They are offered lines of credit of $350,000 long before they make their first diagnoses. Medical and dental students are dealing very poorly with this sudden influx of money. With rising interest rates, some find themselves forced into bankruptcy.
Syndic Patrick Roberge has always seen cases of medical students who come to his office destitute. They accumulated so much debt that they lost control of their finances.
With the rise in interest rates, he receives more students and fears that the phenomenon will increase. “They are already leading the life of a doctor with six years left of their studies to do,” says Patrick Roberge, partner, turnaround and insolvency at Raymond Chabot Grant Thornton.
A student who has accepted a $350,000 line of credit has to pay $2,000 a month just in 6% interest, he cites as an example.
The figure is neither fortuitous nor fictitious: financial institutions offer this amount as credit for medical and dental students.
Some drive a Tesla or a BMW while they are still studying, continues Patrick Roberge. In a case he is currently managing, the trustee offered his client’s creditors a longer than average installment to settle part of the debt. Six or seven years, which would give him time to increase his income.
“Otherwise, it’s downright bankruptcy,” says the trustee. She will not surrender in seven years. »
“We realized at some point that our students have quick access to credit. Financial institutions are getting their hands on potential future very good customers,” explains Éric Lavoie, assistant dean for pre-doctoral medical studies at the Faculty of Medicine and Health Sciences at the University of Sherbrooke.
The situation is not widespread, but worrying enough for the faculties concerned to tackle it.
“Historically speaking, confides Éric Lavoie, we have some who have fallen into the magic potion. I even had a situation here at the University of Sherbrooke several years ago. A student, grateful for the sacrifices her parents had made, as soon as she got her line of credit, invited the whole extended family to an all-inclusive resort for the holiday season. She was in first grade and figured it was her turn to spoil them. »
Future veterinarians are also in demand. TD Bank, for example, offers them a loan of $200,000, including $50,000 from the first year of study. Other students are welcome, but the loan limit is set at $80,000 for an undergraduate study program that would last four years, with an allocation of $20,000 per year.
“At first, the credit was disbursed in installments,” says Julie Gauthier, senior director, central planning group at MD Financial Management, a firm that also works with medical students.
The bankers assessed the real needs of the student and granted the loans based on this assessment, says Julie Gauthier. But the practice changed, she says, about 15 years ago; now credit is often granted all at once.
“We are quite privileged financially, the doctors, concedes Victoria Blouin, medical student and president of the Student Medical Federation of Quebec. As a student, however, the debt can be quite significant. »
No precise data is available on cases of insolvency or even bankruptcy, she said.
“Anecdotally, we hear stories,” the University of Montreal student drops out.
Dr. Anne Charbonneau did more than hear rumors: when she was vice-dean of the faculty of dentistry at the University of Montreal, she received in her office students in tears, crushed by debts.
According to her, it is often at the end of their studies that new dentists are caught up in their situation. They have to repay loans and the income is not up to what was planned or hoped for.
Dr. Charbonneau has always been very concerned about this issue.
“Some see that line of credit there as a guarantee that they’re going to finish their program and be able to pay it off in a jiffy,” she said. That’s money, $350,000! »
Dr. Charbonneau is behind the personal finance workshops that have been offered since 2011 by the faculty of dentistry at the University of Montreal.
“I wanted to make them aware of how long it takes to pay off debts,” she says. Is it going to be one year, two years, five years or ten years? And the money they borrow now, how much is it going to cost them? »
12% of Canadian medical students graduated with more than $200,000 in debt last year; 7% had less than $20,000 in debt, while 45% of students finished with debt between $20,000 and $100,000.
Julie Gauthier is a financial management specialist for healthcare professionals. Retired school desks.
“You have to put it in the context of studying medicine, where there are three important phases,” she explains. First, the first two or three years are essentially academic courses at the university. According to Julie Gauthier, these years are less conducive to overconsumption since medical or dental students evolve in a student environment. “They compare themselves to other students,” she says, “who eat ramen, take public transportation, and have low rent. »
Then comes the externship, a period of 21 months. This is where, for some, financial behavior can change, notes this observer. The students are at the hospital, mixed with groups of doctors.
“They live like surgeons,” she gives as an example. So they hear about travel, electronics, condos, nice cars…”
For some vulnerable students, this is where the spiral begins. Then, during the residency, these may worsen their situation. The salary, around $60,000, will not support a standard of living more associated with that of a medical specialist, says Julie Gauthier.
“If they’ve accumulated a bit of debt, a $100,000 or $150,000 on a margin during their school and internship period, you have to put up with that,” says this specialist, who also notes that the Rising interest rates can be a game-changer for those who were just arriving. “At 2.5%, it was fine, but at 6.7%, we are elsewhere. »
Different universities offer financial education in different forms.
At the University of Sherbrooke, medical students have a personal finance management course upon entering their first year. This compulsory and graded course was added to the program in 2017, when it was seen that managing finances for medical students could be a problem.
“Here, 80% of our students come from CEGEP and 20% from university,” says Dr. Éric Lavoie. We understand that a student who comes out of CEGEP is usually younger and has probably not had much opportunity to manage his or her finances by himself or herself. Most lived with their parents until they entered the medical program. »
By doing this training very early in their course, it has a greater impact on possible debt, estimates the vice-dean for pre-doctoral medical studies at the Faculty of Medicine and Health Sciences at the University of Sherbrooke.
“Yes, medical students, when they finish their studies, will have a very, very good income, continues Éric Lavoie. We don’t question that. On the other hand, I myself have accompanied students who have not completed their medical studies. It does not mean that these people are going to have such a lucrative job. I remember one person who had gone to medical school, who was at the residency level. She was about to finish and become a medical specialist and she realized that she was not cut out for medicine, but what kept her from quitting was that she had so many debts. »
More than half of medical residents (58%) who participated in a survey conducted by their federation in 2019 admitted to not making a budget. Those with debt valued it at $118,000, on average. The most indebted 10% had more than $280,000 in debt.
Source: Association of Faculties of Medicine of Canada
When they sign contracts that propel their careers, young hockey players have access to sums they have never seen before in their bank accounts. How do you make sure they don’t spend all that money as quickly as it appeared? Agent Dominic de Blois, director of The Will Sports Group, explains his management philosophy, in three key points.
“I’m not a financial planner, I don’t manage money,” Dominic de Blois says bluntly.
When they find themselves with a very lucrative contract, the players he represents are therefore offered a management and financial planning service by an external firm, so that the agency maintains a healthy distance from the personal finances of its clients. .
Already, says Dominic de Blois, hockey has changed. The sums paid to players are more reasonable at the start of their career. And better distributed. According to the old collective agreement, a player drafted in the first round obtained a bonus of one million dollars, recalls the agent.
“He was getting three checks for $333,000. It was a lot easier to get lost then…”
“I remember a player who went to the Canadian camp, relates Mr. de Blois. He had arrived with an $85,000 Mercedes. He hasn’t played a game in the National League. He had Armani clothes. He wasted all his money. I’d be curious to know what he’s up to today, but I’m pretty sure he’s out of money. »
“We offer an educational component,” says Dominic de Blois. For example, the young person who has received his signing bonus is entitled to resources. »
And the resource is not his uncle Richard, specifies the agent…
When you substantially increase income, you have to increase knowledge. Or at the very least, arouse interest in business management. Young people who play in the United States receive their salary without deductions. You have to be doubly careful, says Mr. de Blois.
The player will also be entitled to workshops, meetings and receive newsletters that will give him financial information and basic notions on the stock market and investments.
Finally, his agent will also allow himself certain recommendations. The best example? The car. Young people often want to buy a luxury model, new, as soon as they receive their first major check. Dominic de Blois takes the liberty of directing them towards more reasonable purchases…
When they turn professional (and often even before), players receive lots of offers from friends or complete strangers who offer them to invest in a project or an excellent business that will provide them with staggering returns.
They must be directed to an external advisor who can study the offers received or, outright, accompany them in meetings with potential business partners, explains the director of The Will Sports Group.
In doing so, the young person also learns to ask the right questions. Dominic de Blois admits that new professionals are a prime target for sharks.
“When players come to the National League, there’s always someone who comes up to them with a great idea for them…”
