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When tackling student debt, information, collaboration is key

One-hundred-thirty-five thousand dollars. That's the average debt for all new veterinarians who graduated from veterinary schools in the United States in 2014. Sixty-seven thousand dollars. That's the average starting salary for new veterinarians who accepted a full-time position prior to graduation in 2014.

How can one keep up with the other? Why is debt growing faster than starting pay? What can be done to correct the debt-to-income ratio among veterinarians joining the workforce?

These complex questions continue to pose serious challenges to veterinary educators, veterinary students, and the entire veterinary profession. Answers aren't easy to come by, but we're working hard at trying to find them through the ongoing efforts of the AVMA's Economics Division.

Staffed by three Ph.D. economists and their support team, the Economics Division is involved in an information-gathering process never before seen at the AVMA, as they and their partners assemble information on the markets for veterinarians and veterinary services, the size and composition of the veterinary workforce, the demographics of the profession, veterinary debt and income, and much more.

Take, for instance, the division's work on debt-to-income ratios. The debt-to-income ratio provides a measure of the financial health of veterinarians entering the profession and is, perhaps, the best early measure of the financial health of new veterinarians. For 2014, the mean debt-to-income ratio for new veterinarians who reported having accepted a fulltime position in public or private practice prior to graduation and who reported their overall educational debt was 2.05:1, indicating that, on average, educational debt was slightly more than twice the annual starting salary.

This important indicator can be influenced by the cost of training new veterinarians, the financial acumen of veterinary students, and the ability of veterinarians to improve the willingness of animal owners and the general public to pay for veterinary services. Over time, the direction and magnitude of change in the debt-to-income ratio provides important information on changes in the financial performance of the veterinary profession as a whole. Just one AVMA Economics Division finding-and it's an important one-is that an additional $1,000 in starting salary will lead to higher lifetime earnings over a veterinarian's career sufficient to offset an additional $25,000 in educational debt.

Aided and guided by this type of information, representatives from the AVMA, the Association of American Veterinary Medical Colleges, and the Michigan State University College of Veterinary Medicine will be meeting with veterinary students, recent graduates, practice owners, and members of academia and industry at AVMA headquarters in November. This working group's goal is to lay the framework for a more comprehensive summit to be held at Michigan State in the spring of 2016.

Those gathering at November's meeting and the subsequent Michigan State summit hope to produce a shared understanding of the issues contributing to student debt, including the cost of education, debt management, and how starting salaries play a role in the debt-to-income ratio. Ultimately, we hope to collectively identify robust, practical strategies to address the debt problem and its components that we can share with the profession to help correct the imbalances that exist and enhance the overall financial health of the profession.

Joe Kinnarney, DVM