Live prudently now to pay down debt later

If students begin curbing all unhealthy spending habits while in school,academic leaders say they can trim the size of their pending student loanrepayment substantially upon graduation.

Dr. Grant Turnwald did the math: if students saved the dollar a day thatthey would normally spend on soda, they'd have at least $13,000 extra dollarsupon retirement at age 65.

Or put another way, they could make a $13,000 payment on loans. Thoughthat might make a marginal dent in the debt load of recent veterinary graduates,Turnwald of Virginia Tech (VT) says every dollar saved is one less dollarpaid post-graduation.

The average debt load of graduating veterinary students at Colorado StateUniversity (CSU), for example, is $73,000 - the standardized debt of manystudents, which can be higher or marginally lower at other veterinary schools.

Given that students may be "lucky" to land a job that pays$55,000, the financial burden of outstanding loans on new graduates obviouslyweighs heavy.

That's why financial experts advise students to get a head start on financialplanning long before entering the job market.

Plan ahead

When students enter veterinary school at CSU, they're briefed on financialaid as freshmen and throughout their student career.

To stay ahead of the financial burden, Cheryl Hesser, CSU associate directorof administration, advises students to start paying back loans while stillin school.

"Attempt to make the quarterly interest payments on your loans becausethose really add onto the principal when students get ready to graduate,"she says. "It's a big shock to students."

Once students graduate, they can refer to a bevy of Web sites for guidanceon where to begin making payments. (See sidebar.)

Turnwald, VT associate dean for academic affairs, says students at VTbegin talking about cash and debt during orientation. The first-year curriculumincludes a personal finance course, which stresses the importance of savingtoward retirement and cutting down expenses while in veterinary school.In another course, students develop a budget for their first year aftergraduation by factoring in the cost of living in a particular city.

Turnwald says, "I hope by doing that, we can get the message tothem earlier on that if they are going to have any standard of living theyneed to minimize debt while in veterinary school and secondly, they aregoing to need to know how to negotiate for good salary when they start."

He adds: "Adopt a standard of living compatible with their debtload and income. Standard of living means the type of vehicle they purchase,house they buy or rent, how much they spend on entertainment, eating outand so on."

Adding to debt

Speaking of spending money they don't have, Hesser says that while veterinarystudents do "a pretty good job of being minimalists," she addsthey have one soft spot: owning pets.

"Typically, they also don't have a pet, but they have menageries,which involve additional costs," she says.

Stretching their limited budget even further, many more students liveon their own, without roommates, due to the rigors of the veterinary program.

Exit counseling

As students near graduation, as one last preparation for loan repayment,any school that disburses federal student loans is required to provide exitcounseling for their borrowers, according to Sandra Murray, Student LoanCollections, University of Missouri (UM).

UM devotes a Web page to exit counseling (http://www.missouri.-edu/~muloans/exit.html),which explains that exit counseling is required for two reasons: 1) It fulfillsthe federal requirement agreed upon when a student signs his or her promissorynotes; (2) It provides the student with valuable information regarding therepayment of the loans.

Consolidation options

Part of exit counseling may involve discussions on consolidating loans.

Hesser of CSU encourages her students to evaluate all consolidating optionsprior to graduation. "Otherwise, they're making more of these littlepayments of $35 to $50 each than if they had tried to consolidate into onepayment."

Students can contact the consolidating companies directly. (They willconsolidate any type of federal student loan, except Health Profession PrimaryCare Loans, which have special restrictions.)

Don't keep secrets

When new graduates find themselves in a financial crunch and unable tomake payment, the biggest mistake they make, according to Hesser, is neglectingto contact their lender.

"The biggest issue is keeping track of where your loan is at andnot being afraid to pick up the phone, call your lender and say, 'I've gota problem. I've got a job that's paying me $12,000 a year,' or 'I don'thave a job' or 'We've run into problems at home.' Or 'My wife is pregnantand has problems carrying pregnancy and she can't work.' Whatever it is,if they let the lenders know, the lenders want to work with them."

For those who think it won't happen to them, Hesser says it happenedto her current veterinarian, who was forced to default, but is back on tracknow.

"Lenders don't want to make borrowers delinquent, they don't wantto put them into default, they want to get repaid," she adds. "Thelaw allows lenders to work with the borrower as much as they legally can."