With the rising cost of tuition coupled with hard economic times, many audiologists, especially new graduates, are struggling professionally, personally, and financially. The American Academy of Audiology’s (AAA) New Professionals Committee has responded to the many questions and concerns from members on managing student debt after graduation by presenting “Avoiding Burnout Through Student Loan Management” at AAA2021 Virtual. The purpose was to share how financial planning, specifically student loan payment options, can place workplace burnout. By understanding common financial challenges for new graduates and explaining available student loan payment options, we can help talented audiologists have balanced and fulfilling careers.
MANIFESTATIONS OF BURNOUT
The World Health Organization defines burnout as “feelings of energy depletion or exhaustion; increased mental distance from one’s job, or feelings of negativism or cynicism related to one’s job; and reduced professional efficacy.” 1 First noted in the 1970s, burnout is more widely recognized by today’s workforce. 2 As we enter the third year of the COVID-19 pandemic, burnout has especially affected the healthcare industry. The combination of long hours, understaffing, increasing patient caseloads—all while avoiding a serious virus—has affected many. Common symptoms of burnout include, but are not limited to, emotional exhaustion and the physical manifestations of stress like headaches, exhaustion, insomnia, pain, increased muscle tension, and high blood pressure. 3 With the demands of work and astronomical amounts of student debt, it’s not surprising that new audiologists can reach burnout quickly, particularly financial burnout.
Financial burnout occurs when debt and fear connect. The fear seeps into the day to day, including work, which adds another layer to workplace burnout. Financial literacy is a skill that many adults have to learn on their own. Some are lucky to have family or professionals who taught them financial planning, but many times these skills are learned after graduating from higher education. New professionals often feel guilty about the amount of money they borrowed to complete their degree and saving for the future seems out of reach. We begin to question why we chose audiology in the first place because our degree has cost us so much, no matter how much we enjoy our jobs.
MANAGE BURNOUT EFFECTIVELY
When making financial choices and battling burnout, new professionals should weigh the value (monetary and non-monetary) of a purchase or investment. A budget for hobbies and activities that can combat burnout like traveling, fitness, and spending time with loved ones, for example, are valuable. A large portion of a new professional’s budget is student loans; enrolling in the right repayment option can create some wiggle room for the activities that bring enjoyment.
The most common types of student loans are subsidized and unsubsidized federal loans. Subsidized loans are available to eligible undergraduate students who demonstrate financial need. Unsubsidized loans are available to undergraduate, graduate, and professional students and the loan amount is not based on financial need.
Additionally, Parent Loans for Undergraduate Students (PLUS) are not based on financial need but can be based on credit. Undergraduate students applying for a PLUS loan usually require a parent co-signer, whereas a graduate or professional student does not need a co-signer depending on their credit.
WEIGH THE OPTIONS
One benefit to all federal student loans is the fixed interest rates. Another benefit is that federal student loan repayments are not required until after graduation. 4 A new audiologist typically has a combination of federal loans in varying amounts to help pay tuition for their degrees. Some students even take out private loans where the amounts, conditions, and terms are lender dependent. Rates on private loans may be variable and, similar to any other personal loan or line of credit, may require payments right away. In general, private loans are borrowed after federal loans, scholarships, and other forms of funding have been exhausted.
The most common type of loan repayment for federal student loans is fixed monthly payments for 10 years. 5 If the fixed monthly rate is too high, there are options to lower the monthly payment, such as an extended payment plan that spans 25-30 years. The downside to extended payment plans, however, is the accruing interest.
For those who want to slowly increase the amount they pay each month, a graduated payment option is paid over the course of 10 years, but the monthly amount starts lower and gradually increases every two years. Others may benefit from an income-driven repayment plan where the monthly payments are dependent on the annual salary. Income-driven repayment plan payments are usually capped at 10-15% of your discretionary income. The payments occur over 20-25 years every month, and the remainder of the balance is eligible for forgiveness. If a borrower is approved for loan forgiveness, the IRS considers the forgiven amount as income that will be claimed on federal taxes.
Another type of forgiveness that some audiologists qualify for is public service loan forgiveness (PSLF). To qualify for PSLF, not only do the payments need to meet qualifications, but a graduate must work full-time at a qualifying nonprofit or government employer. Once an audiologist completes 10 years of on-time monthly payments, an audiologist can apply for PSLF.
For those having difficulty paying their student loans, they may consider loan consolidation or refinancing. Consolidation of student loans is taking smaller federal loans with varying interest rates and combining them into one lump sum loan with one fixed interest rate. Sometimes the payment length or amount can be changed. The terms and interest rate are dependent on the federal loan servicer. Refinancing is similar, but it is essentially a brand new loan. The goal is to lower the interest rate and lower monthly payment amounts. Essentially, refinancing is paying off multiple loans with a new loan. Refinancing is often done through a private lender, making it no longer eligible for loan forgiveness programs, deferment, cancellation, and the ability to change repayment plans such as consolidation through a federal loan servicer.
Two terms that all borrowers should understand are forbearance and deferment. Forbearance temporarily suspends student loan payments, but loans can still collect interest. Someone might opt for forbearance when a financial emergency occurs and they are unable to make their monthly payments for a temporary amount of time. Deferment is the same as forbearance, but some loans may not collect interest. Be wary of choosing forbearance and deferment if the goal is to apply for a loan forgiveness program, as both options could disqualify the application.
THE PANDEMIC BREAK
The COVID-19 Pandemic created financial uncertainty for many people. Those with student loans received some relief when the US Department of Education extended the federal student loan payment pause through May 1, 2022. The pause created relief measures for eligible loans in the form of suspension of loan payments, a 0% interest rate, and stopped collections on defaulted loans. 6 Many audiologists continued to work throughout the pandemic and took advantage of the student loan pause offered by the government by paying down the principal balance of their loans. For those who have the intention of filing for PSLF, there is an opportunity to receive credit for past payments that would not otherwise qualify. 7 In a time of uncertainty and stress, some borrowers have been able to prioritize other bills and debts because of this pause.
IMPACT FOR EMPLOYERS
For employers hiring new graduates, understand that there is a large chance your audiologists are managing some type of student debt. As of 2019, about 30% of all American adults had outstanding student debt, according to the Fed. 8th New graduates often consider the position, pay, growth opportunities, and how employment can influence their student loan repayments. If your workplace qualifies for loan repayment or forgiveness options, make that known to your desired candidates, as it could have weight on their decision for where they choose to work.
For audiologists who continue to feel burned out and under financial stress, my advice is to focus on the future. The debt you acquired is part of your past and you are dealing with it because you have to. Don’t ignore your financial obligations, but stop feeling guilty about your past financial mistakes. If money negatively consumes your everyday thoughts, it’s time to readjust your spending so you can make choices with confidence. Remember that everyone has to learn about finances—it’s a skill set that will become more natural with practice.
Disclaimer:This is not financial or business advice. This article represents the opinions of the author and not those of the American Academy of Audiology.