Posted 7:02pm May 18th, 2011 by Shauna
I’ve become stubbornly passionate about sharing my acupuncture school experience and early practitioner journey with prospective acupuncture students. In the spirit of full disclosure, you should know that I’m not making a dime off any of this nor do I ever expect to. I’m speaking out because few people in the acupuncture profession will actually pony up the information and certainly not the AOM schools. Straight up, the numbers thrown around by the schools and the profession just didn’t match up the longer I spent in school. Why were so many graduates TAing, in no hurry to finish their board exams, ‘slowly’ building their practice, maintaining part-time jobs outside the profession, leaving the profession for other jobs, or never practicing at all? Really, at all? Yep…..not at all. Each year that I was in school, I was afforded the time to get to know fellow acupuncture students who were entering the acupuncture profession. I’ve somehow kept up with a vast number of people who graduated from OCOM and other AOM schools. The reality of AOM student loan debt in relation to actual AOM income is completely out of balance. It was even presented by the NCCAOM at the American Public Health Association conference as early as the fall of 2008.
When I started to write this blog, I couldn’t get the 3 D’s out of my head: Divorce, Default & Death. I know it sounds dramatic, but unfortunately they are some of the less appealing student loan repayment options that are on the table. I’ll get to divorce below. Death needs no explanation. Default, while financially irresponsible, might not be so bad. Well except for the fact that you could be stripped of your professional licensure. The reason for the student loan debt in the first place. If you are considering attending acupuncture school and need to take out student loans to finance your education, these options could be yours one day too. Think I’m joking when I say ‘don’t go to acupuncture school’? Unfortunately, I’m not. Not following me? For some background see this CAN guest blog post from last year. If you haven’t read it, you really should….you’ll enjoy part deux so much more!
In the time since I wrote that blog, I’ve been working almost solely as an acupuncturist (seasonally I work a few hours per week as a ski & snowboard instructor). In order to keep first year business expenses down, I made the conscious decision to not open a brick and mortar clinic. Instead, I’ve built a growing mobile acupuncture practice and worked part-time at WCA. The key here is no additional debt burden. This scenario has also allowed me to really focus on the clinical side of patient care instead of being distracted by trying to run a full time acupuncture business, take out a small business loan with an upside down income to debt ratio or worry if I’d have enough money in the bank for office and related business expenses. Don’t forget, actually having enough real money (after taxes) to pay myself a monthly salary to pay my monthly student loan payment.
Now let’s visit tax time 2011. It marked the first full year of being an acupuncturist. Since 2002 or 2003, this is what I wanted to be. It was a milestone. Historically, I wrap up my taxes by Valentine’s Day. I’ve never had a tax balance due. I’ve always received an annual refund of some sort. This has been happening since I could file a tax return when I was in high school. This year was different. I really dragged my feet. I’d been crunching some numbers and staying up on the options of managing my staggering AOM student loan debt otherwise known as my acupuncture mortgage. I had a plan and a backup plan. If you know me, you know I even had a backup backup plan. None of it panned out. Not the plan (A), the backup plan (B) or the backup backup plan (C).
Plan A – File ‘married’, break even or get around a $1,000 in a return. This plan granted us the smallest return ever, just over $1,000, but no complaints. Future consequences of this choice are significant and pretty financially crippling as my husband’s income would be included in the pool of available money to calculate my monthly student loan payments. The reality is that his income bears the most weight to keep the roof over heads, keep us fed with health insurance, etc. With this choice, I estimate that I’ll likely owe around $400 per month in a student loan payment or just under $5,000 annually. OK, doable with both of us working while slowly chipping away at the acupuncture mortgage.
Plan B – File ‘married separate’, break even or owe between $500-$1,000 in additional taxes. I worked to keep my first business expenses under control and put away a couple thousand dollars in anticipation of this possibility. As touted by the IBR options, filing taxes under this status would afford me a more realistic repayment plan and take into account the income actually obtained by working as an acupuncturist. With this choice, I estimate that I’ll likely owe under $200 per month for 25 years. While not desirable, very appropriate in relation to the income derived from my acupuncture practices (i.e. actually treating patients, not TAing, selling acupuncture needles, waiting tables, etc.) and achievable while not putting my family in a financial hard place. What actually happened was that filing ‘married separate’ would have cost my family $3,500 on top of the taxes that were already due and accounted for with the normal filing process. This scenario would continue annually. Not very appealing and not working to reduce the balance of my acupuncture mortgage.
Plan C – Divorce. Really? Has it honestly come down to putting this card on the table? Actually, yes. When you crunch the numbers, this option makes the most financial sense on paper. Crazy thing is, before I even started classes at OCOM, I specifically asked the Financial Aid administrator for historical information regarding the FAFSA results for other married students in the program. I was told quote “getting married is not a negative. It usually helps with many other aspects of being a student”. When I visited with the Financial Aid administrator in person and asked for possible breaking points in income levels that I needed to consider, the message was an almost sound bite similar. What I’m trying to let other potential AOM students know is that much like them, I did my homework, asked very pointed questions, weighed pros & cons before matriculating and looking back it was more like being in a used car lot (sorry car dealers). I didn’t need to get married to validate my relationship. What I did need was some solid advice from the people who are supposed to have a handle on this information for prospective students. If there were consequences that I should take under consideration, I was prepared to make the best decision possible for the sake of our finances and cost of my AOM education.
Now what? I’m on to Plan D by now. Ironic isn’t it, Plan D and the 3 D’s. I’m in the process of moving my loans out of ‘deferment’ status and completing the formal transition into the Income Based Repayment (IBR) plan. This is the best option available to me before divorce, default or death to remain in the acupuncture profession. OK, no worries, the IBR payments will be reasonable, right? Guess again. How does approximately $700 per month in a student loan payment sound to you? The $700 per month is not on the standard 10 year repayment plan either. It is for at least 17 years if I can keep up with these monthly payments. Are you kidding me? This is half of our monthly mortgage payment and more than twice as much as our monthly food budget. Around $8,500 per year in student loan payments for 17 years or about $144,000 total! The impact of this is huge. All of this for an AOM education at a school that holds no career fair for their interns. For a profession that has no officially recognized BLS workforce data let alone jobs for their graduates to move into. So prospective students, does this idea still sound appealing to you? Please see the writing on the wall and don’t go to acupuncture school if you need to finance your AOM education on student loans! There is sufficient evidence out there now to support the fact that an AOM education is a bad return on your investment.
As you are reading this, you may be thinking, how could this be? Let’s see the data, the numbers (props to acupunkgirl) based on our real life family of two who own a small home, have chosen to be child free, have a single car payment, commute by bike and/or take public transportation (unless time or safety dictate otherwise), are pretty handy and don’t pay full retail for the majority of discretionary purchases. All in all, we do pretty well with what we have, plan and save for what we want, or do without things we really don’t need. Our numbers look like this:
$70,000 = AGI. This is our combined adjusted gross income. If you don’t know what this is you might want to get a handle on it before if you think you want to go to acupuncture school. It’s what the IBR payments are based from. It’s not exactly real money that you get to fully touch and hold.
$50,000 = Actual take home pay. This is real money that goes in our bank accounts after state & federal taxes, health insurance, retirement, etc are subtracted from the $70,000.
The $50,000 of real money needs to pay for the following annual expenses:
$25,000 = Mortgage, properties taxes, home owners insurance, mortgage insurance and all utilities. If we were renting we could reduce this to around $18,000 per year at best unless we lived in a box. Let’s be realistic here.
$15,000 = Food, auto insurance, car payment, gas, health insurance co-pays, anticipated misc expenses, etc.
$5,000 = Savings. This is way less than we should be saving, but probably on par or better than most people today.
From the $50,000 of real money, the above normal and expected annual expenses leave us approximately a $5,000 cushion fund. As most people know, especially home owners, this isn’t just free money lying around. Things come up over the year that we like to try not to tap into our savings for. Normal but not always expected house fixes, vet bills, short cheap sanity weekends away all eat away at this buffer pretty quickly. So the fact that my acupuncture mortgage monthly payment is becoming $700 per month in the near future is quiet daunting. That’s about $3,500 more than what we have left in our remaining $5,000 cushion each year. Essentially draining our buffer finances, our responsible safety net, and putting us in a poor position should any quantifiable expenses come up. Not just for a few months or even a couple years until we work through it and quickly clear the debt, but for at least 17 years. But who I am to assume prospective acupuncture students ever want to own homes or any financial security. No, that would be crazy….about as crazy an idea as plunking down $100,000 in student loans to go to acupuncture school.
I have to wonder when the last time an AOM school administrator sat down and looked at the IBR chart, let alone any student loan repayment options, and calculated what their expected payment would be if they had $100,000 in student loan debt? How would this impact their own family and for how many decades? Would they advise their own child to go to acupuncture school? Could they honestly tell prospective acupuncture students that financing an AOM education on student loans is even worth considering? Hopefully not and especially not if they need to resort to the spiel that they are investing in their future by investing in themselves! I can think of an endless list of ways to invest in yourself that don’t ever involve going to acupuncture school and graduating with an acupuncture mortgage of their very own with little chance of finding a real paying job in the profession. Let’s start with #1) invest in yourself by NOT going to acupuncture school unless you have $100,000 in the bank right now.
So now what? Well, obviously the current cost of the AOM education can’t continue along its historical path. It is completely unsustainable for everyone but the acupuncture schools. It’s unsustainable for the students, for the patients, and even for the tax payers down the road. Think housing bubble here. I really don’t mean to break prospective acupuncture student hearts with actual numbers, information and experiences but these details need to be shared openly and honestly if we are ever going to grow as a profession. We have to work to change this. We need to work to make sure the education is accessible and affordable to a wide range of prospective students from a wide range of backgrounds who can become licensed acupuncturists and serve their communities by providing accessible and affordable acupuncture. We’ve got some elemental work to do. OK, who’s in?