Feature Financial Literacy and the New DPT Grad Few recent graduates were exposed to classes in financial literacy while they were in school. Most educators think they should have been. By Keith Koria | February 2017 When it comes to financial literacy, is today's physical therapist (PT) student—to borrow the question posed by a popular television show—smarter than a fifth grader? Probably. But, are these doctoral students more financially savvy than a high school senior? All too often, the likely answer is no. "Many students never have had to handle their own finances. Their parents took care of it for them at the undergraduate level, so those students are in unfamiliar territory," says Kathy Anderson, director of financial aid at the MGH Institute of Health Professions in Boston. "In my opinion, parents do their children a disservice by keeping them out of financial discussions, because financial literacy isn't something that students learn in K-12 education." That's led to some alarming results: In 1 survey, 28% of first-year college students with federal debt reported that they did not have any federal debt—and 14% reported having no debt at all.1 In another survey, 73% of undergraduate and graduate students thought Sallie Mae (the Student Loan Marketing Association) was a person, not a company.2 More than half—54%—of student loan holders did not try to determine how much their future monthly payments would be before taking on their loans.3 On a 5-question financial literacy quiz developed by the Financial Industry Regulatory Authority, Millennials exhibited "very low levels of financial literacy," with only 24% answering at least 4 questions correctly, compared with 48% of Baby Boomers.4 Today's physical therapist graduates on average leave school with more than $83,000 in student loan debt. Total average debt (adding, for example, credit cards and other loans) for recent graduates is more than $96,000.5 Total US student loan debt stood at $1.411 trillion on December 1, 2016,6 up from $240 billion at the start of 2003.3 Once the pomp and circumstance of graduation ends, reality sets in, and with it comes the stress and worry of how to pay those debts and handle finances going forward. Mark A. Boland, PT, DPT, MBA, would like recent graduates to become more knowledgeable about financial literacy concepts so they can better reduce and manage that debt. He is clinical assistant professor in the Department of Physical Therapy at Saint Francis University in Loretto, Pennsylvania. "Recent graduates need to have a general idea of the impact their debt will have on their personal budget and future borrowing power," he says. "They also need to be confident in their ability to manage their debt, develop and adhere to a personal budget, and begin to save for retirement." Boland was the primary investigator on 2 Saint Francis studies examining student loan debt and starting salaries. Helping to soften the financial blow, these students are entering a profession that is predicted to grow by 34% from 2014 to 2024—"much faster" than the average rate for all career paths, according to the 2014-15 Occupational Outlook Handbook, published by the US Bureau of Labor Statistics. In addition, new graduates most likely will find work that pays well enough to help them manage and retire their debt.7 Student loan debt is a key contributor (though not the only one) to the postgraduation financial woes of many new PTs. But this seldom is addressed in PT education, Boland notes, even though it's vital that new and recent graduates understand not only how to avoid debt, but also how to cope with debt-related issues. Terence Brown, PT, DPT, president of APTA's Private Practice Section and a PT at Frankfort Physical Therapy in Kentucky, says that before choosing a PT program, prospective students should consider the cost of attending the institution. "We probably assume that students are doing this research before they enter school, but many are not," says Brown. Influencing the Profession When Boland speaks to recent graduates, he hears that student loan debt is influencing their career choices. That pressure, he believes, has the potential to negatively affect the profession. "Instead of choosing a job based on a favorable geographic location or a clinical setting about which they are passionate, many graduates are choosing jobs based solely on salary so that they are better able to manage their debt," he notes. "While this may help them achieve short-term financial goals, it also could lead to decreased professional development and job satisfaction." Mary Ann Wharton, PT, curriculum coordinator of Saint Francis University's physical therapy program, agrees—calling the evolution of job selection "a profound problem." "In the past, [graduates] would come out of school and make choices based on good clinical opportunities. They would get experience to enhance their skills," she says. "Now, we are seeing a lot of graduates choosing clinics based on saving money, such as being close to home, and they're maybe not getting the same depth of experience. They may not have mentors in these positions. A graduate may become a manager in a 1-person clinic right off the bat, with no one to help him or her out with billing and insurance policies and procedures. Those choices and experiences will have a profound effect on [that practitioner's] clinical expertise." Brown concurs. "Many decisions are market-driven," he says. "Some PTs choose to work in public service jobs in order to use the Public Service Loan Forgiveness Program, which forgives the remaining balance of student loans after the PT has made 120 qualifying monthly payments. Or they're heading to rural areas because of debt-forgiveness programs linked to working in underserved regions," he says. Getting the Timing Right By the time a student graduates from a DPT program, much of any financial "damage" has been done. New graduates have some options for assistance, but they already have taken out loans as students and have incurred other indebtedness. PTs interviewed for this article—and academicians generally—emphasize the need to educate students before those decisions are made. So, when should financial literacy education occur? During PT education is an approach some schools are taking. Saint Francis has incorporated it into its DPT program in several ways—including development of a personal budget; discussion of student loan repayment options; and lectures by a financial planner who discusses general budgeting, investing, and debt-management to better prepare students for life after graduation. Financial literacy courses are required. The school also offers extensive online resources related to financial literacy, including videos and links to other sites. However, some educators balk at adding such content to already stretched DPT curricula. While not specifically referring to financial literacy, Leslie Portney, PT, DPT, PhD, in her 2014 Pauline Cerasoli Lecture at APTA's Combined Sections Meeting titled, "Choosing a Disruptive Path Toward Tomorrow," said, "We are constantly faced with having to add material to a very crowded curriculum. We can't just keep stuffing more into our courses and expect any true learning to occur."8 Instead, Portney proposed a provisional licensure model that would allow students to graduate at the completion of a shorter generalist curriculum, followed by a 1-year internship, then a residency. Diane Jette, PT, DSc, suggests a similar process: DPT students would graduate in 2 years, then complete a third year as paid interns. "That structure could save graduates from paying for often heavily credited clinical education courses and allow them to earn money during mentored experiences," she says. "Our speech and language pathology colleagues have a system that's somewhat like this, and medical education requires that students pass parts of the medical board examinations at different points in their education, both before and after graduation."9 Jette, a Catherine Worthingham Fellow of the American Physical Therapy Association, is associate chair of, and a professor within, the Physical Therapy Department at MGH Institute of Health Professions. If financial literacy education can't be added to many graduate programs, can it be moved to the undergraduate level? The undergraduate curriculum is likelier to be flexible. And, armed earlier with financial literacy tools, students likely would benefit. Indiana University (IU), while not proposing to shorten its 4-year undergraduate program, is promoting financial literacy by educating its students on the benefits of graduating within those 4 years, rather than in 5 or more. The efforts seem to be working. In the past 5 years, the number of IU students seeking a bachelor's degree who graduate in 4 years has risen from 38% to 42%.10 Considering that IU has 94,000 undergraduates and that even the in-state cost of attending the school is $21,412 annually, reducing the time it takes students to earn a bachelor's degree can result in real savings. The State University of New York (SUNY), meanwhile, created Smart Track, a program to provide students with standardized information about financial aid and the availability of financial literacy tools. SUNY observes that with the average net price across all 4-year, degree-granting institutions in the system standing at $20,374 during the 2010-2011 academic year, an additional year of full-time enrollment translates into an extra $234 per month in student loan payments. Extending enrollment to 6 years results in an additional $469 per month in loan payments. SUNY also points out another drawback to those extra years of full-time enrollment: "Students forgo earnings while they remain in school."11 In addition to educating students about the advantages of ontime graduation, IU is using other strategies to enhance students' financial literacy. For example, in 2012 the university began annually sending letters to students that estimate their total loan debt and future monthly payments. Since then, borrowing by undergraduates has dropped by 18%. As a result of the drop, last year the state of Indiana began requiring all colleges that accept state aid to send similar letters to their undergraduate students. Nebraska passed a law along these lines in 2016. Montana State University in Bozeman uses a more targeted approach. Students with high debt—primarily students whose annual borrowing represents about double the amount of in-state tuition— receive letters alerting them to their obligation and encouraging them to seek financial counseling. Students receiving the letter borrow an average of one-third ($1,360) less the next semester, according to a 2015 analysis by Montana State and Federal Reserve researchers.12 Students receiving the letters also are slightly more likely to switch to a major associated with higher-paying jobs, researchers found. One discovery made in several surveys was best summarized by the Indiana experience: "Students usually accept whatever aid colleges award them, without questioning whether they could live more cheaply—and borrow less. Before all the financial literacy work began," says Phil Schuman, IU's director of financial literacy, "I don't think students actually knew they had the option to take less aid." Similarly, Tyler Pruett, director of financial aid at Samuel Merritt University in Oakland, California, reminds students to not just accept the first loan offer. "And they'll be getting lots of offers. Health profession graduates are the most sought-after financial customers in the student loan world, because they tend to pay their loans back and generally have well-paying careers." Clearly, some college students veer off financial course before they can be reached. So, the next question is: Can financial literacy education be moved down to the high school level? Saint Francis' Boland notes that students who complete undergraduate course work and enter PT school spend their academic careers focused on preparing for licensure as physical therapists. As a result, he would like to see financial topics explored not only in undergraduate curricula, but in high school. "I would love to see financial literacy taught to younger kids, so that they would be comfortable budgeting and managing money," he says. "It would become second nature. This would promote a better understanding of how borrowing decisions they make during their college careers will affect them later in life, he says. "Money shouldn't be scary." In 2009, researchers at the University of Wisconsin-Madison published results of a national survey of K-12 teachers. Regarding instruction in financial literacy in high school or even lower grades, there's good news and bad news. The good news: Most thought it should be taught. The bad news: Most didn't feel qualified to teach it.13 Those results were based on more than 1,200 online responses from K-12 teachers, prospective teachers enrolled in teacher education programs, and teacher education faculty. Eighty-eight percent of the prospective teachers and the education faculty said financial education should be taught in grades 9-12, as did 92% of the K-12 teachers. In fact, many states already do teach financial literacy in high school. In 2015, Champlain (Vermont) College's Center for Financial Literacy rated states on their efforts to improve financial literacy in high schools. Five states received a grade of "A," 20 states received "Bs," 11 states received "Cs," 3 states received "Ds," and 12 states received "Fs."14 The top-scoring state was Utah, which merited an A+ because it requires all high school students to take a half-year course dedicated to personal finance topics. Students also are required to take an end-of-course assessment examination. States earning Cs required that substantive personal finance topics be taught in high school by including these topics in their instructional guidelines. However, those states left it to the local school board to determine how and where to do that integration. The states receiving Fs had few or no requirements for personal finance education in high school. The University of Wisconsin-Madison study also found that 89% of teachers said students should be required either to take a financial education course or to pass a financial literacy test as a prerequisite for high school graduation. Survey respondents could provide multiple answers, and many supported beginning even earlier than high school. Support for teaching financial education in grades 6-8 ranged from 59% for prospective teachers to 80% for education faculty. Many felt that financial literacy education shouldn't even wait until the sixth grade. Sixty percent of the education faculty and more than 33% of prospective and current teachers said financial education should be taught in grades 3-5. Minimizing Debt "Somehow, the student needs to realize before it happens that you can't incur $160,000 in debt and [pay it off reasonably with] a $60,000 job," Brown says. That's why Terry Nordstrom, PT, EdD, an associate professor of physical therapy at Samuel Merritt, says a key element of financial responsibility is minimizing debt before going into a graduate program. "Use community college. Use state-supported systems," he advises. "Work, if you need to, to pay off your college debt or your college expenses. Live with your family. Do everything you can to minimize your undergraduate expenses, because then you have a lot more freedom in your graduate program." "We advise students to pay down consumer debt and check their credit at least 6 months before the DPT program begins," Anderson says. "Students should be prepared to live frugally while in school." Brad Cooper, PT, MSPT, MBA, ATC, chief executive officer of Colorado-based US Corporate Wellness, agrees with the others interviewed for this article that this conversation really should occur 6 years earlier, as it would be much easier to manage or avoid debt if PT students knew some of these concepts before entering college. Since time machines don't exist, Cooper suggests that when students graduate with debt, that they pour all of their efforts into eliminating it. "I knew someone who got a sign-on bonus—a nice one—when he took a job. But he used the money to buy a sports car. He could have paid off his loans and would never have had to think of them again," he says. "Instead, he had a depreciating asset, and, years later, he still has all those loans to pay off." Cooper advises students to be as frugal as possible. Make meals in a crock pot instead of going out. Choose a smaller or less attractive apartment if the rent is cheaper. Walk or bike places rather than taking public transportation. "The smartest thing to do is to work through high school and undergrad studies," he says. "It's a heck of a lot easier then to combine work with school than it is once you're in a DPT program. If you're able to enter grad school without outstanding undergrad loans, your path will be easier. If you're careful through grad school, you can then pay off those loans within a few years with hard work, by taking a second job, by working some overtime, living frugally, and so on." Coping With Debt DPT students and recent graduates experiencing financial difficulties should not delay seeking help, those interviewed for this article agree. Early intervention is key. Anderson's advice is to seek out experts—especially the school's financial aid office, because personnel there can point students and recent grads to helpful resources. Many financial aid offices offer tools to improve students' financial literacy. Recent graduates need to pay attention to the variety of repayment options and any loan forgiveness programs out there, Anderson adds. "There never have been more options, which make paying back loans easier. But deciding which option to choose can be overwhelming, so trust the experts," she advises. "We recognize that students are very busy while they are enrolled, but we encourage them to take time to come to a seminar we offer that details loan-repayment strategies. If that's not possible before graduation, we also let students know that our services are available to them after graduation." In the long term, the hope is that the cost of education can somehow come down, to reduce the need for such high debt and subsequent financial wrangling in the first place. "Down the road, we need to make professional education less expensive," Brown says. "Should it cost this much money to be a physical therapist? I don't think that it should." But even if the cost of education can be controlled, the need for financial literacy education will remain, say those interviewed for this article. Keith Loria is a freelance writer. Update: New Financial Literacy ResourcesShortly after the publication of the above story, APTA launched the Financial Solutions Center, an online resource that offers members opportunities to help deepen their financial knowledge and potentially refinance student debt at a discounted interest rate. The center includes a free financial education program that uses videos, articles, webinars, quizzes, online communities, live chats, and more to create a personalized experience in financial and debt education.