Founder Letter: Bubble Trouble: Why Mounting Student Debt is PT's Greatest Financial Threat

In 2008, the United States faced the largest and most devastating financial crisis since the Great Depression: as major banks handed out loans left and right to high-risk lenders—and hid massive interest spikes in the fineprint—many borrowers struggled to make regular mortgage payments, especially when faced with unforeseeable financial setbacks. In the midst of rising property values during the ’90s and ’00s, this worked out favorably for banks—for a while, anyway. But with so many borrowers unable to make their monthly payments, banks eventually found themselves with a surplus of valuable houses on hand and no one who could afford to buy them. As we know, this housing bubble eventually burst—and was a major catalyst for the 2008 recession.

So, why am I talking about the subprime mortgage crisis in a post about physical therapy student loan debt? Well, during our recent industry survey, we dug into an issue that, as Evidence in Motion founder and CEO John Childs pointed out to us, has an unsettling parallel to the ’08 housing debacle. According to the results of our survey—which you can see for yourself here—more than half of physical therapy students will have over $70,000 in student loan debt at graduation, and more than a third will owe over $100,000.

The staggering amount of individual debt is bad enough, but it’s exacerbated by the fact that the average PT’s starting annual salary is wildly disproportionate to the amount of debt he or she can expect to incur during schooling. Our survey found that nearly three-fourths of students believe they will earn about $60,001–$80,000 in their first PT job after graduation—an expectation that aligns with industry salary averages. (To gain some perspective, physicians typically take on similar or slightly higher amounts of student loan debt, but their expected starting salaries are nearly three times higher than the average PT starting salary.)

This imbalance could kill our profession.

Here’s the thing: the current job market for physical therapists is strong. The aging population has created a need for highly skilled musculoskeletal experts, and the high cost of surgery is leading patients to seek out less invasive ways to address functional disorders and diseases. However, the rising cost of health care has led to an increased emphasis on productivity in physical therapy practices, driving many clinics to turn their attention to add-on and wellness services—which some argue take the focus away from actually treating patients and making them better—in order to stay financially solvent. This climate also leads to less profitability and thus, less pay—making it difficult for employers to compete and for debt-saddled graduates to make ends meet. Blend this all together, and you have a recipe for widespread PT burnout.

And yet, despite all of this, physical therapists often cite high levels of job satisfaction. In fact, in our survey, most PTs indicated that they do, for the most part, like their jobs. However, they also expressed concern over the future direction of the profession and the healthcare industry as a whole. It’s as if they know the bubble is there; they can feel it. And when it bursts, the fallout could completely change the industry as we know it today.

Students don’t always realize what they’re committing to when they take on loans.

To a young person fresh out of high school—or even a few years out—who’s looking for ways to pay for college, student loans sound like an ideal solution. You can pay your tuition now and think about repaying your loans once you’ve finished your undergrad and graduate school and you’re off “making the big bucks.” And perhaps that’s true for physicians, whose average starting salary is in the six figures. But as I mentioned above, the vast majority of new PT grads can expect to earn between $60,001–$80,000, despite racking up similar amounts of debt to MD students. To me, that just doesn’t add up, and I think it’s on all of us—not solely those who have, or will, take out loans to pay for school—to acknowledge that it’s a problem and start working toward a solution.

We have an opportunity to innovate.

No matter what your opinion is regarding the current state of higher education, it’s clear that the system in its current form is in desperate need of a shakeup. Sure, it’s important for students to do their due diligence before making a life-altering decision like taking on tens of thousands of dollars in student loans. And sure, there are organizations that have popped up in the wake of this crisis—like FitBUX and Student Loan Planner—to help students and graduates better navigate the lending process.

But if educational costs continue to skyrocket, we could see a huge—and detrimental—effect to the makeup of our profession. Access to quality education—and to a career in PT—shouldn’t be exclusive to those who can afford it outright. Unfortunately, most of today’s students are obtaining loans based on the dichotomy that has, in their lifetime, always defined educational funding: they can either pay for it out-of-pocket—a pipe dream for the vast majority of Americans—or take out student loans, which result in tremendous debt. (I would be remiss not to mention that there are grants and scholarships available, but in the grand scheme of things, they barely make a dent, and full scholarships are few and far between.)

It’s no surprise then, that when those PTs graduate, they are immediately looking for ways to bump up their earning power—extra shifts, overtime hours, per diem (PRN) work, or other side gigs—while minimizing living expenses. They are pushed to accept lower-than-expected pay and high debt as a fact of life right out of the gate, and with that kind of pressure weighing on them every day, how can they maintain focus on providing the best possible patient care? It’s almost like they are destined to burn out, because I think most of us would agree that providing amazing patient care—helping people—was the reason we wanted to become PTs in the first place. New-grad physical therapists are some of the most passionate, motivated providers in all of health care, and we, as a profession, should be finding ways to keep that fire burning. Now, that’s not to say that in some cases, this pressure-laden environment doesn’t have some positive outcomes. After all, we have seen plenty of therapists move out of clinical roles to innovate in other areas—technology, for example—and that’s not necessarily a bad thing. But for those who want to remain in patient care without the financial strain, we must figure out how to alleviate it. And the way I see it, one of the best places to start is with our DPT programs themselves. And that’ll require some ingenuity on our part.

Program Curriculum

One potential solution could lie in reconsidering DPT program curriculum. After all, our profession is always evolving—and our education programs should, too. The duration of traditional DPT programs has given rise to some debate—namely, that the current graduation requirements are a bit excessive. When PTs were only expected to obtain a master’s degree, most physical therapy programs were already overloaded credit-wise. In fact, in many ways, the MPT already resembled a doctorate-level degree in terms of the amount of work required. So, there may be opportunity to trim the volume and shorten the program duration—and thus, reduce the cost of the degree. As Childs puts it, “We ‘overshot’ the DPT curriculum in the transition from the master’s to the doctorate by adding another full 12–18 months in most cases. Therefore, there’s ample room to shorten programs by at least 6 months, if not more.”

Residency Programs

Additionally, new grads are often encouraged to enter residency programs after graduation, which, in many cases, means they’re making sub-average wages—and further delaying student loan repayment. The argument for that recommendation has long been that residency-trained PTs produce better outcomes. However, studies like this one from the Journal of Orthopaedic & Sports Physical Therapy show us that there’s very little difference between the outcomes achieved by residency-trained PTs and those achieved by non-residency therapists. So, perhaps instead of expecting new grads to put off paying on their debt, we can create alternative pathways to specialization and meaningful experience through mentorship and on-the-job training. Additionally, online options—like Evidence in Motion’s fast-tracked, hybrid DPT education program—could offer a more cost-effective and flexible path to obtaining a DPT or completing additional training after graduation.

It’s been 10 years since the housing bubble burst, but for many Americans, those memories are still fresh, which is all the more reason to avoid a potential crisis in our profession. Outrageous student loan debt isn’t unique to physical therapy, but I believe the PT industry is caught in an unfortunate conundrum: we’ve adopted a doctorate-level education as an entry-level prerequisite for practicing physical therapy, but we lack the recognition—and salary potential—of other doctoring professions. So, I leave you with this to consider: knowing what you know about the future of the physical therapy, would you recommend this career to a young person?

This month, we hope dive into this question—and more—during our webinar on the state of rehab therapy. Join us on July 12, 2018, to gain more insight into our current professional climate and how things could change in the very near future. Register here.