Managing Student Loan Debt with APA

Managing Student Loan Debt with APA

Eddy Ameen, Ph.D.

(Jessica):Okay, we’ll go ahead and get started. Thank you very much, everyone, um, for joining us today. We’re very excited to be working with Georgia Psychological Association to bring this really very timely and relevant content to everyone. My name is Jessica, and I work in the membership department at APA Headquarters in Washington, D.C. and I’m very excited to introduce Eddy Ameen, who is the director at APA’s office on early career psychologists.

So, Eddy gets a lot of questions on managing student loan debt, um, and we’re also very pleased to bring you this presentation in collaboration with Iontuition, which is a debt management platform that APA has partnered with and is a free benefit of APA membership. So, they will also be giving us a run-down of their tool, and will be available to answer any questions that anybody has. So, um, we will be using a tool called “Poll Everywhere” to do a few polls throughout the presentation, um, and to ask questions. So, that’s a simple text feature, you’ll see the instructions as we move through the presentation but if you do have your phone handy, that’s how you’ll be responding to the poll. So, with that, I’ll turn it over to Dr. Eddy Ameen.

(Dr. Ameen):Good morning, or good afternoon, depending on where you are dialing in from. I’m delighted to share some information that I have about student debt and ways that fellow early career psychologists and up-and-coming psychologists are seeking to manage that debt. So, I’ll keep my webcam on for just a minute or so and then we’ll just focus it specifically on the slides. As Jessica mentioned, we’ll have some polls- I think two polls I have scheduled- so when you see the information pop up in how to answer the poll, you can do so in real-time, pretty easily. Again, one of the neatest things I get to do is frighten people about debt and then help them get to a place of understanding that it can be manageable, and I think between some of the resources that I’ll tell you about and then our Iontuition new member benefit you’ll b be in pretty good hands by the end of this hour.

So, today I hope to share with you, um, these things: some information about average early career debts and salaries; information about common loan forgiveness programs; budgeting tips with the cognate that I am not a financial, um, provider or financial advisor so these are some suggestions that I’ve gleaned over my time at APA, but you should definitely consult with somebody that you trust for better and more accurate financial advice. I do have an advocacy call to action- one of our loan forgiveness programs is in danger- if you’ve been paying attention to the news, so is a lot of higher education after the latest tax proposal- but we have a specific call to action that I’ll get to share with you some great resources at APA, and then of course turn it over to colleagues at Iontuition to demo this new member benefit that a lot of people are taking advantage of.

Our first poll, before we get in too much, is “How worried about student debt are you?” The choice are: “Not at all”, “A little”, “A moderate amount”, “A lot”, and “Like woah!”. Um, Jessica’s answer is E, she is a little worried about student debt, her answer is there already, but I’m hoping- there’s a big number of you on the webinar- I’m hoping that you will take the chance to text your response, when you go to the website listed on the screen right now: “PollEv.com/eddyameen321”. So, we’ll wait a minute as responses come in, and I should have had some knock-knock jokes in line for you.

(Jessica): And just so everybody knows, for the future polls you won’t have to re-text Eddy Ameen, you’ll be in the poll group moving forward.

(Dr. Ameen): Ah, that’s a good point… As more data comes in, I’m seeing these categories C, D, and E adjust quite a lot. This “Like woah!” category is taking off. What I am not surprised about, although I am disheartened about, is that there is no one here that only is a little concerned about student debt, or not at all concerned about student debt. Um, I know that as you are a self-selected bunch, if you had no student debt concerns you might not have selected this webinar, but, I am seeing increasing concerns in my job at APA around student debt, so this sort of matches that. Thank you for taking the poll. If you haven’t logged in your answer already, then you’ll have a chance to respond next time.

This is the clinical side of me coming out, I’m asking you to think of your happy place as we talk about student debt, I know that some people’s legs will start shaking, some people will feel a little heart palpitation- I’m asking you to find your happy place, whether that is- for me that’s just a good image of a beach- if you have a place where you feel safe and calm where you can tackle some of this, I encourage you to have that in the back of your mind and bring it to the front of your mind if you get stressed out during this conversation.

So, here’s some base-line data on what the median first year out early career psychologist makes. In 1999 50% of people were making $38,000 or less, or you could say $38,000 or more- that’s the median salary. The median debt for someone coming out of that time was $42,000. The salaries have increased a little bit over time, although I think you can see in the third column that debt has far out-paced growth in salary over time for entry first year psychologists. Right now, in 2014 according to some data that we collected and published last year in the journal TEPP- or Training in Education and Professional Psychology- median debt was $95,000. That is graduate-only debt, so that excludes any amount that somebody might have from their undergraduate degree.

Now, my point here is that not all debt is the same. I’m showing you a little bit of information from an infographic that we have on the APAGS website. Again, this is from a 2014 study of students and early career psychologists, and we look at debt broken down into 3 different types. The first column says “HSP-PhD”. So, if you are a health service psychologist that means you got your doctorate in clinical, counseling, school psychology or combined or integrated program in school, clinical or counseling psychology. The “HSP-PsyD” is if you got a PsyD in one of those fields, and “SRO” is science, research, and other sub-fields in psychology, so this is social, developmental, IO and so forth. You’re most likely to graduate with any graduate debt at all if you had a PsyD, followed by a PhD, followed by doing something that was not health-service psychology. And, debts also vary, median debts vary based on the type of degree you’ll have. So, the median debt for a PsyDin clinical counseling or school was two hundred thousand dollars in 2014. $75 K for folks doing the same type of work but getting a PhD. And $45-and-a-half thousand dollars for folks getting another kind of doctorate. Using these three columns again, you can see that after 10 years that debt grew. So, if we took the middle column, if you owe $220,000 thousand dollars in graduate loans, upon graduation, if you took 10 years to pay it off it would swell to $276,000 thousand. The maximum amount of time you can take to pay back your federal student loans is 25 years. If you took that amount of time and made 25 years of equal payments, you would actually be paying back $416,000 dollars. This was using a 6.4% percent interest rate. So, point being in this, um, first few rows is that debt does grow over time due to interest, and the amount that you have to pay back each month will depend on the kind of income, the kind of plan you select. A lot of folks that I speak to, although certainly not enough, choose an income-contingent plan. That calculates their monthly student loan payment back to their federal servicer based on a formula, which has as its biggest factor in that formula, the amount of income, adjusted gross income somebody takes home each year. It also factors the number of dependents that you have. It does not factor where you live in the country, so New Yorkers and North Dakotans will be factored at the same amount. But it’s important to note that the longer you take to pay off your loans the lower your amounts are, and generally, for folks- especially if we base it on some our median salaries in psychology- they will, you will have lower amounts if you do income-contingent, versus a standard repayment plan.

Our study also found that the primary source of support for training expenses for most survey respondents, whether student or ECP, was federal loans, followed by university employment, followed by university grants, and then a small handful of people were able to find external grants to support their education. Now, this might help explain why there’s a disparity in borrowing amongst PsyD and PhD students: um, students are more likely to obtain university employment getting a PhD, whereas 2% of PsyD students were able to obtain employment. So, that is one way that schools can offer a tuition rate, tuition waivers, tuition reimbursement, or stipends, through employment. Um, the primary sources to support living expenses, again, number one was federal loans, followed in close second my university employment. So, that’s why students are racking up debt. 48% of our survey respondents said that they had significant financial stress, and 59% of all current student reported the same.

Now, we used this survey that we did in 2014 to dispel some myths. People were telling us, or conjecturing that students are probably living lavishly, but we found that not to be the case. Most students rented an apartment with a partner, rent is about one thousand dollars a month total, and more students now share an apartment than ECP’s did, so our students are more frugal than their predecessors. Personal vacations were not lavish, they were on average about two-seventy-five to four hundred dollars per year. Yes, while many grad students did or do own a car, the median car was ten years old and it cost at present value close to sixty-five hundred dollars. So, these were typically not the high-end luxury cars that, um, I joke that I went to a grad school that had many luxury cars in the parking lot, but most of these were undergrad cars.

Um, and then, we’ve often asked people “How are you coping?” We put up a poster at the APAGS booth at the convention a few years ago, asking people to tell us by sticker where their student loan total would be upon graduation, but also how they plan to deal with student debt. So, I’m going to ask you, now, to do the same. Please take your second poll and let us know how you plan to pay off your student loan debt. Through denial, by reducing your borrowing- that is if you’re still in school, by paying it off slowly, or paying it off quickly. Some of the folks that I’ve talked to have taken out second jobs, they might be adjuncting, they might be doing extra clinical work outside, they might ne freelancing, um, so paying it off more quickly. And I’ll just pause for a minute here while you respond in.

Alright, well things are starting to sort of level out. What I’m noticing is that nobody is saying “Reduce borrowing”. Perhaps it’s because folks on this call are largely early career psychologists, or not in a position right now to reduce borrowing, or perhaps, students are finding it impossible to take out fewer loans because they’re already living hand-to-mouth in some cases. So, what I’m interested with here, is that um, yes denial is a common, one out of five of you are denying that you have student debt and I certainly know what that’s like. I always thought it would be in the future and I would find a way to pay off that debt. Um, the most common strategy, though, is number C, “Pay it off slowly”.And almost half of you are endeavoring to pay it off slowly. It will be there, it will be a monkey on your back, but you’re not in a rush to get rid of it, um, taking the slow approach. That is a common strategy and that brings me to the next point on my outline.

I want to talk to you about the most common strategy right now, for anyone, regardless of degree, regardless of subfield, regardless of current occupation, what matters most for the public service loan forgiveness program is where you are working. This program says that if you make 120 payments while you are employed in a public service setting, regardless of your job, but if you are employed in your public service setting and you make one hundred twenty payments, basically that translates to if you’re paying months after month, that’s ten solid years of payments, anything left over after you make those payment will be forgiven by the federal government. Now, interestingly, we are in high time to see whether the government makes its payments back. See, this law didn’t come into effect until two thousand seven, so the first people eligible are coming into effect right now, um, and filing application. The application just went live on the department of education website very recently, so no checks have been written yet, I will get back to the action alert a little bit later on, but while this program still exists, um, I highly encourage people to learn about it and see if they might be eligible. So you don’t have to be in the same job for ten years or a hundred and twenty payments- you don’t even have to do, um one job full time- you can do two-part time qualifying jobs to make this work. And this can be in the federal, state or local government, most non-profits that have five oh one C three designation qualify, for example APA is quite a large five oh one C three, so anyone that works at APA with student debt who wants to take advantage of this ten-year repayment will qualify. If you work in early childhood education, if you work in public health, particularly as a practitioner, or you work providing services, uh, uh, for the elderly and disabled you would qualify. You can read the fine print online, but this is just to give you the top-level information to get you thinking about qualifying. So again, ten years of payments, it’s okay if you take breaks, um, you need to be employed the equivalent of full time, only certain loans qualify, um, if you wish to initiate this process and you haven’t consolidated your loans into one, um, payment, you will be asked to do so; your Stafford subsidized loans and unsubsidized loans and Federal Direct Plus and the Federal Direct consolidated loans qualify. Uh, now the biggest point here is that it makes sense to do an income-driven payment plan to get the government to forgive anything after those ten years. If you put yourself on a ten-year payment plan then there won’t be anything left over, so I would say choose the income-contingent plan, if you wish to take advantage of this.

You can go to studentaid.ed.gov right now, um, bookmark that link, and you’ll see that there’s a couple of forms available for this. One of them is the employment certification. The program as it was structured is very user-managed. There, you do not have to get into this system from the time that you get your job, but I think it’s to your advantage to certify your employment every year. That way, your loan servicer is keeping track alongside you how many eligible payments your making, based on the employment that you’re in. I every year have a note in my calendar each January to fill out the first few sections of this form that you see on the screen and then give it to my human resources manager, have them sign and attend that I’m still employed, and then I fax that to my loan servicer. Yes, I actually fax it, although I just learned that they do allow you to upload the form as well. Um, the one loan servicer that has a contact to do public service loan forgiveness is My Fed Loan. So if you have Sally Mae or Great Lakes or something else, if you call them and tell them that you wish to begin employment certification to do public service loan forgiveness they might tell you don’t worry about it you can do that at the end of the ten years, but if you insist, they will have to transfer you to My Fed Loan as your loan servicer. Now in that process you might be waived one or two payments. It doesn’t mean that those payments that you don’t make wont count towards the one hundred and twenty, but you might lose some time in the process of switching loan services, so just keep that in mind.

There are other possibilities. The most popular one for, uh, clinicians, is the National Health ServicesCorps. This is will help repay up to a hundred and seventy thousand dollars, although I think that that did get downgraded and we just haven’t updated our chart, um, you make two to five years of commitment to work in a federally qualified health center, um, you have to be licensed to practice, you have to apply in the beginning for this program- its not retroactive like the government loan forgiveness, and it’s much more competitive. Um, there’s also, of course NIH offers a great number of loan repayment programs, we have all of these listed on the APAGS website, apa.org/apags/resources.