Advice about medical student loans?

[its_always_a_scam]

Hello!

I'm seeking some objective third-party advice about the amount of student loan I should take. I'm very happy and blessed to say that I will be attending medical school this coming Fall . That being said, I'm unsure of what I should do financially. Here's the situation:

I've been working full-time for the last few years and besides paying bills and what not to support myself, I've been squirreling away every cent I can in the event that I got accepted to medical school. The approximate cost of attendance for the school I'm matriculating to is around 65k a year, but only about 35k of that is tuition. I have about 30k saved up so far. FAFSA is offering me the full 65k (40 or so stafford and the rest gradplus), but I'm unsure of how much loan I should take - partial or full.

The apartment I have gotten for living in for my first year will have a monthly rent of about 1500. So let's just say that I'll be spending about 55k a year for school and living expenses and I won't be working anymore.

Here are my options:
1. Take the full 55k a year out on loans and keep the 30k I've saved for emergencies
2. Pay some of the tuition/rent with the 30k I have saved up and take out loans for the rest - i.e. take 40k Stafford loan and pay the rest of it on my own
3. Use all of the 30k saved up for tuition/rent and then in later years (MS2,MS3,MS4) take out a full loan

Any thoughts?

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[ThoracicGuy]

Hello!

I'm seeking some objective third-party advice about the amount of student loan I should take. I'm very happy and blessed to say that I will be attending medical school this coming Fall . That being said, I'm unsure of what I should do financially. Here's the situation:

I've been working full-time for the last few years and besides paying bills and what not to support myself, I've been squirreling away every cent I can in the event that I got accepted to medical school. The approximate cost of attendance for the school I'm matriculating to is around 65k a year, but only about 35k of that is tuition. I have about 30k saved up so far. FAFSA is offering me the full 65k (40 or so stafford and the rest gradplus), but I'm unsure of how much loan I should take - partial or full.

The apartment I have gotten for living in for my first year will have a monthly rent of about 1500. So let's just say that I'll be spending about 55k a year for school and living expenses and I won't be working anymore.

Here are my options:
1. Take the full 55k a year out on loans and keep the 30k I've saved for emergencies
2. Pay some of the tuition/rent with the 30k I have saved up and take out loans for the rest - i.e. take 40k Stafford loan and pay the rest of it on my own
3. Use all of the 30k saved up for tuition/rent and then in later years (MS2,MS3,MS4) take out a full loan

Any thoughts?

I would keep at least some of that as your emergency fund. Stuff happens and if your car breaks down or whatever, it's nice to have something to get it taken care of.

 

[Cara Delevingne]

Keep some in case of emergency. Loan disbursement, AFAIK, is twice a year. Someone correct me if I'm wrong.

 

[y123]

Option 1

 

[Dreamislandcaptive]

keep your money and save it for a rainy day.

 

[Thatsnotmyname.]

That $30K will capitalize to $37.56K when you graduate, which is something to consider

I have $15K saved and that's all going to reducing my 1st years loan.

And is that a 1br rent?? I'm moving to Brooklyn and my rent is going to be less than half that

 

[Me.D.]

Maybe you could pay down your grad plus loans every year. Alternatively, you could not let your loans go into deferment by making interest only payments while in school. That way your loan's interest doesn't capitalize once you finish school and thus your loan would have significantly less principle.

You should run the numbers with AAMC's loan repayment calculator and see what's the most favorable situation for you given how you plan to repay your loans.

 

[DumboOctopus]

You should use it. Maybe your financial aid will be more generous if you don't have 30k of savings! Some schools calculate student contribution by their savings, so it's best to have little savings in such a case.

 

[ZorkDork1]

Hello!

I'm seeking some objective third-party advice about the amount of student loan I should take. I'm very happy and blessed to say that I will be attending medical school this coming Fall . That being said, I'm unsure of what I should do financially. Here's the situation:

I've been working full-time for the last few years and besides paying bills and what not to support myself, I've been squirreling away every cent I can in the event that I got accepted to medical school. The approximate cost of attendance for the school I'm matriculating to is around 65k a year, but only about 35k of that is tuition. I have about 30k saved up so far. FAFSA is offering me the full 65k (40 or so stafford and the rest gradplus), but I'm unsure of how much loan I should take - partial or full.

The apartment I have gotten for living in for my first year will have a monthly rent of about 1500. So let's just say that I'll be spending about 55k a year for school and living expenses and I won't be working anymore.

Here are my options:
1. Take the full 55k a year out on loans and keep the 30k I've saved for emergencies
2. Pay some of the tuition/rent with the 30k I have saved up and take out loans for the rest - i.e. take 40k Stafford loan and pay the rest of it on my own
3. Use all of the 30k saved up for tuition/rent and then in later years (MS2,MS3,MS4) take out a full loan

Any thoughts?

Wow, that's a high rent.
I recommend either downsizing or getting a roommate to dilute the costs.
Also, apart from 3-4 months of living expenses saved up for emergencies, for me personally, I would spend the rest paying off loans as fast as possible.

I wish I had more advice than that. Good luck!

 

[Crayola227]

you should save it all and not even worry about trying to use that money to pay down loans

financial aid never takes residency interview travel expenses and relocation into account

last numbers I saw said the average applicant spends $12-15,000 just for interviews
what if you were going for something competitive and had to apply to more??

most schools don't include the cost for the steps, step 2 CS alone is $1200 nevermind there's only what, 5 cities in the US to take it at, so add in flight/hotel/rental car/cab/food to that

now, you *can* apply for more financial aid for a car repair!! But TG's point still stands.

Nevermind when you move for residency having to wait up to a whole month for your first paycheck, and needing first month last month rent, any out of pocket med expenses until your deductible kicks in

I guarantee you will need this money in your road to becoming a doctor in the next 5 years at least and it will not be coming from financial aid

you should take out the maximum in your loans IMHO. I have reasons I say this but it might be a bit of advice others will crunch future numbers on and say otherwise.

 

[Crayola227]

forget paying down loans as fast as you can as a doc

get a financial advisor

there's one argument I can make that almost shuts down the "pay down your loans" argument pretty solidly but it would probably identify too much

 

[tensticks]

That $30K will capitalize to $37.56K when you graduate, which is something to consider

I have $15K saved and that's all going to reducing my 1st years loan.

And is that a 1br rent?? I'm moving to Brooklyn and my rent is going to be less than half that

Yes it's insane I know. It's a 1 br rent, for personal reasons its the only way I can move close to the medical school, at least for the first year. That rent amount includes median utility (water, electricity, internet) rates per month.

Also, I'm sorry, I don't understand what you mean when you say that the 30K would capitalize to 37.56k. Mind explaining, please?

 

[tensticks]

you should save it all and not even worry about trying to use that money to pay down loans

financial aid never takes residency interview travel expenses and relocation into account

last numbers I saw said the average applicant spends $12-15,000 just for interviews
what if you were going for something competitive and had to apply to more??

most schools don't include the cost for the steps, step 2 CS alone is $1200 nevermind there's only what, 5 cities in the US to take it at, so add in flight/hotel/rental car/cab/food to that

now, you *can* apply for more financial aid for a car repair!! But TG's point still stands.

Nevermind when you move for residency having to wait up to a whole month for your first paycheck, and needing first month last month rent, any out of pocket med expenses until your deductible kicks in

I guarantee you will need this money in your road to becoming a doctor in the next 5 years at least and it will not be coming from financial aid

you should take out the maximum in your loans IMHO. I have reasons I say this but it might be a bit of advice others will crunch future numbers on and say otherwise.

Wow, I hadn't even thought of those expenses. Thank you so much for the advice!

 

[ThoracicGuy]

forget paying down loans as fast as you can as a doc

get a financial advisor

there's one argument I can make that almost shuts down the "pay down your loans" argument pretty solidly but it would probably identify too much

You have to be careful about financial advisors. You want one that acts as a fiduciary, otherwise they are just salesmen. If your loan rates are over 4%, then it makes sense to pay them down quickly compared to using the money in investments.

 

[Thatsnotmyname.]

Yes it's insane I know. It's a 1 br rent, for personal reasons its the only way I can move close to the medical school, at least for the first year. That rent amount includes median utility (water, electricity, internet) rates per month.

Also, I'm sorry, I don't understand what you mean when you say that the 30K would capitalize to 37.56k. Mind explaining, please?

Any interest that accrues on your loans (and doesnt get paid off during school) gets added to your principle balance 6 months after graduation. So you start gaining interest on that unpaid interest

So your interest during school will be $30K at 6.3% and then after it capitalizes the interest will be calculated at $37.5K at 6.3%

 

[SpartanWolverine]

Keep some in case of emergency. Loan disbursement, AFAIK, is twice a year. Someone correct me if I'm wrong.

May depend somewhat on your school, but mine allows me to request adjustments to my loans at any time. So, for example, I had 6 disbursements last year. It takes a couple weeks for them to process my request and get it deposited in my account, but I would think if that's the case at my school it should be possible at any school... but be sure you know the policies of your specific financial aid office. I tend to be conservative in my assessment of what I will need for the semester and request more if needed (while always keeping a decent amount in an emergency fund just in case).

 

[Thatsnotmyname.]

you should save it all and not even worry about trying to use that money to pay down loans

financial aid never takes residency interview travel expenses and relocation into account

last numbers I saw said the average applicant spends $12-15,000 just for interviews
what if you were going for something competitive and had to apply to more??

most schools don't include the cost for the steps, step 2 CS alone is $1200 nevermind there's only what, 5 cities in the US to take it at, so add in flight/hotel/rental car/cab/food to that

now, you *can* apply for more financial aid for a car repair!! But TG's point still stands.

Nevermind when you move for residency having to wait up to a whole month for your first paycheck, and needing first month last month rent, any out of pocket med expenses until your deductible kicks in

I guarantee you will need this money in your road to becoming a doctor in the next 5 years at least and it will not be coming from financial aid

you should take out the maximum in your loans IMHO. I have reasons I say this but it might be a bit of advice others will crunch future numbers on and say otherwise.

I noticed that. The states school I interviewed at (IS and OOS) almost always had Step 2 fee and travel expenses and a residency application budget included in loans. Privates almost never included these costs.

 

[tensticks]

Any interest that accrues on your loans (and doesnt get paid off during school) gets added to your principle balance 6 months after graduation. So you start gaining interest on that unpaid interest

So your interest during school will be $30K at 6.3% and then after it capitalizes the interest will be calculated at $37.5K at 6.3%

Ah that makes sense. So from what I've learned so far from everyone's comments, I'm leaning towards taking the full loan and perhaps paying off some of the interest so that it doesn't turn into principle. This way I'm not wiping out my bank account but still making some progress on reducing my debt. As @Thatsnotmyname. and @SpartanWolverine pointed out, it would be in my best interest to see what is included in COA for the later years of medical school. As far as I know, my school does only two disbursements a year, fall and spring.

 

[mvenus929]

I noticed that. The states school I interviewed at (IS and OOS) almost always had Step 2 fee and travel expenses and a residency application budget included in loans. Privates almost never included these costs.

Keep in mind that your fourth year budget will have to cover you through quite possibly the end of July, but most schools only give you enough to cover 9 months of expenses because you graduate in May. I had to do some creative things in managing my loans for residency interviews and moving expenses, including using my credit card as much as I could and getting a graduation gift of $1000 to help get me through the month of July til I got that glorious first paycheck.