Week 24 - Not all Debt gets Paid Back

The Part About Student Loans No One Says Out Loud

There’s this quiet moment most veterinary students hit, usually sometime near graduation, where everything starts to feel very real. Not in a dramatic way. In a numbers-on-a-screen kind of way.

You log in, you see your balance, and there’s this underlying question sitting there:

How is this actually supposed to work? And if you’ve ever felt like the answer to that question is weirdly unclear, you’re not wrong. Because the truth is, federal student loans, especially at the level most veterinarians graduate with, don’t operate the way people assume they do.

You’re Not Playing the Same Game as Other Debt

Most of us grow up hearing the same advice about money: pay things off quickly, avoid interest, don’t carry balances. That works great for credit cards, car loans, mortgages, things that are designed to be paid down and closed out.

But student loans, particularly federal ones, were built differently. They come with an entirely separate path, one that doesn’t revolve around paying every dollar back. And that’s where things start to feel confusing, because no one really explains that clearly upfront.

Once you enter repayment, you’re not just choosing a payment amount, you’re choosing a system. One system is straightforward: you pay your balance down over time until it’s gone.

The other system looks at your income and says, essentially, “pay what you can.”

And if you stay in that system long enough, 20 to 25 years, whatever is left at the end is forgiven. Not reduced. Not restructured. Forgiven. That’s the part that tends to stop people in their tracks, because it doesn’t sound like how debt is supposed to work.

Why This Matters So Much for Veterinarians

If veterinary salaries scaled cleanly with debt, this wouldn’t be such a big conversation.

But they don’t. A lot of new grads are stepping into solid careers, but not into incomes that comfortably match six-figure loan balances right away.

So when you try to force a traditional repayment structure onto that situation, things get tight fast. It’s not uncommon to run the numbers and realize that a standard plan would leave very little room for anything else; saving, traveling, even just breathing a little.That’s where income-driven repayment starts to feel less like an option and more like a necessary shift.

The Part That Makes People Nervous

At some point, almost everyone asks the same question: Okay, but what’s the catch?

And there is one, but it’s not nearly as scary as it’s made out to be.

When your remaining balance is forgiven, the IRS currently treats that amount as income.

So yes, there’s a tax bill at the end. But it’s not a one-to-one trade. You’re not paying back the full balance, you’re paying a portion of it in taxes. And when you actually compare the numbers, most borrowers still come out significantly ahead. It’s less of a penalty and more of something you plan for.

This is where things get counterintuitive. A lot of smart, responsible people start making extra payments because it feels like the “right” thing to do. And under normal circumstances, it is. But if your long-term plan involves forgiveness, those extra payments don’t really move you forward. They don’t shorten the timeline. They don’t reduce your required payments in a meaningful way. They just reduce what would have eventually been forgiven. So you end up putting more money toward a system that wasn’t asking you to.

The Hardest Part Isn’t the Math

It’s the mindset.

Because you might watch your balance grow for a while. You might feel like you’re not making progress in the traditional sense. And that can be uncomfortable, especially if you’re used to thinking of debt as something that should always be shrinking. But in this system, progress doesn’t always look like a lower number. Sometimes it looks like sticking to a plan that makes more sense long-term, even when it doesn’t feel intuitive in the moment.

At the end of the day, this isn’t about finding a perfect answer. It’s about understanding that you have options, and that those options aren’t all created equal.

If you don’t actively choose how you want to approach repayment, it’s very easy to fall into a default path that wasn’t designed with your situation in mind. And with loan balances this large, small decisions early on can turn into very big differences later.