Quantcast

$200,000 in debt is going to be nuts (thanks SCCO)

Bootcamp for OAT
This forum made possible through the generous support of SDN members, donors, and sponsors. Thank you.

Penguin2012

Full Member
10+ Year Member
Joined
Apr 13, 2008
Messages
80
Reaction score
0
Dear fellow optometriers (not a real word, I know),

Turns out that SCCO will cost nearly $50,000 a year for me to get by according to their financial aid packet. ($46,000 the first 2 years, $50k and 51K the last two years). These are numbers according to their estimates and not mine.

I am going to approximate a lot of the numbers but bear with me.

If I can get a subsidized loan for the amount of $10,000 each year that has interest deferred until after I graduate, I'll need about $38,000 more on top of that (unsubsidized) that will accrue interest during school.

The interest for a stafford unsubsidized loan is 6.8%.

Boils down to:

$40,000 + 4x 38,000 + $25, 840 (accrued interest over 4 years @ 6.8%; I calculated this buy adding 6.8% x 38,000 = year 1 interest + 6.8%x $76,000 = year 2 interest) = $217,840.

Now SCCO has a solid tuition of $26,000 a year. And they allocated $950 a month on rent and $450 on personal expense monthly (food etc.), $250 for transportation monthly, $1000 for insurance a year. SCCO seems pretty objective and each number seems like a reasonable estimate.

So if I room with a roommate and spend less than $15 a day on food it can bring it all down. Let's just say I owe $200,000 and not $217,840.

Still I graduate with $200,000 in debt @ 6.8% interest. That's $13,600 worth of interest approximately (I know I know, it changes month-to-month as I pay off the principle but whatever) the first year out.

$13,600 / 12 = 1133 monthly. JUST INTEREST!

Just venting....
 

cunikki

SCCO 2009
10+ Year Member
7+ Year Member
Joined
Nov 10, 2004
Messages
201
Reaction score
0
hahah i know you are upset but just think logically for a second.... that 50k they estimate is really on the high end... i dont know about how you live but me and my roommate pay 1200 for a 2 bedroom.. so thats already 350 a month less than what they give you for rent, and i have cheapo insurance that is 46 bucks a month for basic coverage, there is no way i spend 250 on transportation since i walk to school, and i highly doubt i spend 450 on 'personal expenses'
the reason they have that number is so that people who need it (ie there are a lot of married students at school with wives that stay home with their kids and dont work) can get enough money to make it, but there is absolutely no reason to spend that much money unless you plan on living super extravagantly. shrug think about who you really are and what you would really spend and take out that amount. or you could do it like some of my friends and take out the whole amount and invest it.

ps i know it sounds like a lot of money but you also read the part about how they have a 0% default rate on loans, right? that means that people end up earning enough money as doctors to make it worthwhile.

sometimes you got to spend a little to make a little :)
 

Penguin2012

Full Member
10+ Year Member
Joined
Apr 13, 2008
Messages
80
Reaction score
0
hahah i know you are upset but just think logically for a second.... that 50k they estimate is really on the high end... i dont know about how you live but me and my roommate pay 1200 for a 2 bedroom.. so thats already 350 a month less than what they give you for rent, and i have cheapo insurance that is 46 bucks a month for basic coverage, there is no way i spend 250 on transportation since i walk to school, and i highly doubt i spend 450 on 'personal expenses'
the reason they have that number is so that people who need it (ie there are a lot of married students at school with wives that stay home with their kids and dont work) can get enough money to make it, but there is absolutely no reason to spend that much money unless you plan on living super extravagantly. shrug think about who you really are and what you would really spend and take out that amount. or you could do it like some of my friends and take out the whole amount and invest it.

ps i know it sounds like a lot of money but you also read the part about how they have a 0% default rate on loans, right? that means that people end up earning enough money as doctors to make it worthwhile.

sometimes you got to spend a little to make a little :)

CuNikki, I love your optimism. $250 a month on transportation is a stretch considering I will live probably 5 miles away.

I guess I should get a cheapo insurance also... I am a fairly healthy person =)
 

gochi

Full Member
10+ Year Member
Joined
Nov 24, 2006
Messages
1,105
Reaction score
0
Dear fellow optometriers (not a real word, I know),

Turns out that SCCO will cost nearly $50,000 a year for me to get by according to their financial aid packet. ($46,000 the first 2 years, $50k and 51K the last two years). These are numbers according to their estimates and not mine.

I am going to approximate a lot of the numbers but bear with me.

If I can get a subsidized loan for the amount of $10,000 each year that has interest deferred until after I graduate, I'll need about $38,000 more on top of that (unsubsidized) that will accrue interest during school.

The interest for a stafford unsubsidized loan is 6.8%.

Boils down to:

$40,000 + 4x 38,000 + $25, 840 (accrued interest over 4 years @ 6.8%; I calculated this buy adding 6.8% x 38,000 = year 1 interest + 6.8%x $76,000 = year 2 interest) = $217,840.

Now SCCO has a solid tuition of $26,000 a year. And they allocated $950 a month on rent and $450 on personal expense monthly (food etc.), $250 for transportation monthly, $1000 for insurance a year. SCCO seems pretty objective and each number seems like a reasonable estimate.

So if I room with a roommate and spend less than $15 a day on food it can bring it all down. Let's just say I owe $200,000 and not $217,840.

Still I graduate with $200,000 in debt @ 6.8% interest. That's $13,600 worth of interest approximately (I know I know, it changes month-to-month as I pay off the principle but whatever) the first year out.

$13,600 / 12 = 1133 monthly. JUST INTEREST!

Just venting....


Well that's not supercalifragilisticexpialidocious. I actually spelled that correctly!
 

panzer

Full Member
10+ Year Member
Joined
Jul 8, 2007
Messages
250
Reaction score
0
Let the optometry screwing begin
!
 

blazenmadison

Full Member
10+ Year Member
Joined
Jan 27, 2006
Messages
432
Reaction score
5
I've had to switched lenders two times, since my original lenders went out of business. :*( I hope when I graduate we will be out of this pseudorecession.

From the AOA...
"Financial turmoil disrupts student loan industry

April 14, 2008


New regulations and widely publicized turmoil in the financial services industry are making federally guaranteed student loans more challenging for students to secure with the lender of their choice, according to the American Optometric Student Association (AOSA) and Student Assistance Foundation (SAF), AOA's partner in the student loan industry.

Students who plan to attend schools and colleges of optometry this fall should begin evaluating current lender programs and arranging any necessary student loans now, the AOSA advises.

"Students will need to do some research in order to determine their best option for obtaining student loans for the 2008-2009 academic year," said Don Oliver, executive vice president of sales and marketing for nonprofit SAF, which administered the AOA Advantage student loan program for five years.

The program has been suspended due to the passing of new legislation and because of the uncertainty in the financial markets. The AOA is seeking new options for students.

"While this may seem daunting, the situation isn't impossible and help is available," Oliver said.

Some lenders, including some banks, reportedly plan to stop issuing student loans under the Federal Family Educational Loan Program (FFELP) after June 30.

According to Oliver, the student loan industry began to change in October 2007 following the passage of the federal College Cost Reduction and Access Act.

The purpose of the act was to decrease college costs for students, increase federal programs directed toward improving access to college, and to implement school and lender regulations directed toward ensuring that students have more choice in selecting loan providers.

However, Oliver explained, the act required significant increases in loan fees and decreases in returns to lenders totaling $20 billion in order to pay for the changes to the FFELP. As a result, student loan companies across the country were prompted to evaluate all of their student loan products and the profitability associated with them.

Some lenders found their profitability levels to be marginal at best and chose to discontinue offering FFELP consolidation loans. Others chose to leave the student loan industry altogether. To date, lenders who chose to leave the industry represent 10 percent of the Stafford and PLUS loan volume and 30 percent of the consolidation loan volume.

In recent months, the "meltdown" in the real estate mortgage market compounded the problem as its effects began to impact other segments of the financial market, including college loans, Oliver said.

As a result of massive mortgage defaults, a number of the nation's largest financial institutions have had to write off billions of dollars in bad debt, leaving many with markedly less capital to invest in college loans, Oliver said.

Many of these financial institutions and major investment banks have traditionally been among the largest purchasers of the bonds issued to fund student loans.

Specialized education lenders, who rely on the secondary markets to fund federally backed student loans across the nation, have less cash available to lend as a result. In addition, the cost of funding student loans in these markets has exceeded the revenues lenders now receive on student loans, Oliver said.

According to Oliver, that means optometry students seeking loans may now find lenders to be offering minimal borrower benefits on FFELP loans and higher interest rates and fees on private educational loans. In addition, consumers may be subject to tougher criteria to obtain private loans than in the past.

"We encourage students to contact their lender early - whether that is a local financial institution or national student loan provider - to make sure they will be offering student loans this year," he said. "If not, it's time to start doing some research. A number of options are available."

One option, Oliver suggests, is for students to contact nonprofit student loan providers or higher education financing agencies in their home state or the state in which they are attending school. Often these providers offer special benefits to students who meet their criteria.

Beyond that, Oliver said, students can investigate the loan programs offered by major "money center" banks such as US Bank, Bank of America, or Wells Fargo. Such financial institutions do not primarily rely on the secondary financial markets to fund student loans and generally are still participating in the FFELP program.

However "in order to secure the most advantageous loan, students need to take the time to read the fine print associated with student loan offers - make sure the borrower benefits advertised extend to the academic year for which they need the loan," Oliver emphasized.

In addition, he said, the U.S. Department of Education is prepared to step in as a "lender of last resort" should the situation in the industry become too dire."
 

Penguin2012

Full Member
10+ Year Member
Joined
Apr 13, 2008
Messages
80
Reaction score
0
I've had to switched lenders two times, since my original lenders went out of business. :*( I hope when I graduate we will be out of this pseudorecession.

From the AOA...
"Financial turmoil disrupts student loan industry

April 14, 2008


New regulations and widely publicized turmoil in the financial services industry are making federally guaranteed student loans more challenging for students to secure with the lender of their choice, according to the American Optometric Student Association (AOSA) and Student Assistance Foundation (SAF), AOA's partner in the student loan industry.

Students who plan to attend schools and colleges of optometry this fall should begin evaluating current lender programs and arranging any necessary student loans now, the AOSA advises.

"Students will need to do some research in order to determine their best option for obtaining student loans for the 2008-2009 academic year," said Don Oliver, executive vice president of sales and marketing for nonprofit SAF, which administered the AOA Advantage student loan program for five years.

The program has been suspended due to the passing of new legislation and because of the uncertainty in the financial markets. The AOA is seeking new options for students.

"While this may seem daunting, the situation isn't impossible and help is available," Oliver said.

Some lenders, including some banks, reportedly plan to stop issuing student loans under the Federal Family Educational Loan Program (FFELP) after June 30.

According to Oliver, the student loan industry began to change in October 2007 following the passage of the federal College Cost Reduction and Access Act.

The purpose of the act was to decrease college costs for students, increase federal programs directed toward improving access to college, and to implement school and lender regulations directed toward ensuring that students have more choice in selecting loan providers.

However, Oliver explained, the act required significant increases in loan fees and decreases in returns to lenders totaling $20 billion in order to pay for the changes to the FFELP. As a result, student loan companies across the country were prompted to evaluate all of their student loan products and the profitability associated with them.

Some lenders found their profitability levels to be marginal at best and chose to discontinue offering FFELP consolidation loans. Others chose to leave the student loan industry altogether. To date, lenders who chose to leave the industry represent 10 percent of the Stafford and PLUS loan volume and 30 percent of the consolidation loan volume.

In recent months, the "meltdown" in the real estate mortgage market compounded the problem as its effects began to impact other segments of the financial market, including college loans, Oliver said.

As a result of massive mortgage defaults, a number of the nation's largest financial institutions have had to write off billions of dollars in bad debt, leaving many with markedly less capital to invest in college loans, Oliver said.

Many of these financial institutions and major investment banks have traditionally been among the largest purchasers of the bonds issued to fund student loans.

Specialized education lenders, who rely on the secondary markets to fund federally backed student loans across the nation, have less cash available to lend as a result. In addition, the cost of funding student loans in these markets has exceeded the revenues lenders now receive on student loans, Oliver said.

According to Oliver, that means optometry students seeking loans may now find lenders to be offering minimal borrower benefits on FFELP loans and higher interest rates and fees on private educational loans. In addition, consumers may be subject to tougher criteria to obtain private loans than in the past.

"We encourage students to contact their lender early - whether that is a local financial institution or national student loan provider - to make sure they will be offering student loans this year," he said. "If not, it's time to start doing some research. A number of options are available."

One option, Oliver suggests, is for students to contact nonprofit student loan providers or higher education financing agencies in their home state or the state in which they are attending school. Often these providers offer special benefits to students who meet their criteria.

Beyond that, Oliver said, students can investigate the loan programs offered by major "money center" banks such as US Bank, Bank of America, or Wells Fargo. Such financial institutions do not primarily rely on the secondary financial markets to fund student loans and generally are still participating in the FFELP program.

However "in order to secure the most advantageous loan, students need to take the time to read the fine print associated with student loan offers - make sure the borrower benefits advertised extend to the academic year for which they need the loan," Oliver emphasized.

In addition, he said, the U.S. Department of Education is prepared to step in as a "lender of last resort" should the situation in the industry become too dire."

Great article Blazen, thank you for posting. I shadowed an SCCO alumn (class of 02') and he was mentioning how his interest rate on his student loan was like 2% which was incredible (slower than the rate of inflation).

It's less the bottom line red debt (200K) that I worry about and more the 6.8% interest to tell you the truth. With high interest rates on my student loan, makes me sort of reluctant to try to buy out a business as was my plan coming out of opt school. My credit score is 800+ so when I bought my car I had my car interest rate at 6.2%. Pretty crazy how a student loan is more than an auto loan interest =(.
 

eyestrain

Member
10+ Year Member
Joined
Sep 29, 2005
Messages
863
Reaction score
2
It's less the bottom line red debt (200K) that I worry about and more the 6.8% interest to tell you the truth.

That's what I'd be afraid of too. They were 6.something for my last year of school, but when consolidated they wound up at just over 3% or something because rates were so low my first 2-3 years. $200,000 @ 3% is pretty friggin' scary. $200,00 @ 6.8% and I might be looking for the nearest bridge to jump off.
 

panzer

Full Member
10+ Year Member
Joined
Jul 8, 2007
Messages
250
Reaction score
0
That's what I'd be afraid of too. They were 6.something for my last year of school, but when consolidated they wound up at just over 3% or something because rates were so low my first 2-3 years. $200,000 @ 3% is pretty friggin' scary. $200,00 @ 6.8% and I might be looking for the nearest bridge to jump off.

Don't you DARE default on govt loans and burden us taxpayers! :mad:

:sleep::sleep:
 

mthwong

Aspiring California O.D.
10+ Year Member
Joined
Jan 25, 2008
Messages
42
Reaction score
0
If I can get a subsidized loan for the amount of $10,000 each year that has interest deferred until after I graduate, I'll need about $38,000 more on top of that (unsubsidized) that will accrue interest during school.

The interest for a stafford unsubsidized loan is 6.8%.


The max amount per year for the unsubsidized loan is $8,500, so you can't receive $10,000.
 

eyestrain

Member
10+ Year Member
Joined
Sep 29, 2005
Messages
863
Reaction score
2
Don't you DARE default on govt loans and burden us taxpayers! :mad:

:sleep::sleep:

Well, mine are at 3%, so I'm not going to be jumping any time soon. And even if I did, don't student loans get written off if I die? I thought they did. Maybe not if I suicided.
 

KHE

Senior Member
15+ Year Member
Joined
Jun 14, 2005
Messages
3,356
Reaction score
371
Dear fellow optometriers (not a real word, I know),

Turns out that SCCO will cost nearly $50,000 a year for me to get by according to their financial aid packet. ($46,000 the first 2 years, $50k and 51K the last two years). These are numbers according to their estimates and not mine.

I am going to approximate a lot of the numbers but bear with me.

If I can get a subsidized loan for the amount of $10,000 each year that has interest deferred until after I graduate, I'll need about $38,000 more on top of that (unsubsidized) that will accrue interest during school.

The interest for a stafford unsubsidized loan is 6.8%.

Boils down to:

$40,000 + 4x 38,000 + $25, 840 (accrued interest over 4 years @ 6.8%; I calculated this buy adding 6.8% x 38,000 = year 1 interest + 6.8%x $76,000 = year 2 interest) = $217,840.

Now SCCO has a solid tuition of $26,000 a year. And they allocated $950 a month on rent and $450 on personal expense monthly (food etc.), $250 for transportation monthly, $1000 for insurance a year. SCCO seems pretty objective and each number seems like a reasonable estimate.

So if I room with a roommate and spend less than $15 a day on food it can bring it all down. Let's just say I owe $200,000 and not $217,840.

Still I graduate with $200,000 in debt @ 6.8% interest. That's $13,600 worth of interest approximately (I know I know, it changes month-to-month as I pay off the principle but whatever) the first year out.

$13,600 / 12 = 1133 monthly. JUST INTEREST!

Just venting....

Do NOT attempt to pay a loan like that off in 10 years. Spread it out over 30! How many times do I have to say this?!?

Also....at the level of loan, you are getting to the point where you are going to need to sit down and think REALLY hard about whether you want to go forward with this or not because you are really starting to get up into a territory where it may just not be worth it. I'm not saying it is or it isn't, but this requires a LOT of thought and introspection and advice from financial advisors. Don't fall into the trap of thinking "Oh...it's OK. I'm gonna be an EYE DOCTOR. I'll just borrow the money." THINK long and hard.
 

eyepoker

Full Member
10+ Year Member
Joined
Jan 29, 2008
Messages
115
Reaction score
0
ppl who graduated recently (05-07) what's your rate after consolidation?

and what about the ppl who are going into program now, are we all going to have 6.8% rate after 4 yrs??
 

eyestrain

Member
10+ Year Member
Joined
Sep 29, 2005
Messages
863
Reaction score
2
ppl who graduated recently (05-07) what's your rate after consolidation?

and what about the ppl who are going into program now, are we all going to have 6.8% rate after 4 yrs??

I graduated in '07. My consolidated rate is 3.75% until I make 33 months of on-time payments, then it drops to 2.75% or something close to that.
 

eyepoker

Full Member
10+ Year Member
Joined
Jan 29, 2008
Messages
115
Reaction score
0
really? 3.75% isn't so bad compare to the 6.8% now, who is your lender eyestrain?
 

eyestrain

Member
10+ Year Member
Joined
Sep 29, 2005
Messages
863
Reaction score
2
really? 3.75% isn't so bad compare to the 6.8% now, who is your lender eyestrain?

You're right, and I'm certainly not going to complain about it. You guys in school now, however, are screwed with the high interest no matter what you do.
 

still_confused

Senior Member
10+ Year Member
5+ Year Member
Joined
Sep 12, 2005
Messages
442
Reaction score
1
You're right, and I'm certainly not going to complain about it. You guys in school now, however, are screwed with the high interest no matter what you do.

vote for the candidate supporting lower interest rates for students!!

anyone know where i can find the candidate's stances on this issue? their websites are vague at best
 

Penguin2012

Full Member
10+ Year Member
Joined
Apr 13, 2008
Messages
80
Reaction score
0
Do NOT attempt to pay a loan like that off in 10 years. Spread it out over 30! How many times do I have to say this?!?

Also....at the level of loan, you are getting to the point where you are going to need to sit down and think REALLY hard about whether you want to go forward with this or not because you are really starting to get up into a territory where it may just not be worth it. I'm not saying it is or it isn't, but this requires a LOT of thought and introspection and advice from financial advisors. Don't fall into the trap of thinking "Oh...it's OK. I'm gonna be an EYE DOCTOR. I'll just borrow the money." THINK long and hard.

Definitely going to spread it out over 30 years, gotta make sure I have some cash flow and don't plan on dumping my money into a 10-year payment.

I wish I was in Eyestrain's position, 3.75% sounds like a dream with it dropping to 2.75% after 33 months (that's like the rate of inflation!!!).

What hurts is that if I attempt to buy a practice or even start up cold, I will need to take another loan on top of my student loan. Any idea's how much a practice grossing 300K sells for? I have heard something about taking roughly 33% of the gross home, so making 100K would work.
 

Penguin2012

Full Member
10+ Year Member
Joined
Apr 13, 2008
Messages
80
Reaction score
0
The max amount per year for the unsubsidized loan is $8,500, so you can't receive $10,000.

Actually the max amount for a subsidized loan is $8500, and unsubsidized can be much more.

For the purpose of presenting roundish numbers for the sake of just a discussion, I rounded the subsidized amount to $10,000.
 

jefguth

Senior Member
10+ Year Member
5+ Year Member
Joined
Oct 12, 2004
Messages
819
Reaction score
0
vote for the candidate supporting lower interest rates for students!!

anyone know where i can find the candidate's stances on this issue? their websites are vague at best

HA! Interest rates are hardly a political decision - well at least I don't think any candidates are going to take a stance on interest rates since that would be seen as political intervention in the Federal Reserve.

Now I don't know much about these subsidized, consolidated loans etc. but shouldn't these rates being doing down right now? I mean the prime lending rate is pretty low at the moment with wall street journal prime currently at 5.25%?

http://www.hsh.com/indices/prime00s.html
 

Penguin2012

Full Member
10+ Year Member
Joined
Apr 13, 2008
Messages
80
Reaction score
0
HA! Interest rates are hardly a political decision - well at least I don't think any candidates are going to take a stance on interest rates since that would be seen as political intervention in the Federal Reserve.

Now I don't know much about these subsidized, consolidated loans etc. but shouldn't these rates being doing down right now? I mean the prime lending rate is pretty low at the moment with wall street journal prime currently at 5.25%?

http://www.hsh.com/indices/prime00s.html

Even 5.25% sounds great to me. I hope you are right :)

To be clear though to one of the previous posts about "let the optometry screwing begin," this thread was less me wanting to bash optometry. Most professional schools of all types can leave one in significant debt. But it's just that these new interests rates we see from student loans are going to handcuff many graduates of my class.

It makes going commercial that much more tempting then trying to strike out on your own building a practice or working for a private practice that can pay significantly less starting off.

I never like the comments of commercialization as evil and disgusting. While we all agree you will never make as much money or perhaps be as happy as working for yourself and building your own practice, it is increasingly hard for someone like me to approach a bank with little financial track record (I have just been a student afterall) and with such a large student loan.

If I can't get that bank loan, and I don't have rich parents, and there are no private practices willing to offer me a chance at partnership in the future, can't really fault me for starting off commercial?
 

KHE

Senior Member
15+ Year Member
Joined
Jun 14, 2005
Messages
3,356
Reaction score
371
Even 5.25% sounds great to me. I hope you are right :)

To be clear though to one of the previous posts about "let the optometry screwing begin," this thread was less me wanting to bash optometry. Most professional schools of all types can leave one in significant debt. But it's just that these new interests rates we see from student loans are going to handcuff many graduates of my class.

It makes going commercial that much more tempting then trying to strike out on your own building a practice or working for a private practice that can pay significantly less starting off.

I never like the comments of commercialization as evil and disgusting. While we all agree you will never make as much money or perhaps be as happy as working for yourself and building your own practice, it is increasingly hard for someone like me to approach a bank with little financial track record (I have just been a student afterall) and with such a large student loan.

If I can't get that bank loan, and I don't have rich parents, and there are no private practices willing to offer me a chance at partnership in the future, can't really fault me for starting off commercial?

Ok.....EVERYONE PAY ATTENTION RIGHT NOW!!!!

1) You do NOT have to go commercial. What you do is pay off the student loan in the longest possible term, or at least you take the MAXIMUM POSSIBLE REPAYMENT SCHEDULE.

2) In almost every case, you will end up making more money as a practice owner than you will working for someone else. Some commercial leases are more lucrative than others, but the majority of them make the lease holder a low six figure income. Initially, this sounds nice because it's better than most private practices pay their associated doctors but the goal should be private practice ownership but in the long run there is going to be little you can do to grow or expand unless you take on multiple leases. I can tell you that as a private practice owner, I make a multiple six figure income, and you can too.

3) There are specialty lenders out there that specialize in lending to doctors specifically for practice aquisition or start up. I have given a couple of talks at a couple of schools of optometry on this issue....trust me when I say.....you WILL be able to get the financing that you need to purchase or start a practice and you do not need a lengthy financial record to do it.
 

eyestrain

Member
10+ Year Member
Joined
Sep 29, 2005
Messages
863
Reaction score
2
I never like the comments of commercialization as evil and disgusting. While we all agree you will never make as much money or perhaps be as happy as working for yourself and building your own practice, it is increasingly hard for someone like me to approach a bank with little financial track record (I have just been a student afterall) and with such a large student loan.

If I can't get that bank loan, and I don't have rich parents, and there are no private practices willing to offer me a chance at partnership in the future, can't really fault me for starting off commercial?

Trust me, it is NOT difficult to get lots and lots of money to start a practice even with massive student debt, little to no financial assets, no rich parents, no cosigners, etc, etc. It's alarmingly easy, actually.
 

Penguin2012

Full Member
10+ Year Member
Joined
Apr 13, 2008
Messages
80
Reaction score
0
Khe, eyestrain.

Thanks for your comments. It's actually really encouraging.

So if I can get that bank loan approved potentially, I guess I am still in the driver's sit as to which mode of practice I choose to pursue, depending on what risk I am willing to take on with my own practice.

I have heard from talking to various ODs that buying a practice was their preferred method than starting cold. I guess 4 years from now, I just need to get a little bit lucky in finding a practice that isn't selling at a ridiculous amount vs. their gross revenue. Also with a steady cash flow, and potential to grow.
 

Jay12

Full Member
10+ Year Member
5+ Year Member
Joined
Mar 21, 2007
Messages
241
Reaction score
0
This may be a silly question, but when going out to buy a Private Practice....what resources does one use when looking for a practice that is on sale? (i.e. Internet, newspaper, AOA website, talk to a owner about possible selling of their practice ?)

Thanks.
 

panzer

Full Member
10+ Year Member
Joined
Jul 8, 2007
Messages
250
Reaction score
0
Well, mine are at 3%, so I'm not going to be jumping any time soon. And even if I did, don't student loans get written off if I die? I thought they did. Maybe not if I suicided.

But duh, it is not like bush will personally pay your loan "after death".. :idea: :laugh:
 

panzer

Full Member
10+ Year Member
Joined
Jul 8, 2007
Messages
250
Reaction score
0
HA! Interest rates are hardly a political decision - well at least I don't think any candidates are going to take a stance on interest rates since that would be seen as political intervention in the Federal Reserve.

Now I don't know much about these subsidized, consolidated loans etc. but shouldn't these rates being doing down right now? I mean the prime lending rate is pretty low at the moment with wall street journal prime currently at 5.25%?

http://www.hsh.com/indices/prime00s.html

But banks also make interest on the loan itself meaning they add a higher percentage [around 1% or more] on the loan they give to us! :love:
 

panzer

Full Member
10+ Year Member
Joined
Jul 8, 2007
Messages
250
Reaction score
0
Trust me, it is NOT difficult to get lots and lots of money to start a practice even with massive student debt, little to no financial assets, no rich parents, no cosigners, etc, etc. It's alarmingly easy, actually.

Can you pass me those "tips"? :scared:

Just remember, I don't want to time in a federal prison for your "tip".. :scared:
 

KHE

Senior Member
15+ Year Member
Joined
Jun 14, 2005
Messages
3,356
Reaction score
371
Khe, eyestrain.

Thanks for your comments. It's actually really encouraging.

So if I can get that bank loan approved potentially, I guess I am still in the driver's sit as to which mode of practice I choose to pursue, depending on what risk I am willing to take on with my own practice.

I have heard from talking to various ODs that buying a practice was their preferred method than starting cold. I guess 4 years from now, I just need to get a little bit lucky in finding a practice that isn't selling at a ridiculous amount vs. their gross revenue. Also with a steady cash flow, and potential to grow.

I respectfully disagree with eyestrain's tone of his posting. I do not think that aquiring funds is "alarmingly easy." Perhaps his experience was different than mine but the point is that it IS doable, and it is a lot easier than many of you are probably thinking it is.

Evaluating the viability of a practice for purchase is a tough issue, but a general rule of thumb (and I mean GENERAL) is that a practice should sell for 2/3 of gross, or twice the net.
 

KHE

Senior Member
15+ Year Member
Joined
Jun 14, 2005
Messages
3,356
Reaction score
371
This may be a silly question, but when going out to buy a Private Practice....what resources does one use when looking for a practice that is on sale? (i.e. Internet, newspaper, AOA website, talk to a owner about possible selling of their practice ?)

Thanks.

A number of different methods can be used to find a practice but for me, the most effective ones are talking to frame reps (NOT drug reps) and just cold calling people.
 

iowaeyes

Full Member
10+ Year Member
Joined
Oct 20, 2006
Messages
78
Reaction score
0
Just to go back to the original discussion of interest rates, this posting made me realize that I didn't even know the interest rate on my $48,000 of debt:scared: I looked it up, and the majority of my loans are at 6.8% but a small percentage are at 8.25%. Definitely going to have to consolidate to a lower interest rate after graduation...

By the way, our lender at Indiana is Sallie Mae.
 

eyestrain

Member
10+ Year Member
Joined
Sep 29, 2005
Messages
863
Reaction score
2
I respectfully disagree with eyestrain's tone of his posting. I do not think that aquiring funds is "alarmingly easy." Perhaps his experience was different than mine but the point is that it IS doable, and it is a lot easier than many of you are probably thinking it is.

Fair enough. In my experience, I thought it was pretty damn easy considering my financial situation at the time. I got my loan through GE Financial. If I remember correctly it involved filling out a relatively short application at first. Then they wanted some more info (understandably). I think it was a personal finance statement, or something like that, in which I just listed my debts (lots) and my assets (few). They also wanted a business plan, which I sent them. I think that was pretty much it. It does take a lot of legwork to get the business plan together, but it's not that difficult, just time-consuming.

FWIW, I also applied through the SBA and was told by my banker I could probably get a loan through them too, but the terms wouldn't be as good as GE's. I sent in the application anyway, but the banker apparently left town without really telling anyone and I never heard what happened with my application.
 

stonegoat

Full Member
10+ Year Member
5+ Year Member
Joined
Jan 25, 2007
Messages
180
Reaction score
0
It is pretty scary graduating with lots of debt....I know. I graduated with $170K debt.

However, compared to the costs of setting up a successful practice, it's peanuts.

I think you have to ask yourself what other "business" can I buy for ~$200K and make a six figure income my first year out?? Not very many.

It's a good deal.
 

jefguth

Senior Member
10+ Year Member
5+ Year Member
Joined
Oct 12, 2004
Messages
819
Reaction score
0
But banks also make interest on the loan itself meaning they add a higher percentage [around 1% or more] on the loan they give to us! :love:

You're right, but my point is that at THIS MOMENT in time, the prime lending rate is historically rather low.
 

shirazyterp

Full Member
10+ Year Member
5+ Year Member
Joined
Jan 20, 2007
Messages
39
Reaction score
0
So does anyone know what loans are going to be available now, and what ones are going to be cancelled? I think PCO is a lender, so I don't think that they will stop giving out loans... but when do schools send out info on their fin aid?


I just talked to PCO Financial Aid Office and PCO will not be lending any money for next year due to the economy. We have to get loans through other lenders!

Damn Economy!
 

IndianaOD

Full Member
10+ Year Member
Joined
Feb 14, 2007
Messages
1,146
Reaction score
3
I just talked to PCO Financial Aid Office and PCO will not be lending any money for next year due to the economy. We have to get loans through other lenders!

Damn Economy!


Wow, optometry must be getting worse if the schools don't think their own grads can pay them back after graduating! :eek:
 

Habitual Rx

Full Member
10+ Year Member
Joined
Mar 27, 2007
Messages
214
Reaction score
0
Wow, optometry must be getting worse if the schools don't think their own grads can pay them back after graduating! :eek:

No kidding...

"We basically have no faith in you... but you're an asset to our team!"
 

shirazyterp

Full Member
10+ Year Member
5+ Year Member
Joined
Jan 20, 2007
Messages
39
Reaction score
0
I don’t' know if it's necessarily that Optometry is not having faith in us giving back but I think that the lenders who supported them stopped supporting them maybe? They don’t have money straight up to give to us I’m assuming! So they have to get money from elsewhere. They said they hope that for next year they can get it back up but they told me because of the economy they can’t give out loans right now!

She said not to worry…that there are a lot other places that I still can get loans from!
 

Framecontrol

Full Member
10+ Year Member
7+ Year Member
Joined
Aug 2, 2007
Messages
158
Reaction score
1
Hopefully by the time i get into Opt school, Obama or Hillary can fix this mess of an economy.......
 

cocojambo

New Member
10+ Year Member
Joined
Apr 24, 2008
Messages
5
Reaction score
0
3.75% is a pretty good rate, here we have from 7-8% for a finance degree... I guess it's different for med students
 
Top