The Case for Offering Student Loan Payback Programs in Your Clinic

Student loans have become an even greater burden on today’s rehab therapists; according to our 2022 State of Rehab Therapy report, 52% of new graduates are leaving school with more than $70,000 in debt, and 34% have debt exceeding $100,000. Not surprisingly, many therapists are looking for better pay to deal with that debt, and are willing to move out of clinical work—or health care altogether—if necessary.

And yet, most clinic leaders don’t seem to have made the connection between retention issues and the student loan crisis that rehab therapy is facing—or if they have, they haven’t taken any action in their own practices. Only 8.3% of surveyed clinic leaders had a student loan payback program as one of their retention strategies. For clinics losing therapists to higher-paying jobs within health care (or outside of it), payback programs are a great way to help keep talented clinicians on their team.    

But are student loan payback programs a feasible option for all clinics? And where would you even start if you wanted to create your own program? For those answers, I spoke with Brian Gallagher, PT, Founder and President of MEG Business Management, who has some great insights on how clinics can implement payback programs, and why they should offer this incentive as part of their retention programs. (And if you want to hear more of his thoughts, check out his podcast interview with WebPT co-founder and COO Dr. Heidi Jannenga.)   

Student loan payback programs aren’t as expensive as you might think.  

Given the big numbers surrounding current student loan debt, some clinic owners might assume that a payback program would have to be costly to tackle those huge balances. Not so, said Gallagher; a hypothetical payback incentive priced at $5,000 per employee would only cost $96 a week—far more reasonable than most owners might assume. The $5,000 number is a good benchmark for folks to consider because, per the Consolidated Appropriations Act, employers can offer up to $5,250 in student loan repayment benefits tax-free through 2025.  

Of course, employers are free to make the amount more or less to fit their comfortability and budgets. The key to implementing a payback program that works for you, Gallagher explained, is to figure out how it fits within your practice:

“Because practices are of different sizes and magnitudes, I think when you look at any incentive or benefit program, you need to understand how it’s going to be budgeted into the practice. Ask yourself: how much money are you willing to set aside in this benefits package? Then, prorate the amount of student loans each employee has. Not all students should necessarily be entitled to the same benefit package—it should be commensurate with the student debt distribution per employee.”    

The cost of not having a payback program can be even higher.   

Contributing thousands a year to a payback program will inevitably cost more, sure—but what’s the cost of having to replace unsatisfied therapists who end up leaving? According to Gallagher, the cost of losing a single employee in the PT space is $23,000 on average. And with the current turnover rate within the industry hovering around 9% (per our State of Rehab Therapy report), one in ten employees are likely to leave their over the next year. Thus, the larger your organization, the larger the cost of attrition.

Suddenly, a payback program seems like a modest expense to bolster your retention.  

Student loan payback programs can set you apart. 

Clinic owners should consider how investing in a payback program can help attract the best candidates during the hiring process—especially considering most students haven’t given much thought to the notion of their employer helping repay student loans. Per our aforementioned report, 81.4% of student respondents stated they planned to pay back their student loan debt as they would a normal loan. Imagine, then, the recruiting tool a payback program could be—especially if competing clinics aren’t offering the same?     

One study from American Student Assistance found that 86% of those surveyed between the ages of 22 and 33 would be willing to commit to an employer for five years in exchange for help paying off their student loans. And Gallagher estimates that rehab therapy employers gain roughly a 25% edge in recruiting and a 50% boost to retention by offering loan repayment. In an environment where PTs are in high demand and therapists have options when considering employers, therapists wanting to work—and stay—at your clinic are invaluable to your success.  

Retention strategies, like loan repayment, demonstrate your commitment to an employee-centric culture.  

Incentive programs as a whole are as much about communicating culture and values as the actual financial value provided. Employees want to work somewhere that respects their beliefs and prioritizes both personal and professional growth (a finding born from our State of Rehab Therapy report), and a payback program goes a long way in demonstrating that your clinic values that growth. Gallagher notes that a loan repayment program helps clinicians further their continuing education and allows them to upskill themselves—which can benefit your clinic as much as it does the therapist.   

Interest in payback programs will only increase. 

Much of the slow adoption of payback programs can be chalked up to employers’ lack of awareness or lack of understanding with regard to how these programs work. As Gallagher pointed out, “Employers are somewhat hesitant to be risk-takers with their money on unproven strategies.” But the recent news about President Biden’s loan forgiveness plan has put student debt squarely in the national conversation. This is a good thing, because the more that ideas like forgiveness and repayment gain traction and become part of the mainstream conversation, the more that employers will be willing to get on board with student loan payback programs—especially if employees start to want them in greater numbers.  

Student loan payback programs aren't a fix-all for the retention issues plaguing rehab therapy. But they can help clinicians struggling under mountains of debt, and hopefully convince them to stay at your clinic. And with the current demand in the labor market for therapists, clinic owners can’t put a price on attracting and keeping the best talent. 

As Gallagher said, “I believe that, even if there was no tax incentive available to the employer, this is still one of the most viable and impactful benefit programs you should be putting into your practice, because it builds your company culture and proves that you’re investing in that individual personally and professionally.”