Physical Therapist Student Loan Debt

The cost of higher education in the United States is big news. One major reason for the media attention is rising student loan debt. Concerns about rising student loan debt are being voiced at the federal government level¹ and by political candidates,^2,3 institutions of higher education,⁴ professional organizations,^5,6 and, of course, consumers.⁷

There seems to be little agreement on the reasons for escalating costs, although there is nearly universal agreement that the costs are out of control. Various authors have argued for and against the effects of several factors on increasing costs, including growing numbers of institutional administrators,^8,9 increasing federal regulation,¹⁰ new campus buildings to attract students,^9,11 rising costs of employee health insurance,¹² costs of intercollegiate sports,⁹ and an increasing proportion of professors staying beyond traditional retirement age.¹³ State support for public institutions has declined over the past 2 to 3 decades,^9,14,15 and both public and private institutions saw declines in gifts and endowments during the recent recession.⁹ Consequently, institutions have charged students more to make up for budget deficits.¹⁵ The result is that over the past 3 decades, tuition and fees have increased approximately 210% at 4-year public universities and by approximately 130% at private 4-year nonprofit institutions,⁹ while median household income has increased by approximately 2%.¹⁵ Although tuition increases have been accompanied by expansion of financial aid packages, increasing proportions of those packages are in the form of loans.^9,16 Taken together, these forces have caused higher education costs to outstrip the capacity of many family budgets, requiring more borrowing than in the past.

Consequences of high student loan debt are reported to include delays in starting families, buying homes, or saving for retirement.^17,18 Some evidence suggests that student loan debt influences decisions about where to work⁵ or live,¹⁷ with increasing importance of salary and cost of living in decision making. Another upshot of high student loan debt may be inability to afford additional education for career advancement—a reason to be worried that we will have insufficient numbers of physical therapists with PhD degrees to support academic and research programs. Adding to concern, a study published in 2015 reported a negative association between cumulative student loan amounts and psychological well-being of individuals in early adulthood.¹⁹

How has the changing landscape of higher education affordability affected physical therapist students and graduates? Although the aggregate amount for federal student loans is capped at $31,000 for dependent undergraduate students, the aggregate limit for graduate or professional students is $138,500.²⁰ Aggregate loan limits for private student loans are $75,000 to $120,000 for undergraduate students, and limits for graduate and professional students are higher.²¹ These limits usually include all student loan debt, from both federal and private sources. The availability of loans is one factor influencing institutions to increase tuition for graduate programs, particularly those that are in demand.²² Reflecting this trend, since fiscal year 2004–2005 the mean total cost of physical therapist education programs has increased nearly 100% at private institutions (mean in fiscal year 2014–2015=$99,797) and approximately 50% for in-state students at public universities (mean in fiscal year 2014–2015=$55,997).²³

Eighty-six percent of doctor of physical therapy (DPT) students graduating from one state university program in 2005–2007 financed their education with student loans, and more than 13% had student loans of more than $80,000.²⁴ A 2011 American Physical Therapy Association (APTA) position paper reported that physical therapist program graduates 1 to 5 years out of school had an average cumulative student loan debt of approximately $96,000.⁵ In 2015, one large state university system reported that across all programs in the system, the average student loan debt for DPT graduates who borrowed was approximately $74,000.²⁵ When adding average undergraduate debt accumulated by graduates from that system, an average total student loan debt of $92,000 was predicted. Financial experts recommend that cumulative student loan debt not exceed a graduate's starting annual salary²⁶ or that monthly loan payments not exceed 10% of monthly salary.²⁷ American Physical Therapy Association data indicate that, on average, in 2013 physical therapists up to 10 years postgraduation did not make more than $80,000.²⁸ This fact makes it quite likely that many DPT graduates accumulate more than the recommended amount of student loan debt. On a larger scale, this possibility begs the question: “How long will it take for costs of DPT programs to outweigh the attractiveness of becoming a physical therapist?”

In fact, we may be in a physical therapy education bubble market. Housing bubble markets are characterized by increasing demand for, and rising valuations of, property until rising costs become unsustainable relative to income.²⁹ Similarly, an education bubble is sustained by the assumption of a high demand for physical therapist services for which society is willing to pay. In this case, the assumption is that students will pay the ever-increasing tuition for professional education so that they can transform their tuition dollars into skills that allow them to provide those payable services.³⁰ Moreover, similar to the housing bubble, student loans are readily available, with low interest rates and fairly long payback periods. Increasing inability to repay student loans would represent the bubble bursting, as the ratio of debt to earning potential increases to a tipping point.

The demand for physical therapist education is borne out by the fact that there are many more applicants to programs than there are seats; 54% of individuals applying through the Physical Therapy Centralized Application Service (PTCAS) in 2014 did not get accepted into any program.³¹ To sustain the bubble, demand for, and willingness to pay for, professional education must remain high; however, the bubble is likely to be affected by what happens under the Affordable Care Act (ACA). For example, it is unclear how accountable care organizations and medical homes, emphasized in the ACA, might affect the demand for physical therapist services. At the same time, more people have access to insurance and, thus, to physical therapist services through the provisions of the ACA. Many of the most affordable insurance plans, however, have high deductibles that are applied to physical therapist services, affecting the affordability of those services. A recently published study of workforce projections for physical therapists estimated a 4% growth rate in graduates from 2017 to 2020 and various rates of attrition from the profession.³² Seven of the 9 formulas projected a deficit by 2020; however, the authors noted that they did not account for any changes affected by the ACA. Growth on the supply side may be higher than anticipated, with 28 new DPT programs at some stage of development as of June 15, 2016.³³ Regardless of any shifts in supply, health care practice structures, or individuals' accessibility to insurance, it seems unlikely that with pressures to improve the affordability of health care, salaries for physical therapists will rise to the same degree as tuition. As evidence, average salaries for physical therapists increased by 25% from 2004 to 2013.²⁸

Because it is unlikely that many people will be able to attend a DPT program without any student loans, to effectively tackle the problem of student loan debt requires efforts to both improve student loan affordability and reduce educational program costs. Expansion of the federal Income-Based Repayment Program is one way the Obama administration has addressed the issue of student loan affordability. Additionally, loan forgiveness through the Public Service Loan Forgiveness Program may apply to certain borrowers. Specific to physical therapy, APTA has worked for several years, unfortunately without success, on efforts to pass federal legislation that would allow physical therapists to participate in the National Health Service Corps Loan Repayment Program.¹⁸ The APTA website also provides information to help potential and current students and graduates develop strategies to manage student loan debt and find scholarships. In addition, the APTA House of Delegates (RC 11-16) recently called for evaluation of the effects of student loan debt on the profession with recommendations for addressing the issue. These efforts, however, do not address the fundamental problem: escalating costs of DPT programs.

Physical therapist education programs are housed in a variety of educational institutions with variable financial models, revenue sources, and missions. Moreover, physical therapist programs tend to work individually within their institutions rather than collectively. Student loan debt is such a pervasive and important problem, however, that it provides the perfect opportunity for collaboration. Collectively, faculty and administrators across programs, as well as thought leaders in health professions education, may be able to use their influence to address program costs. It is more or less unheard of for institutions to lower tuition and fees. A possible tactic, however, may be to work toward slowing the rates of increase. Institutional governing boards, the Commission on Accreditation in Physical Therapy Education (CAPTE), and the Federation of State Boards of Physical Therapy (FSBPT) also must be part of the solution to help lower costs. The American Council of Academic Physical Therapy (ACAPT) is the most viable structure for facilitating the necessary cooperation among various stakeholders. How we address this imperative may be the test of its collective power as an organization. The objectives of collaboration should include formulating, implementing, and evaluating innovative methods for reducing costs to students and improving the efficiency of program delivery.

• Received July 2, 2016.
• Accepted July 18, 2016.

• © 2016 American Physical Therapy Association