If you want a rewarding career in the medical field that focuses on helping others, occupational therapy (OT) is a natural choice. But the cost of getting an OT degree varies—a lot. Depending on the program you choose, you could end up with a degree that makes student loan repayment relatively easy—or one that makes your debt-to-income ratio more than 3 to 1. Let’s break down what this looks like and how you can influence the way OT student loan debt may impact you.

Cashing In on Private Pay: The PTs Guide to Going Out-of-Network - Regular BannerCashing In on Private Pay: The PTs Guide to Going Out-of-Network - Small Banner

Two Student Loan Examples

If you want to be an occupational therapist, you typically need a master’s degree or a doctorate. Many students cannot afford the cost of such an advanced degree outright, so they turn to student loans to bridge the gap.

According to data from the Bureau of Labor Statistics, the median salary for an occupational therapist in 2018 was $84,270 per year. That can be a good salary if your student loan debt is reasonable. And how much you borrow depends a lot on the school you choose.

Example 1

Let’s say Laura wants to get a Doctor of Occupational Therapy (OTD) degree and chooses to attend Texas Woman's University. Texas Woman's University offers an in-state tuition rate of $5,020 per year.

According to the school’s website, the total cost of attendance—including tuition, fees, and room and board—is estimated to be $19,271 if you live off-campus. Let’s say it takes three years for Laura to complete the degree. Thus, she will graduate with approximately $60,000 in student loan debt.

Example 2

Paul is interested in getting his OTD from Nova Southeastern University, where tuition currently is $31,512. Yes, that’s just tuition.

According to the university's website, applicants should be prepared to pay for three and a half years of school. So, when Paul graduates, he will have $110,292 in student loans for tuition only. Let’s assume Paul will pay $20,000 per year in cost of living expenses and needs to borrow that, too. That comes to a total of $180,292.

The Impact of School Selection

As you can see, looking purely at the base cost of attending these two different schools, Paul is paying three times more for his degree than Laura is. That’s not including any other potential costs and fees.

And yet, despite the educational cost disparity, there’s no major difference in expected pay upon graduation. Both Paul and Laura will enter a profession with a median salary of about $84,270, and assuming that is what they end up making, one will owe less than her salary, while the other will owe nearly $100,000 more than his salary.

OT Student Loan Repayment Plans

Continuing with these two example scenarios, if Laura is earning $84,270 per year and owes $60,000, her monthly payment on a standard repayment plan would be $697. Total payments would be $83,598, assuming a 7% average interest rate—so the interest would tack on more than $20,000.

Paul is also earning $84,270, but he owes $180,292. With the same standard repayment plan, his monthly payments will be a whopping $2,093. His total payment amount would be $251,201—meaning he’d pay more than $70,000 in interest.

On the standard repayment plan, you’ll incur fewer interest charges due to a short 10-year repayment term. If you wanted to make your loan payments more affordable, you could sign up for an income-driven repayment plan (if you have federal student loans).

An income-driven repayment plan will limit your monthly payments to 10%–20% of your discretionary income. The good news is that under these plans, you can apply for student loan forgiveness if there’s a remaining balance after the repayment term, which is typically between 20 and 25 years.

But in our examples, both Paul and Laura make the same amount: $84,270. Yet, they owe a vastly different amount. Because Paul owes so much more, that 10%-20% of his income will only make a small dent in his student loans. He will likely need to get his loans forgiven.

And while loan forgiveness can be great, there’s one problem: according to current laws, any forgiven loans under income-driven repayment are considered taxable income. So, Paul may ultimately pay taxes on the loan amount being forgiven.

Laura, on the other hand, would pay off her $60,000 balance before the repayment term under an income-driven repayment plan, so she wouldn’t need student loan forgiveness and thus, would not be hit with a tax bill.

Other Debt Options and Considerations

As you can see from the examples, Laura and Paul will have very different journeys in student loan repayment. Paul’s most feasible choice is to opt for student loan forgiveness via income-driven repayment, while Laura likely will be able to pay back her loans relatively comfortably.

So, if you’re interested in becoming an OT—but you haven’t yet chosen a program—be sure to consider schools with more affordable degrees so you can keep your student loan payments in check.

If you’re a borrower like Paul with more than six figures of debt, you’re not alone. Although it can be difficult to repay your loans, income-driven repayment might be your best bet. If you decide to go the income-driven repayment route, be sure to start preparing for the tax implications now—perhaps by allocating a certain amount of your budget each month to a separate savings account. That way, you won’t be caught off-guard.

If applicable, you could also apply for Public Service Loan Forgiveness (PSLF) after 10 years of work and 120 payments. Under PSLF, your payments are on one income-driven repayment plan, and there’s no taxation on forgiven student loan balances.

Another option is to refinance student your loans to get a better interest rate, which saves a ton of money over the life of the loan.

Even if you have massive debt, you do have options—although repayment definitely won’t be easy. And if you’re just starting your OT education journey, be sure to consider costs, loan amounts, and repayment options before you make any decisions. This will help ensure you have a more comfortable—and financially secure—life now and in the future.

Travis Hornsby founded Student Loan Planner after helping his physician wife navigate ridiculously complex student loan repayment decisions. To date, he’s consulted on over $400 million in student debt personally, more than anyone else in the country. He is a Chartered Financial Analyst and brings his background as a former bond trader trading billions of dollars.

He brings that same intensity to analyzing the best repayment paths for graduate degree professionals with six figures of student debt. He's helped over 1,700 clients save over $80 million dollars on their student loans, and he’s been featured in U.S. News, Business Insider, Forbes, Huffington Post, Rolling Stone, ChooseFi, Bigger Pockets Money, and more.

  • The Private Practice Owner's Guide to Fair Compensation Image

    articleJul 22, 2016 | 12 min. read

    The Private Practice Owner's Guide to Fair Compensation

    As a business owner, your life would be a whole lot easier if there were set-in-stone rules for determining what’s fair when it comes to employee compensation. Unfortunately, there are not—which is why it’s so important to create compensation packages that not only fall within or exceed local averages, but also feel good for your practice and your employees. After all, everyone in your practice is working toward the same goals: a thriving business and satisfied patients. …

  • The State of Rehab Therapy in 2019 Image

    downloadJun 17, 2019

    The State of Rehab Therapy in 2019

    Each year, we survey thousands of rehab therapy professionals on the metrics, strategies, and complicating factors that influence success in the current healthcare market. In 2019, we received more than 6,000 responses from individuals in a variety of settings, specialties, and geographic regions—and we’ve compiled all that data into the single most comprehensive annual report on the state of the rehab therapy industry.  This report features insights on everything from demographics and financial metrics to regulatory challenges …

  • The State of Rehab Therapy in 2018 Image

    downloadJun 28, 2018

    The State of Rehab Therapy in 2018

    To see results from our most recent industry survey, check out the 2019 State of Rehab Therapy Report. To say that the healthcare industry is complex would be an understatement. While the advent of technology has made care more precise, efficient, and collaborative than ever before, it has also put greater pressure on providers to deliver high-value care at scale. After all, big data makes it possible to not only develop the most effective, evidence-based best practices …

  • Common Questions from Our 2018 State of Rehab Therapy Webinar Image

    articleJul 13, 2018 | 21 min. read

    Common Questions from Our 2018 State of Rehab Therapy Webinar

    Earlier this year, we surveyed nearly 7,000 PT, OT, and SLP professionals on the current state of the rehab therapy industry, asking questions on everything from salary and student loan debt to payer mix and patient dropout. We then compiled their responses into our comprehensive State of Rehab Therapy in 2018 report and hosted webinar during which Dr. Heidi Jannenga, PT, DPT, ATC/L, president and co-founder of WebPT, and Nancy Ham, WebPT CEO, offered their take on …

  • Occupational Therapist Salary Guide Image

    downloadApr 20, 2016

    Occupational Therapist Salary Guide

    Whether you’re weighing career opportunities or negotiating a salary bump, it’s important to know what you’re worth. Sure, you didn’t become an occupational therapist for the paycheck—but you still should earn what you deserve. With all the factors that go into determining salary, though—location, experience, and practice setting, to name a few—how can you be sure yours is fair? Well, our OT Salary Guide is a great place to start. Enter your email address below, and we’ll …

  • The 2018 Rehab Therapy Salary Report Image

    downloadAug 24, 2018

    The 2018 Rehab Therapy Salary Report

    While all the information we obtained in our 2018 annual industry survey was incredibly useful, the information regarding salary has been—as you might imagine—highly sought-after. After all, who doesn’t want to ensure they’re maximizing their earning potential? Thus, we decided to take all the data we collected about individual provider earnings and compile it into this stand-alone rehab therapy salary report. Enter your email below, and we’ll send you The 2018 Rehab Therapy Salary Report today, so …

  • The State of Rehab Therapy in 2018 Image

    webinarJun 1, 2018

    The State of Rehab Therapy in 2018

    Falling reimbursements. Skyrocketing insurance premiums and copays. Crippling student loan debt. As a PT, OT, or SLP, sometimes it feels like it’s you against the world. After all, the challenges you face on a daily basis are many and complex. But, you’re not alone. In fact, we recently surveyed nearly 7,000 rehab therapy professionals on everything from payment rates and clinic budgets to education costs and salary, and we found some pretty strong—and surprising—trends. [video://fast.wistia.net/embed/iframe/eh5khgt1r6]   Curious …

  • Four Things You Need to Know About OT Salary Image

    articleApr 22, 2016 | 4 min. read

    Four Things You Need to Know About OT Salary

    You didn’t choose this profession for the paycheck. You became an occupational therapist because you enjoy helping people improve the quality of their lives—and that’s the way it should be. Still, you shouldn’t completely ignore the dollar amount on your paystub. Money might not be your main motivator, but you deserve fair compensation for the quality of therapy you provide. But determining what’s fair can be tricky, because there are a lot of forces at play. So, …

  • Are You Paying Your Rehab Therapy Clinic Staff Enough? Image

    articleAug 30, 2018 | 4 min. read

    Are You Paying Your Rehab Therapy Clinic Staff Enough?

    Every good boss wants to ensure that he or she is paying his or her employees enough—in most cases, more than enough—to cover the cost of living and prevent financial worry from getting in the way of job satisfaction. But with many rehab therapy students graduating with massive debt —and fee schedules on the decline—it can be difficult for a rehab therapy practice to properly pay staff and keep enough money in the practice to remain in …

Achieve greatness in practice with the ultimate EMR for PTs, OTs, and SLPs.