The issue of pharmacy school debt has been on the most talked about. This is because pharmacists are becoming more and extraordinarily valuable. So many new drugs are coming to the market and we have an aging population.
Rising demand has led to increases in PharmD schools and candidates. Current pharmacists have a lot to keep up with as the environment continues to grow and evolve. With all of the growth and new pharmaceuticals coming to market, PharmDs are compensated nicely for their work.
The median pharmacist salary is $124,170 according to the Bureau of Labor Statistics. The problem is that income has stagnated with the inflow of new PharmDs and colleges of pharmacy are rising their tuition rapidly.
Pharmacy Times reports that the average student loan debt for PharmD graduates is $163,496 in 2017, a 9.5% increase from 2015 according to the American Association of Colleges of Pharmacy’s 2017 Graduating Student National Summary Report. Read on to see how it compares with other school student loan.
Average Pharmacy School Debt Comparing to Others
The average pharmacist student loan debt is higher ($198,560) among those who attended a private college and lower ($144,083) among those who attended a public school.
Pharmacy school graduates tend to have larger student loan balances than people whose highest level of education is a bachelor’s degree. But compared with some other health professionals, pharmacists have less student debt, on average.
Compared with some other health professionals, pharmacists have less student debt, on average.
Here’s how the average pharmacist student loan debt compares with other fields for the class of 2018, the most recent year all of the data is available.
- Average pharmacy school debt: $163,494.
- Average medical school debt: $196,520.
- Dental averageschool debt: $285,184.
- Average veterinary school debt: $183,014.
- Average bachelor’s degree debt: $29,200.
Doctor of Pharmacy (PharmD) Student Loan Repayment Options
Here at Student Loan Planner, we have done over 1,800 consults and advised on over $450,000,000 of student debt. Our experience shows that there are two optimal ways for pharmacists to pay off student loans. They just so happen to be on opposite ends of the spectrum.
Option 1 – Aggressive Pay Back: For people who owe 1.5 times their income or less (e.g. someone who makes $100,000 with loans at $150,000 or less), their best bet is to throw every dollar they can find to pay back their loans as fast as possible, no more than 10 years.
Option 2 – Pay the least amount possible: For people who owe more than twice their income (e.g. someone who makes $100,000 and owes $200,000 or more), the goal is to get on an income-driven repayment plan that will keep their payments low and maximize loan forgiveness whether it’s Public Service Loan Forgiveness (PSLF) or taxable loan forgiveness.
PAYE vs refinancing for pharmacists
As for PAYE vs refinancing, the options look relatively close from an out-of-pocket cost, and here are the pros and cons for each option:
- Affordable monthly payments which will allow her to save, invest and put money toward other financial goals (pro).
- Has 20 years to save up for the taxes owed (pro)
- Loan balance will grow from $210,000 to $232,000 (con)
- It will take her 6 years longer vs refinancing (con)
- She’ll be out of debt in 10 years or less (pro).
- Total out of pocket cost is about $19,000 lower (pro)
- Once she refinances, the federal loan program benefits are gone for good (con)
- Stuck with $2,279 monthly payments for 10 years with little to no flexibility (con)
Tackling Pharmacy School Debt
Repaying pharmacy school debt can feel overwhelming. But there are several options for repaying pharmacy school loans. The best repayment approach for you depends on your post-graduation plans.
- Doing a residency program: Switching to a federal income-driven repayment plan can help make payments more affordable on a pharmacy resident’s stipend. These plans cap monthly payments at 10% to 20% of your income and forgive any amount that remains after 20 or 25 years, depending on the plan. Once you complete a residency, consider pursuing a loan forgiveness program or refinancing.
- If you’re working in the public sector or in an underserved area: You may be eligible for a pharmacist loan forgiveness program. The most popular program is Public Service Loan Forgiveness, which offers tax-free forgiveness after you make 10 years’ worth of payments while working for the government or a nonprofit. To maximize forgiveness, make qualifying payments on an income-driven repayment plan.
- If you’re working in the private sector: Student loan refinancing can save you money in interest and help you become debt-free faster. To refinance student loans, you typically need good credit — at least a score in the high 600s — and a debt-to-income ratio of 50% or lower. Once you refinance, you’re no longer eligible for income-driven repayment and federal forgiveness programs, including Public Service Loan Forgiveness.
Now you must be thinking, is becoming a pharmacist worth the cost? The answer is purely yes.
PharmD can find a clear path to pay back their student loans despite how much their pharmacist salary is. A path that could not only save them significant money but help them understand the actions to do.