Chiropractics lobbied for special student loans, defaulted in droves

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The chiropractic industry counted a win after it successfully lobbied for inclusion in a federal student loan program for those studying health-related professions. Decades later, though, significant numbers of chiropractors have defaulted on their loans, leaving Uncle Sam to make up the difference.

Fifty-three percent of healthcare providers barred from receiving Medicare and Medicaid reimbursements from patients because they defaulted on Health Education Assistance Loans (HEAL) are chiropractors, according to an analysis of the Department of Health and Human Services’ exclusion list.

The data shows people well into middle age–even in their 60s–saddled with debt, sometimes as much as $500,000, from the four years of graduate chiropractic school.

In the late 1970s, the federal government attempted to beef up America’s health care by providing special loans for graduate students of medicine, dentistry and the like: The Health Professional Student Loan program, which was subsidized, and HEAL, for which interest could reach the double digits and began accumulating right away, and which was considered an option of last resort. The initial version of the latter program did not so much as provide a credit check before granting loans.

The former program was targeted to those studying to become medical doctors, but after lobbying by professional groups, HEAL was expanded to include a handful of “alternative medicine” professions.

The assistance helped chiropractic colleges enroll more students into their degree programs, with optimistic claims about earning potential.

“Becoming a doctor of chiropractic can give you the lifestyle of your dreams, and the profession is growing,” claims the Web site of the Palmer College of Chiropractic.

In reality, many chiropractics said, it is difficult for those in the field to take home enough to pay the bills, in part because insurance plans often won’t cover extended visits to chiropractics, and because demand is low.

Students interested in “alternative medicine” may be more likely to take out loans on an education without doing research on the probable returns because some are naive or gullible, claimed Alan Grubstein, a California practitioner who considers himself more of a businessman than a “typical chiropractor.”

“Some of these people believe in magic and spells and potions, so of course they’re going to believe it,” he said.

And some schools–which tend to be unaffiliated with existing universities–are riddled with incompetence.

“When I was on my HEAL loans, the college had me down for the wrong graduation date, and even before I graduated from college, I was in default,” Grubstein, who is listed as owing $220,484, said. He added that he’s now making payments, but hasn’t been reinstated, so he remains barred from receiving reimbursements.

The school he attended, the Southern California College of Chiropractic, is particularly infamous. “While I was finishing up, two different presidents or deans were taken out of the school in handcuffs,” he said.

Former president Alan Weston, who had been fired by two chiropractic schools for financial mismanagement, was convicted in 1993 of money laundering–along with a co-defendant who was a rabbi–in federal court.

By the ’90s, high default rates began to attract attention, and in 1998, HEAL was discontinued.

All this leaves many chiropractics feeling frustrated. “There’s no recourse,” Grubstein said–of his experience in particular, because the school is now bankrupt and nonexistent, but for indebted chiropractors everywhere as well. “There’s no one you can sit down and talk to. It’s like they say: You can’t fight city hall.”

“The HEAL program is a very interesting historical footnote,” said David O’Bryon, director of the Association of Chiropractic Colleges (ACC), which represents accredited institutions that train chiropractors. “The program had so many flaws in it for everyone, but one issue for chiropractics is they started repayments before they were licensed to practice” due to the timing of board exams.

O’Bryon added that the data on the excluded list can be inaccurate or outdated, and that outside of the discontinued HEAL program, chiropractics have a default rate of only zero to two percent.

For 559 one-time students of the trade who owe a combined $56 million, however, the fiasco is by no means old news. Twelve years after the loans were discontinued, ninety-one former Palmer students still owe $8 million in federal loans, an average of $88,000 each. 

Palmer spent $12,000 lobbying Congress in 1998–the year HEAL loans were discontinued–and then ceased lobbying until 2006. The American Chiropractic Association, the trade group for the profession, spent $320,000 on lobbying in 2008, the last full year for which data is available, and the ACC spent $70,000.

Today, federal workers’ health plans provide chiropractic coverage, and the department of Veterans Affairs, in particular, has recently sharply ramped up its use of the treatment for veterans.

Check it out yourself

Sunlight has put the HEAL exclusion data in Google Fusion Tables, a new tool that lets you perform easy aggregation and visualization, so readers can do their own analysis. The table is here. Here’s a map of healthcare practitioners who have defaulted on student loans, based on the addresses of the individuals at the time of exclusion. Not all individuals may still be at those locations.