Advantages of deferring med school loans until after residency

[Dmizrahi]

What are they?

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[TheRealMD]

You aren't starving. The end.

 

[Dmizrahi]

Of course it depends on a lot of different factors, but why not start chipping away the debt if you can during residency? if you make 2100 - 2500 dollars a month and your living expenses are at most $1900/mo, does it make sense financially to start eliminating the debt, what is the common strategy used by most residents?

 

[167649]

What are they?

You can't pay off 300,000 dollars worth of debt on a resident's salary, at least not completely unless you want to sleep in central park and not eat anything. That being said, it is a wise idea to pay off what you can while a resident. I don't know of any strategies per say but living modestly (you can do this and still live comfortably) outside of your hosptal hours is probably the best start. Don't run up any credit card debt and don't think that just because the plastic surgeon down the street from where you grew up had a ferrari you can afford one at this point in your career. It is important to have as much of a life as possible outside of your 90hr+ work week, but even so you can usually balance your checkbook to the point you can start paying them off during residency.

 

[167649]

Of course it depends on a lot of different factors, but why not start chipping away the debt if you can during residency? if you make 2100 - 2500 dollars a month and your living expenses are at most $1900/mo, does it make sense financially to start eliminating the debt, what is the common strategy used by most residents?

Of course living expenses do vary, rent in some areas can be 1200 a month. Factor in food, car payments, gas, car insurance, utilities, cell phone, clothes, etc expenses can be more than 1900 a month. It really depends on the area and what you do. In NY or LA 1900 a month is unheard of (meaning cheap). But still, watching what you spend you can usually cut back on all these things (taking the bus instead of buying a car saves thousands, and so on).

 

[Dmizrahi]

Hey thanks a lot Rooter, I'm used to living very modestly and have in fact gained an appreciation for it. I've done some research and from what I've found, it seems like most residents try to defer payment until after residency and I'm assuming because they want to live a little bit. But I was also wondering if they deferred payment because they had a better investment strategy to get more bang for their buck or if it just made more financial sense to defer until after residency.

With that said, I'm assuming if there were some sort of investment strategy, most residents would be doing it.

I'm looking at attending medical school in Philadelphia, Residency of course is unknown and I'm getting off the hook a little bit with hopefully anywhere from 150 -200k debt. (rough estimation)

 

[Maxprime]

The main benefit is that you get to defer paying the loans until after residency. Sadly, for you, this is the answer to your question.

 

[Bacchus]

No one is deferring anything until after residency. Maybe some may go into forbearance, but rememeber we cannot defer any longer.

 

[Crixivan]

No one is deferring anything until after residency. Maybe some may go into forbearance, but rememeber we cannot defer any longer.

This is true. The College Cost Reduction Act eliminated this option unless law changes happen.

We will have to see what physician pay is like in the future before we know for sure how much we should pay off during residency, but some payment will likely be required.

Most of the residents I know have families to support on 40-45K salaries along with a mortgage. That doesn't leave a lot of breathing room for loan payments.

 

[etf]

if you've got $300k in debt at 2.9% interest, you'd be an idiot to ever pay it off. of course, both numbers are extremes, but i'm sure you get the gist of it - educational debt is usually a cheap form of debt, so you should probably worry about paying off credit cards/bumping up savings before you really get too focused on paying off the student loans. although there is a huge psychological benefit of not having to fork over cash every month to aunt sallie mae.

 

[Law2Doc]

We will have to see what physician pay is like in the future before we know for sure how much we should pay off during residency,

You don't really have to wait and see, this is one figure you can make pretty confident assumptions about. Residency salary has not kept up with cost of living in many, many decades. Currently it starts at about $40k on average (variable by specialty and region). A decade ago it was mid to high $30ks. I wouldn't expect it to be starting at much higher than $45k (on average) by the time you get there. Educational debt, however, has kept up with inflation, so you can expect to have to pay more with the same money. It's still an income rather than an outflow though so it probably feels a lot more financially sound than med school.

 

[Dmizrahi]

This is true. The College Cost Reduction Act eliminated this option unless law changes happen.

We will have to see what physician pay is like in the future before we know for sure how much we should pay off during residency, but some payment will likely be required.

Most of the residents I know have families to support on 40-45K salaries along with a mortgage. That doesn't leave a lot of breathing room for loan payments.

Is there a chance that based on how many hours we'll be working a week and the salary we'll be making, if you break it down to an hourly wage, won't we basically be making minimum wage as a resident and thereby exempting us from the college cost reduction act and allowing us to defer?

 

[Crixivan]

Is there a chance that based on how many hours we'll be working a week and the salary we'll be making, if you break it down to an hourly wage, won't we basically be making minimum wage as a resident and thereby exempting us from the college cost reduction act and allowing us to defer?

I'm not sure of the specifics, but there are several threads in which the law is discussed. Here's one:

http://forums.studentdoctor.net/showthread.php?t=455867

 

[twick121]

Is there a chance that based on how many hours we'll be working a week and the salary we'll be making, if you break it down to an hourly wage, won't we basically be making minimum wage as a resident and thereby exempting us from the college cost reduction act and allowing us to defer?

according to the legal people at our school as the new law stands now, no. However, the AMA is supposedly working hard to change that...hopefully they are successful

 

[patriots0000000]

we shouldnt have to leave it to the ama and other powers, we should all take proactive steps ourselves to make a change...what that is not sure yet lol BUT SOMETHING!

 

[Bacchus]

Read the front-page articles on SDN. The second article is about the residency payments now required of residents. All the information you need is there along with a link to send your congressman or woman a letter underwritten by the AMA.

The best way to get results is to unify medical students and residents, along with attendings, and bombard congress.

 

[etf]

The best way to get results is to unify medical students and residents, along with attendings, and bombard congress.

medical-care strike for congress and the president. no body provides any medical care to any of them until residency pay is brought up to a reasonable amount.

 

[Dmizrahi]

medical-care strike for congress and the president. no body provides any medical care to any of them until residency pay is brought up to a reasonable amount.

I'm down, lets unite and instigate some change! What would be the best way to unify?

 

[Bacchus]

medical-care strike for congress and the president. no body provides any medical care to any of them until residency pay is brought up to a reasonable amount.

That would change a lot, fast.

 

[Maxprime]

Why physicians get crapped on 101 - they get into the profession because they care more about others than themselves. If all physicians refused to take medicare, they would never be able to survive the guilt for not treating patients. I'm not saying this is a bad thing - just how it is.

Although I do love the idea of not treating anyone involved with the legislation - that seems almost possible. My current state is lacking enough neurosurgeons to keep proper coverage - all it's going to take is some senator to get whacked on the head and die on an ER because it's too expensive to practice here.

 

[AlexMorph]

That would change a lot, fast.

but realistic chances of that happening are practically nil