Any conversation about student debt would be amiss if we didn’t discuss how we accrued that debt in the first place! Also, and this is key, the best way to manage your student debt is to have less of it! And the only time you lower the amount you borrow is while you are in school! 

To use the words of my friend and student loan expert, Dr. Tony Bartels, “It’s always easier to manage less debt than more” 

Almost every veterinarian, to a tee, will tell you, “I wish I borrowed a little less…I wish I looked into more scholarships, picked up an extra few hours at work, paid a little closer attention to my budget.” This is your chance - let’s work on Borrowing Better. 

VIN Foundation has done an excellent job of putting together information for those still in the borrowing phase of their veterinary school student loan journey, and today we're going to highlight those resources.  They even have a checklist that you can follow step-by-step.

Let’s do this together! 

Step 1, remember the calculations you did for the Cost of Attendance at your school. This is the required tuition and fees, plus the estimated living expenses of a student. This total is what financial aid awards are going to be set at for your school. Your scholarships plus your loan disbursements will be exactly that Cost of Attendance. 

 Can you beat those estimates? Can you save money on living expenses? Can a job help offset some expenses?  If so, then you can return some of the loan proceeds up to 120 days after the money is distributed. And you can do this without interest and any loan fees. It’s the only time in your life that this will happen! If you don’t do anything, you will graduate veterinary school with the maximum amount of money borrowed and that’s going to create a problem down the road! 

If you can return some of the loan disbursement, you’ll reduce your overall loan balance and you’ll be Borrowing Better! And your future self will thank you tremendously! Even $1,000, $2,000 or $5,000 will make a difference in your overall future. 

How do we get to that point to be able to beat the Cost of Attendance estimates? How do we return some loan proceeds? I have to be honest, it’s work. We’ve got to develop a budget, check the budget, and stick to the budget. I promise you the money is there in your budget, but it’s up to you to go find it. You might have to make some tough decisions about transportation, recreation, dining, or streaming services, but it’s there. Almost every single time the Cost of Attendance is an overestimate. And this is one of the reasons for the large amount of debt that professional school students rack up. 

The other huge reason for the budget is knowing you can make it, through the semester and year, on your current trajectory, so you can safely return the excessive loan proceeds. It’s a leap of faith, and you have to have the budget forecast to make that scary decision. 

Budgeting and making smart decisions every day leads to being able to return some loan proceeds and returning the money leads to less money being borrowed. Less borrowing leads to less overall debt and that will make your life easier! Having less debt is always better than having the maximum amount of debt! 

What are some other ways to borrow better? Well, apply for every single scholarship you can find! Talk to the people in your school’s administration responsible for or gathering scholarships and make sure you’re not missing out. Write essays, complete your resume and fill out that application! It’s the best possible way to boost your income. Many scholarships have just a handful of applicants, and many are not based on your GPA. It’s basically free money, you just have put in a little effort. 

Here’s another, a part time job, during the semester or during the summer can bring in significant income and allow you to offset some borrowing. Additionally, the job can provide some experience, some future opportunities and help you decide what to do with your career. Sometimes you can even study on the job. Don’t let the job sabotage your grades, but if you can, it’s a huge way to offset your borrowing. 

Step 2, download your Student Aid file at studentaid.gov and visit VIN Foundation's My Student Loans. Those with more to borrow can then upload that file into the In-School Loan Estimator and Student Loan Repayment Simulator. This will help you calculate your projected debt, even from undergraduate or other graduate degrees and help calculate your debt to income ratio. Knowing these numbers is like shining a light on your future, and that will help you make way better decisions. Making financial decisions without crunching numbers is always bad. It’s like trying to treat kidney disease without a BUN and Creatinine. 

When it does come to borrowing, where should you start? Which types of loans? If the Health Professions Student Loans are available to you - start there. These loans are not available at all schools, contact your financial aid office to learn if these are offered at your school. They don’t have fees, and their interest rates are usually pretty favorable. So utilize them first before moving onto other loan types. Then go to the Direct Unsubsidized, which have fees, but are better than the rest. 

The very last government loan you should take is the Direct GRAD PLUS loan. Know that it has super high fees and pretty high interest. 

But I point this out, because sometimes when you are borrowing, and clicking on your financial aid award, they all look the same. I’ll repeat - Health Professions Student Loans, Direct Unsubsidized, then lastly Direct GRAD PLUS.

Then after that, if you’ve exhausted the federal student loan options, if you for some reason still need student loans, then and only then should you look at private loans. 

Don’t take private loans, don’t take a second mortgage on your parents home, don’t use a co-borrower unless ABSOLUTELY NECESSARY. Even if the interest is lower. Only take these types of loans if you have exhausted every other option. 

Next, resist the temptation to pay interest on other student loans while in school. Borrowing money to pay interest is hardly ever a good move. There’s an exception to this, if you have private student loans from undergrad, you may consider paying them off, in order to consolidate them into the federal student loan system. If you have a unique situation like this, it would be very helpful to get the advice of an expert on the VIN Student debt folder. It’s free for all veterinary students and it’s one of the only places on VIN that you can post anonymously. So you can get the detailed advice you need for FREE. 

OK - This one is a little more complicated. If a family member is thinking about paying for your education as a gift by paying your student loans after graduation, work with them to pay for your education directly. If they wait until you graduate, they’ll be paying a ton of accrued interest and end up paying way more. 

The whole point of Borrowing Better is to gather information, know your numbers and borrow less money. Basically you are preparing for the repayment phase of your student debt journey. If you can lay the groundwork, smooth the path and ready yourself, the adjustment to repayment becomes so much easier. 

I know you can do it, because you are here. You’re already committed to the journey, now the next step is to Borrow Better! 

Your homework is to go through the Borrow Better checklist and prepare for repayment!