By Joseph Reinke, CFA, CEO of FitBUX, Inc.
Student loans are a hot topic in many student physical therapist (“SPTs”) and Fresh DPTs minds. Over the past 4 months FitBUX has uncovered a trend that we did not expect to find and has come to the forefront as a MAJOR issue that is not being discussed within the PT industry.
The Problem
At the conclusion of our pilot program (the testing of our technology), we saw over a half a million dollars in credit card debt from Fresh DPTs on our platform. The primary culprit of the credit card debt was the failure of these individuals to strategize or plan for post-graduation while they were still students. What we commonly saw were students and recent grads that had to wait until after graduation to take the NPTE. During the time period between graduating and taking the NPTE (which could be months), graduates cannot take out additional Federal student loans because they are no longer considered students. Unfortunately, this isn’t commonly discussed amongst the PT community and we found many new grads turning to the only thing they know: CREDIT CARDS.
If you extrapolate our data and apply it to one cohort, the problem would equate to roughly $25 million in credit card debt for each graduating class collectively across all DPT programs (Note: We are still collecting data and admit that this estimation may or may not be statistically correct. However, it is the best estimate we could establish at this time. As we collect more data we will be updating the figure) The more important point here is the impact of this debt on the future of each individual who has to take out credit card debt. Those who combine credit card debt with student loan debt can find themselves stuck in a vicious debt cycle before their professional career even begins. This results in a bigger strain on budgets, limits financial options, and puts individuals in worse shape.
Current Solutions
If you are still a student, the best way to avoid this situation is to develop and plan a strategy that incorporates one or more of the three solutions below:
Work. This may entail working part-time during school or immediately after graduation. It may also mean taking on a side-job that isn’t something you really wanted to do, like being a server at a local restaurant or working the front desk at a gym or as a PT aide. Remember, the short-term sacrifice and humility will pay off big time in the long-run.
If you have to, borrow more in Federal loans while in school and save that money. Many people will question this because it’s a recommendation to take out more in student loans. However, if you only have two choices, this or credit card debt, Federal loans are a lot better since interest rates are often much less than credit card rates.
Be creative. For example, one popular solution we’ve seen individuals do is to take a loan from their parents. Once you’ve passed the NPTE and obtained your job, start paying back your loved ones.
If you’ve already graduated and have taken out credit card debt, look into refinancing or consolidating the credit card debt with a personal loan. A personal loan could offer a lower interest rate than that charged by your credit card. Make sure you stay disciplined and don’t continue to rack up credit card debt.
About FitBUX: FitBUX is a finance company specializing in helping physical therapist with their student loans. Their services are free to use and are available to all SPTs and DPTs who. Sign up at www.fitbux.com.