• Feature

    Financial Strategies for Recent Graduates

    Many PTs face financial challenges early in their careers. These can arise from such circumstances and factors as student loan debt, starting a family, caring for an aging relative, or starting a private practice. What strategies can new (and not so new) PTs use to address their financial issues?

    Financial Strategies

    You're several years out in the working world and ready to expand your horizons.

    You've been working in one clinical setting for a few years and are ready to try something different.

    Maybe you've settled into a position and are ready to begin your family.

    Or, you've dreamed about owning your practice, and it's time to make that a reality. At the same time, you're faced with student debt repayment and feeling stressed about your finances. That affects your priorities and choices both today and for the future.

    Rachel Jarrouge, PT, DPT, was a new graduate in 2014, living in New York City, working in an outpatient facility, renting an apartment, and able only to pay interest on her student loans. Her focus was on paying off those loans as quickly as possible. She knew within six months of starting work that she needed to make a change.

    Rhett Roberson, PT, DPT, a board-certified clinical specialist in orthopaedic physical therapy and a fellow of the American Academy of Orthopaedic Manual Physical Therapy, graduated with his DPT in 2009. For his first three years after graduation he worked in an outpatient hospital setting and hoped to open his own practice and increase mentorship opportunities in the profession. He had a goal. Roberson now has a private practice and is developing a nonprofit, Mentorevolution, with business partner Beth Collier, based in Atlanta.

    Libby Trausch, PT, DPT, co-owner of Breathe. Physical Therapy & Wellness in Des Moines, Iowa, and her husband are both PTs. They went to private schools and took out large loans. Since then, they've bought a home and started a family. She now is co-owner of a niche practice in women's health.

    Jorgie Hadder, PT, DPT, had worked in a subacute rehabilitation setting with older adults at the Eaton County Health and Rehabilitation Center in Charlotte, Michigan, since graduating nearly five years ago. She recently moved to a new city and position, where she's balancing student loans with starting a family.

    Whether your focus is on student loan repayment, saving for a big purchase such as a home, getting ready to expand your family, or starting a new practice, it can feel overwhelming and stressful. There is no "best" way to achieve your goals. It will take patience, hard work, creativity, and flexibility. Creating your roadmap includes understanding your finances and going after your dreams. You're juggling your career, student debt, and living your life while preparing for the future. It's an exciting time, but it can be stressful, too.

    Your route might not be a straight line to your goals. It might more closely resemble climbing a jungle gym — a description offered by Sheryl Sandberg in her book "Lean In," where the path to success might be lateral or dip down slightly before rising. Life throws surprises and new opportunities in your path, she noted, and sometimes you might deviate from the road you're on and find a new or better path.

    The important thing is your vision. It's time to plan.

    Having some understanding of finances and budgeting is helpful. Where can you get that knowledge? For some, it might be a class in school. For others it might be from family or friends.

    Personal Finance 101

    Hadder knew the extent of her finances and that PT school would be an investment. "If I'd looked at just the price tag, I would have been hesitant to do it. But I felt strongly that my career was something I wanted to invest in. I felt that with good financial health and planning it would pay for itself."

    Early on, she attended a presentation from financial advisors at her school. One thing stuck with her. They talked about debt and the importance of retirement planning. She found the presentation helpful, and soon after graduation she met with a financial advisor to talk about employer retirement options and to plan for the future. She asked questions to better understand the value of investing and timing for balancing student loan repayment. Hadder says working with a financial professional was beneficial.

    Roberson concedes that he probably was undereducated about the extent of his loans, what indebtedness would mean, and interest rate changes. When he was an undergrad, interest rates were 2.5%. They jumped to 6% while he was in school. "I didn't have a lot of financial education," he explains, "and it's easy to be financially naive. You're not asked if you are sure you'd like to take the entire loan amount this semester or what it'll translate to over time. You're only thinking that you need to pay tuition." He learned about finances mostly through experience — just "living it."

    Jarrouge now works at MD Anderson Cancer Center in Houston, Texas. She says she had a leg up in understanding her finances because she had learned from siblings who had attended college in the U.S. (Her family is from Lebanon.) When she was choosing a DPT program, she considered multiple factors, including program details, tuition, and the cost of living where the schools were located.

    She selected the State University of New York at Stony Brook. She thought she was prepared.

    She felt blindsided, however, by the effect of interest rates. Her parents back in Lebanon were not in a financial position to help, but they believed in the importance of education, both academically and culturally. They imparted that belief to Jarrouge but provided her with little guidance on what would come next.

    Jarrouge, like Roberson, didn't understand how interest rates fluctuate, and that monthly payments are not based solely on the amount borrowed. By the time she graduated, the interest rate on her loans was close to 7% and she was six figures in debt. The first year after graduation, she worked in New York City for a base salary. Her monthly student loan payments were almost as much as her rent. After about six months, she was just surviving, living month to month. Though she wanted to stay in the city, she knew she had to make a change. She started looking at areas she could better afford. She considered other cities — including Houston, where her brother lived. She moved to Texas, where base salaries were higher, there was no state income tax, and the cost of living was much lower.

    Focusing on paying down her loans, Jarrouge tried to refinance through a program her brother used. She was denied, however, because the underwriters didn't believe she'd be able to make the payments based on her income as a PT. That turned out to be a blessing, she says, because she soon accepted the position at MD Anderson. As a state institution, it offered the benefits given to a government employee, including automatic, mandatory enrollment in the state's teacher retirement plan. That meant starting to save for retirement was one less worry.

    Jarrouge also took advantage of the Income-Based Repayment Plan under the federal government's student loan program. Borrowers pay 15% of their monthly discretionary income (or 10% for new borrowers) over 25 years. After that the loan balance is forgiven. Being in such a plan also made Jarrouge eligible for the federal Public Service Loan Forgiveness Program. Under this program, individuals who work full-time in public service jobs, including 501(C)(3) nonprofit or public health organizations, may be eligible for loan forgiveness after 10 years and having made 120 qualifying payments. Jarrouge's position at MD Anderson met the criteria for a public service job.

    By taking advantage of those programs she was, as she put it, "stepping off the hamster wheel." Jarrouge now is about five years into paying her student loans. She has started a program to share her knowledge about these federal programs with students who come through her facility on their last clinical rotation.

    Choosing a Place to Practice

    A recent study conducted by the Florida Physical Therapy Association's Early Professionals Special Interest Group concluded that practice setting choice may be affected by physical therapist student debt, and that student debt may be an overall barrier to practice and career choices. The study also found that the mean debt-to-income ratio based on total reported educational debt was 197%. The most frequently reported debt range related to DPT study and total educational debt was $100,000 to $124,999. (The study, authored by Steven Ambler, was published in December 2019 in PTJ.)

    While Jarrouge's move was motivated by cost-of-living considerations, she discovered a new area of practice that she enjoys. She always thought she would be outpatient and private practice oriented. With the move, she discovered the field of oncology. She never thought she would be treating a specialty population, but she now says that oncology opportunities are the first thing she'd consider if she ever were to relocate.

    Hadder knew she wanted to work in rehabilitation, and she had a passion for neurology — an area of practice that, she says, requires creativity to meet the needs of complex patients with multiple comorbidities. She sought a workplace whose focus aligned with hers. She's proud of her facility, its working environment, and the ethical and quality care that Eaton provides. And it's a nonprofit, which allowed Hadder to enter the Public Student Loan Forgiveness program. When her husband got a new job in a different city, she sought another nonprofit position in an effort to stay in the program. In January, she moved into home health, where she'll continue to work with older adults and those with neurologic issues.

    A Vision for the Future

    Early in his career, Roberson knew he was going to need to address his financial and professional development, but he wanted to do it "in a way that would drive my career in the direction I wanted to go." He wanted to be independent and to start a company that would offer a professional development component. He also wanted to increase mentorship opportunities in the profession.

    Roberson credits excellent mentors along the way who helped guide him professionally. He looked for resources that would help him adapt to his financial restraints. He explains that he was constantly working, always trying to find appropriate supplemental positions that would augment what he was trying to do. He completed an orthopedic residency and held positions in a hospital-based outpatient facility, then became clinic director at a private practice. During that time, he also taught and worked PRN. He was a clinical adjunct while in the private practice. He transitioned from lecturing and coordinating courses for DPT students to teaching and coordinating the residency program, which included lecturing on weekends at Mercer University in Georgia.

    While still working full-time, he was laying the groundwork for his companies. One is a private practice he co-owns that focuses on wellness, prevention, and consumer education. He provides those services on a contract basis at country clubs.

    His other company's goal is to improve options for mentorship in physical therapy and offer professional development. Other than residencies and fellowships, he says, many PTs don't have the opportunity to access a structured mentorship program. He and his business partner have been working on a mentorship app that is real-time and HIPAA-compliant. Roberson describes the software as a "connection piece." A mentor puts his or her profile on the app. The mentee can view the information and set up an appointment — physical or virtual — with the mentor.

    That company will be run as a nonprofit. He and his partner have invested time, but — reflecting their financial situation — haven't had to invest a lot of money. With the transition to a nonprofit, they'll also be able to consider other fundraising and grant options. In addition, they've connected with Move Together, an organization whose mission is to increase quality rehabilitation around the world. Roberson and his partner joined Move Together on a trip to Guatemala, where that organization is building a clinic. Their vision has expanded to bring education and elevate the knowledge of the clinicians who'll be working in the clinics.

    Jarrouge and Roberson both had a vision or a plan for their immediate futures. Jarrouge wanted to pay down her debt quickly. Roberson wanted to start his own practice and promote mentorship.

    Libby Trausch also had plans.

    Before entering her DPT program, Trausch felt she had a good knowledge of finances. As an undergraduate student she did a personal self-study on investments. She also worked at a mortgage company before going to PT school, and understood such concepts as interest and debt. She and her PT husband came out of their private schools with $250,000 in student debt. They've made choices along the way to make life easier.

    Trausch started working at Des Moines University, which has a generous employer match for its 401(k) retirement plan. She faced a choice: Focus on paying off student loans or leveraging the employer 401(k) match. She decided to start early on retirement planning.

    Along the way, she made a major misstep. She and her husband bought a house — in 2007, at the top of the market just before real estate prices dropped. Meanwhile, her mother owned her own home. They both sold their houses — Trausch at a loss, her mother for a profit. They used the money to buy a better house than they could have afforded on their own, with an apartment for her mom. Her mother had lived in another town, so the joint purchase brought them together. It also helped Trausch and her husband save on child care costs. At the time, she was pregnant with her first child. She now has three.

    Child care, Trausch says, is a huge financial line item that drives many women out of the profession of physical therapy. In her area, the cost of daycare for three children could be $15,000 a year. To reduce the need for child care, the adults juggled their schedules. Trausch took off one day a week, her mother took off a different day, and her husband came home early for childcare duties.

    Fast forward a few years, and she opened a niche practice with her business partner. They did their best to open without debt. They started out inexpensively and used personal funds to buy treatment tables. They didn't need big, expensive equipment.

    Prior to opening, Trausch worked hard to establish herself as a women's health expert. She got into birth circles — groups of people (women and sometimes including men) who are anticipating or have gone through the birthing process — because she was in the middle of having babies herself and she networked with other birth professionals in town. In one of those birth circles, she met a chiropractor who rented them a room to get started.

    Trausch had differentiated herself as an expert, so the newly opened practice soon was busy. When additional space was needed, Trausch and her business partner looked in cheaper locations. "Through our networks, clients were coming to find us," she says. The practice has been able to grow without debt by using inexpensive social media marketing.

    She also recognizes the cost — financial and operationally — of employee turnover. She's in a carefully chosen network "so I can run a practice that doesn't burn out the therapists."

    Trausch has now shifted her personal financial strategy, focusing more on student loan payments and less on retirement. "The student loan debt is disgusting, but I love what I do," she says. "I love owning the practice. I love being a PT."

    She didn't set out to own a business. Now that she does, though, she says she was meant to do this. "It feels exactly right. I enjoy the puzzle of making it work and the challenge of building it."

    Takeaway Messages

    There isn't a quick fix to student loan repayment or an easy way to deal with the financial challenges of being a recent graduate. There are, however, opportunities for loan forgiveness through the federal government if you meet certain criteria. If you don't, you might consider looking at private loan consolidation. To learn more, visit the APTA Financial Solutions Center.

    Budgeting and flexibility are keys to reducing stress and anxiety. If you have a plan and a vision, PTs interviewed for this article emphasize, it becomes easier to know what to do next. Your career is for the long term. When planning your budget, you'll want to consider all of your expenses — including housing, utilities, transportation, food, entertainment, and debt. In addition, experts recommend that everyone have an emergency fund of three to nine months of expenses in case of job loss.

    It's not too soon to consider your future self and start planning for retirement. In terms of funding, start small and build from there. Jarrouge's employer offers a retirement fund match. By taking advantage of these funds early in her career, she'll reap the rewards of compound interest over many working years — plus the "free money" contributed by her employer.

    Child care is an issue. Trausch was able to leverage having three adults in the home to put together a care plan for her three children that reduced the need for outside help. Her mom retired last June and now takes care of all the children.

    Hadder has had child care considerations since having her first child in January 2019. She says she waited a bit longer to start a family because she wanted to be financially ready. When she returned to work, she learned that her employer has a dependent care program. She pays into a fund with pre-tax money that can be used for child care payments.

    Buying or renting a home is another consideration, and there's no "right" answer. Roberson was able to take advantage of the economic downturn to purchase a house, where he and his wife lived before turning it into a rental and selling it. Trausch reports that her husband "likes to fix things" in their home, so, when repairs are needed, he often can handle them. Hadder and her husband feel it's better to own a home if possible, so they purchased a small starter house. Jarrouge is focused on paying down her student loan debt and rents her home.

    Lifestyle can be affected. Jarrouge says the only stress in her life is paying her student loans. She has no other debt. She has not bought a house or new car. The move from New York City to Houston also was a shift for her. With the resulting changes in her budget, she's able to live without roommates and can afford to travel.

    Trausch says she did better financially at the university, but she deems her time to be valuable. "I'm not one to overwork to have more money. Time is more important," she says. But, she adds, she and her husband are not extravagant; for example, they take vacations in their camper.

    Hadder says her family has what it needs, although she would like to be in a financial position to attend more professional development programs and conferences.

    Roberson has been able to travel because owning his own businesses gives him flexibility. The real challenge, he says, is making the decision to take a break and go on vacation.

    Final Thoughts

    It's important to live within your means, Hadder says. She'd rather have a smaller house and the opportunity to go on a vacation with the people she cares about than spend her money on extravagances.

    Roberson recommends creating a financial plan and working backward from there. It's important to know where you're heading, he explains, because it helps to focus your priorities toward that goal. Your choices might change along the way to make life easier, but you'll still be reaching for your goals.

    Jarrouge, now six years postgraduation, probably is making more money than she would have at the 10-year mark in New York City. While she had to sacrifice living there, doing so improved her quality of life — and she can afford to go back to visit.

    Monica Baroody is a senior specialist in membership development at APTA.


    For more on repayment strategies and understanding your student debt, visit the following:

    APTA Financial Solutions Center

    The APTA Financial Solutions Center is helping members educate themselves on their finances and budgeting, and on managing the cost of physical therapy education. It offers a free online financial educational platform to help you create a budget, learn about investing, and plan for big future purchases. It also links to a database of certified financial planners.

    An exciting additional feature is a student loan refinancing program. Eligible APTA members can get interest rate discounts that can significantly reduce their loans' cost. Last year, use of the student loan refinancing program increased by 260%. This is a tool that all students should check out. (APTA.org/FinancialSolutions)


    I would agree with the consensus of the article, a wonderful summary of thoughts as well as practice backgrounds. From a purely financial approach, we as PTs need to operate at the highest levels of our practice acts, integrate deeply in the healthcare platform and bring value with consistent outcomes to our patients. Then, and only then will we have strong arguments for increased reimbursements and professional scope. As a private practice owner, I'm convinced the 'cash-based' models undermine the focus of our profession into the medical community. In addition to marketing directly to patients, we should be stepping up our game in professional circles, becoming "essential" to the successful outcome in patient care across the continuum, and not simply "oh I tried PT and it didn't work". Matt Calendrillo PT, DPT, BOCOP - LIVE EVERY DAY A Physical Therapy Co. Simsbury Suffield Avon CT, Springfield MA
    Posted by Matthew Calendrillo -> ?JSZCK on 3/31/2020 6:27:45 PM

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