This is the $300,000 question. Most veterinary students and veterinarians will automatically tell you that student debt is bad. In fact, they make the immediate assumption that it’s bad and don’t even think about it.
But before you automatically assume that student debt is “bad” let’s take a deeper look.
First, for many of us, taking out student loans is the only way to pay for veterinary school. We don’t have significant savings personally or from our parents. We don’t have a spouse that is able to earn enough and we certainly can’t earn enough in our part-time jobs to pay for tuition and living expenses. (Having a job to offset some debt is very helpful though.)
So, student loans are the only ticket to getting our veterinary degree. It’s necessary. No loans means no veterinary degree. But with student loans come student debt. So we have to learn to manage our debt before it manages our life.
Student debt can be bad if it controls our lives. Student debt can be very bad if we can’t make our payments or we default.
Controlling your student debt is very possible, and very important. It just takes a little knowledge and a little effort.
There are programs and safety nets to ensure that you can make your payments and you don’t default, but you have to do stuff!
Here’s why I don’t see student loans as a bad thing - When you have your veterinary degree and your license to practice, your earning potential increases drastically. Said another way, your income goes up! I see a balance sheet, where Assets are listed on one side and Liabilities (debt) are on the other side. Yes, the Debt goes up, but the Asset column does too! This asset however is not listed on your balance sheet. Your veterinary degree is not something you can sell, it stays with you forever! You get to use it as long as you have a license and as long as you are able to practice.
Here’s another way to look at this concept. Controlling debt is a function of servicing debt (making your payments). Billionaires have tons of debt. Debt that would break a normal person. But the billionaire has the income to service the debt. To make the payments. Most veterinary student debt would destroy a person without a professional degree.
So, don’t let the zeros stagger you! The sheer sticker shock of seeing a balance of $200,000 or $300,000 can be very daunting. As long as you have the income to make your payments and a plan you’ll be ok!
So are there bad aspects of student debt? Let’s walk through some of the common misconceptions that you may think or have heard.
Does student debt affect your credit score?
No, if you make your payments on time! Student loans will not decrease your credit score unless you miss payments or default on your loans. A delinquency of greater than 90 days or default will negatively affect your credit score.
On the other hand, if you make your payments on-time, student loans can actually increase your credit score, by building your credit and lengthen the amount of time you have had credit.
Will student debt affect your ability to buy a house or a car?
When banks look at lending for a mortgage or a car, they are looking at the borrower’s ability to pay back the loan by making payments. The bank does this by studying the amount of income the borrower has as compared to the other payment obligations.
Don’t take us wrong here, less student debt is always better than more student debt.
Managing less debt is easier than managing more debt. Always try to minimize your debt while you are in school. However, if you don’t have a choice, if you have to take student loans to get your veterinary degree, then that’s ok!
The point of this is to give you the facts and hopefully reduce anxiety and fear about student loans. They are not something to run from, they are a tool that we have to use!