$$$ and Med School

[ChicagoPreMedStudent]

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I want to preface this by saying I am extremely blessed and fortunate to have this kind of advantage I am not trying to come off condescending or mean or rude.

I am part of a 7 year BS/MD program. I have 69,000 total for my three year BS degree from scholarships and I will also be reapplying for more grants my second year, but on top of that I have 250,000 from parents to get through college and medical school. I understand that even with this advantage I will most likely still be taking out loans, but I am wondering if I should takeout loans for my undergrad (about 25k/yr) and save the money from parents for Medical School or if I should take out loans during medical school (70k/yr + living).

Thankfully, I have a conditional acceptance to the med school - I don't have to take the MCAT and I dont need ECs/Clinical etch just have to keep my GPA above 3.75. (which I know still isnt easy but in my mind it is easier than the alternative which would be me getting a 3.98 and still not feeling good enough) I will probably still sendup doing clinical and EC but maybe not to the extent I see other people doing it.

What I am saying is this may leave me some room to get a summer job, so I could make some money, to replace the money I spent on undergrad tuition and 'replenish' it so to speak. (A friend of mine has parents that own some really nice restaurants downtown (Chicago) and the waiters make really nice tips. She told me she could get me a job easily. If I worked full time over the summer I could almost break even with my undergrad fees.)

Right now, it's just a jumbled mess of ideas. If anyone has any suggestions, please let me know. I am really hoping to graduate med school somewhat debt free but I know its probably not going to happen.

 

[Flareicus]

The benefits of you being in a BS/MD program is that you can skimp out on doing the ECs other applicants would be expected to do (on top of probably saving hundreds-thousands on not having to study and sit for the MCAT). If you want to take that time to work and save up some money in order to lessen your medical school debt, I would say go for it.

In regards to loans in undergrad or medical school, it would probably best to take loans in undergrad if you're able to get subsidized loans as you would not accrue interest on them while you're completing school undergrad. As far as I understand, none of the loans you take out in medical school will be subsidized so they will be picking up interest as you're going through medical school. Though as far as your situation sounds, you would probably be okay regardless of which you choose given how much of a head start you have on most students.

 

[Rachapkis]

Given your situation, even if you don’t work, you will not exit medical school with the substantial debt load that burdens many others. Given that you are fortunate in that regard, I would focus on doing well in school AND acquiring the ECs/clinical hours that you will need if you are required to apply to medical school—just in case your GPA dips below 3.75. However, if you are able to accomplish those goals and work over the summer, I don’t see a reason that you shouldn’t pick up some hours at the restaurant to augment your war chest.

 

[EdgeTrimmer]

Most 7 year BSMD students needs to take classes at least one summer. Do you have enough AP/IB credits to avoid that? How much are you expecting to make with the job?

 

[bluefreckles]

My two cents—what if you change your mind about med school? Many people go into undergrad thinking they won’t, but many do anyway. In that case, it would be best to save the loans for med and use your parents’ $$$ first. That way, you’re not left with unused college savings money AND now unnecessary educational loans.

I went into undergrad with significant help from my parents, too. I didn’t change my mind about med school, but if I had, I would have been pretty upset to graduate college with loans and unused money.

 

[LizzyM]

I went into undergrad with significant help from my parents, too. I didn’t change my mind about med school, but if I had, I would have been pretty upset to graduate college with loans and unused money.

If the OP doesn't go on to med school, they could use the nest egg to pay off the loans. No biggie.

 

[Rogue42]

I am a bit confused. You already have $70,000 in scholarships to pay for your $75,000 undergraduate education?

Seems to me you should take that $250,000 and put it into a low risk mutual fund which averages a 10% return per year, and when needed pull whatever you need to cover the cost of the rest of your undergraduate education. As such, you should net anywhere from 15 to 25 thousand dollars a year from the mutual fund itself. You come out with more money than you put in, and you cover the cost of undergrad.

Then use the same method to cover the costs of medical school until you are out of money. If you have debt at this point, it will be so low that it'll be null.

Granted, not many people are comfortable with investing their money, so the other scenario is that you take the money, use whatever you have to pay for the rest of undergrad, which really should be $50,000 you less, and you still have $200,000 for medical school. Again, you will end up with so little debt that it should not matter.

 

[Putkernerinthehall]

I am a bit confused. You already have $70,000 in scholarships to pay for your $75,000 undergraduate education?

Seems to me you should take that $250,000 and put it into a low risk mutual fund which averages a 10% return per year, and when needed pull whatever you need to cover the cost of the rest of your undergraduate education. As such, you should net anywhere from 15 to 25 thousand dollars a year from the mutual fund itself. You come out with more money than you put in, and you cover the cost of undergrad.

Then use the same method to cover the costs of medical school until you are out of money. If you have debt at this point, it will be so low that it'll be null.

Granted, not many people are comfortable with investing their money, so the other scenario is that you take the money, use whatever you have to pay for the rest of undergrad, which really should be $50,000 you less, and you still have $200,000 for medical school. Again, you will end up with so little debt that it should not matter.

Be careful. This is money you'll need to start tapping in 3-4 years. A 100% equities mutual fund is not low risk, and while it may return 10% annually over the long haul, you should not count on that return over a short time horizon. You could lose half your money the year before med school starts. I would however consider investing some of it as @Rogue42 suggests. Maybe but 40%-50% in mutual fund and 50-60% in a CD or money market fund. Or some split you feel comfortable with. You're in a great spot.

 

[EdgeTrimmer]

I am a bit confused. You already have $70,000 in scholarships to pay for your $75,000 undergraduate education?

Seems to me you should take that $250,000 and put it into a low risk mutual fund which averages a 10% return per year, and when needed pull whatever you need to cover the cost of the rest of your undergraduate education. As such, you should net anywhere from 15 to 25 thousand dollars a year from the mutual fund itself. You come out with more money than you put in, and you cover the cost of undergrad.

Then use the same method to cover the costs of medical school until you are out of money. If you have debt at this point, it will be so low that it'll be null.

Granted, not many people are comfortable with investing their money, so the other scenario is that you take the money, use whatever you have to pay for the rest of undergrad, which really should be $50,000 you less, and you still have $200,000 for medical school. Again, you will end up with so little debt that it should not matter.

I don't think you can expect any mutual fund to return 10% in short term. All the assets are at the peak.

 

[Angus Avagadro]

Be careful. This is money you'll need to start tapping in 3-4 years. A 100% equities mutual fund is not low risk, and while it may return 10% annually over the long haul, you should not count on that return over a short time horizon. You could lose half your money the year before med school starts. I would however consider investing some of it as @Rogue42 suggests. Maybe but 40%-50% in mutual fund and 50-60% in a CD or money market fund. Or some split you feel comfortable with. You're in a great spot.

Be careful. This is money you'll need to start tapping in 3-4 years. A 100% equities mutual fund is not low risk, and while it may return 10% annually over the long haul, you should not count on that return over a short time horizon. You could lose half your money the year before med school starts. I would however consider investing some of it as @Rogue42 suggests. Maybe but 40%-50% in mutual fund and 50-60% in a CD or money market fund. Or some split you feel comfortable with. You're in a great spot.

I would not invest any money in the stock market that I might need in the short term. It wasn't that long ago we had a 30% drop. That would be 75k in OPS case.

 

[Putkernerinthehall]

I don't think you can expect any mutual fund to return 10% in short term. All the assets are at the peak.

And how do you know assets are at their peak ? Not disagreeing it's been an unusually strong market and OP should not have substantial assets invested, but what crystal ball tells you they are at their peak ?

 

[EdgeTrimmer]

And how do you know assets are at their peak ? Not disagreeing it's been an unusually strong market and OP should not have substantial assets invested, but what crystal ball tells you they are at their peak ?

Based on history (PE ratios for stock market, affordability for housing market, bond yields etc..) and "History repeats itself". I don't have crystal ball otherwise I would have been busy using it 🙂

 

[Putkernerinthehall]

I would not invest any money in the stock market that I might need in the short term. It wasn't that long ago we had a 30% drop. That would be 75k in OPS case.

Based on history (PE ratios for stock market, affordability for housing market, bond yields etc..) and "History repeats itself". I don't have crystal ball otherwise I would have been busy using it 🙂

I bet you would have said the same thing in November / December last year. And today the market is higher.

 

[Angus Avagadro]

I bet you would have said the same thing in November / December last year. And today the market is higher.

I would say the same thing anytime. Why would you gamble in the stock market with money you are going to need? Why not go to Vegas and play roulette? You have just under a 50% chance of doubling your money?

 

[Putkernerinthehall]

I would say the same thing anytime. Why would you gamble in the stock market with money you are going to need? Why not go to Vegas and play roulette? You have just under a 50% chance of doubling your money?

If you have sufficient time horizon, investing a portion in equities makes sense to keep ahead of inflation. For example, 30% equities and 70% fixed income would be enough in equities, historically, to keep ahead of inflation. Yes, if you need the money soon, equities are not the place to put your savings. But, entering a 7-year program, I can see putting a portion in equities in year one and then reducing the exposure as the years pass so that I don't have any money in equities when I'm in year 6-7 for example.

 

[EdgeTrimmer]

If you have sufficient time horizon, investing a portion in equities makes sense to keep ahead of inflation. For example, 30% equities and 70% fixed income would be enough in equities, historically, to keep ahead of inflation. Yes, if you need the money soon, equities are not the place to put your savings. But, entering a 7-year program, I can see putting a portion in equities in year one and then reducing the exposure as the years pass so that I don't have any money in equities when I'm in year 6-7 for example.

I was talking about short time span and for 7 year program you need to start drawing from beginning of 4th. Fixed income also not risk free unless you are doing short term bonds.

 

[Angus Avagadro]

If you have sufficient time horizon, investing a portion in equities makes sense to keep ahead of inflation. For example, 30% equities and 70% fixed income would be enough in equities, historically, to keep ahead of inflation. Yes, if you need the money soon, equities are not the place to put your savings. But, entering a 7-year program, I can see putting a portion in equities in year one and then reducing the exposure as the years pass so that I don't have any money in equities when I'm in year 6-7 for example.

It's still gambling. Of course you can mitigate some of the risk. So if you want to gamble with money you are going to need, then go ahead. Life is full of choices. Make good ones. Plenty of examples out there on how not to do things with your money.

 

[EdgeTrimmer]

It's still gambling. Of course you can mitigate some of the risk. So if you want to gamble with money you are going to need, then go ahead. Life is full of choices. Make good ones. Plenty of examples out there on how not to do things with your money.

It is. I still have some of the 529 money aggressively invested because we can use that part at the end if there is a correction.

 

[Putkernerinthehall]

I was talking about short time span and for 7 year program you need to start drawing from beginning of 4th. Fixed income also not risk free unless you are doing short term bonds.

I'd bury money in my backyard before putting into bonds right now.