How long realistically for a single person to pay back a $400,000+ loan?

MedAdComMD said:

Good Morning everyone,

I have a family member who is 80,000$ in debt out of undergrad, 20,000$ out of debt in a masters programs, and potentially another 60,000$ out of debt in a 2-year SMP, followed by a 250,000$ debt out of medical school.

If she comes out and becomes a family physician making 150,000$/year - how long realistically do you think it will take her to pay off this 410,000$ loan?

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Is this an actual personal scenario, or are you trying to see how well us pre-meds grasp the gravity of accrued debt during medical school?

To answer your question though, without knowing any other details than total debt and income after graduation...probably ~30 years.

MedAdComMD said:

Good Morning everyone,

I have a family member who is 80,000$ in debt out of undergrad, 20,000$ out of debt in a masters programs, and potentially another 60,000$ out of debt in a 2-year SMP, followed by a 250,000$ debt out of medical school.

If she comes out and becomes a family physician making 150,000$/year - how long realistically do you think it will take her to pay off this 410,000$ loan?

Click to expand...

Ummm, I have no clue but I think that's the highest education debt I've ever heard anyone have!

Don't education debts HAVE to be paid off within 30 years?

Well that $410,000 is just principal borrowed....with interest it is likely $600,000-$800,000 over the lifetime of payback. Do a FV analysis X(1.(insert rate)^(years)

Lesson: Compounding interest is a b$tch

MedAdComMD said:

Good Morning everyone,

I have a family member who is 80,000$ in debt out of undergrad, 20,000$ out of debt in a masters programs, and potentially another 60,000$ out of debt in a 2-year SMP, followed by a 250,000$ debt out of medical school.

If she comes out and becomes a family physician making 150,000$/year - how long realistically do you think it will take her to pay off this 410,000$ loan?

Click to expand...

150,000 (Is she married?) If not, then she's in the 28 percent tax bracket.

150000 - 42000 = 108,000 a year (after income tax)

Social security tax up to 106,800 dollars earned @ 6.2%

108,000 - 6,621.6 = 101,378.4 dollars a year.

Assume she lives in New York, which collects 7% state income tax.

101,378.4 - 10,500 = 90,878 dollars a year.

Now assume she pays 15,000 a year in malpractice insurance
90878 - 15000 = 75,878 dollars a year.

Ok so after taxes and malpractice, she's now making about 75,000 a year.

Now assume she needs at least 40,000 a year to survive (pay bills, live in an apartment, car insurance, etc.)

That leaves about 35,000 a year to pay off 400,000 in debt

Let's assume no interest accumulates until the point she graduates. Let's assume 6% interest.

According to this site, it will take 19.4 years.
http://www.finaid.org/calculators/scripts/loanpayments.cgi

MedAdComMD said:

This is a potential scenario for a distant family member. She is currently only 100K in debt, but if she does a 2 year SMP then medical school, she would be probably 400K+ in debt.

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Well...I would make darn sure that she has no doubts that this is what she wants. That's a pretty crushing debt. I don't mean to sound pretentious or anything, but if you were on an adcom, shouldn't you have a fairly good idea or at least have better resources than a pre-med message board?

Or...if all the loans are federal government loans you can choose to pay your loans off through the "income based repayment plan" and at the end of 25 years any remaining balance is forgiven. The monthly payment on $400K with a $150K salary is around $1600 and anything not paid off at 25 years just goes away.

http://studentaid.ed.gov/PORTALSWebApp/students/english/IBRPlan.jsp

Public service loan forgiveness would really be their best/only option.

Captain Fantastic said:

Or...if all the loans are federal government loans you can choose to pay your loans off through the "income based repayment plan" and at the end of 25 years any remaining balance is forgiven. The monthly payment on $400K with a $150K salary is around $1600 and anything not paid off at 25 years just goes away.

http://studentaid.ed.gov/PORTALSWebApp/students/english/IBRPlan.jsp

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Which, if you work that out, comes to 400k.

MedAdComMD said:

I don't deal with financial aid/loan industry. I am now currently on leave as a stay-at-home mom.

I personally graduated with only about 100,000$ of debt - which is entirely different situation than hers.

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I see. Well anyway, from the seemingly educated posts on here, it looks like no matter what, she will be working hard for a long time to pay off a debt like that. If she is going into it for the money, it would be foolish.

DrBowtie said:

Public service loan forgiveness would really be their best/only option.

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This.

It depends on how quickly she is willing to pay things back. Let's assume all loans are unsubsidized loans secured at 6.8% (this excludes subsidized Stafford loans + IBR but also assumes that GRADPlus loans aren't at a higher interest rate, so possibly a wash?), $500/month payment during residency, and securing a position that allows one to start paying bills immediately after residency. Let's also assume that the $160,000 borrowed before starting medical school was borrowed under unsubsidized loans at 6.8%. That puts her at $485,000 at the end of M4.

If she is willing to pay ~36,000/year, she would never be able to reduce her principal and it would take an infinite amount of time to pay it all back.
If she is willing to pay $42,500/year, it would take ~30 years after residency to pay it all back.
If she is willing to pay $50,000/year, it would take ~20 years after residency to pay it all back.
If she is willing to pay $62,500/year, it would take ~14 years after residency to pay it all back.
If she is willing to pay $75,000/year, it would take ~11 years after residency to pay it all back.

There is also loan forgiveness at 10 years (for non-profit employees) and 25 years (for everyone else).

Nvm I think I did my math wrong :S

Better marry another doctor

HINKLO said:

Which, if you work that out, comes to 400k.

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Understood. The government intends to recoup its money.

The points I am making are: 1) 25 years is the maximum you will repay in the program, which was the OP's question and 2) the payment is reasonable compared to your salary.

HINKLO said:

Which, if you work that out, comes to 400k.

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Which is less than the 800K+ that would result from interest.

Captain Fantastic said:

Understood. The government intends to recoup its money.

The points I am making are: 1) 25 years is the maximum you will repay in the program, which was the OP's question and 2) the payment is reasonable compared to your salary.

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I see. Also, you effectively only end up paying principle instead of all the interest too.

Edit: Ninja'd ^

So who knows if the program will be around for another 20 years (won't officially go into effect until 2017 and the government might reconsider this program then), but currently if you work for an non-profit organization for 10 years, after 10-years, all your loans will be forgiven. Something like 80% of hospitals are non-profit -- so just choose your residency, fellowship, and first job currently, and after 10-years you will be loan free (ideally).

Public Service Loan Forgiveness

Avoidthetiger said:

So who knows if the program will be around for another 20 years (won't officially go into effect until 2017 and the government might reconsider this program then), but currently if you work for an non-profit organization for 10 years, after 10-years, all your loans will be forgiven. Something like 80% of hospitals are non-profit -- so just choose your residency, fellowship, and first job currently, and after 10-years you will be loan free (ideally).

Public Service Loan Forgiveness

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Law requires public service/charity, not just "non-profit". Specifically, a private organization has to be 501c3 certified by the IRS to qualify. Most teaching hospitals would qualify, but not all hospitals will so I wouldn't count on this unless you intend to work for pennies at an inner-city hospital.

Where did you get the 80% of hospitals are non-profit statistic? That seems awful high.

Edited to add stats from American Hospital Association:
5008community hospitals in US (ie not psych or federal/vet)
2918 private non-profit--58%
998 private for-profit--20%
1092 state/local government owned--22%

LifeTake2 said:

Law requires public service/charity, not just "non-profit". Specifically, a private organization has to be 501c3 certified by the IRS to qualify. Most teaching hospitals would qualify, but not all hospitals will so I wouldn't count on this unless you intend to work for pennies at an inner-city hospital.

Where did you get the 80% of hospitals are non-profit statistic? That seems awful high IMHO.

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wikipedia -- In 2003, of the roughly 3,900 nonfederal, short-term, acute care general hospitals in the United States, the majority—about 62 percent—were nonprofit. The rest included government hospitals (20 percent) and for-profit hospitals (18 percent).[1]

I lumped the government hospitals and non-profits together for about 80%... even though the government aren't non-profit, when I did research on this a few months ago, I believed they counted too.

The law considers health care professionals as doing a public service -- so any physician at a non-profit counts. And actually, I do plan on working in inner-city hospitals, so I'm covered regardless =P

The biggest problem though is that the OP's family member just can't count on this being in existence in 15-20years. I'm hoping, but I'm still very worried about loans still.

typicalindian said:

Also, in the extreme scenario that universal health care shoots down doctors salaries to ~ 80k a year(more or less, this is a random number), what will she do then?

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She'll likely do the same thing you did to reach that 80K figure: pull something out of her ass.

typicalindian said:

Honestly if she is serious about that, that is extremely dumb on her part. Even if it is her "life dream" to become a doctor, for that amount of debt it's not worth it. Is she planning on ever having a family? If so I don't think I'd want to marry someone with almost half a million dollars of debt. Also, in the extreme scenario that universal health care shoots down doctors salaries to ~ 80k a year(more or less, this is a random number), what will she do then?

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SO true. I think there is some hope here though. For example, if she does get into medical school, perhaps she will have a state-school option, which with living expenses should be well under 250K for the 4 years. Also, the model we are working with revolves her working in NY as a physician making 150K/year. She might end up in nevada, florida, Alaska, New Hampshire, South Dakota, Tennessee, Texas, Washington, or Wyoming (states with either no income tax, or only income tax on dividends and interest), practicing in a lucrative field (2x or 3x150K..and I don't want to get in an argument about physician salaries, those numbers and MUCH higher ones exist). Also, portion of your student loan interest is a tax deduction.

Basically, 400K in debt with interest sucks, but there is reasonable hope that it might not be 400K, and she could be making enough to service it.

Eric01 said:

150,000 (Is she married?) If not, then she's in the 28 percent tax bracket.

150000 - 42000 = 108,000 a year (after income tax)

Social security tax up to 106,800 dollars earned @ 6.2%

108,000 - 6,621.6 = 101,378.4 dollars a year.

Assume she lives in New York, which collects 7% state income tax.

101,378.4 - 10,500 = 90,878 dollars a year.

Now assume she pays 15,000 a year in malpractice insurance
90878 - 15000 = 75,878 dollars a year.

Ok so after taxes and malpractice, she's now making about 75,000 a year.

Now assume she needs at least 40,000 a year to survive (pay bills, live in an apartment, car insurance, etc.)

That leaves about 35,000 a year to pay off 400,000 in debt

Let's assume no interest accumulates until the point she graduates. Let's assume 6% interest.

According to this site, it will take 19.4 years.
http://www.finaid.org/calculators/scripts/loanpayments.cgi

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That was very interesting and informative way to present the information, thanks.

Long Way to Go said:

It depends on how quickly she is willing to pay things back. Let's assume all loans are unsubsidized loans secured at 6.8% (this excludes subsidized Stafford loans + IBR but also assumes that GRADPlus loans aren't at a higher interest rate, so possibly a wash?), $500/month payment during residency, and securing a position that allows one to start paying bills immediately after residency. Let's also assume that the $160,000 borrowed before starting medical school was borrowed under unsubsidized loans at 6.8%. That puts her at $485,000 at the end of M4.

If she is willing to pay ~36,000/year, she would never be able to reduce her principal and it would take an infinite amount of time to pay it all back.
If she is willing to pay $42,500/year, it would take ~30 years after residency to pay it all back.
If she is willing to pay $50,000/year, it would take ~20 years after residency to pay it all back.
If she is willing to pay $62,500/year, it would take ~14 years after residency to pay it all back.
If she is willing to pay $75,000/year, it would take ~11 years after residency to pay it all back.

There is also loan forgiveness at 10 years (for non-profit employees) and 25 years (for everyone else).

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Excellent Post Long Way To Go, you took the words right out of my mouth. This leads to the excellent point all medical students have to make and that is what they want to practice.

This is a major reason many of us second guess going into primary care. The pay sucks and the loans are crazy. The 10 year pay back program sounds nice, but is unstable and no one knows if it will be around in the future. There are so many factors that go into deciding what type of physician you want to be and unfortunately money is sometimes a driving factor. Making 90K as a pediatrician out of residency and having to pay back loans and support a family after working your ***** off for 12 years is not very encouraging.

Solution: ace Step 1, get a solid residency in a great specialty and make enough money where paying back 75K a year won’t be a big deal and you and your family can still live comfortably all the while loving what you’re doing at work.

Also would be wise to look at less expensive med schools so it doesn't cost 250k.

Also would be wise to see if there are any alternatives to a two year SMP.

Medicine4Bruhs said:

That was very interesting and informative way to present the information, thanks.

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However, main error with these numbers is you don't pay taxes on the 150K. You pay taxes AFTER you have deducted school loan interest, mal practice insurance and a whole bunch of other things that qualify. So you actually end up with a higher number.

I also want to say 40k living expenses + NY + Married = not gonna happen. This is one of the main reason NY is the state with the Highest IMG (46%). Almost one half of practicing physicians in the State of New York studied medicine in a foreign country. (Journal of American Medicine. PM me and I will give you the exact publication)

MedAdComMD said:

Good Morning everyone,

I have a family member who is 80,000$ in debt out of undergrad, 20,000$ out of debt in a masters programs, and potentially another 60,000$ out of debt in a 2-year SMP, followed by a 250,000$ debt out of medical school.

If she comes out and becomes a family physician making 150,000$/year - how long realistically do you think it will take her to pay off this 410,000$ loan?

Click to expand...

In addition to what everyone has said about PSLF and 25 year loan forgiveness, bear in mind that in the latter program, forgiven loan amounts are taxed as income. Way to go Uncle Sam.

Honestly, it's do-able, but it will definitely take 25 years if she isn't up for the "challenge" of "scrimping, saving, and living modest means". It's like a mortgage--400K or so--people survive and do it...it just won't be a "walk in the park" living your life and paying off your loans when the amount is that high.

How is that possible?

What kind of crazy expensive schools does this person go to. 80k just from undergrad? this person is good enough to get into med and didn't get a single undergrad scholarship? No work during the summer? how do you get into debt in master's? Maybe i'm, naive, but here in Canada. Master's program pays the student, not the other way around. Grad students make about 22k a year, and 250k in med school alone? What kind of luxury apartment is this person renting... Living expenses alone should not pass 12k a year. My tuition + living didn't even touch 12k/year in undergrad.

Anyone who passes 250k in loans is just plain not smart with money. They are very intelligent medical wise, but dumb with money. A cheaper undergrad university should of been chosen and to prevent further debt a cheaper medical school should be pursued. Avoid lucrative spending while in school.

It depends on how much she is willing to pay each month. A person living in CA making $150k/year will end up with $7095.82 after all deductions (www.paycheckcity.com). Accoring to www.finaid.org/calculators/loanpayments.phtml at 6.8% interest:

Loan Term: 10 years
Monthly Loan Payment: $4,603.21
Amount left over: $2492.61 (In my experience , it is possible to live off of.)
Number of Payments: 120
Cumulative Payments: $552,385.75
Total Interest Paid: $152,385.75


Loan Term: 20 years
Monthly Loan Payment: $3,053.36
Amount left over: $4042.46
Number of Payments: 240
Cumulative Payments: $732,805.45
Total Interest Paid: $332,805.45


Loan Term: 30 years
Monthly Loan Payment: $2,607.70
Amount left over: $4488.12
Number of Payments: 360
Cumulative Payments: $938,772.89
Total Interest Paid: $538,772.89


Looking at these numbers (especially interest paid!), makes me so glad that I went to a CC and then a state university instead of the $40k/year "prestigious" university.

ILikeDrugs said:

It depends on how much she is willing to pay each month. A person living in CA making $150k/year will end up with $7095.82 after all deductions (www.paycheckcity.com). Accoring to www.finaid.org/calculators/loanpayments.phtml at 6.8% interest:

Loan Term: 10 years
Monthly Loan Payment: $4,603.21
Amount left over: $2492.61 (In my experience , it is possible to live off of.)
Number of Payments: 120
Cumulative Payments: $552,385.75
Total Interest Paid: $152,385.75


Loan Term: 20 years
Monthly Loan Payment: $3,053.36
Amount left over: $4042.46
Number of Payments: 240
Cumulative Payments: $732,805.45
Total Interest Paid: $332,805.45


Loan Term: 30 years
Monthly Loan Payment: $2,607.70
Amount left over: $4488.12
Number of Payments: 360
Cumulative Payments: $938,772.89
Total Interest Paid: $538,772.89


Looking at these numbers (especially interest paid!), makes me so glad that I went to a CC and then a state university instead of the $40k/year "prestigious" university.

Click to expand...

So basically this person will end up living like a nurse, if that. This would have never happened even 10 years ago, but future trends will favor examples like this.

MedAdComMD said:

Good Morning everyone,

I have a family member who is 80,000$ in debt out of undergrad, 20,000$ out of debt in a masters programs, and potentially another 60,000$ out of debt in a 2-year SMP, followed by a 250,000$ debt out of medical school.

If she comes out and becomes a family physician making 150,000$/year - how long realistically do you think it will take her to pay off this 410,000$ loan?

Click to expand...

How do you get in debt for a Masters program?

She could always work in an under served area for about 5 years and have the government pay off 150k (thats the max for http://nhsc.bhpr.hrsa.gov). That would leave ~$250k (an amount not to far from the norm for a new attending). Then after that, she could move on to some hospital that offers a loan forgiveness program if she still finds that she wants help.

Prateek said:

How do you get in debt for a Masters program?

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Masters degrees cost money, unless schools started handing them out for free just recently?

Eric01 said:

150,000 (Is she married?) If not, then she's in the 28 percent tax bracket.

150000 - 42000 = 108,000 a year (after income tax)

Social security tax up to 106,800 dollars earned @ 6.2%

108,000 - 6,621.6 = 101,378.4 dollars a year.

Assume she lives in New York, which collects 7% state income tax.

101,378.4 - 10,500 = 90,878 dollars a year.

Now assume she pays 15,000 a year in malpractice insurance
90878 - 15000 = 75,878 dollars a year.

Ok so after taxes and malpractice, she's now making about 75,000 a year.

Now assume she needs at least 40,000 a year to survive (pay bills, live in an apartment, car insurance, etc.)

That leaves about 35,000 a year to pay off 400,000 in debt

Let's assume no interest accumulates until the point she graduates. Let's assume 6% interest.

According to this site, it will take 19.4 years.
http://www.finaid.org/calculators/scripts/loanpayments.cgi

Click to expand...

The problem is that you are assuming she will have 400k in debt 6 years from now when finishes med school, but you are using a salary of 150k, which is the 2011 salary, not the 2020/2021 salary she'll be starting with

Brachyury said:

The problem is that you are assuming she will have 400k in debt 6 years from now when finishes med school, but you are using a salary of 150k, which is the 2011 salary, not the 2020/2021 salary she'll be starting with

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Do you honestly expect a higher salary 10 years from now?

Brachyury said:

The problem is that you are assuming she will have 400k in debt 6 years from now when finishes med school, but you are using a salary of 150k, which is the 2011 salary, not the 2020/2021 salary she'll be starting with

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Well the OP said to start with 150,000. Honestly there's a lot of nuances one can do, I just set up a ball park estimate. The real answer is probably +/- 5 years depending on the interest rate, if the interest is applied during school, and how much salary advancement they gain, tax breaks, and marriage.

But in all honesty I think 2020 salary is going to work against doctors, even with inflation, it looks like doctor's salaries are most likely to go down with medicare cuts.

Eric01 said:

150,000 (Is she married?) If not, then she's in the 28 percent tax bracket.

150000 - 42000 = 108,000 a year (after income tax)

Social security tax up to 106,800 dollars earned @ 6.2%

108,000 - 6,621.6 = 101,378.4 dollars a year.

Assume she lives in New York, which collects 7% state income tax.

101,378.4 - 10,500 = 90,878 dollars a year.

Now assume she pays 15,000 a year in malpractice insurance
90878 - 15000 = 75,878 dollars a year.

Ok so after taxes and malpractice, she's now making about 75,000 a year.

Now assume she needs at least 40,000 a year to survive (pay bills, live in an apartment, car insurance, etc.)

That leaves about 35,000 a year to pay off 400,000 in debt

Let's assume no interest accumulates until the point she graduates. Let's assume 6% interest.

According to this site, it will take 19.4 years.
http://www.finaid.org/calculators/scripts/loanpayments.cgi

Click to expand...

As far as I know, physicians don't pay for their own malpractice and even if they did the salary figures of 150k are understood to be after malpractice. Your tax figures are kind of high I think? According to paycheckcity.com a person living in Pennsylvania making $150k/year should bring home (after federal and state taxes) a little under $102k/year.

circulus vitios said:

As far as I know, physicians don't pay for their own malpractice and even if they did the salary figures of 150k are understood to be after malpractice. Your tax figures are kind of high I think? According to paycheckcity.com a person living in Pennsylvania making $150k/year should bring home (after federal and state taxes) a little under $102k/year.

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Maybe that number includes tax deductions? The only thing I fooled around with was set the social security tax to 6.2% (2010) levels from the 2011 levels of 4.2%, because it doesn't seem like that tax break is going to stay for very long. Also, Pennsylvania doesn't have a progressive state tax, their income tax rate is set at 3%

It would be wise for her to work in a state without a state income tax, I just used one with one because many of the states do and so there's a high probability she will deal with one.

ILikeDrugs said:

Masters degrees cost money, unless schools started handing them out for free just recently?

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Masters is paid isn't it? In Canada, All masters/Ph.D students receive ~22k a year in stipends. Its sorta like residency. Yeah your still learning, but your also working for your supervisor. And the amount your paid outways the tuition. Its enough to cover tuition, apartment, food, and most grads i know are also able to afford a car.

Eric01 said:

150,000 (Is she married?) If not, then she's in the 28 percent tax bracket.

150000 - 42000 = 108,000 a year (after income tax)

Social security tax up to 106,800 dollars earned @ 6.2%

108,000 - 6,621.6 = 101,378.4 dollars a year.

Assume she lives in New York, which collects 7% state income tax.

101,378.4 - 10,500 = 90,878 dollars a year.

Now assume she pays 15,000 a year in malpractice insurance
90878 - 15000 = 75,878 dollars a year.

Ok so after taxes and malpractice, she's now making about 75,000 a year.

Now assume she needs at least 40,000 a year to survive (pay bills, live in an apartment, car insurance, etc.)

That leaves about 35,000 a year to pay off 400,000 in debt

Let's assume no interest accumulates until the point she graduates. Let's assume 6% interest.

According to this site, it will take 19.4 years.
http://www.finaid.org/calculators/scripts/loanpayments.cgi

Click to expand...

Excellent.
However you need to add the Medicare tax - 1.45% = $2175
http://www.ssa.gov/oact/progdata/taxRates.html

PlacentaSac said:

However, main error with these numbers is you don't pay taxes on the 150K. You pay taxes AFTER you have deducted school loan interest, mal practice insurance and a whole bunch of other things that qualify. So you actually end up with a higher number.

I also want to say 40k living expenses + NY + Married = not gonna happen. This is one of the main reason NY is the state with the Highest IMG (46%). Almost one half of practicing physicians in the State of New York studied medicine in a foreign country. (Journal of American Medicine. PM me and I will give you the exact publication)

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This is BS. Doctors generally do not get to deduct student loan interest because they are over the income limit. Even those few who can take it the deduction is limited to $2500 a year (this is a pittance compared to the debt loads of most med school grads). Malpractice insurance is a business expense which comes right off of your net profit.
Student Loan Interest Deduction
You may be able to deduct up to $2,500 of the interest you paid on student loans on your federal individual income tax return. The deduction is not limited to government-sponsored loans, but does not apply to loans made to students by family members. The Tax Relief Act of 2010 extended the student loan deduction through 2012. After 2012, the deduction will revert to a previous tax law in which interest on a student loan is deductible only for the first 60-months of repayment.

Income Limits


The amount of your student loan interest deduction will be phased out if your modified adjusted gross income is between $55,000 and $70,000 ($110,000 and $140,000 if you file a joint return). You will not be able to take a student loan interest deduction if your modified adjusted gross income is $70,000 or more ($140,000 or more if you file a joint return).

Eligibility


You are eligible to take the interest deduction if you paid interest on a student loan for you, your spouse, or a person who was your dependent. An eligible student is a student who was enrolled at least half-time in a program that led to a degree, certificate, or other recognized educational credential.
http://www.getreadyforcollege.org/gpg.cfm?pageid=115

futuredoc15 said:

Excellent.
However you need to add the Medicare tax - 1.45% = $2175
http://www.ssa.gov/oact/progdata/taxRates.html

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Haha oh silly me. Not to mention local (county)/property taxes!

Remember, paying taxes makes you patriotic

We're going to assume some things: she starts a 2 year smp this year, and that she will start med school right after, and then complete three years of a FP residency

SMP 2011-2013
Med School 2013-2017
Residency 2017-2020
Start Private Practice in 2020

Since she will have a lot of loans, we'll assume the combined interest on her loans (assuming student loan rates do not increase or decrease) will be 7.2% (I'm also going to be VERY conservative and assume none of her loans are subsidized)
OK, let's say the starting FP salary in 2011 is 150k, since PC specialties are the least likely to get dinged in the future, we'll assume a salary growth of 3%. Thus her starting salary in 2020 will be $196,500

We'll assume in 2011 a first year resident earns a salary of 47k, and we'll assume a 3% growth, which means in 2017 she'll earn $56,259
All loans originating on or after July 1, 2014 will be capped at 10% pre-tax income under IBR, thus her loans from her last three years will have a payback of 10% of her income, but loans before that, like from her SMP and first year of med school, will have a 15% repayment cap.
We're going to use this calculator http://www.finaid.org/calculators/ibr.phtml.

To avoid a marriage penalty, we're going to have her file her taxes separately, her starting salary will be %56,259 and her salary will change in three years to $196,500; we'll assume income growth of 3%. We'll also assume she has a household size of 3 (assuming she has one child). Make sure to enter the total debt (410k) into the unsubsidized column at 7.2%, and make sure to change the box that switches the 10-year forgiveness to the 25-year repayment plan

This calculator assumes that all of her loans are at a 15% repayment cap, and even then, she'll be paying her loans for the full 25 years (3 years of residency and 22 years of private practice) and will receive 126k in loan forgiveness, but she will have to report 126k in income on her taxes. Since her loans will be a mix of 10% and 15% caps, her actual foregiveness amount will be higher since she will be paying less over the life of the loans. Alternatively, she could just do 7 years of public service after residency and have her loans cancelled.

One thing I want all of you to notice is her max monthly payment is $3,871. This number is the maximum she will ever have to pay, and it is calculated from what the monthly payment would be if she started a ten year repayment plan when she started repayment on her loans. For example, if you start residency we 300k in loans, you would probably pay something like $450k over the 10 years you repay the loans. Thus your monthly cap is 450,000/(120)= $3,750. So in a given year, you will never pay more than $45,000. What happens if you are a radiologist whose first private practice job out of residency pays $350k a year. Well 15% of you income is $52,500, which means instead of having to pay %52,500 that year, you will only pay 45k since that is your cap. If all of your loans are at 10%, and your max yearly repayment is 45k and your salary is 350k, 10% of 350k is 35k, thus you'd pay 35k instead of 45k

There are also primary care loans, but with the advent of my IBR, they're useless: primary care loans have a flat 5% interest rate, and interest does not accure on the loans until you are an attending (technically, they start when you are in residency, but you are elidgible for an extra three years of subsidy). However, primary care loans cannot be cancelled via IBR and they must be repayed in full.

Eric01 said:

Well the OP said to start with 150,000. Honestly there's a lot of nuances one can do, I just set up a ball park estimate. The real answer is probably +/- 5 years depending on the interest rate, if the interest is applied during school, and how much salary advancement they gain, tax breaks, and marriage.

But in all honesty I think 2020 salary is going to work against doctors, even with inflation, it looks like doctor's salaries are most likely to go down with medicare cuts.

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Yeah, in radiology and anesthesiology; I doubt family practice is going to see comparable cuts. A major part of health care reform is to enact changes that will see PC salaries rise and specialist salaries fall

ILikeDrugs said:

Masters degrees cost money, unless schools started handing them out for free just recently?

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Staradmiral said:

Masters is paid isn't it? In Canada, All masters/Ph.D students receive ~22k a year in stipends. Its sorta like residency. Yeah your still learning, but your also working for your supervisor. And the amount your paid outways the tuition. Its enough to cover tuition, apartment, food, and most grads i know are also able to afford a car.

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Yup, that's how it is in Canada at least. You make a good deal of money from stipends, TA positions (~$40/hour over here) and external scholarships

Eric01 said:

150,000 (Is she married?) If not, then she's in the 28 percent tax bracket.

150000 - 42000 = 108,000 a year (after income tax)

Social security tax up to 106,800 dollars earned @ 6.2%

108,000 - 6,621.6 = 101,378.4 dollars a year.

Assume she lives in New York, which collects 7% state income tax.

101,378.4 - 10,500 = 90,878 dollars a year.

Now assume she pays 15,000 a year in malpractice insurance
90878 - 15000 = 75,878 dollars a year.

Ok so after taxes and malpractice, she's now making about 75,000 a year.

Now assume she needs at least 40,000 a year to survive (pay bills, live in an apartment, car insurance, etc.)

That leaves about 35,000 a year to pay off 400,000 in debt

Let's assume no interest accumulates until the point she graduates. Let's assume 6% interest.

According to this site, it will take 19.4 years.
http://www.finaid.org/calculators/scripts/loanpayments.cgi

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Very nice analysis. The only thing that throws it off a little is the malpractice. The 150K estimate income is pure gross take-home salary, after malpractice and business expenses have already been covered.

All of this repayment headache stuff can be avoided if she buckled down during med school, got a 245+ step 1 score and get into a good high paying specialty. i think it would be worth the extra year or two making 45k as a resident.

ILikeDrugs said:

All of this repayment headache stuff can be avoided if she buckled down during med school, got a 245+ step 1 score and get into a good high paying specialty. i think it would be worth the extra year or two making 45k as a resident.

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What if that "good high paying specialty" faces a steep cut?

Dubaifan490 said:

What if that "good high paying specialty" faces a steep cut?

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I think some of you guys are being overly pessimistic