For the past six years, FitBUX has been helping new grad physical therapist navigate student loans and build financial plans to achieve their lifestyle goals.
The following article provides data that we’ve collected for physical therapist salaries, student loan debt, and the real life impact that education costs have on the bigger financial picture for physical therapist. We will also analyze the impact of getting your DPT relative to your income to answer the question: Is the DPT worth it?
The physical therapy salary and student loan data is based on over 10,000 PTs throughout the country that our FitBUX Coaches have helped. Furthermore, we included additional data that we have collected such as physical therapist salary by state and physical therapist salary by occupation.
What Is The Entry Level Physical Therapist Salary?
The average new grad physical therapist salary on FitBUX is $73,000. The 75th percentile salary is $76,000 and the 25th percentile is $62,500.
We consider new grads as anyone who graduated within the past 5 years. We extrapolate that a physical therapist’s salary in their first year post-graduation would likely be lower than the mean stated above. This happens for a number of reasons:
- A significant number of physical therapist on our platform have continued on with residencies immediately after graduation. Therefore, in the above data, we do not include the depressed salary from their time as a resident. The salary figure used is the amount they make immediately upon completing their residency.
- On our FitBUX profiles, we ask when each person graduated. However, individuals do not always enter the correct year. Individuals tend to state that they graduated later than when they actually did. For example, they may have graduated in 2019 but their profile says 2020.
When we remove this data and focus on new grads from the past 12 months, the average physical therapist salary for entry level physical therapist drops to $71,500.
What Is The Average Physical Therapist Student Loan Debt?
The average student loan debt for physical therapist on FitBUX is $154,000. The 75th percentile is $198,500 and the 25th percentile is $98,900.
The average interest rate on this debt is 5.68%. Using the standard 10-year student loan repayment plan, the required monthly payment with a student loan balance of $154,000 would be $1,674. The 75th percentile monthly payment with student loan debt of $198,500 would be $2,172 and the 25th percentile monthly payment with student loan debt of $98,900 would be $1,082.
As a side note, new grads also have an average of $1,240 in credit card debt.
Is It Worth Being A Physical Therapist? The Traditional Way Of Answering This Question
We will start by analyzing being a PT in isolation of other professions. We then combine that with various levels of student loan debt and analyze the impact to a physical therapist’s financial outlook. I.e. what is the impact on things such as retirement and buying a home with student loan debt.
To perform this analysis, we ran six simulations using our new financial planning technology. Below are the results of those simulations as well as explanations.
For each of the simulations we used the following assumptions:
- Average age of a new grad physical therapist on FitBUX is 28 years old. Therefore, we started our simulation at 28 and assumed a retirement age of 65 years old.
- We ran three simulations assuming individuals are pursuing a student loan pay-off strategy and three simulations that they are pursuing loan forgiveness via an income-based repayment plan.
- For each of the simulations, we assumed a starting salary of $73,000
- Starting student loan debt levels were $73,000, $154,000, and $198,500. The later two amounts represent the mean and 75th percentile of student loan debt. $73,000 is the “optimal” amount of student loan debt. (Note: Traditionally, in the finance world the optimal amount of student loan debt is to graduate with a 1:1 ratio of total student loan debt to annual income or less. Thus, the average salary of $73,000 a year yields an optimal total student loan debt amount of $73,000).
- The simulations ran assumed the physical therapist was not married (we include additional simulations of getting married to illustrate the impact on various debt levels as well).
- On average, we see that unmarried physical therapist can designate 30% of their gross income to a combination of building assets (investments) or paying off debt.
- For the pay-off simulations, we assumed 27% of gross income would be used to pay-off student loans and 3% towards retirement investments.
- For the income-based repayment simulations, we assumed the minimum required payment was made on student loans (7.3%), 10% going towards retirement investments (401k and Roth IRA combination), and 12.7% invested in taxable asset investments.
- We assumed a 3% matching contribution for retirement funds. This is the average matching contribution that we’ve observed for physical therapist. We also assumed an annual investment rate of return of 5%.
- We assumed the individual is following the FitBUX financial planning method whereby as their income increases the amount contributed increases to assets and debt based on allocating 30% of their gross income to these categories. We assumed a 3% gross income increase per year.
Results Of Simulations – Pay Off
The results can be broken up into two groups: Pay-off simulations and Income-Based Repayment situations.
The chart below summarizes the results for the pay-off simulations based on 3 levels of starting debt post-graduation and an entry level physical therapist salary of $73,000.
All three simulations result in a significant amount of assets at retirement age. In addition, all three result in the ability to generate enough assets and have over a 70% probability of not running out of money in retirement.
However, the only simulation that would give physical therapist the ability to pay off student loans quickly, save for retirement, and potentially save for a larger purchase such as a home is the $73,000 in student loan scenario.
The other two scenarios result in having between $73,000 and $99,000 in assets after 10 years. However, most of those assets would be in the form of retirement assets and include the retirement match. Thus, you would have to make a choice between saving for retirement and getting your retirement match or saving for a down payment on a house.
In addition, even if you saved for a house, it would be hard to afford a mortgage payment and a student loan required payment. Therefore, if you have $153,000 or more in loans it would be extremely hard to afford a house in the 1st 10 years post-graduation and repay your student loans.
Results Of Simulation – Income-Based Repayment
Income-based repayment plans limit your required monthly payment to a percentage of your income. Long story short, for most people these required payments will be lower than pay-off strategies. Therefore, you can save more money from your pay check today.
The long-run effect of IBR relative to pay-off strategies is that they have the potential to give you more assets especially as you increase the amount of student loan debt you have. They also give you much more money in the short-run.
Therefore, one can buy a house and save for retirement sooner but the trade-off is having student loans for the next 20 years.
This also comes with risks such as tax laws changing, behavior, getting married. We’ll dive into two of these risks below.
Behavior – Those going on IBR can put themselves in a good financial situation. However, statistically we’ve seen those that choose pay-off strategies have more financial discipline than those on IBR strategies.
The key to IBR is to start saving ASAP. Often times we see people choose them not because they want to save for retirement or buy a house but simply to “afford” their current lifestyle. Often times we see these individuals get into more debt related problems from purchasing vehicles and running up credit card bills. This is something that I touch on in this podcast.
Marriage can drastically change these scenarios as well. For example, if one’s spouse made 73k per year with no student loan debt, they could realistically pay off the loans in less than 5 years even with one spouse having $198k in student loans.
Is It Worth It To Be A Physical Therapist? The Optimal Way Of Answering The Question
The above method of answering this question looked at dollars and cents. However, it is flawed because it doesn’t include the risk of your income. For example, a physical therapists salary has a lot less risk than a real estate agent.
Therefore, the proper way to do an analysis is to factor in risk. The way we do that in finance is to look at human capital. In short, your human capital is how much your future income is worth today and the analysis of human capital factors in risk to your income.
Thus, we can look at the value of your human capital with your DPT vs other options. For example, you can compare it to just being an undergrad or relative to another profession such as an OT, SLP, PA, etc…
Below is a chart of human capital by profession and an explanation:
How To Interpret This Analysis – Advanced vs No Advanced Degree
This analysis incorporates everything, i.e. physical therapist salary, the risk to that salary, etc… We’ll first compare it to not having an advanced degree then we’ll compare it to other advanced degree options.
After getting a DPT, the average physical therapists will have a human capital value of $1.2 million dollars. An average undergrad only has a human capital value of approximately $629k. From a finance perspective, you would say that the DPT is worth it as long as you don’t have to spend more than $570k to get it ($570k is the difference between the human capital values).
However, we always want to see a return on investment. Therefore, let’s say our target is to get a 4x return on the time we invest into getting the DPT.
You should be willing to pay approximately $142k for your degree ($570k divided by 4). A few big keys to this analysis:
- $142k is not the amount of debt you would be willing to get. Instead it represents the cost you would pay. Debt is just one way to pay and is not an explicit cost.
- The $142k does not include the cost of getting an undergrad degree because you’ve already attained that.
- The cost that do go into the $142k are:
- Tuition
- Books
- Interest on debt
Notice we didn’t say debt is a cost, simply the interest. The reason for this is that you borrow money for tuition and books. Therefore, we’ve already incorporated tuition and books. Plus you could pay cash for tuition and books without taking out debt.
You’ll also notice we don’t include items like rent and food. The reason being is that you would be eating and renting regardless of going to school or not. The only thing you may be forgoing while in school is a job. Therefore, interest you are charged on the money you borrow to cover living expenses is the true “cost” of forgoing income now to get your DPT.
In summary, most DPT programs cost less than $142k. Therefore, when you look at the level of income you receive (i.e. physical therapist salary both today and growing over time) and the lower risk to that income relative to just having an undergrad degree, then yes the DPT in our opinion is absolutely worth it.
The key for you to determine if it’s worth it is to say what type of return do you want on your investment. If you love being a PT and wouldn’t want to do anything else, then maybe a 2x return would be worth it which means you’d be willing to pay $285k for your DPT.
If you say you want a massive return, something like 6x then you would only want to spend about $95k on your DPT.
How To Interpret This Analysis – Advanced vs Advanced Degree
In reality, all DPTs are extremely smart. Very few people that we meet and are thinking of getting their DPT are saying to themselves, “I’m going to get my DPT or I’m not going to get anything at all.”
Instead, DPTs have many other options such as becoming an OT, SLP, MD, PA, NP, etc…
Every one of these professions takes longer or shorter to complete, has different levels of income, different employment levels, etc…
In addition, you can’t say “Is a DPT worth it?” when comparing it to other advanced degrees. Instead, you’d have to say which degree from a financial standpoint increases my human capital the most and gives me the biggest return on my investment.
In the chart from the previous section, we only included two other professions as examples. As you can see the DPT is better from a financial perspective than an MOT/OTD for Occupational Therapy. This is because most OTs are about the same age as DPTs when they graduate but receive lower average salaries and employment opportunities.
On the flip side of that, PAs create a tremendous amount of human capital. Although employment is slightly worse than DPTs, it is offset by other factors such as taking less time to graduate (this means PAs are earning income sooner than DPTs) and they also have much higher starting salaries.
In all, from what we see, DPTs are in the middle of the pack when it comes to being compared vs other advanced degrees.
If you’d like to see the value of your human capital, join FitBUX at https://www.fitbux.com. Once you complete your profile, click the net wealth option on the left hand menu.
Physical Therapist Salary By State
Below is a chart of starting physical therapist salaries by state. These are statewide and salaries can vary largely within the state as well as area of work. Therefore, we have included salaries by occupation and specific information for a handful of locations.
Below we point out why you must dive deeper into each state vs. just looking at the average salary for each state using various examples:
Physical Therapist Salary In California
Average physical therapist salary in California is $80,688 for new grads. However, California is a large state so starting physical therapist salaries can range greatly. We typically see a starting salary of about $92k in the South Bay (south of San Francisco), close to 100k starting salaries in locations such as Humboldt county, and starting pay around $82k in Southern California.
In addition, starting salary can be different even for the same company based on location as well as the type of company you are working for.
For example, Kaiser Northern California typical starting salary is $92k to $95k while Southern California is about $82k. Prior to unionization at Kaiser Northern California, we’ve seen increases in Kaiser Southern California’s salaries be drastically lower than new grad increases in salary in Northern California.
You can also see a drastic difference in salaries based on the type of company you work for. Hospital based systems like Kaiser tend to have the best salary and retirement packages. Non-profits tend to have decent salaries and really good retirement. Private practices tend to be on the low end of salary and retirement benefits.
Physical Therapist Salary In Florida
Physical therapist salary in Florida is $71,698 for new grads. However, Florida is another state were we see drastic differences in salaries. Florida tends to have one of the highest physical therapist salaries for those that work in home health. This is especially true in areas that have high retirement age residence. It is not uncommon for us to see new grads pulling in over 100k in salary working home health in Florida.
Also, Florida has no state income tax. Therefore, all else equal, your take home pay is great relative to other states such as New York or California.
Physical Therapist Salary In New York City
New York is ranked 20th overall with a new grad physical therapist salary of $72,466. However, this can be deceiving. You would expect New York City to have much higher income that other places in the state. However, physical therapist salary in New York City tend to be extremely low.
However, there is one caveat. Most of the positions within the city are non-profits. Therefore, these positions qualify for Public Service Loan Forgiveness.
So, if you don’t mind low salary and high cost of living, you can be student loan free within 10 years of graduation.
Physical Therapist Salary In North Carolina
North Carolina is ranked 34th with a new grad physical therapist salary of $70,054. However, there are two aspects to consider. Most new grads we work with from North Caroline tend to work close to the universities they attended. The super majority of these jobs are non-profits so they qualify for PSLF.
In addition, North Carolina has an awesome program if you work in underserved areas. They forgive $20k over your loans immediately each year for 3 years!
Physical Therapist Salary In Texas
Texas is 15th in the country for average physical therapist salary of $74,328. This holds true almost anywhere in the state plus any setting you work in.
However, we bring up Texas because a lot of new grads we speak with want to move to Austin. Physical therapist salary in Austin tends to be horrible, especially for outpatient. If you are lucky enough to find a job expect to have a massive pay cut relative to other places you’ve worked.
Physical Therapist Salary In Nevada
Nevada ranks 6th overall and the average physical therapist salary is $78,484. In addition to this, the cost of living is low relative to other states and there is no state income tax. This makes Nevada one of the top places to work as a new grad PT from a financial perspective.
Physical Therapist Salary In Colorado
Physical therapist salary in Colorado ranked 45th at $67,388 making it one of the worst places for a new grad to start their career. In addition, it is going to be hard to find a job in Denver, especially in outpatient.
Also, the cost of living can be relatively high especially if you plan on working in a resort town.
Physical Therapist Salary By Setting
Below is a chart of New Grad PT salaries based on occupational setting:
Travel Physical Therapy Salary
We did not include travel physical therapy salaries in the above data and analysis. The reason being is that we typically see travelers spend only 2 – 4 years traveling. Therefore, the salary they obtain is not “sustainable.”
However, the average travel physical therapy salary for FitBUX members is $88k – $95k per year. The range depends mostly on how many weeks you take off between contracts and where you get your travel contracts at. Its not uncommon for us to see travelers pick up extra PRN shifts and make over $100,000 a year.
In addition, roughly half the income you receive is stipend money. Therefore, your after-tax cash flow tends to be much higher than a traditional 40 hours/week new grad physical therapist.
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