Med School Tuition is Insane

[Silent Cool]

I know its taboo but needless to say due the cost of attendance I posted above money is defiantly a factor when picking a speciality.

It's not the end all be all but it's a factor.

I'm not alone there are thousands of current students in the same boat I am, hence the multitude of posts asking about income.

Future income is THE factor in picking a specialty. I am currently looking at specialties that pay the highest and that:

1) I think I will be good at and,
2) I have a fighting chance at getting accepted to

With disgusting debt loads like those that students have today, I can't believe that any rational person would not consider money when picking a field.

I have posted this before and I will post it again: this bubble--just like the mortgage bubble--is entirely because of federal intervention, overhaul, etc...--whatever you want to call it.

Get the government out of....everything.

-sc

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[NOsaintsfan]

Future income is THE factor in picking a specialty. I am currently looking at specialties that pay the highest and that:

1) I think I will be good at and,
2) I have a fighting chance at getting accepted to

With disgusting debt loads like those that students have today, I can't believe that any rational person would not consider money when picking a field.

I have posted this before and I will post it again: this bubble--just like the mortgage bubble--is entirely because of federal intervention, overhaul, etc...--whatever you want to call it.

Get the government out of....everything.

-sc

Its really kinda sad if you think about it. In principle everyone should go into medicine with altruistic desires and I think most do. I mean you must have a desire to help people on some level or your going to be miserable as a doc. With that in mind the crazy cost of medical school tuition has FORCED many to consider money/income more than we all would like to admit.

Sure people have always considered money on some level when going into medicine but if school tuition were 50k instead of 300k+ it would be a lot easier to take future income out of the equation. Oh well, such as life.

I think a lot if not most current medical students are with you SC. I for one am not going to go into a specialty I hate just for big bucks, but I will narrow down my choices based on what I like and potential income. I wish income wasn't such a big part of the decision process and that I could pick something solely on how much I loved the field, but with over 300K in loans that will begin to accrue interest all through residency money has to be a factor. Shoot by the time people like me are done with a 4yr residency the payback on 300K of loans will be in the 470K ballpark.

I realize that its just the cost of entering the field, but tuition cannot keep rising like it is. Eventually there will be a point where its not longer feasible to enter medicine with that sort of debt load.

When that will be who knows, but its coming sooner rather than later.

 

[aneftp]

Here's my take on med school tution and anesthesia.

I wonder if CRNAs qualify for loan forgiveness after 10 years. (Because CRNAs are technically "RNs".

Seems to me like CRNAs want to be RNs when they can get RN perks like loan forgiveness and overtime (with VA system). I know VA doesn't pay docs for OT.

 

[Fabio001]

http://studentaid.ed.gov/repay-loans/understand/plans/pay-as-you-earn

I am currently an MS3 and will fall into the category of having over $400,000 debt by the time I graduate. I almost did .mil, but I backed out at the last minute deciding that I could just pay back my debt really quick once I was done with training, like in a few years. However, since getting into medical school I have learned about loan forgiveness - PSLF, PAYE, and IBR. It seems that the general consensus is that nobody can rely on PSLF being around in 10-20 years, but can we rely on PAYE loan forgiveness being around?

According to the PAYE calculator, in paying back $400,000 I will pay a total of $9000 in residency/fellowship, and a total of around $370,000 in the 15 years I spend as an attending until the remainder is forgiven through PAYE. ... So, correct me if I'm wrong, but it seems that if an individual has debt at or around $400,000, there is no reason not to just ride out pay-as-you-earn and wait for loan forgiveness with PAYE if you qualify for it (not to mention, if PSLF does come through, you save even more money!)

What do you guys think?

 

[IlDestriero]

I think high income earners relying on loan forgiveness is a dangerous assumption. Loan forgiveness is easily phased out like income tax deductions. As more people use it, the cost will skyrocket and cuts will come. It's inevitable. Good luck defending forgiveness on 1%er income. It's not going to happen. Be cautious and have a pack up plan or instead of retiring comfortably at 62, you'll work years more to cover interest you could have avoided.

 

[badasshairday]

I think high income earners relying on loan forgiveness is a dangerous assumption. Loan forgiveness is easily phased out like income tax deductions. As more people use it, the cost will skyrocket and cuts will come. It's inevitable. Good luck defending forgiveness on 1%er income. It's not going to happen. Be cautious and have a pack up plan or instead of retiring comfortably at 62, you'll work years more to cover interest you could have avoided.

I understand the skepticism towards loan forgiveness. But the issue I am having is that I can aggressively start paying off my loan and then realize that loan forgiveness wasn't phased out for my graduating class and feel like a sucker. We just don't know what the future holds.

 

[IlDestriero]

In your place, I might roll the dice, but put away an extra 2-3k/month to cover my 6. The interest will still hurt you.

 

[aneftp]

All I know is that anesthesiologist in major cities in the east coast during the mid 1990s were barely making in the low to mid 100s. CRNAs were making in the 70s range.

So income has gone up for the last 12-13 years to 2x-3x the 1990s bad times.

Even with 200-300k debt u can pay off the loan in about 10 years. Just spend wisely. And save.

 

[TeamZissou]

What's an income?

 

[Fabio001]

I'm with the majority in feeling like banking on PSLF is a bad move, but IBR and PAYE are actual programs that you're accepted into once you go into repayment, so the whole idea of being grandfathered in even if the program dies seems very real, no?

So, if I made enormous payments for 5 years and paid off my loans ASAP, I would literally spend an additional 5 years living like a resident - meaning no private school for my kids, no piano or dance lessons, not to mention no mortgage and no family vacations, etc... All in all I would have paid around $500,000 back in those 5 years. But, I'll be debt free!!!

Alternatively, I could pay back 2200 a month for those 5 years, and maybe get PSLF (which would be sweet). If PSLF falls flat, I would simply continue to pay 2200 back every month over an additional 10 years (around $400,000 in total) and get forgiveness with PAYE. Even if PSLF falls flat, I still save money by just paying the minimum PAYE payment and getting loan forgiveness in 20 years! The interest never hurts me!!! Am I missing something?

 

[Perrotfish]

I'm with the majority in feeling like banking on PSLF is a bad move, but IBR and PAYE are actual programs that you're accepted into once you go into repayment, so the whole idea of being grandfathered in even if the program dies seems very real, no?

So, if I made enormous payments for 5 years and paid off my loans ASAP, I would literally spend an additional 5 years living like a resident - meaning no private school for my kids, no piano or dance lessons, not to mention no mortgage and no family vacations, etc... All in all I would have paid around $500,000 back in those 5 years. But, I'll be debt free!!!

Alternatively, I could pay back 2200 a month for those 5 years, and maybe get PSLF (which would be sweet). If PSLF falls flat, I would simply continue to pay 2200 back every month over an additional 10 years (around $400,000 in total) and get forgiveness with PAYE. Even if PSLF falls flat, I still save money by just paying the minimum PAYE payment and getting loan forgiveness in 20 years! The interest never hurts me!!! Am I missing something?

The language on the governments website very specifically says that you aren't accepted to PAYE/IBR when you start repayment, to be accepted to the program you tell them that you have made 240/300 qualifying payments. Until that point you are not 'in' the program, they do not have any kind of a contract with you, real or implied, and the pain and simple language on the website makes it clear that they are free to change the terms on you at any time.

You're right that PAYE is a better deal than paying of the loans at 220K/year salary. What you're missing is the fact that the government can change the terms on you at any time. I think you might also be missing the psychological burden of debt. Having a million dollars hanging over your head is f-ing horrifying.

Finally I'm not sure why you would need to 'live like a resident' for 5 years to pay back 500K if you're assuming a 260K salary. That seems like a pretty big salary boost from a resident even after you subtract 100K of after tax dollars, and definitely more than enough to manage catholic school and a mortgage.

 

[BLADEMDA]

The language on the governments website very specifically says that you aren't accepted to PAYE/IBR when you start repayment, to be accepted to the program you tell them that you have made 240/300 qualifying payments. Until that point you are not 'in' the program, they do not have any kind of a contract with you, real or implied, and the pain and simple language on the website makes it clear that they are free to change the terms on you at any time.

You're right that PAYE is a better deal than paying of the loans at 220K/year salary. What you're missing is the fact that the government can change the terms on you at any time. I think you might also be missing the psychological burden of debt. Having a million dollars hanging over your head is f-ing horrifying.

Finally I'm not sure why you would need to 'live like a resident' for 5 years to pay back 500K if you're assuming a 260K salary. That seems like a pretty big salary boost from a resident even after you subtract 100K of after tax dollars, and definitely more than enough to manage catholic school and a mortgage.

I really like your first 3 paragraphs. They were very intelligent thoughts. But, paragraph 4 shows you have no concept of what a $260,000 (pretax W-2) income really means in the USA.
Anyone patiyng back $500K over 5 years based on a $260K pretax income would need to live like resident (PGY-4).

 

[BLADEMDA]

Future income is THE factor in picking a specialty. I am currently looking at specialties that pay the highest and that:

1) I think I will be good at and,
2) I have a fighting chance at getting accepted to

With disgusting debt loads like those that students have today, I can't believe that any rational person would not consider money when picking a field.

I have posted this before and I will post it again: this bubble--just like the mortgage bubble--is entirely because of federal intervention, overhaul, etc...--whatever you want to call it.

Get the government out of....everything.

-sc

Med students seem enamored with ER/EM. Is that a field you are considering? What is your cut-off for a specialty? Is income your only factor in picking a specialty?

 

[Perrotfish]

I really like your first 3 paragraphs. They were very intelligent thoughts. But, paragraph 4 shows you have no concept of what a $260,000 (pretax W-2) income really means in the USA.
Anyone patiyng back $500K over 5 years based on a $260K pretax income would need to live like resident (PGY-4).

What are your assumptions concerning taxes? Assuming you're filing as single with just a standard deduction (which is an absolute worst case scenario) you owe about 70K in federal taxes on that income of 260K. You have no property to tax in this scenario. Most PGY-3/4 residents I know pull in a mid 50K pretax income, with a good chunk of that getting carved off for taxes and IBR for an after tax after debt income of no more than 40K. Even with another 100K going to loan repayment, it seems like you'll have nearly double that left over from your 190K post federal tax income unless you are paying truly obscene state income taxes.

 

[BLADEMDA]

We found someone with that salary would take home $158,000 to $194,500 -- and even more if they lived in a state without income tax.


Now, subtract 401K money
Subtract health insurance costs
Subtract life insurance costs
Subtract disability policy
Subtract $100,000 for student loan repayment.


Still driving that old beater? No new clothes? No new furniture? No new gifts like a watch or stainless steel CZ limited edition 9mm?

Net: resident income and lifestyle

 

[aneftp]

We found someone with that salary would take home $158,000 to $194,500 -- and even more if they lived in a state without income tax.


Now, subtract 401K money
Subtract health insurance costs
Subtract life insurance costs
Subtract disability policy
Subtract $100,000 for student loan repayment.


Still driving that old beater? No new clothes? No new furniture? No new gifts like a watch or stainless steel CZ limited edition 9mm?

Net: resident income and lifestyle

I don't think one needs to live a "resident lifestyle" to pay off loans early.

I've been out in practice for 9 years. Let's say I travel very well take between 6-8 weeks off a year. Have a family of 4. I live in a very nice home in a well to do neighborhood in Florida.

I spend between $6000-7000 a month in total expenses. House payments, insurance food everything plus we take at least 2 big trips a year along with quite a few "mini vacations since we are in Florida". Bare in mind I have a non working spouse and 2 kids also.

That means I probably spend between $70-90K a year in "living expenses" plus vacation.

People just need to budget themselves.

Some of my friends spend like crazy. Like 15K a month. They lease cars year after year. They barely pay the min on their student loans.

Even spending say 100K a year on living and basic expenses plus vacation. You should have between 50-70k easily on a 250K W2 income. You may not pay that 500K student loan off in 5 years. But 10 years is and should be the goal.

 

[Fabio001]

The language on the governments website very specifically says that you aren't accepted to PAYE/IBR when you start repayment, to be accepted to the program you tell them that you have made 240/300 qualifying payments. Until that point you are not 'in' the program, they do not have any kind of a contract with you, real or implied, and the pain and simple language on the website makes it clear that they are free to change the terms on you at any time.

You're right that PAYE is a better deal than paying of the loans at 220K/year salary. What you're missing is the fact that the government can change the terms on you at any time. I think you might also be missing the psychological burden of debt. Having a million dollars hanging over your head is f-ing horrifying.

Finally I'm not sure why you would need to 'live like a resident' for 5 years to pay back 500K if you're assuming a 260K salary. That seems like a pretty big salary boost from a resident even after you subtract 100K of after tax dollars, and definitely more than enough to manage catholic school and a mortgage.

I'm not a lawyer, but from everything that I've read, PAYE is much more than just a loan forgiveness program, which is all you seem to have gathered. You need to 'qualify' first (Under Pay As You Earn, your monthly payment amount will be 10 percent of your discretionary income, will never be more than the amount you would be required to pay under the 10-year Standard Repayment Plan, and may be less than under other repayment plans) and then if you do qualify, you can sign up for the program right when you go into repayment. At that point, you begin making payments equal to the algorithm I just quoted. If this was not a program that you were accepted into at the time you start repayment, you wouldn't get any of the other benefits listed, such as the interest payment benefit or the limitation of interest capitalization.

PAYE is not a loan forgiveness program like PSLF, but a stratification program with a loan forgiveness back-up for folks who have an income that is low relative to the amount of student loan debt they accrued; it's much more similar to IBR, but much better (for those who qualify).

 

[Perrotfish]

We found someone with that salary would take home $158,000 to $194,500 -- and even more if they lived in a state without income tax.


Now, subtract 401K money
Subtract health insurance costs
Subtract life insurance costs
Subtract disability policy
Subtract $100,000 for student loan repayment.


Still driving that old beater? No new clothes? No new furniture? No new gifts like a watch or stainless steel CZ limited edition 9mm?

Net: resident income and lifestyle

I'm not sure where you're getting the range of 158-194.5K on an income of 260K. The most the federal government will ever take is if you file for the standard deduction as single. What I get for that's about 70K (68.5). After federal taxes you will never take home less than 190K out of a 260K salary. Most people will pay less.

Residents already carry (or should carry) health insurance and disability so that doesn't factor in since you pay for it either way. 401Ks are completely optional savings and should be completely ignored when you have non-dischargable debt accumulating at 7.5% a year, especially if you're on an aggressive short term repayment plan.

Without state income taxes an attending making 260K takes home 90K after federal taxes and 100K of debt relief, out of which they pay their disability and health insurance. A resident takes home 40K after taxes and IBR, out of which he pays his disability and debt relief. The attending makes more than twice as much. And 90K is more than enough for a house, Catholic school for the kids, and a few luxury items.

 

[IJL]

401Ks are completely optional savings and should be completely ignored when you have non-dischargable debt accumulating at 7.5% a year, especially if you're on an aggressive short term repayment plan.

Really?

 

[Perrotfish]

Really?

My opinion on financial planning priorities: food/shelter/transportation >>> insurance (health/disability) >>>>Eliminate high interest debt >>>> establish a modest emergency fund >>>> max out your tax advantaged retirement savings >>> other savings and spending.

Its good to want to always want to max out the matching 401K/IRA/whatever, but high interest debt is still the priority and grad student loans are high enough interest (to me) to qualify. If you can't refinance it into low interest debt you kick its ass, then start saving. Also give yourself credit for what you're doing. Eliminating 100K of debt a year is basically saving 100K in an investment with a guaranteed return of 7.5%. Insisting that you find another 10K to save on top of those savings is a little extreme.

Obviously this plan assumed the money that would have gone into the 401K is going into an aggressive repayment plan.

 

[IJL]

My opinion on financial planning priorities: food/shelter/transportation >>> insurance (health/disability) >>>>Eliminate high interest debt >>>> establish a modest emergency fund >>>> max out your tax advantaged retirement savings >>> other savings and spending.

Its good to want to always want to max out the matching 401K/IRA/whatever, but high interest debt is still the priority and grad student loans are high enough interest (to me) to qualify. If you can't refinance it into low interest debt you kick its ass, then start saving. Also give yourself credit for what you're doing. Eliminating 100K of debt a year is basically saving 100K in an investment with a guaranteed return of 7.5%. Insisting that you find another 10K to save on top of those savings is a little extreme.

Obviously this plan assumed the money that would have gone into the 401K is going into an aggressive repayment plan.

I mostly agree (my loans are 6.8% though). I think maxing out an IRA is a must.

 

[Silent Cool]

Med students seem enamored with ER/EM. Is that a field you are considering? What is your cut-off for a specialty? Is income your only factor in picking a specialty?

Blade,

Income is not the only factor. I may have misrepresented myself in my statement (speaking somewhat emotionally about the absurdity of the current debt levels). What I mean is that the stress of having 450K+ debt is so great that I have difficulty figuring out what I like or don't like and, for the most part, I don't seem to be too concerned with it. All I can think about is what field offers a high enough income such that I can eliminate my debt as quickly as possible. Unfortunately, that anxiety is so great that it's difficult for me to focus on what I like or don't.

Nevertheless, I have done some objective soul-searching and come to the following conclusions. EM is not a field that I would consider, mainly because it offers no opportunity to be independent of the hospital. EM is 'In Vogue' right now, but that too will pass. The demand for 'Emergency' services has been increasing tremendously over the past 10 years, while the supply of ER docs has been relatively low. As such, there is somewhat of a 'boom' (I believe) in ER medicine right now, but the supply of ER docs is catching up quickly (on a related note, see: radiology circa year 2000 and the subsequent increase in supply and the eventual decline in the job market).

Anyway, I want to be in a field that will give me the opportunity to practice solo or with just a small group of physicians, and be free of hospital-based employment if I desire. Pain I believe would be one field. Psych is another. Concierge PC is another possibility but I'm not sure how doable that is; additionally, I believe that accepting medicare/medicaid will eventually be a condition of medical licensure, meaning that concierge medicine may become extremely difficult if not impossible. Fields like plastic surgery and derm offer the same benefits but those are off the table for obvious reasons. I would be interested in PMR and operating a rehabilitation facility in the future. I've also thought about Allergy.

I think surgical fields are off the table. I'm not the surgical type.

 

[BLADEMDA]

I mostly agree (my loans are 6.8% though). I think maxing out an IRA is a must.

Paying off student loans at a rate of $100,000 per year while earning $260K pretax is unrealistic. You will need to earn $350K plus to pay off that much money per year. But, paying off loans at $60,000 per year is quite doable if your income is $260k.

I agree about maxing out your 401K every year. In addition, a disability policy as an Attending usually costs more money per month than a policy as a Resident. Disability insurance is essential for the first 20-25 years of your career.

 

[BLADEMDA]

So a kid starting college this year could be looking at a $400,000 medical school education in terms of cost. At what point does the cost exceed the value? Never? Will students pay any amount of money to be a physician? Would most pay $700,000 for a medical degree? How would you borrow that much money?

 

[NOsaintsfan]

So a kid starting college this year could be looking at a $400,000 medical school education in terms of cost. At what point does the cost exceed the value? Never? Will students pay any amount of money to be a physician? Would most pay $700,000 for a medical degree? How would you borrow that much money?

This is something I don't hear being discussed on the national level much however is a very real issue that is on the horizon. With the shortage of docs we currently have, the impending onslaught of baby boomers about to retire and the ever increasing need to train new docs this will have to be addressed.

My feeling is that it will be like most big issues in our country -- it won't get dealt with until it comes to a head.

Medical school costs and the upcoming lack of residency slots (2015 big year) are two issues that our nation will have to deal with in the immediate future.

 

[BLADEMDA]

This is something I don't hear being discussed on the national level much however is a very real issue that is on the horizon. With the shortage of docs we currently have, the impending onslaught of baby boomers about to retire and the ever increasing need to train new docs this will have to be addressed.

My feeling is that it will be like most big issues in our country -- it won't get dealt with until it comes to a head.

Medical school costs and the upcoming lack of residency slots (2015 big year) are two issues that our nation will have to deal with in the immediate future.

Are UNPAID Residency positions part of the future?

 

[IlDestriero]

Perhaps. They won't address the physician shortage issue as it will fuel mid level expansion. Cheaper and better. In reality, neither.
The loan issue is rich people problems, don't expect any bail outs from the 98% for the 2%. The rich will get squeezed at every opportunity and physicians will get a double whammy as income will decline. In 10 years we'll all be taking a big hit, in another 10, the house of cards will come down and we will be looking at widespread socialized medicine, rationed care, etc. Huge frugal systems may survive as a private option for the wealthy. As all this is evolving, costing the government billions to trillions, your loan forgiveness will not even be on any radar screen.

 

[NOsaintsfan]

Are UNPAID Residency positions part of the future?

I don't think this is out of the question. I few already exist. Some of the osteopathic dermatology residencies are unpaid. Currently I suspect they can do this because derm is so competitive and some will do anything just to get into the field.

This could be an option for the future however. With ever rising debt loads of medical students and stagnant numbers of residency slots this may be an option that more and more people turn to.

Its not hard to envision a situation a few years post 2015 when the US is graduating significantly more medical students than we have residency slots. Its a numbers game, potentially hundreds/thousands of students could be stuck with huge debt, no residency, and a virtually worthless degree. People will become desperate.

This sounds like a ripe condition for many unpaid residencies to open.

It will be very interesting so see how this plays out because my understanding is that starting a new residency from scratch takes several years to get everything approved and lined up. So even if congress decides to open up additional funding for GME training in 2015 or so it will take 2-5 years to significantly add more residency slots.

I certainly hope it doesn't come to this, but its defiantly not out of the question.

 

[NOsaintsfan]

Perhaps. They won't address the physician shortage issue as it will fuel mid level expansion. Cheaper and better. In reality, neither.
The loan issue is rich people problems, don't expect any bail outs from the 98% for the 2%. The rich will get squeezed at every opportunity and physicians will get a double whammy as income will decline. In 10 years we'll all be taking a big hit, in another 10, the house of cards will come down and we will be looking at widespread socialized medicine, rationed care, etc. Huge frugal systems may survive as a private option for the wealthy. As all this is evolving, costing the government billions to trillions, your loan forgiveness will not even be on any radar screen.

Common sense tells me that PLANNING on receiving loan forgiveness is sort of like planning on winning the lottery.

Sure it is POSSIBLE and can happen, but if you sit around and depend on that well.......you may be very disappointed.

 

[TeamZissou]

Are UNPAID Residency positions part of the future?

They already exist and are highly sought after in the Dermatology world. It's probably a matter of time till we see other specialties realize they can have free labor.

Edit: looks like someone beat me to it.

 

[Perrotfish]

I don't think this is out of the question. I few already exist. Some of the osteopathic dermatology residencies are unpaid. Currently I suspect they can do this because derm is so competitive and some will do anything just to get into the field.

This could be an option for the future however. With ever rising debt loads of medical students and stagnant numbers of residency slots this may be an option that more and more people turn to.

Its not hard to envision a situation a few years post 2015 when the US is graduating significantly more medical students than we have residency slots. Its a numbers game, potentially hundreds/thousands of students could be stuck with huge debt, no residency, and a virtually worthless degree. People will become desperate.

This sounds like a ripe condition for many unpaid residencies to open.

Residencies are ALL 'unpaid' from the perspective of the residencies. Medicare,or Medicaid if you're a Pediatrician, pays academic hospitals approximately 120K per year per resident in training, of which they slice off 50K for your salary and another 20K for your benefits and insurance. Even with that windfall, the only reason they're willing to pay you any of that money as a salary is because the government forces them to: approximately 50K/year is a 1:1 reimbursement for direct expenses (i.e. the residency needs to send the government your pay stubs to get reimbursed, they can't just pocket the money). If the government just sent them a no strings attached check for 120K residents would probably all be unpaid employees right now.

The reason unpaid un-reimbursed residences haven't sprung up seems to be not a lack of demand, but rather that hospitals believe that they are money losers. They may be right: while the labor may be a plus, the enormous size of the ancillary staff required to handle the bureaucratic nightmare of the accreditation process probably more than balances out the gains. Residents need to be not just free, but 50K better than free to be profitable/neutral.

 

[Postictal Raiden]

So a kid starting college this year could be looking at a $400,000 medical school education in terms of cost. At what point does the cost exceed the value? Never? Will students pay any amount of money to be a physician? Would most pay $700,000 for a medical degree? How would you borrow that much money?

As long as I could pay back my debt in 10 years while having at least 70K of after tax income to live on, I'm OK. If I make 200K after residency, that's ~110k-120 of post-tax and health insurance income (assuming a family of 4). Deducting 70K from that will leave me with 40-50K to put toward my school debt. In other words, if I'm going to make 200K a year post residency, I better not exceed 350K of debt by the time I'm done residency.

 

[ASA6]

things you are forgetting: 1) state income tax. most states have it. in California earning that much it's 10%. so take away another 19k. 2) payroll taxes. like social security and Medicare. these can add up to another 8%. 3) are you a 1099? most anesthesiologists are. congrats, you might pay another 6.2% for the employers side of unemployment tax. most likely if you have no deductions, on 260k salary, you are bringing home about 150-170. and that's without health insurance, savings, boards, etc.

 

[IJL]

things you are forgetting: 1) state income tax. most states have it. in California earning that much it's 10%. so take away another 19k. 2) payroll taxes. like social security and Medicare. these can add up to another 8%. 3) are you a 1099? most anesthesiologists are. congrats, you might pay another 6.2% for the employers side of unemployment tax. most likely if you have no deductions, on 260k salary, you are bringing home about 150-170. and that's without health insurance, savings, boards, etc.

Reason #2,357 why I would never consider living in California.

 

[Silent Cool]

So a kid starting college this year could be looking at a $400,000 medical school education in terms of cost. At what point does the cost exceed the value? Never? Will students pay any amount of money to be a physician? Would most pay $700,000 for a medical degree? How would you borrow that much money?

I would say that we are already at that level right now. Someone starting at Tufts med today would owe 400K at graduation. After three years, that would be 484K.

The way that people would borrow 700K would be the same way they are borrowing it now: the federal government gives them whatever the university asks for. And that's the problem.

 

[Silent Cool]

Are UNPAID Residency positions part of the future?

-This was talked about recently in another thread, and I believe that there is some discussion of defunding residency training for some higher paid/more competitive residencies.

-In dentistry this is already the case and, in fact, many of those residencies CHARGE tuition. Again, the tuition is made possible because the fed gov't will simply hand out money like candy to the university if it asks for it.

 

[pgg]

As long as I could pay back my debt in 10 years while having at least 70K of after tax income to live on, I'm OK. If I make 200K after residency, that's ~110k-120 of post-tax and health insurance income (assuming a family of 4). Deducting 70K from that will leave me with 40-50K to put toward my school debt. In other words, if I'm going to make 200K a year post residency, I better not exceed 350K of debt by the time I'm done residency.

Much depends on where you live. $70K of income after debt payments supports a family of four a lot better in rural West Virginia than it does in the DC 'burbs of northern Virginia.


I'll be the first to agree that a lot of doctors could use a dose of financial perspective, and that a paycheck is just one component of happiness ... but it's telling that nearly 100% of the SDN posts declaring assured future happiness with median-level incomes are composed by pre-meds and med students, not attendings. It's easy to think you don't really need or want much, when you're studying in the twilight surreal world of borrowed money, and you haven't yet paid the first installment of the blood sweat tear tax yet, still a decade or more way from earning the board certification on your wall.


I would not be cool with paying the price I did, and doing the job I do, for $70K after tax. I might count my blessings, look around at my unemployed neighbors, and be glad I have a job, a house with a current mortgage, and kids who don't need free school lunches ... but that minimal subsistance is not what I invested all those years to enjoy.

Given your effort, responsibility, and liability as a physician, it doesn't make you crass or selfish to want an income well above society's median.

Which in 2011 was $70,004 in Maryland, by the way.

 

[Postictal Raiden]

Much depends on where you live. $70K of income after debt payments supports a family of four a lot better in rural West Virginia than it does in the DC 'burbs of northern Virginia.


I'll be the first to agree that a lot of doctors could use a dose of financial perspective, and that a paycheck is just one component of happiness ... but it's telling that nearly 100% of the SDN posts declaring assured future happiness with median-level incomes are composed by pre-meds and med students, not attendings. It's easy to think you don't really need or want much, when you're studying in the twilight surreal world of borrowed money, and you haven't yet paid the first installment of the blood sweat tear tax yet, still a decade or more way from earning the board certification on your wall.


I would not be cool with paying the price I did, and doing the job I do, for $70K after tax. I might count my blessings, look around at my unemployed neighbors, and be glad I have a job, a house with a current mortgage, and kids who don't need free school lunches ... but that minimal subsistance is not what I invested all those years to enjoy.

Given your effort, responsibility, and liability as a physician, it doesn't make you crass or selfish to want an income well above society's median.

Which in 2011 was $70,004 in Maryland, by the way.

I wholeheartedly agree with you. I won't be happy making median salary either. Not after years of hard work and delayed gratification. However, I think you could live in "hell" as long as you know you will eventually get out.

 

[pgg]

I wholeheartedly agree with you. I won't be happy making median salary either. Not after years of hard work and delayed gratification. However, I think you could live in "hell" as long as you know you will eventually get out.

Amen to that.

It does surprise me though that more doctors aren't willing to spend a couple years out in BFE right after residency. In a lot of specialties, especially anesthesia, geographic flexibility for a few years could go a looooong way toward getting high debt paid off, or a big FU account established. Higher pay, lower living expenses. And if you really really hate being out in the sticks, work a bunch of overtime and get out sooner.

 

[ssmallz]

Amen to that.

It does surprise me though that more doctors aren't willing to spend a couple years out in BFE right after residency. In a lot of specialties, especially anesthesia, geographic flexibility for a few years could go a looooong way toward getting high debt paid off, or a big FU account established. Higher pay, lower living expenses. And if you really really hate being out in the sticks, work a bunch of overtime and get out sooner.

Let's be clear that we're talkin about 250k salaries and not 70k.....250k goes a long way toward takin care of your expenses and then a bit left over, even if you're living in a high rent district. It might not be what a lot of people think of when they think of attending lifestyle but it still gets you where you want to be with enough left over to save for retirement and a house. Don't forget that most of the country does this w/significantly less even after we account for our med school debts. You might not be rich on 250k but you're not gonna starve either.

Living in BFE for a few years sounds great in theory but the reality is far different. First off it's a huge hassel to pick up your life and move. Toss the wife, kids, and schools into the equation and the difficulty gets amped up significantly. Secondly, if your family ain't happy with living in BFE it's going to be very hard to convince them that you absolutely need to live there when the alternative is moving to your desirable location w/a salary of 250k. And if they're not happy, is the money really worth it? Lastly, don't forget that after spending those 5 years in BFE trying to get a job in your dream city might be more difficult than you expect. With little to no connections finding a good job in a tight market will be tough and w/out living in the area it's very hard to know a good job from a bad job. Once you join this new group you are now low man on the totem poll so you end up working more and earning less. Looking at all this makes it very easy to follow the path of least resistance and stay in BFE way longer than you intended. It's a lot easier to just move to the area first, establish yourself and just accept the lower salary.

As anesthesiologists we are all well paid and can afford to live anywhere we want. Sure we may have to make some sacrifices to live in certain areas but we can all do it relatively painlessly. IMO people should focus more on the lifestyle and location of a job and less on salary b/c it will likely make you happier in the long run. Debt can be dealt with and there's no shame in paying it off over 30 years. In the end it's only money

 

[NOsaintsfan]

Let's be clear that we're talkin about 250k salaries and not 70k.....250k goes a long way toward takin care of your expenses and then a bit left over, even if you're living in a high rent district. It might not be what a lot of people think of when they think of attending lifestyle but it still gets you where you want to be with enough left over to save for retirement and a house. Don't forget that most of the country does this w/significantly less even after we account for our med school debts. You might not be rich on 250k but you're not gonna starve either.

Living in BFE for a few years sounds great in theory but the reality is far different. First off it's a huge hassel to pick up your life and move. Toss the wife, kids, and schools into the equation and the difficulty gets amped up significantly. Secondly, if your family ain't happy with living in BFE it's going to be very hard to convince them that you absolutely need to live there when the alternative is moving to your desirable location w/a salary of 250k. And if they're not happy, is the money really worth it? Lastly, don't forget that after spending those 5 years in BFE trying to get a job in your dream city might be more difficult than you expect. With little to no connections finding a good job in a tight market will be tough and w/out living in the area it's very hard to know a good job from a bad job. Once you join this new group you are now low man on the totem poll so you end up working more and earning less. Looking at all this makes it very easy to follow the path of least resistance and stay in BFE way longer than you intended. It's a lot easier to just move to the area first, establish yourself and just accept the lower salary.

As anesthesiologists we are all well paid and can afford to live anywhere we want. Sure we may have to make some sacrifices to live in certain areas but we can all do it relatively painlessly. IMO people should focus more on the lifestyle and location of a job and less on salary b/c it will likely make you happier in the long run. Debt can be dealt with and there's no shame in paying it off over 30 years. In the end it's only money

Much of what you say is true so to be clear I'm not arguing or disagreeing with you really.

I would like to point out that this doesn't necessarily work for everyone either though. To some (many) debt, especially high debt (400k+) not attached to a tangible asset like a house is an anchor and a huge source of anxiety. Some simply won't be happy or feel comfortable until they can get out from under that. For many being "free" means financial freedom.

In the end everyone going into medicine these days that needs to take out huge loans to pay for it has to look in the mirror and figure out a plan. That plan may be like the one you laid out, or more similar to what others have said that involves doing whatever possible to pay back the loans fast.

Regardless, you need a plan or at least an idea of your comfort level with debt and how you will approach paying it off.

It also is a huge help if you have an idea of what your getting yourself into when you start down this incredibly long road. I have lots of classmates that spent a lot of time focusing on the idealist side of medicine and came into it for those reasons alone. Don't get me wrong that is great and I think everyone going into medicine should have a base desire to treat/help people. That being said some of those same people never thought about the other aspects of medicine such as the "JOB" part of it, or how to deal with the very large loans. I see many around me in my class that never actually thought of this as a job rather they just thought about helping poor people in 3 world countries or running free clinics for the homeless in the inner city. That's great, but there is a whole other side to a medicine career that must be considered if you are going to have a realistic idea of what your embarking on when you sign up for medical school.

To not consider that stuff means that you didn't truly understand or take into account what you were getting yourself into and could be a big source of unhappiness down the road.

 

[pgg]

Let's be clear that we're talkin about 250k salaries and not 70k.....

Well, that's just it -

A Maryland family of 4 earning the median salary of $70,004 by W-2 will pay very little in income tax. After a mortgage deduction or maybe even the standard deduction, they might be eligible for the child tax credit or earned income tax credit, I'm not sure exactly where those cutoffs are. After the usual federal/state deductions and credits, they might wind up with $55K in income to spend on housing, food, utilities, and candy bars.

The physician who earns $250K isn't eligible for the child tax credit, earned income tax credit, makes too much to deduct student loan interest, can't contribute to a Roth IRA, etc. Roughly $60K to federal tax, in California you can add another $25K or so. Payroll taxes on the first $107K for a 1099 contractor (15.3% in 2013) are about $16K. Now he's down to $150K in take home income ... and if we use the above example of $100K to aggressively pay off student loans, well, there he is with $50K.


And we get back to

Paying off student loans at a rate of $100,000 per year while earning $260K pretax is unrealistic.

and he is very clearly correct.


The physician making $250K while paying back $400K in loans at 6.8%, which could well be the norm for a lot of people going forward, can live on somewhat-over-median-ish income, pay off $50K/year, and get the loans repaid in about 10 years. That's kind of disappointing, but doable.

The physician making $150K? Oh, ****. That's a problem.



Your points on the drawbacks to living in BFE are well taken. I'm somewhat biased in that I don't like city life or lots of people. I like cowtown. I did med school and internship in Washington DC and the Smithsonian was neat but I'll never go back. My wife's a country girl who feels the same way, and we don't let our kids vote on where we live.

Still, the horror on the faces of my city-dwelling brethren when we talk about living out in the sticks just strikes me as ... weird. I just don't get why they want to earn less, pay more to live, put up with traffic, all for the privilege of better restaurant selection. But to each his own.

 

[psychbender]

Still, the horror on the faces of my city-dwelling brethren when we talk about living out in the sticks just strikes me as ... weird. I just don't get why they want to earn less, pay more to live, put up with traffic, all for the privilege of better restaurant selection. But to each his own.

My sister just sold her house inside the beltway, and was trying to find a slightly bigger house inside the beltway with enough of a backyard for a swingset. Most of the houses that she was looking at were over $700,000. I told her that she should move just a few miles out in any direction, and the price for the same house would drop by at least one to two hundred thousand...she looked back at me as though I was spouting blasphemy. I will never understand city-dwellers.

 

[JonnyG]

I had an insane amount of loans after residency. I decided that my student loans were my biggest stresser in my life, so I found a rural job that pays me a great salary and pays 1/3 of my loans every three years of service. I miss being in a real city, but the low cost of living, nice weather, and the ability to get to really nice places in two hours is making it worth it. I think its one of the best finacial decisions I have ever made.

 

[DreamMachine]

I had an insane amount of loans after residency. I decided that my student loans were my biggest stresser in my life, so I found a rural job that pays me a great salary and pays 1/3 of my loans every three years of service. I miss being in a real city, but the low cost of living, nice weather, and the ability to get to really nice places in two hours is making it worth it. I think its one of the best finacial decisions I have ever made.

By rural, you don't mean Bala Cynwyd, do you?

Wawa is pretty f-ing awesome.

 

[Silent Cool]

And it gets even worse:

'Does The President Want ObamaCare Death Panels For Higher Education?'

http://www.forbes.com/sites/merrill...-obamacare-death-panels-for-higher-education/

 

[gasattack3]

A very close family member is a small business owner. He recently told me what he typically earns, gross, per year. Prior to that, I had an idea, but wasn't really sure.

This guy has been relatively frugal throughout a 35 year career thus far, and I think these figures only apply to the last 15-20 years as the first decade was build mode. He's also been conservative, yet successful, in his investment portfolio, but not to the extent that it's providing him a LOT of extra INCOME (it's mostly retirement stuff) which would augment his lifestyle.

It's true that there are many deductible's which are beneficial to a business owner, such as gas cards and other write offs which they take advantage of but don't abuse.

Basically, he said that on his BEST year he earned $250k but that was only a couple good years. Typically he ranges from about 150-200K per year. It's a good business and while they are there it's not like he's slaving away. I think he probably works about 45 hours per week. 50 TOPS. It's kind of a well-oiled machine and they've been very conservative over the years.

This guy goes on about 4 NICE vacations per year (Caribbean), has a nice boat, lives in a nice(yet small) detached condo (he's divorced and gave up 1/2 of everything in that process including his house...). Drives very nice cars. Does pretty much whatever he wants. He also put 3 kids through undergrad.

Again, he's not lavish or do eccentric things. Comfortable is a perfect description of his lifestyle.

Things he didn't/couldn't do:
Send his kids to an expensive/elite private school (public school district was good). Have a country club membership. Live in a super-exclusive neighborhood (he's always lived in good ones though). Live in a super elegant or very large home (but, again, good ones and this is all relative). Drive super luxury cars (good ones though). Doesn't own a cottage in the country/on a lake or a place in FL (though I'm sure this would be possible given recent prices and what he spends on vacations every year).

Bottom line is that everything is relative. You CAN still live a "comfortable" life with likely future earning potential in our field. I will concede that with some amount of student loan/debt, medicine will be much much less appealing in the future. Given the amount of RISK, responsibility, and hours/call etc. etc. it's NOT unreasonable to expect to earn a premium for that.

Just a different perspective on things.......

 

[circulus vitios]

Paying off student loans at a rate of $100,000 per year while earning $260K pretax is unrealistic. You will need to earn $350K plus to pay off that much money per year. But, paying off loans at $60,000 per year is quite doable if your income is $260k.

I agree about maxing out your 401K every year. In addition, a disability policy as an Attending usually costs more money per month than a policy as a Resident. Disability insurance is essential for the first 20-25 years of your career.

How? $260k pre tax is $160k post tax and $60k post student loans. That is more than enough to live comfortably, even for a family of 4 in an high living expense area. Worst case scenario, you would have to live on a paltry $60k/year post student loan income for 4-5 years, probably closer to 3.5 years for most people.

Don't take this as an attempt to justify the ridiculous tuition rates, or an implication that physicians shouldn't make "so much money." I'm just saying that living on $60k/year for <5 years isn't impossible or even uncomfortable.

 

[BLADEMDA]

How? $260k pre tax is $160k post tax and $60k post student loans. That is more than enough to live comfortably, even for a family of 4 in an high living expense area. Worst case scenario, you would have to live on a paltry $60k/year post student loan income for 4-5 years, probably closer to 3.5 years for most people.

Don't take this as an attempt to justify the ridiculous tuition rates, or an implication that physicians shouldn't make "so much money." I'm just saying that living on $60k/year for <5 years isn't impossible or even uncomfortable.

My original post was that one would need to live like a Resident to pay back $100,000 per year of student loan debt if the annual income is only $260K pretax. I know from personal experience what it is like to live on $30K, $50K, $100K, $150K, $250K, etc and pretax income isn't what you have left to actually spend.

A single person could certainly earn just $260K pretax, pay off $100K per year of student loans while living on the remaining money. Is this possible? Yes. Is it realistic? No.

 

[deleted307836]

A single person could certainly earn just $260K pretax, pay off $100K per year of student loans while living on the remaining money. Is this possible? Yes. Is it realistic? No.

Wow, I couldn't disagree more with this.

I speak as a single person currently earning less than 60k (pretax) and living very comfortably on what I make. And I save about a third of what I make.

260k pretax comes out to 160k post tax. If 100k goes to loans, that leaves 5k a month for living expenses and saving/investing (though I'm not sure I would invest if I still had loans left, hypothetically).

Not only is that an incredibly realistic scenario, I find it to be quite desirable.

For someone like me, a single person who doesn't want kinds, that's a lifestyle I wouldn't mind maintaining indefinitely - once the loans are gone, I would be able to save/invest very aggressively.

You live in a very insulated world if you don't determine that to be a "realistic" scenario.