Med School Debt

[Johnny Appleseed]

I've been a little frustrated about the lack of info that exists on how much debt med students will really have when they finish residency. I've seen articles stating that the average medical student debt is ~$189,000. That just isn't true for most of us.

If we take out $75,500 the first year, which isn't a whole lot (50k tuition, 4k insurance, 2k fees, 19k living expenses, etc.) it will turn into $95,020 by the end of medical school. If we take out the same our second year it will become $90,140 by the end of medical school. By our third I assume we will need to borrow more to pay for travel expenses, increases in tuition, etc. So say we borrow $80,500 our third year, it will become $90,960. If we borrowed even more our fourth year (say $88,500)to cover residency applications, interviews, and travel it would turn into $94,290 by the end of med school. Total that would come out to be $370,410. The simple daily interest (which is what the feds use) on that amount is ~$70 a day! That's right, at the end of medical school you will be "earning" $70 bucks a day on your loans. A resident simply can't afford to pay that amount of interest, therefore the debt will continue to climb during residency.

One way to ease the buildup of that interest during residency is to refinance the med school loans. There are pros and cons to this as well. Federal loans qualify for certain forgiveness programs and other benefits. However, by refinancing to a 3% interest rate one could save $45k during a 3 yr residency just on interest.

So lets assume this hypothetical DO student finishes residency in family practice with $403,746.90 in debt. Medscape lists average salary of FP as $209,000. That would give you a monthly income of $17,500. Doesn't sound so bad..... But, after state/federal income taxes that monthly pay would be reduced to ~$12,000 give or take a few grand depending on your state/circumstances. Of that 12k you live off 6k a month, which is not a bad life, but it is by no means luxurious. That leaves you 6k a month to use to pay off your loans. At that rate your loans would be paid off in just over 6 yrs.

Finally, after undergrad, med school, residency, and 5-10 yrs of loan repayment you could start contributing to retirement, kid's college funds (if they aren't already in college), a mortgage, etc. That means 21 yrs after starting undergrad you could begin saving for your future. That would put most of us into our 40s.

Obviously there is huge variability in this hypothetical scenario, but for many of us it isn't too far off the mark.

I'm happy I'm seeing this now and understanding it so I'm not disappointed with my life in the future. I'm stoked to go to med school and be a doctor, but I realize when I finish residency I will not instantly be a loaded, super rich doc.

I think it is important as a pre-med to at least consider the financial side of things and keep expectations realistic. Hopefully this post will help illustrate the financial obstacles we as medical students have to face.

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[PastorDoc]

Thanks for sharing. It is important to be realistic and start developing financial acumen now. So much emphasis is placed on getting in and staying in that it’s no surprise many fail to prepare for how to pay it all back and save $$ in the process.

I’ve already promised my SO stretches of time where rice and beans will be the main course lol

 

[CJhooper123]

I've been a little frustrated about the lack of info that exists on how much debt med students will really have when they finish residency. I've seen articles stating that the average medical student debt is ~$189,000. That just isn't true for most of us.

If we take out $75,500 the first year, which isn't a whole lot (50k tuition, 4k insurance, 2k fees, 19k living expenses, etc.) it will turn into $95,020 by the end of medical school. If we take out the same our second year it will become $90,140 by the end of medical school. By our third I assume we will need to borrow more to pay for travel expenses, increases in tuition, etc. So say we borrow $80,500 our third year, it will become $90,960. If we borrowed even more our fourth year (say $88,500)to cover residency applications, interviews, and travel it would turn into $94,290 by the end of med school. Total that would come out to be $370,410. The simple daily interest (which is what the feds use) on that amount is ~$70 a day! That's right, at the end of medical school you will be "earning" $70 bucks a day on your loans. A resident simply can't afford to pay that amount of interest, therefore the debt will continue to climb during residency.

One way to ease the buildup of that interest during residency is to refinance the med school loans. There are pros and cons to this as well. Federal loans qualify for certain forgiveness programs and other benefits. However, by refinancing to a 3% interest rate one could save $45k during a 3 yr residency just on interest.

So lets assume this hypothetical DO student finishes residency in family practice with $403,746.90 in debt. Medscape lists average salary of FP as $209,000. That would give you a monthly income of $17,500. Doesn't sound so bad..... But, after state/federal income taxes that monthly pay would be reduced to ~$12,000 give or take a few grand depending on your state/circumstances. Of that 12k you live off 6k a month, which is not a bad life, but it is by no means luxurious. That leaves you 6k a month to use to pay off your loans. At that rate your loans would be paid off in just over 6 yrs.

Finally, after undergrad, med school, residency, and 5-10 yrs of loan repayment you could start contributing to retirement, kid's college funds (if they aren't already in college), a mortgage, etc. That means 21 yrs after starting undergrad you could begin saving for your future. That would put most of us into our 40s.

Obviously there is huge variability in this hypothetical scenario, but for many of us it isn't too far off the mark.

I'm happy I'm seeing this now and understanding it so I'm not disappointed with my life in the future. I'm stoked to go to med school and be a doctor, but I realize when I finish residency I will not instantly be a loaded, super rich doc.

I think it is important as a pre-med to at least consider the financial side of things and keep expectations realistic. Hopefully this post will help illustrate the financial obstacles we as medical students have to face.


View attachment 228357 View attachment 228358

Dumb Q - is this due to interest? Couldn't you pay accrued interest as you go through med school prior to graduating?

 

[de Ribas]

it will turn into $95,020

why will 75K turn to 95 in 4 years?

I've seen articles stating that the average medical student debt is ~$189,000. That just isn't true for most of us.

If it's an average, than it is an average and saying that it is not true for the most people then it is incorrect.

People have different situations: some have parents pay for them fully or partially, some people have lots of scholarships, some had savings, some people go to schools where tuition is around 35K and not 50K, and so on.

The simple daily interest (which is what the feds use) on that amount is ~$70 a day!

are you saying that on 370K loan, $2,100 is only interest per month???

Depends what interest rate and term

 

[prof2doc]

I've been a little frustrated about the lack of info that exists on how much debt med students will really have when they finish residency. I've seen articles stating that the average medical student debt is ~$189,000. That just isn't true for most of us.

If we take out $75,500 the first year, which isn't a whole lot (50k tuition, 4k insurance, 2k fees, 19k living expenses, etc.) it will turn into $95,020 by the end of medical school. If we take out the same our second year it will become $90,140 by the end of medical school. By our third I assume we will need to borrow more to pay for travel expenses, increases in tuition, etc. So say we borrow $80,500 our third year, it will become $90,960. If we borrowed even more our fourth year (say $88,500)to cover residency applications, interviews, and travel it would turn into $94,290 by the end of med school. Total that would come out to be $370,410. The simple daily interest (which is what the feds use) on that amount is ~$70 a day! That's right, at the end of medical school you will be "earning" $70 bucks a day on your loans. A resident simply can't afford to pay that amount of interest, therefore the debt will continue to climb during residency.

One way to ease the buildup of that interest during residency is to refinance the med school loans. There are pros and cons to this as well. Federal loans qualify for certain forgiveness programs and other benefits. However, by refinancing to a 3% interest rate one could save $45k during a 3 yr residency just on interest.

So lets assume this hypothetical DO student finishes residency in family practice with $403,746.90 in debt. Medscape lists average salary of FP as $209,000. That would give you a monthly income of $17,500. Doesn't sound so bad..... But, after state/federal income taxes that monthly pay would be reduced to ~$12,000 give or take a few grand depending on your state/circumstances. Of that 12k you live off 6k a month, which is not a bad life, but it is by no means luxurious. That leaves you 6k a month to use to pay off your loans. At that rate your loans would be paid off in just over 6 yrs.

Finally, after undergrad, med school, residency, and 5-10 yrs of loan repayment you could start contributing to retirement, kid's college funds (if they aren't already in college), a mortgage, etc. That means 21 yrs after starting undergrad you could begin saving for your future. That would put most of us into our 40s.

Obviously there is huge variability in this hypothetical scenario, but for many of us it isn't too far off the mark.

I'm happy I'm seeing this now and understanding it so I'm not disappointed with my life in the future. I'm stoked to go to med school and be a doctor, but I realize when I finish residency I will not instantly be a loaded, super rich doc.

I think it is important as a pre-med to at least consider the financial side of things and keep expectations realistic. Hopefully this post will help illustrate the financial obstacles we as medical students have to face.


View attachment 228357 View attachment 228358

This is great! Where could I get a copy of these spreadsheets?

 

[wysdoc]

I've been a little frustrated about the lack of info that exists on how much debt med students will really have when they finish residency. "

here's a good recent discussion thread on the topic. You can continue to live frugally as a resident and you might not need to borrow as big an amount year 2 & 3 as you did year 1, for example. You do get a salary.

HomeSkool's Guide to Financing Your Medical Education

 

[Cranjis McBasketball]

why will 75K turn to 95 in 4 years?

Because of the interested accrued during the 4 years. The original 75k that he borrowed will be 95k after graduating school.

 

[CJhooper123]

Because of the interested accrued during the 4 years. The original 75k that he borrowed will be 95k after graduating school.

I feel like its definitely doable to pay this off as your in school... save lots of money. Anyone have experience w/ this?

 

[Chibucks15]

I feel like its definitely doable to pay this off as your in school... save lots of money. Anyone have experience w/ this?

To pay what off as youre in school? Unless you have a bunch of savings you pay tuition and live on loans so it realistically isn't doable to pay anything off while you're in school because you don't have an opportunity to work at all. The way to go is simply to not take out the full COA allowance

 

[CJhooper123]

To pay what off as youre in school? Unless you have a bunch of savings you pay tuition and live on loans so it realistically isn't doable to pay anything off while you're in school because you don't have an opportunity to work at all. The way to go is simply to not take out the full COA allowance

To pay off accrued interest. This would prevent the principle loan from ballooning-up.

 

[Chibucks15]

To pay off accrued interest. This would prevent the principle loan from ballooning-up.

Okay...my point still applies...you don't have any extra money unless you have some saved up from before medical school, in which case you simply wouldn't take the full amount. Paying loan money with loan money doesn't really accomplish anything...it really is impossible to work during medical school so unless there is some other source of income I don't know what magical money source anyone would pay interest with

 

[CJhooper123]

Okay...my point still applies...you don't have any extra money unless you have some saved up from before medical school, in which case you simply wouldn't take the full amount. Paying loan money with loan money doesn't really accomplish anything...it really is impossible to work during medical school so unless there is some other source of income I don't know what magical money source anyone would pay interest with

Hoping to get accepted to med school before really planning on how to finance it. But I think its doable to pay for accrued interest. All depends on loan type and whatever interest rate your getting. You can always work b/w M1 and M2?

Check this thread.
Are you guys paying the interest while you are in school on your Stafford loans?

 

[Chibucks15]

Hoping to get accepted to med school before really planning on how to finance it. But I think its doable to pay for accrued interest. All depends on loan type and whatever interest rate your getting. You can always work b/w M1 and M2?

Check this thread.
Are you guys paying the interest while you are in school on your Stafford loans?

I'm talking about my experiences in medical school. I guess you could work in the summer but a lot of people do research during that time in order to prepare for residency applications, plus at that point it's just nice to have a break. Medical school is relentless in a way I didn't realize until I was here. And if you're taking regular federal loans the interest rate is so high even if you work all summer (most likely in a close to minimum wage job) you aren't making that much of a dent in it if I'm being honest. Good luck getting in but honestly I wouldn't count on being able to efficiently pay back the interest on these large loans with just a summer job. Buy "The White Coat Investor". It has financial advice specifically for doctors and medical students on how to handle large loan burdens, etc

 

[CJhooper123]

I'm talking about my experiences in medical school. I guess you could work in the summer but a lot of people do research during that time in order to prepare for residency applications, plus at that point it's just nice to have a break. Medical school is relentless in a way I didn't realize until I was here. And if you're taking regular federal loans the interest rate is so high even if you work all summer (most likely in a close to minimum wage job) you aren't making that much of a dent in it if I'm being honest. 1) Good luck getting in but honestly 2) I wouldn't count on being able to efficiently pay back the interest on these large loans with just a summer job. Buy "The White Coat Investor". It has financial advice specifically for doctors and medical students on how to handle large loan burdens, etc

1) Thank you!

2) I am not sure what the interest rates are for medical school federal loans (I think undergrad is like 6-7% right now but I've been told grad is lower - maybe someone could help me here)
For a $70,000 a year loan w/ 5% interest, your accrued interest after 1 year would be $3,500. This would require monthly payments of $291. Sure this would be tough... but for one loan your essentially saving ~$17,000 (assuming its around 20k w/ accrued interest) in the long run.
From your experience it seems impossible to make this kind of money in school to be successful... so I get that. But if you can keep up w/ your interest your saving thousands in the long run.

 

[Johnny Appleseed]

Dumb Q - is this due to interest? Couldn't you pay accrued interest as you go through med school prior to graduating?

Yes, this is due to interest. It will begin to accrue when the loan is dispersed. That means loans taken out your first year of medical will have the longest amount of time to accrue interest.

You could possibly keep up with paying the interest during school if you have a working spouse or some other source of income, but you could also just take out less loans in the first place. Either way by your fourth year of med school the interest will be ~$70 a day. I don't know any med students that could afford to pay that.

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[Johnny Appleseed]

why will 75K turn to 95 in 4 years?


If it's an average, than it is an average and saying that it is not true for the most people then it is incorrect.

People have different situations: some have parents pay for them fully or partially, some people have lots of scholarships, some had savings, some people go to schools where tuition is around 35K and not 50K, and so on.


are you saying that on 370K loan, $2,100 is only interest per month???

Depends what interest rate and term

75k turns to 95k because it has four years of med school and 3-5 yrs of residency to build interest.

I think the average debt of DO students at private universities is somewhere north of $250,000 especially if you remove the outliers (HPSP, parents paying, etc.). That sets a more realistic expectation for those going the private DO route.

At the federal rates right now(6-7%), if you graduate med school with $370k in debt your interest charge will be $2100 per month. If you refinance to a lower rate, say 3% the interest charge would be ~$900 a month. That is only interest, that payment would touch the principal even a cent.

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[Johnny Appleseed]

This is great! Where could I get a copy of these spreadsheets?

I'll send you the spreadsheet when I get off work today!

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[Chibucks15]

1) Thank you!

2) I am not sure what the interest rates are for medical school federal loans (I think undergrad is like 6-7% right now but I've been told grad is lower - maybe someone could help me here)
For a $70,000 a year loan w/ 5% interest, your accrued interest after 1 year would be $3,500. This would require monthly payments of $291. Sure this would be tough... but for one loan your essentially saving ~$17,000 (assuming its around 20k w/ accrued interest) in the long run.
From your experience it seems impossible to make this kind of money in school to be successful... so I get that. But if you can keep up w/ your interest your saving thousands in the long run.

Yes that could save on 1 year of loans. The issue is that there are 4 and you can't work all summers...just the first, during which you may want to do research (if you want to do anything competitive), or just relax cuz its stressful during school. More power to you and best of luck but from my experience its almost better to just live frugally during residency and pay it down, while taking out less loans to begin with. At least from what upper classmen have told me and my experiences thus far. I suppose it depends on the summer job but in the long run you'll be making enough money to live regardless so putting yourself through more stress may not be the best idea. But as I said, good luck with whatever you decide to do, I'm more putting this up for passers by on the thread, but there's a reason why most medical students don't choose to do that route after crunching all the numbers

 

[Johnny Appleseed]

I feel like its definitely doable to pay this off as your in school... save lots of money. Anyone have experience w/ this?

It might be doable the first year when the interest is only ~12 bucks a day, but by the end of med school it will be impossible without a significant source of income.

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[Cranjis McBasketball]

1) Thank you!

2) I am not sure what the interest rates are for medical school federal loans (I think undergrad is like 6-7% right now but I've been told grad is lower - maybe someone could help me here)
For a $70,000 a year loan w/ 5% interest, your accrued interest after 1 year would be $3,500. This would require monthly payments of $291. Sure this would be tough... but for one loan your essentially saving ~$17,000 (assuming its around 20k w/ accrued interest) in the long run.
From your experience it seems impossible to make this kind of money in school to be successful... so I get that. But if you can keep up w/ your interest your saving thousands in the long run.

If you can pay $291 a month then you won't need to take out 70,000 in loans a year.. You Take out only what you will need to cover expenses.

 

[CJhooper123]

If you can pay $291 a month then you won't need to take out 70,000 in loans a year.. You Take out only what you will need to cover expenses.

This might sound dumb.. but if you took out $67,000 worth of loans and did not pay off accrued interest as you went through medical school you would be worse off (in the long run - financially) compared to taking out $70,000 worth of loans and paying off accrued interest as you go through medical school.

Not saying one is more feasible than the other.

 

[Cath Up]

I'll send you the spreadsheet when I get off work today!

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I would like the spreadsheet too!

This whole topic speaks to why I think I will attend a cheaper program.

 

[Moose A Moose]

OP... dawg, you think too much.

 

[Johnny Appleseed]

OP... dawg, you think too much.

I'm told that a lot.

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[Dullhead]

This might sound dumb.. but if you took out $67,000 worth of loans and did not pay off accrued interest as you went through medical school you would be worse off (in the long run - financially) compared to taking out $70,000 worth of loans and paying off accrued interest as you go through medical school.

Could you show a calculation with an example?

 

[IslandStyle808]

This might sound dumb.. but if you took out $67,000 worth of loans and did not pay off accrued interest as you went through medical school you would be worse off (in the long run - financially) compared to taking out $70,000 worth of loans and paying off accrued interest as you go through medical school.

Not saying one is more feasible than the other.

It will depend on how long you drag out your loans, but I believe you would still be ahead if you took out $67,000 and let the interest accrued after 4 years.

 

[Giovanotto]

Medical school, especially DO school, is too expensive today. Don't do it unless you're rich or can get into LECOM or an in-state public school.

 

[CJhooper123]

It will depend on how long you drag out your loans, but I believe you would still be ahead if you took out $67,000 and let the interest accrued after 4 years.

Your right.. depends on loan type and interest.
Also - I did a quick number crunch; I stand corrected. You'd practically be at the same spot w/ those 2 loan options

Medical school, especially DO school, is too expensive today. Don't do it unless you're rich or can get into LECOM or an in-state public school.

I don't think that DO is a terrible option.
It's just important to understand your loans and how to maximize efficiency when paying them back. I'm sure many physicians have horror stories to share w/ regards to their loans. So many people have a one-track mind of becoming a physician that they ignore the twists and turns of the process. I plan on investigating refinance and consolidation options.

 

[calivianya]

Medical school, especially DO school, is too expensive today. Don't do it unless you're rich or can get into LECOM or an in-state public school.

VCOM's cheaper than a lot of MD programs, let alone other DO programs (with the exception of in-state public schools). ~$45k? Yes please. I interviewed at a MD program whose tuition is ~$56k and that's not even the worst out there. It's all a racket.

I'm really hoping my husband's job pays enough to pay for living expenses altogether, so I don't have to take out living expenses loans. I'm hoping the same for when I'm in residency, to the point that I could throw 100% of my earnings at my loans, but we'll see.

Valid plan for saving money in med school? Marry someone with decent income, whose career and personality is flexible enough to move wherever you want to go every few years with no complaints before you start. I'm only half joking.

 

[cliquesh]

I know a few people (MDs and DOs) with ~$500k debt after residency. I know one of them pays about $5k a month towards his loans each month. He makes around $500k so he is alright financially. I mean, he isn't investing much money for retirement, but his lifestyle for his family is nice enough. I don't know how he would have managed if he was in primary care.

By the way, medical education is not worth the price tag. You self teach yourself most of it, anyway.

 

[IslandStyle808]

I know a few people (MDs and DOs) with ~$500k debt after residency. I know one of them pays about $5k a month towards his loans each month. He makes around $500k so he is alright financially. I mean, he isn't investing much money for retirement, but his lifestyle for his family is nice enough. I don't know how he would have managed if he was in primary care.

By the way, medical education is not worth the price tag. You self teach yourself most of it, anyway.

Were they able to negotiate with the hospitals to help pay their loans? If so, do you know the amount they got toward their loans?

 

[GypsyHummus]

Another thing about these so called reporting is that they only take into account tuition, and not living expenses.

I read all the time that "Med students take on average 150K or more in student debt." Well, if a school's tuition is 40K/Year yes, but it costs money to live. You need housing, insurance, food, gas, clothing, etc.

So what happens is a school's who's tuition is 40K/year really becomes 60K/year plus interest. 60K times 4 is 240K plus interest is really around 280-300K.

Hope you are independently wealthy if you decide on CCOM or AZCOM.

 

[GypsyHummus]

The solution is easy, go into Orthopedics or other surgical specialties and make 500K/year. (Which is like 320K depending on your state). You can pay off your loans in 3 years.

Or go to a state MD school.

 

[harkas]

I'll send you the spreadsheet when I get off work today!

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Do you mind sending me a copy too? This is sooo helpful.

 

[cliquesh]

Were they able to negotiate with the hospitals to help pay their loans? If so, do you know the amount they got toward their loans?

Nope. You don't really get to negotiate too much anymore, at least for new attendings.

 

[Johnny Appleseed]

Here is a link to the spreadsheet. Let me know if there are any problems. @harkas @prof2doc @parslea

 

[Reveler]

The solution is easy

Lol

 

[IslandStyle808]

Nope. You don't really get to negotiate too much anymore, at least for new attendings.

Surprised the negotiating power has gone down. Do you have an idea why physicians cannot negotiate for better terms (ex. pay loans, weeks off, bonuses, etc.)? This is kind of worrisome.

 

[GypsyHummus]

Prolly because they are pumping out lots of new physcicians now/physcician extenders are a thing. Why would I as a hospital administrator hire 5 Family med doctors at 200K/doc vs 1 Family med guy and 4 NPs for 100K/NP? You save 400K. Hospitals dont have to negotiate.

Surprised the negotiating power has gone down. Do you have an idea why physicians cannot negotiate for better terms (ex. pay loans, weeks off, bonuses, etc.)? This is kind of worrisome.

 

[harkas]

So this might be a stupid question, but are you allowed to borrow both tuition + COA through direct unsubsidized loans or will it depend on financial need (and the rest has to be a grad PLUS loan)? Is it better to do some of both?

 

[Scrubb]

So this might be a stupid question, but are you allowed to borrow both tuition + COA through direct unsubsidized loans or will it depend on financial need (and the rest has to be a grad PLUS loan)? Is it better to do some of both?

Demonstrated financial need is not required to qualify for Direct Unsubsidized Loans, and these loans can be applied to any of the following: tuition, room and board, books, supplies, equipment, transportation, miscellaneous personal expenses, etc. The annual limit is about $41k (or capped at COA if that's somehow lower), so if you need more than that the rest has to be either Grad PLUS or a private loan (depending on credit, private loan may have better rates).

Recommend visiting this site/page: Direct Unsubsidized Loans - Apply, Cost, Rates, and Repayment | Edvisors

 

[fldoctorgirl]

This concerns me and scares the crap out of me late at night when I'm trying to fall asleep (I'm only half joking...)

I'm still waiting to hear back from an interview at a public MD in my state, but currently the DO school I'm planning on attending has a total COA of about $75k/year. That's $300k over 4 years pre-interest.

I agree with the point that it's not just DO schools, though. Private MDs have crazy high tuition too...I applied to one where the tuition alone was $60k.

 

[Cath Up]

This concerns me and scares the crap out of me late at night when I'm trying to fall asleep (I'm only half joking...)

I'm still waiting to hear back from an interview at a public MD in my state, but currently the DO school I'm planning on attending has a total COA of about $75k/year. That's $300k over 4 years pre-interest.

I agree with the point that it's not just DO schools, though. Private MDs have crazy high tuition too...I applied to one where the tuition alone was $60k.

Yep, and being an out of state student at a state MD school. I know a guy who is at one, and I looked up tuition he is paying... 63k/year. Made me feel a little better about my 53k and 32k DO options.

 

[fldoctorgirl]

Yep, and being an out of state student at a state MD school. I know a guy who is at one, and I looked up tuition he is paying... 63k/year. Made me feel a little better about my 53k and 32k DO options.

Yep! At the MD school I interviewed at the OOS tuition was also around $63k. COA per year was $94k...

 

[Cranjis McBasketball]

Yep! At the MD school I interviewed at the OOS tuition was also around $63k. COA per year was $94k...

People with that much debt almost cant even consider primary care. No wonder theres a shortage