The Michigan State University College of Veterinary Medicine is facing the debt crisis head on—from curriculum reinvention, debt counseling, the addition of a career counselor, slowing the growth of tuition, and increase in scholarships awarded, the College aims to lower the amount of debt and distress incurred by veterinary medicine students. As a constant priority of the Development and Alumni Relations, the percentage of scholarships awarded to students has nearly doubled since 2014. In 2014-2015, 4.7% of the students College tuition bill was covered by scholarships and 7.8% was covered in the 2016-2017 academic year. In a continuous effort to improve students’ financial burdens, the percentage of scholarships awarded to students within the College is projected to increase by 10% by the end of the 2017-2018 academic year.

However, with total tuition currently costing approximately $125,846 for resident and $238,031 for non-resident students for four years of veterinary medical education, it is not uncommon for the majority of veterinary students to accrue significant student loans and debt. The debt-to-income (starting) ratio is particularly high in veterinary medicine, currently standing at 2:1 nationally.

There are some factors that contribute to the veterinary student debt crisis. Such as, standard federal student loans, which can be problematic in regard to overall student debt:

• In 2017, Stafford Loans for professional students carry an interest rate of 6 percent while GradPlus has a 7 percent interest rate. Private interest rates today are from 2.93 percent up to 12.52 percent, but with not the same borrower benefits as federal student loans
• Stafford Loans charge a loan origination fee of 1.069 percent while GradPlus charges 4.264 percent loan origination fee which is paid back to the lending agent. The borrower is charged interest on the total loan amount that includes the origination fee
• Accrue interest from the first day that the loan is distributed
• Added debt on top of the debt some students may already have from completing their undergraduate degrees

The College and MSU Federal Credit Union (MSUFCU) aim to lessen the veterinary student debt load with this new partnership. “MSUFCU would like for students in the College to consider their options when finding student loans. Our student loans are viable options because of their flexibility and low rates,” says Deidre Davis, chief marketing officer for MSUFCU. “The College and MSUFCU want to help veterinary medicine students by lowering the cost of student loans through our new program. We also want students to know that we’re here for them every step of their journey at MSU and beyond,” says Davis.

Fortunately for students, the MSUFCU Veterinary Student Loan is different. At 4.6 percent fixed and 4.75 percent variable, students have the option to choose which interest rate is best for them, and the loan has no origination fee. If students already have a checking account with MSUFCU, or if they set up automatic payments, or they use a cosigner when they obtain the loan, their interest rate is discounted. The loan also offers deferment and non-deferment options. Students can choose the interest-only payment option if the loan is deferred. Additionally, the loan features a six-month repayment grace period. However, there are no prepayment penalties and 5, 10, and 15-year repayment plans are offered.

It is important to know that student debt is multifaceted—each student’s situation is unique, so this loan may not be the best solution for certain students.

“It’s not a perfect solution for every student,” says Donna Harris, assistant professor at the College. “The creation of this loan is one attempt to get started as we address the debt situation. It’s a pilot program, and it's evolving as we learn more about how the program works.” Harris is holding one-on-one meetings with each student who is interested in exploring this new loan option. She will help determine if this loan would be a good fit for each student’s personal debt situation. Another one of MSUFCU’s goals for this loan program is to help students achieve their dreams of becoming veterinarians by offering low-rate, flexible loans to cover costs associated with their educations.

“The flexibility and options this loan provides allows all of us to help the students, and that is really what we needed,” says John Baker, dean of the College.

Lisa Johnson, the consumer loans operations manager from MSUFCU, is another resource for students. As the point person of contact for this new collaboration, Johnson has made herself available so that every student who is interested may call her if they have questions about the loan.

“MSUFCU’s goal is to educate students of all backgrounds on ways they can budget, save, and discover options available to them as they pay for college,” says Johnson.

“The MSUFCU loan works to address a student’s debt load by reducing interest,” says Harris. “There is no origination fee and it provides one more option for a student if his or her unique situation is a fit.”

An ideal student for this type of loan has a lower debt load upon undergraduate graduation and does not plan to continue to post-DVM training, such as internships and residencies. Another consideration is this loan can be applied for and distributed during the school year, should third or fourth year students need additional financial assistance on or before graduating. “Perhaps a fourth-year student needs a small loan for job searching or job relocation post-graduation,” says Harris.

The loan itself is new and evolving. Originally an in-state student loan, this loan is now offered to out-of-state students as well. Davis says the program will be evaluated often, and may be open to other students in the future.

“We will continue to work on adapting the loan to the needs of students in order to make it the best it can be,” says Davis.