400k debt

[wanabdoc]

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Is 400k of debt sound way too high?

I just calculated that, including subsidized, unsubsidized, gradplus for the rest, even the stafford reductions from 6.8 to 3.4 over the next years, I will come out with 395,518 of debt.

This is after a 3 year residency during which I didn't pay back any interest, since the payments would be about $19,000 a year, or half my post-tax paycheck. This increased my debt from about 328k to 395k. Tuition and living expenese were $62,000 per year. 4 year residency would be 420k of debt and 5 year surgery (what I want to do) would be a whopping $449k of debt.

Does this sound right to anyone else, or am I just royally screwed with debt bondage my whole life. Or military bondage. These numbers almost make me vote democratic in the eventual hope of universal college education.

To be fair, it would only be 338k in debt accounting for 4% inflation each year.

 

[coffeebythelake]

Is 400k of debt sound way too high?

I just calculated that, including subsidized, unsubsidized, gradplus for the rest, even the stafford reductions from 6.8 to 3.4 over the next years, I will come out with 395,518 of debt.

This is after a 3 year residency during which I didn't pay back any interest, since the payments would be about $19,000 a year, or half my post-tax paycheck. This increased my debt from about 328k to 395k. Tuition and living expenese were $62,000 per year. 4 year residency would be 420k of debt and 5 year surgery (what I want to do) would be a whopping $449k of debt.

Does this sound right to anyone else, or am I just royally screwed with debt bondage my whole life. Or military bondage. These numbers almost make me vote democratic in the eventual hope of universal college education.

To be fair, it would only be 338k in debt accounting for 4% inflation each year.

Where do you go to school?!

I'm an international student at a med school with ridiculously expensive OSS tuition, and still I estimate my debt to be about $310,000 max.

 

[MSKalltheway]

Where do you go to school?!

I'm an international student at a med school with ridiculously expensive OSS tuition, and still I estimate my debt to be about $310,000 max.

I've only seen that kind of debt after you tack on undergrad loans on top of that, theres no way you could take out almost 100K a year alone with federal loans...unless you dip into private loans too

 

[Gut Shot]

Is 400k of debt sound way too high?

It sucks bigtime, but all you can do now is try not to let it get you down. Consolidate at 3.4%, autodeduct your payments, and move on with your life. Invest heartily in your retirement, live quietly within your means, and you won't miss the money.

 

[Gabujabu]

On the bright side, the way the government currently seems to be handling monetary policy, that money could be worth significantly less due to inflation.

 

[njbmd]

Moving to Financial which is co-hosted with Business of Medicine and discusses educational costs.

 

[UserNameNeeded]

Stafford loans for medical/graduate students are fixed at 6.8% for the forseeable future. It won't be going down to 3.4%--that's only for undergraduate subsidized Stafford loans.

 

[yadayadadude]

Well, if you borrow $62K as a MS1 and continue to do that for four years with modest increases each year -- assuming you have no other debt (e.g., undergrad debt) -- I think you'll be in the hole around $410K after a five year residency forbearance. So my estimates are somewhat lower than yours. But either way, it's one heck of a mess to clean up. I think you have to assume you'll be shelling out $35-40K/year (after taxes!) in repayment for 30 years, essentially your entire career. Whether or not this is "worth it" is a personal question ... for me, the answer would be no, but plenty of pre-meds are lining up for this deal.

 

[Doctor Bagel]

Stafford loans for medical/graduate students are fixed at 6.8% for the forseeable future. It won't be going down to 3.4%--that's only for undergraduate subsidized Stafford loans.

Yeah, the low interest rates are gone for us.

 

[wanabdoc]

I think you have to ***ume you'll be shelling out $35-40K/year (after taxes!) in repayment for 30 years, essentially your entire career. Whether or not this is "worth it" is a personal question ... for me, the answer would be no, but plenty of pre-meds are lining up for this deal.

Actually, according to the IBR calculator in previous threads, if I wanted to be a family doctor (120k salary a year) I would only pay out 21.7k a year in loan repayment. The kicker being that after 25 years, 500+k of debt that I still owe (because 21.7k isn't enough to keep up with even the interest) magically disappears.

This is probably sociopolitical, but the doc in MM's Sicko earned 85k pounds or about 170k dollars. Since as everyone on SDN has told me, the brits pay 50% taxes, that means his take home is $85k. Amazingly, a doc here earning 120k would pay 24k in taxes (single) and 21.7 student loans = 74.3k take home. This is about 62% of his total income. The point being, just think of the 21.7k as an "education" tax that we face in the US (that expires in 25 years).

Also way cool about the IBR was that theoretically no matter how much medical school debt I took out, the 21.7k stayed the same. Can someone explain why I shouldn't just go to town to the maximum allowed knowing what my future payments will be and that no matter how much I borrow now, I will still pay off the same amount? Also knowing if doctors salaries do go down, the payments will also go down? I feel so much better now.

 

[Doctor Bagel]

Is 400k of debt sound way too high?

I just calculated that, including subsidized, unsubsidized, gradplus for the rest, even the stafford reductions from 6.8 to 3.4 over the next years, I will come out with 395,518 of debt.

This is after a 3 year residency during which I didn't pay back any interest, since the payments would be about $19,000 a year, or half my post-tax paycheck. This increased my debt from about 328k to 395k. Tuition and living expenese were $62,000 per year. 4 year residency would be 420k of debt and 5 year surgery (what I want to do) would be a whopping $449k of debt.

Does this sound right to anyone else, or am I just royally screwed with debt bondage my whole life. Or military bondage. These numbers almost make me vote democratic in the eventual hope of universal college education.

To be fair, it would only be 338k in debt accounting for 4% inflation each year.

Are you sure your debt will increase at the level that you're calculating it will increase during residency? We don't really know what's going to happen with the Economic Hardship Deferment after 2009, but as it stands right now, your can defer your loans for 3 years of your residency. That means that no interest will accrue on your subsidized loans, which should be about $34k assuming you don't get Perkins loans. Also, interest isn't capitalized on the unsubsidized loans until you enter repayment or forbearance, so you get at least 7 years (medical school plus 3 years of EH deferment) with no interest capitalizing.

 

[yadayadadude]

Are you sure your debt will increase at the level that you're calculating it will increase during residency? We don't really know what's going to happen with the Economic Hardship Deferment after 2009, but as it stands right now, your can defer your loans for 3 years of your residency. That means that no interest will accrue on your subsidized loans, which should be about $34k assuming you don't get Perkins loans.

I agree his estimates seem a tad high, but not egregiously so. My handy-dandy spreadsheet spit out $410K total debt at capitlization assuming five years of residency forbearance. The difference between deferral and forbearance is really only ~$7K (three years of 6.8% on $34K). Maybe he has some undergrad debt he's adding in as well?

Can someone explain why I shouldn't just go to town to the maximum allowed knowing what my future payments will be and that no matter how much I borrow now, I will still pay off the same amount?

I think this is the most interesting issue raised by the new IBR legislation. Students can't really "go to town" because GradPlus borrowing is limited by each school's COA, but schools no longer have any incentive whatsoever to keep tuition down. Repayment is capped for 25 years, then any remaining debt is forgiven. Uncle Sam is left holding the bag. I'm really curious to see how all this plays out.

 

[wanabdoc]

I agree his estimates seem a tad high, but not egregiously so. My handy-dandy spreadsheet spit out $410K total debt at capitlization assuming five years of residency forbearance. The difference between deferral and forbearance is really only ~$7K (three years of 6.8% on $34K).

I didn't know about capitalization, so I adjusted my spreadsheet and got the following:

295k Total Debt after 4 Years of MS including UNcapitalized interest and about 32k of previous debt.

I want to start payback in residency so:
45k salary
Just under 7k according to IBR annual repayment

When I become a doctor:
200k salary
37,958 IBR Annual Repayment

120k salary
22,284 IBR Annual Repayment

In both cases, the payments lasted 25 years, and the balance was forgiven.

The capitalization issue actually saves a lot of money apparently. This was also using the pittance that is recommended by my school for living expenses.

 

[Archer]

Maybe this doesn't worry me so much because I have had a house mortgage. The ratio of debt to income is what you have to look at and see if you can handle it emotionally and practically. It seems a good investment in most ways but I worked as a teacher for twenty years.

 

[tapir]

Actually, according to the IBR calculator in previous threads, if I wanted to be a family doctor (120k salary a year) I would only pay out 21.7k a year in loan repayment. The kicker being that after 25 years, 500+k of debt that I still owe (because 21.7k isn't enough to keep up with even the interest) magically disappears.

Yeah, ICR appears to work very well at that debt load. Even if you figure a family of 4, with spouse earning zero, you end up with significant forgiveness. According to my calcs, though, assuming 4% annual salary increase from 120k, your total amount paid would be 849k under ICR, and 970k under a regular 30-year term, so not a huge actual benefit for you. The only real downside is that the calculator indicates your ICR payment would gradually rise to a peak of $4400 before the 25 year cutoff. Also, if you have a working spouse, the benefits disappear.

 

[wanabdoc]

Also, if you have a working spouse, the benefits disappear.

If you marry another doctor, than it would still apply right (to both of you?)

Does it matter if you file jointly or singularly (for IBR benefits)?

 

[Doctor Bagel]

Does it matter if you file jointly or singularly (for IBR benefits)?

I would be very surprised if they let you get out of submitting spousal income info if you filed separated for taxes. The FAFSA certainly doesn't work that way.

 

[yadayadadude]

If you marry another doctor, than it would still apply right (to both of you?)

Only if you both have a crazy high debt-to-income ratio. Wouldn't have to be another doc.