wellness. Starting with the VIN Foundation Student Debt Center and just getting familiar with your current student debt, what that’s going to be when you graduate is a great, great first step. You can do that within minutes using the tools that are available on the VIN Foundation Student Debt Center.
Lance Roasa, DVM, JD, MS: Tony, when I talk to students, I find that students fall in two really large categories. One, I call it the head in the sand approach back to the ostrich side of things, so some students stick their head in the sand, they ignore that the student loan thing is happening, they fill out their FAFSA, they spend the money, and just pretend that they’ll take care of it all later. Obviously, Tony and I both deal with those students or those veterinarians that have a very rude awakening earlier in their career. I don’t know about you, Tony, but it keeps me up at night. For those veterinarians that don’t realize that this all is coming. The second large group of veterinary students that I deal with do pay attention as Tony is saying, but they also feel overwhelmed as well, because it seems like there’s a massive amount of information out there. I will back up what Tony says and say taking the steps, trying to put your hand, your arms around it, trying to understand what’s going on, is all you need to do right now. You don’t realize that you’re getting the information that you need, and just by listening to this podcast I know that those students are the ones that are paying attention, that are getting the information that you need, but as you work towards graduation and as you start your early career, it will all come into focus. You’re doing everything that you need to do right now by doing the things that Tony’s talking about, get a budget, get a plan, understand the implications on your future career, and keep working one step at a time.
Tony Bartels, DVM, MBA: Yeah, absolutely. I would say that I would agree with the two major groups. I would say that the head in the sand group, too, I quite often hear, “well, can I just pay somebody to do this for me?” Probably not. This stuff is really complicated, and the advice that you tend to find out there can be quite variable, depending on where you go. You’re going to have to be at least knowledgeable enough to understand the impacts of changes to your own particular situation, as well as be able to evaluate some of the advice that you will get after you graduate. To me, that is one of the things that does keep me up at night, is the veterinarian’s ability to evaluate the advice that they’re receiving, depending on where they’re receiving it from, and the knowledge base of that particular person providing it. So, you have to, just like when you get into veterinary practice, you’re not going to be able to do everything in the veterinary practice, but you’re going to have to know enough about what’s going on to be able to evaluate if the people that are doing those things for you are actually doing a good job. Same applies to your student debt. You’re going to have to know enough about this stuff. Again, it is personally affecting you. This is your student debt, these are your finances, so there should be some significant incentive there for you to learn about some of this stuff so you can improve upon your overall financial wellness by knowing those things that are going to help you versus those things that might be less than helpful.
Outro
Jordan Benshea: Wonderful, thank you both so much. I will say this, again, every link that you guys have mentioned for our listeners will be in our Episode Notes along with the bios of Dr. Bartels and Dr. Roasa. So please take a look at those Episode Notes. Thank you both, Tony and Lance. I really appreciate your time and hopefully this has been helpful to veterinary students.
Lance Roasa, DVM, JD, MS: Thanks, Jordan. Thanks, Tony.
Tony Bartels, DVM, MBA: Yeah, thanks, Jordan. Thanks, Lance, and look forward to doing more of these in the future.
Jordan Benshea: Thank you for joining us for this episode of the Veterinary Pulse. Please check the Episode notes for additional information referenced in the podcast. If you enjoyed this podcast, please follow, subscribe, and share a review. We welcome feedback and hope you will tune in again. You can find out more about the VIN Foundation through our website, VINFoundation.org and our social media channels. Thank you for being here. Be well.
