The Optometrist's Guide to Student Loans
By: Dat Bui, OD April 3, 2020
[Editor's Note] Since federal programs and student loan policies change all the time, we try to keep this guide updated with the latest information as much as possible.
You might be looking at your student loans right now thinking, “How the heck did I take this much money out? This is the price of a freaking house”. The sad reality is that the average optometry student takes out an average of $200,000 for optometry school and will likely be in debt for the next 20 years of his or her life.
The United States’ student debt crisis exceeds $1.5 trillion for 2019 and has been an epidemic in society, shunting the growth of many young professionals. This indirectly forces new and bright doctors to live at home with their parents longer because they cannot afford to pay rent or begin to even think about buying a house. This in turn delays them from starting a family merely because they can barely take care of their own finances.
What do most optometrists normally do?
Sadly, they pay the minimum amount for 20+ years, hoping that our government will miraculously forgive their loans after 20-25 years. This is unfortunately the norm. Don’t be normal...normal sucks! Normal people don’t get rich or become wildly successful.
The Harsh Reality of Optometry
When I was a young optometry student in 2015, I bought into the sad illusion that my “amazing optometrist salary “would easily enable me to pay off my student loans and was a fast-track to building wealth. Unfortunately, this wasn’t the case.
After all the graduation celebrations ended, I was slapped with my first loan payment. I quickly realized that my 6-figure salary was not enough to cover this monthly payment.
An optometrist paying off student loans in 2019 is a lot different than one who graduated 10 years ago. Simply put, the cost of attending optometry school is almost double what it was 10 years ago, while optometrist salaries have remained relatively stagnant.
Currently, optometry schools are not required to teach personal finance. Sure, there is a mandatory federal loan “exit” counseling that often leaves 4th year students more confused than anything. Often, these counseling sessions don’t educate students in choosing the best payoff strategy for their situation.
With the vast complicated multitude of student loan types, refinancing, consolidation, or whether to pursue loan forgiveness - it can be overwhelming. Therefore, it is even more vital for the optometrist to have a solid game plan and we hope this comprehensive guide will educate and allow you to have the best strategy to take down your massive student loans for your own financial situation.
"Sadly, most optometrists pay the minimum amount for 20+ years, hoping that our government will miraculously forgive their loans after 20-25 years. This is unfortunately the norm. Don’t be normal...normal sucks! Normal people don’t get rich or become wildly successful"
STEP 1: Know how much LOAN debt you have
First of all, it is important to know how much student loan debt you actually owe, ranging from undergraduate to optometry school. Unless you used a private lender, a majority of your loans will be federal loans via the Department of Education.
You can quickly access all your federal loan information via the National Student Loan Data System (NSLDS). This is a complete, national record of all your loans/grants with information such as balance amount, interest rate, associated servicer/lenders and duration. You can access it via the Federal Student Loan Repayment with your Federal Student Aid (FSA) ID
For any private student loans, you can check out: www.annualcreditreport.com where you can see all outstanding loans.
STEP 2: Know the Type of Federal Loans
Private Student Loans: Usually more expensive and higher interest rate (some greater >10%). Also, interest accumulates during school. Basically, considered the same as consumer credit debt or a business loan. Require good credit score or a co-signer if credit score is poor.
Federal Student Loans: Usually less expensive (as low as 6.8%) and have multiple government program benefits attached. Federal loans have a grace period while you are in school (at least half-time student) where you don’t have to start paying back loans. If the federal loans are subsidized loans, then the government will pay your interest while you are in school.
STEP 3: Decide which route is best for you
There are three strategies to pay back optometry schools loans, so let's review them in greater detail:
1) Tuition Reimbursement Program
2) Student Loan Refinancing or Standard Federal payment Plan
3) Loan Forgiveness programs
(1) Tuition Reimbursement Program
An employee benefit in which an employer or institution pays for a set amount of “free” money that can be used for your student loans - in exchange for working for certain period of time. Some will require you to pay a certain amount yourself and then match or reimburse you.
Federal Tuition Reimbursement Programs are offered by the federal government though the military, Veteran health administration, Indian Health Reservation and other departments of health. Other state-specific programs such as Health Professional Shortage Areas (HPSA), Medically Underserved Area/Populations (MUA/P), and those on Medicaid or Medicaid Managed Care are available to a lesser degree.
Other private organizations such as National Vision (aka American’s Best) will require a 3-year commitment with a maximum financial assistance of $20,000.