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How is Med-School Debt Manageable?

Discussion in 'Pre-Medical Allopathic [ MD ]' started by Soilworkgmbh, 01.05.12.

  1. Soilworkgmbh

    Soilworkgmbh

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    So I have been reading some pretty frightening articles online about medicare reimbursements and the poor pay of doctors in recent years with the changes in health care coming down the pipeline - I have been able to witness first hand working for a private ophthalmology practice who sees primarily medicare patients...My question is, how are doctors coming out of medical school with $300,000 worth of debt (undergrad and medical school combined loans), and being able to make it? Is there some amazing debt management strategy out there? I suppose I'm just worried about going to medical school in the upcoming year hopefully pending an acceptance, an coming out with tons of debt that I presumably will hardly be able to manage with the coming changes to medicine.

    Anyone have an article to read or something?
  2. CodeBlu

    CodeBlu Van Wilder Lifetime Donor

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  3. Soilworkgmbh

    Soilworkgmbh

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    Trolol
  4. JohnnyRomanes

    JohnnyRomanes wussup doge

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    I prefer the chicken and shrimp. :D
  5. BirdIsTheWord

    BirdIsTheWord

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    Nah brah

    [​IMG]
  6. KLycos

    KLycos

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    The sad things, this is not trolol its srs.

    [​IMG]
  7. Soilworkgmbh

    Soilworkgmbh

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    Thread went from srs concern to: trolol and worry about debt later

    Attached Files:

  8. aSagacious

    aSagacious Send in the clowns Moderator Emeritus

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    Let's play with some numbers (and a few admittedly gross oversimplifications):

    Principal loan amount: $300,000 (let's say 400k including undergraduate debt)
    Loan after interest: $600,000 (the number that gets thrown around is usually 1.5x principal)
    Average gross salary of some random doctor: $225,000
    Taxes withheld: $60,000
    Med mal insurance: $0 (let's assume you start out in a hospital... I know, sloppy assumption for a few reasons)

    ...so you're taking home $165,000 to cover everything else in your life (car, mortgage, insurance, family, etc). It would not be unreasonable to allocate $50,000/yr towards student loan payments. Even in the worst case scenario (as listed above) it would take 12 years to pay off your debt while living off of $115,000.

    Not rich by any means but you still should be able to pay off your loans.
  9. pkwraith

    pkwraith

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    The rough patch is during residency, where your income is around 50k. Making full payments on your loans is going to eat up your entire budget, so you can only attempt part of the interest.

    I'd say $225,000 is a bit high for starting salary. Starting salary and the first decade of income is more important, as that's when you would be working with to pay off the loan. Using median physician salary is going to overestimate your loan repayment power.

    But, I agree that vast majority of physicians pay off their debt in a reasonable amount of time (20 years). Residency is the leanest part, after that, they should return to a semblance of living standard.

    As to the original question, most people with high debt are forced to high reimbursement specialty, if they can make it. If they don't, there are some loan repayment systems out there. Then there's rural medicine and family medicine programs for those going towards low reinbursement specialties in which it otherwise be impossible to pay off their debt. Lots of examples: http://services.aamc.org/fed_loan_p...1&CFTOKEN=B3F5DF95-010F-7F97-75CCB7516C40321F
    National Health Service Corps is a big one: http://nhsc.hrsa.gov/
  10. MIAYO

    MIAYO

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    There is also the non-profit organization deal. If you work for a non-profit(academics) for ten years then your loans will be forgiven. Just have to make minimum payments for 10 years.
  11. Slack3r

    Slack3r Sicker than your average

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    For peds/FM/IM maybe. Looking at MedScape, that seems pretty reasonable, if not low, for most other specialties.
  12. NickNaylor

    NickNaylor Daisy the Dog

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    Frankly I wouldn't be counting on those programs surviving given the long-term cluster**** the US is currently in financially.
  13. MIAYO

    MIAYO

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    Wow, really. Imagine getting screwed over like that.
  14. Asyouwereatrio

    Asyouwereatrio

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    Using some more realistic and very conservative numbers (conservative=assuming lots of taxation and high loan repayment amounts):

    Principal loan amount: $300,000 (let's say 400k including undergraduate debt)
    Loan after interest: $600,000 (the number that gets thrown around is usually 1.5x principal)
    Average gross salary of some random doctor: $225,000 ---> $150,000
    Taxes withheld: $60,000 ---> 50% taxation rate ---> $75,000 annual takehome pay
    Med mal insurance: $0 (let's assume you start out in a hospital... I know, sloppy assumption for a few reasons)

    Monthly take-home= Roughly $6250.
    Loan Repayment: $3000
    Rent and Utilities: $1500
    "Disposable Income"=$1750

    While $1750 may not be THAT much on a "doctor's lifestyle"....it does mean you have some room to breathe. I used big estimates (since most loan repayments on a 25 year plan are less than 3K and monthly take home pay will likely be higher than that for most doctors).

    It's still doable. :)
  15. boggvir

    boggvir Sunny California

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    You borrow as little as possible, and then you don't think about it until you graduate.
  16. johnisles2011

    johnisles2011

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    Most doctors seem to be able to handle it. With reimbursement going lower, though, I have had discussions with several adcom doctors about this, and several of them admit to being frankly worried for the younger generations of doctors, especially if reimbursements continue to get lower.
    I have also heard that a high debt load can keep doctors out of specialties like family practice where the attending salary isn't very good or that they push some people into IM or something else with a short residency so they can start getting an attending's paycheck more quickly.
    It's tough stuff and a lot to consider. I just know that if 90% of other students can do it and be okay, then I probably can too.
  17. AestheticGod

    AestheticGod

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    300k for med school? Is this real life...
  18. gettheleadout

    gettheleadout barefoot jackrabbit Moderator

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    At Pritzker it is! :smuggrin:

    (~$303k full COA)
  19. IMSingular

    IMSingular

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  20. DrBowtie

    DrBowtie Responsible?!?! PGY3 Moderator Emeritus

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    Most doctors and especially adcom members don't have experience in paying the debt at the current average levels and at 6.8%.

    I hate to sound like a broken record, but you simply can't listen to really anyone currently out in practice about paying their student debt as so much has changed even within the 4 years I have been taking medical school loans.

    Major changes while I've been in school:
    1) All Direct loans @ 6.8% or 7.9%. No more consolidation at 2%, No more private services giving perks to get your business.

    2) IBR starting, deferments ending. PSLF program. All of these are new programs that have come up very recently, so I would not bank on them 100% being there in the future. You apply for the PSLF program not at the beginning of repayment, but as you near 120 payments.

    3) Elimination of subsidized stafford loans. $8500 per year that is now churning interest at 6.8%.

    As you can see the student loan game is very fluid with rule changes almost yearly. You need to educate yourself and rely on the financial aid office at your school rather than other doctors.
  21. Signifier

    Signifier

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    I currently have about $400 of disposable monthly income and, financially, life is pretty sweet. $1750 doesn't sound bad at all.
  22. KLycos

    KLycos

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    Like, what does that even mean. You live within your means, real world expenses can be tailored to your budget. Personally, I would advocate always living below your means to allow for saving appropriately. Always having money saved for emergencies and retirement is a dying trend. It's not going to die with me though.
  23. Soilworkgmbh

    Soilworkgmbh

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    This sounds pretty reasonable to me and sounds comfortable. I guess its making it through those years of residency thats going to be tough...and I suppose that things will likely be different in 4 years when I'm finished (pending an acceptance :xf:)
  24. NickNaylor

    NickNaylor Daisy the Dog

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    It's all relative. The ~$200/month I had in discretionary income has a single college guy isn't as much as it is now that I'm living with my girlfriend as a professional student. By the same token, I'm sure that same amount is peanuts when you're a working person that's married and possibly has kids.
  25. IlDestriero

    IlDestriero Ether Man

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    No retirement in there? 20k/yr minimum
    How about life ins? ~2-3k/yr
    Own occupation disability? 3-6k/yr
    Your share of benefits? I pay 3-4k/ yr
    Saving for your kids college? 1000/mo ??? Maybe much more.
    Double your other expenses as well.

  26. Law2Doc

    Law2Doc 5K+ Member Moderator Emeritus

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    These numbers are closer to reasonable, but in a high cost of living area, rent and utilities is going to be about $1000 higher than you indicated, transportation and parking costs may not be free, and there are plenty of other incidentals you have each month (food) that probably bring that disposable income figure to zero. Speaking as someone who previously paid down prior professional school debt, albeit at a much more favorable rate than you can get now, i assure you that you will be living a very Spartan existence for a lot of years if you have to borrow a lot for med school. It's not really an accident that every hospital conference where food is provided is very well attended.
  27. Music MD

    Music MD

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    Average debt is prob closer to the 250 range.. I consider my debt load of around 300, undergad and med school combined, to be on the high side for the typical student. It will be manageable for me.

    I plan on entering a specialty that starts at 200k or better. No its not a competitive specialty, and btw anyone who can pass their classes can probably match into a specialty that starts at 200 or better.. its not as if thats some crazy lofty goal. 200 = 120 after taxes = take home 90 after loans. It's plenty. Most americans live on about a third of that.

    Of course the future reimbursement is uncertain, but keep in mind its mediated by the fact that as you gain experience your income increases.. and after 10-15 years the loans will be repayed, so the overall average take home should be about the same or increase from when you started, all depending on how big of a bite they take from reimbursement.

    You only sort of get into trouble in a couple select specialties imo: Family Medicine and Peds come to mind, where your limited mostly by volume.. salaries can be around 100k. From what i've gathered these specialties its possible to make 200 if you don't mind longer hours and are in the right practice setup and location, or if you do a fellowship and further sub-specialize. But an urban practice with regular hours is going to take a beating.. and paying off 300k with 100k is just asking for trouble. It's not impossible but its certainly not my cup of tea.
  28. Law2Doc

    Law2Doc 5K+ Member Moderator Emeritus

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    In a lot of the country your tax rate is higher than the federal 33% because you also pay state and local taxes. 50% is conservative but in some parts of the country it's close. As for income, most of the higher starting incomes require longer residencies and fellowships, so your debt will be that much higher. Many people are going to come out of a peds residency in 3 years and only earn $130k, or family medicine residency and earn $150k, while still others are going to come out of a more competitive residency/fellowship after 6-8 years and earn over $250k. You'd have to crunch the numbers to see how high your interest might run in 8 years, because without some substantial moonlighting (and many programs don't allow it) you won't be paying down your debt during these years. The conservative planner would use a figure in the $130k - $150k range, because at the premed stage you can't assume you will have the stats to be a dermatologist and make bank.

    I don't think many of the numbers in this thread are off the wall, but I suggest you plan conservatively -- assume the lowest specialty salary and highest cost of living and you should get a safe handle on how much debt you realistically can service. If you luck out and get a more lucrative specialty in a low cost of living location, then your lifestyle will be that much better. But you can't bank on that.
  29. Law2Doc

    Law2Doc 5K+ Member Moderator Emeritus

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    Tuition goes up every year, so the $250k (undergrad and med school) that's reasonable to borrow today will be $300k by the time most in preallo get to that stage. I don't think you can "plan" to go into a specialty that starts at over $200k (depending on how far along you are in med school).You will change your mind about specialty multiple times, both by choice and based on what is realistic based on your numbers. I was surprised by what fields I liked and disliked. Some of it comes from the personalities you interact with along the way. Keep an open mind.
  30. DrBowtie

    DrBowtie Responsible?!?! PGY3 Moderator Emeritus

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    Glad someone else posted this. I thought my head would explode with college students projecting their expenses for 8-10 years from now and not including those things.
  31. SchroedingrsCat

    SchroedingrsCat

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    Maybe people should be more responsible when selecting institutions before they are ready to hate the entire medical fields and "socialists" when reimbursements continue to decrease. There is absolutely no reason to be 300k in debt after med school. none. If you go to the cheapest options, your state school undergrad and med, you would be probably be only 100k in debt, 200 max. Less if you work during undergrad or did work study.

    Can't get into a reasonably priced school or get solid scholarships? Sorry, but this is where students should really reconsider entering the field. They are in most cases setting themselves up for anger by going to an expensive ass school, knowing what they do about reimbursements and the government's financial situation. This is just going to result in tons of spiteful doctors when they can't afford nice cars, but they will never stop and think "Hey perhaps I shouldn't have gone to Tufts for 60K TUITION a year."

    Summary:
    Be willing to live a very modest lifestyle if you can only get into expensive schools with no significant scholarships, or please don't enter the field because your spite will hurt both coworkers and patients.
  32. link2swim06

    link2swim06 PGY-1

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    Here are some easy ways to med school debt:

    1. Stay away from big cities...while they may be more fun, the cost of living is significantly higher and salaries are way lower. This can save you a ton of money. Plus you will have plenty of instant friends in med school wherever you go.

    2. Dont take all your student loan money, unless you have a family its highly doubtful imo you need the "whole" budget they give you, learn to live like a student.

    3. Study hard to keep your doors open, this way you will have more options choosing a residency (see point 5) and a higher paying specialty.

    4. Go to the cheapest school you get into, it rarely matters what school you went to, but rather what you did in med school.

    5. Choose a residency that offers moonlighting opportunity, after your 1st or 2nd year you can moonlight at get near a 6 figure salary as resident if you are willing to work hard (obviously specialty dependent).

    6. Avoid expensive undergrads...I walked away from undergrad with almost no debt and this was due to a cheap state school and having a job.

    7. When you are an attending pay off your loans quickly before you adopt the "attending lifestyle" this will save you a ton of interest payments.

    8. Be cheap during the whole process. i.e. dont buy the $100 blood pressure cuff offered by the rep to your med school, rather go on amazon and buy the $9 one which works just as well.

    If you do all the above you should be able to pay off a ton of loans in residency and by the time you are an attending you will be living in a low cost of living area with a salary mostly likely between 175-500K and should be able to pay off your loans quickly. Also there is no way you will have 300K of debt upon graduation if you can follow all of the above.

    I think the poor financial position of some physicians is not due to opportunity but due to their lack of care and planning of their finances.
  33. NatrixCaelicola

    NatrixCaelicola

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    the usa average indebtedness after med school is like 160,000 for starters. Secondly, in my current job we have a lot of physician clients and since I see their financials I can tell you that they could easily pay off their loans. However, someone mentioned "living the physician lifestyle" above... well guess what, you should probably NOT do that until you pay off your loans. Hell, if you pretend you're living like a resident for 2 years, you've already saved enough to take a huge chunk out of your debt.

    Caveat: the doctors that have the biggest money problems of our clients are the ones with stay at home partners that spend money as quickly as it comes in.

    Be smart and budget and you won't have a problem.
  34. DrBowtie

    DrBowtie Responsible?!?! PGY3 Moderator Emeritus

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    Not to mention that "forgiven" is just code for paid by the rest of the taxpayers. Here's a novel idea that would help our country: pay the debts you sign and benefit from directly.
  35. SchroedingrsCat

    SchroedingrsCat

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    Yes. People going to med school in big cities who spent $150 a night at bars on student loans are in for a rude awakening. People don't really realize they are spending money they don't have. $150 in student loans ends up being about $500 when you're done paying it.

    Honestly med students are some of the most entitled acting people I've ever met. They literally expect to come out of residency and get a McMansion in a gated community with a Lambo after acquiring 300k in student loans. This is not reasonable. Expect to live in a small apartment like you did as a student if you were foolish enough to go to such expensive undergrads and med schools (unless you luck out and go into plastics or something)
  36. link2swim06

    link2swim06 PGY-1

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    I think it's important to note that even the federal tax rate of 33% means you only pay still ~20-25% for most doctors. There are no doctors paying 33% on their entire income.
  37. NickNaylor

    NickNaylor Daisy the Dog

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    I'd be curious to know your definition of "average."
  38. NickNaylor

    NickNaylor Daisy the Dog

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    Wait, so you think that in most of the US a $200-400k home is average?
  39. NickNaylor

    NickNaylor Daisy the Dog

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    When you look at that website, the top end of averages is about $240k for the northeast (which you would expect). The next highest is just over $210k for the west (which, again, you would expect). Everything else is sub $200k. Saying the average home price in America is between $200k-$400k isn't accurate.
  40. thesauce

    thesauce Senior Member

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    Specialties like EM and Anesthesia both start above $200k and are well within reach for the average medical student. I don't think it's unrealistic to assume you'll be an average student.

    But you won't know what you like until you get there, that's true,
  41. WildcatS11

    WildcatS11

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    Your knowledge of current US real estate is enviable.
  42. KLycos

    KLycos

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    This country needs a flat tax.
  43. IlDestriero

    IlDestriero Ether Man

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    Expectations to live like the last or possibly even the current generations of physicians might not be realistic for the pre meds starting college now.
    20 years ago, tuition at elite private colleges and medical schools was 12-15k/yr, 40 years ago it was ~$4k/yr. Debt was not a real concern. Relative incomes were also higher. Now the public blames "rich and greedy" MDs as a significant part of the problem with healthcare in the US which continues to spiral out of control. A gov't takeover is certainly possible, not now, but maybe when you guys are a few years out of residency and ready to become a partner in your fancy PP job. There may not be a pot of gold at the end of the rainbow. Y'all need to consider that when you're making your decisions.
    If you're taking out $100k for undergrad you're a fool, go to your state school. The same is true for taking full loans at the most expensive schools out there. Or maybe you're counting on a decade or 2 of high inflation to help with your debt burden?
    As an aside, I was proud to see that while my medical school is extremely expensive now, it's average debt is one of the lowest.:)
  44. Law2Doc

    Law2Doc 5K+ Member Moderator Emeritus

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    If you are budgeting, you have to be conservative. So you have to assume you come out of med school and into a less lucrative field. But EM is gaining popularity, and anesthesia is like a roller coaster in competitiveness, which us why it got included in ROAD in the first place. It's not unreasonable to assume these will be out of reach of the average applicant in a few years, particularly as the enrollment of US med schools increase.
  45. Silent Cool

    Silent Cool Member

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    People need to stop looking at the "average debt" of a school. It means nothing for students taking out loans. The average debts at most schools aren't bad at all because of 1) students whose parents are paying for all of it and, 2) students who are on the military scholarship. You know what the debt load is for those people? $0. And that's why the "average debt" is something low like $120K. That's nothing. I can't even think of any state schools now at which the total cost would be $120K. For almost anyone taking out loans for the thing, you are going to pay well over $200K, especially when you consider interest.

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