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The Student Loan Mess:
Why Chiropractic Is in Trouble

Timothy A. Mirtz, D.C.

The default rate for student loans is much higher among chiropractors than it is among graduates of any other health profession, Chiropractic leaders would like you to believe this situation exists because the loan program is flawed and reflects "discrimination" against their profession. The simple truth, however, is that the default rates signify that the profession itself is in deep trouble.

Background Information

The Federal Health Education Loan (HEAL) program was enacted under Public Law 94-484 and took effect in October 12, 1976. In 1981, Public Law 97-35 made chiropractic, health administration, and clinical psychology students eligible to borrow up to $12,500 per year for four years. In 1992, Congress raised the the maximum graduate students could borrow in federal loans from $11,500 to $18,500. Of this amount, $8,500 is available as a subsidized Stafford Loan on which the government pays interest while the student is in school. The remaining $10,000 is available through an unsubsidized Stafford loan, on which interest starts to accrue immediately. Borrowers obtain these loans through private lenders or directly from the federal government. Private lenders aggressively market their own loan programs to graduate students typically with rates pegged to the 91-day Treasury bill plus 2.4 to 3.25 percentage points while one is in school and rising to 2.85 to 3.5 points after graduation [1].

From fiscal year 1978 through 1998, the HEAL program insured loans to over 156,000 borrowers and was a big help to chiropractic schools and their students. But as time went on, it became clear that the default rate of chiropractic graduates was very high. By 1991, taxpayers had lost an estimated $3.6 billion on bad student loans, and the Bush Administration recommended dropping chiropractic from the HEAL program [2]. Congress did not do this [3], but increasing debt (from $10 million in 1987 to $42 million in 1992) stimulated the Department of Health and Human Services to release the names of defaulters with the hope that public humiliation would pressure them into paying. Many media outlets responded by portraying the defaulters as "deadbeats, but some defaulters were portrayed sympathetically. In St. Charles, Missouri, for example, the local newspaper issued these contrasting reports:

The U.S Attorney's office is looking for two "deadbeats" in St. Charles County who have defaulted on more than $200,000 in student loans. "We consider them deadbeats, even though they are professionals and graduates of chiropractic colleges," said Eric Tolen, assistant U.S.attorney [4].

A former chiropractor turned high school teacher who is deep in debt to the government because of student loans said his experiences have taught him valuable lessons. "I'm in my boat, and I want others to stay out of it. It almost like a prison sentence -- a lifelong prison sentence." The prison sentence Scott Pinkham referred to is the debt he owes the US government for student loans he used to finance his education at Logan College of Chiropractic in Chesterfield, Missouri. Pinkham said he passed his chiropractic board exam in September 1987 and became partners with a man who was still a student and whose father was willing to finance the start-up of a practice. "This gentleman financed my practice on the premise that I would get an office up and running so that his son could them join me as a 50-50 partner upon graduation," Pinkham explained. Pinkham said the practice opened in July 1988, but that after his partner graduated in April, 1989, the partnership fell apart. "After practicing together for one month, father and son suddenly decided the practice could not support two doctors. At that point, the father called in my loan for $120,000. My family and I were devastated, and despite several more attempts to make it in practice, I have never recovered financially." Since he was hired as a teacher at Francis Howell North in 1991, Pinkham said he has received numerous awards, including Teacher of the Year for 1992-1993. "A deadbeat would not pour his heart and soul into his family, his neighbors and his students," Pinkham said [5].

The HEAL program ended in 1998. Today, chiropractic education is funded by a privatized version called ChiroLoan, which began in 1992 [6]. As far as I know, its default rates have not been publicly revealed. I have inquired several times but received no data.

Recent Statistics

The Department of Health and Human Services maintains a list of defaulted HEAL borrowers which identifies the defaulters and provides several statistical analyses. As of February 6, 2003, the site included the following figures:

The data indicate that the percentage of chiropractic students defaulting vastly exceed the percentage of students from other disciplines. Other data indicate that, over the years, the percentages of defaulters who had declared bankruptcy or were reportedly disabled were also much higher among chiropractors [7].

Efforts at "Spin Control"

In 1993, ACA executive vice president Jerome McAndrews, D.C.,charged that the loan crisis reflected discrimination against chiropractors and issued a special report in response to the federal government's crackdown of HEAL defaulters [8]. According to McAndrews, the reasons for the high default rate were:

• Higher tuition costs at chiropractic colleges; medical schools have lower tuition because of research grants.
• Licensing exams for chiropractors are given out of phase with graduation dates.
• Medical students are eligible for the Health Professions Student Loan whereas chiropractors are not.
• Medical doctors have developed large group practices. New medical graduates have better opportunity for employment. Chiropractors, on the other hand, have to develop lines of credit and open solo practices.
• Chiropractors have faced "the long term consequences of medicine's illegal boycott." ACA believes that despite the chiropractic legal victory, chiropractic's reputation has been harmed thus it takes a chiropractor longer to build a successful practice.
• Chiropractors have to buy expensive x-ray equipment (total cost of $36,000) when chiropractors could have easily referred to hospitals for such services.

None the above reasons involves "discrimination":

• Chiropractic tuition rates are high because when student loans became available, the schools raised their rates accordingly. Life University, for example, tripled its tuition rate between 1990 and 1995 [9]. Moreover, the cost of attending medical school is generally higher than the cost of going to chiropractic colleges.
• The timing of licensing exams represents a failure of the chiropractic community to welcome new graduates. Some chiropractors believe this is done for anti-competitive reasons. As noted by Robert Ward, D,C.:

A number of state boards . . . make it impossible for many graduates to become licensed until after the grace period has expired, effectively nullifying the loan grace period. Policies like these greatly increase the likelihood of financial failure and default, and apply tremendous pressure to the new doctor to do anything, however, unethical, to generate income. In the absence of a clear rationale for the existence of restrictive policies by state boards, it is likely that such policies exist solely to protect the business interests of established doctors by restricting competition from an influx of new graduates [10].

• Medical students may be eligible for different loan options because after graduation they can meet the needs of underserved areas. They can prescribe medications, give inoculations, deliver babies, perform surgery, and provide many other health services that are needed more than spinal manipulation. Moreover, chiropractors who are philosophically opposed to standard medical care, including medications and vaccinations, are even more unsuitable for primary-care practice. Thus the lack of federal subsidy is due to chiropractic's shortcomings and not bias within the medical community.
• Most chiropractors are solo practitioners because chiropractors vary widely in philosophy and practice styles.
• The "We haven't recovered from the AMA boycott" argument is another ploy used to justify chiropractic failures. The AMA's antichiropractic campaign took place more than 25 years ago when chiropractic was completely mired in quackery. The average doctor's opinion of chiropractors is based on their disdain for "subluxation" theory and the bad experiences their patients report to them.
• Most hospitals and private radiologists are willing to provide x-ray examinations for chiropractic patients. But many chiropractors prefer to buy their own machines because (a) x-ray exams can be very profitable and (b) medical radiologists will report as normal many films on which chiropractors see "subluxations."

Some chiropractic leaders have charged that the HEAL program was flawed because it initially did not include a credit check [6].

Chiropractic Incomes Are Falling

Most insurance companies don't knowingly pay for "maintenance care" in which the chiropractor keeps the patient coming back to have "subluxations" diagnosed and treated. Managed-care programs, which strive to eliminate unnecessary care, try to avoid practitioners who provide unnecessary services. Chiropractic schools have been turning out more new chiropractors than are needed. As a result, the field is overcrowded, inflation-adjusted chiropractic incomes have been falling, and new graduates can have a very difficult time earning a living.

In 1994, Stephen Seater, executive director of the Foundation for Chiropractic Education and Research, stated:

On an average day, the FCER staff talks to about 50 practicing chiropractors. These doctors are telling us more and more frequently that their practices are down, some by as much as 50%! And time and time again, the villain is managed care. In areas where managed care is growing rapidly, it is systematically cutting out most chiropractors [11].

In 1997, Michael Pedigo DC, a former president of the International Chiropractic Association and the ACA stated:

Are there too many DC's in today's market? The primary reason we hear more doctors expressing concerns that the colleges are graduating what they consider to be too many doctors is that most practices across the country are seeing fewer patients and being paid less per visit than just a few years ago. I hear figures like the average practice is down 30 to 40% and income is down 40 to 50%. Adding to that new doctors graduating with $80,000-$100,000 in student loans and inability to join some managed care groups until they have been in practice for three years, and you have an environment that is even more difficult for these new doctors to succeed [12].

Data from the U.S. Department of Commerce indicate that the total reported net income for chiropractic offices and clinics rose from $6.56 billion in 1992 to $7.68 billion in 1998, which is about 2.8% per year. Since the number of practicing chiropractors has been increasing, and taking inflation into account, these figures show that real chiropractic income has been decreasing steadily. In 2001, Donald Petersen, editor of Dynamic Chiropractic, wrote:

The number of phone calls and emails we receive from new DC's is on the increase. Many are questioning why they can't seem to be able to make a living in their chosen profession. They graduate with high hopes, but also with the heavy burden of a substantial student loan debt, and are facing a very challenging health care marketplace. . . .

Are these recent graduates just whining about the challenges that have always faced new DC's or are they serious issues that threaten the growth and success of our profession? Are we avoiding talking about the tough issues? If so, how much is our avoidance hurting us? [13]

The Bottom Line

The chiropractic loan default rate signifies an immense problem. The chiropractic profession is overcrowded; average chiropractic income has been falling; and new graduates who wish to practice ethically may be unable to earn a living. Yet chiropractic leaders suggest that loan defaults reflect individual failures rather than problems that are professionwide. I believe that the main chiropractic trade organizations do not wish to admit the truth because it would undermine their public relations efforts. The bottom line is that students who are considering chiropractic as a career should think seriously about doing something else.

References

1. Berman N. Facing 20 years of debt. Money Magazine 24(11):109-114, 1995.
2. Schools facing dismissal from loan program. Associated Press, Aug 24, 1993.
3. Last minute action by Congress saves HEAL program. ACA/FYI, Dec 1991:15.
4. Watson F. Two local chiropractors named on deadbeat list. St. Charles Journal, March 26, 1995.
5. Watson F. Former chiropractor in debt to government says he learned lessons. St. Charles Journal, May 28, 1995.
6. ChiroLoan: A boon to students and colleges. Dynamic Chiropractic 14(9):21, 1996.
7. Federal Health Education Assistance Loan Annual Report Fiscal Year 1995, Bureau of Health Professions.
8. McAndrews J. HEAL update: ACA says correction of inequities will allow DC's to pay up. ACA Update, Sep/Oct. 1993:11-12.
9. Dr. Sid and chiropractic make the front page: Life's founder/president is subject of revealing 2-part series in Atlanta Journal. Dynamic Chiropractic 14(3):26, 1996.
10. Ward R. Restrictive policies by some boards. Dynamic Chiropractic 13(24):29, 1995.
11. Seater S. FCER Forum: Warfare requires new directions. Dynamic Chiropractic 13(24):26, 1995.
12. Pedigo MD. Too many DCs, not enough, what to do? Dynamic Chiropractic 15(12):17, 1997.
13. Petersen DM. Regulated GROWTH? Dynamic Chiropractic 19(26):12, 2001.

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Dr. Mirtz practices chiropractic in Eudora, Kansas.

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