Are they insane?!

[UserNameNeeded]

I'm completing my TG Loans By Web process to get my student loans. One of the steps is to use their calculator to estimate what salary you need to repay the debt level.

Now, my state school's estimated total student cost is pretty average (I think?) at less than $40,000. I'm aiming to borrow $5,000 less than that per year. This is what the calculator spouted back out:

Debt Wizard
Question:
How much salary do I need to support my student loan debt?
Answer:
Based on student loan debt of $140,000.00 to be repaid over 10 years at 6.8 percent interest, my estimated monthly payment is $1,611.12.

To support repayment of the debt, I should earn at least:
* $116.19 Hourly
* $20,139.06 Monthly
* $241,668.69 Annually

What kind of whacked out system is this? It is expecting a medical graduate to be earning over $240,000 immediately after graduation for ten straight years. Who the hell can do this? No one!! At least no one who didn't need to take out the loans in the first place.

It's just baffling our country would have this kind of system in place that makes it virtually impossible for new doctors to live and practice here.

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[diosa428]

I'm completing my TG Loans By Web process to get my student loans. One of the steps is to use their calculator to estimate what salary you need to repay the debt level.

Now, my state school's estimated total student cost is pretty average (I think?) at less than $40,000. I'm aiming to borrow $5,000 less than that per year. This is what the calculator spouted back out:





What kind of whacked out system is this? It is expecting a medical graduate to be earning over $240,000 immediately after graduation for ten straight years. Who the hell can do this? No one!! At least no one who didn't need to take out the loans in the first place.

It's just baffling our country would have this kind of system in place that makes it virtually impossible for new doctors to live and practice here.

Well, you can defer your loans through residency (at least 3 years, not sure if you can defer through all of residency for longer programs). Also, most people do not repay their med school loans in 10 years. 10 years is often the minimum repayment period. You're looking at more like 20-30 years.

 

[sentrosi]

Yeah. I did that thing too.

I think their estimate is way way off. Perhaps they assume that we only use an abnormally small percentage of our salary to pay our loans.

 

[UserNameNeeded]

Well, you can defer your loans through residency (at least 3 years, not sure if you can defer through all of residency for longer programs). Also, most people do not repay their med school loans in 10 years. 10 years is often the minimum repayment period. You're looking at more like 20-30 years.

That's not the point, though (and even if it were, interest would accrue on the bulk of the loans and then be capitalized upon repayment leading us to repay an even bigger amount, requiring an even higher salary) and it's not even about all of the clever, essential things we as student borrowers need to do to lessen the blow of having to take out and repay these loans.

This is the guarantor of our student loans telling us the LEAST amount of money we need to make to pay back the very loans they're guaranteeing on the pain (of our) death. How irresponsible, immoral and (ought-to-be) criminal is it that they're "giving" medical students such huge amounts of loans and expecting them to make a salary (that does not exist in the real world!) that they themselves calculate as appropriate to repay those high interest compounding loans.

 

[ChuckRock]

I think you are having some trouble interpreting those results.


As sentrosi said, they are assuming you are using a very small percentage of your debt for repayment. 240k is WAY MORE than you'd need to repay that loan and live comfortably. 244,668.69 - (1611.12 X 12) = 222,335.25

Even if you made only half of that you'd still have over 100k left over after making your payments. 122,334.35 - (1611.12 X 12) = 103,010.90

(yea yea with taxes etc the numbers are a litte different, but you get the idea)

 

[SanDiegoSOD]

You won't have to pay over 10 years. Many physicians consolidate their loans and pay them over 30 years, as if it were a second mortgage.

 

[saradoor]

As a rule of thumb, lenders will not let you have a total debt payment above 1/4 of your gross take home pay. Applying this simple rule, it seems if you have a student loan payment of ~1600/mo and a mortgage payment of ~1400/mo (225K loan @6.5% over 30yrs), you are probably looking at 144K/yr min.

 

[SanDiegoSOD]

Applying this simple rule, it seems if you have a student loan payment of ~1600/mo and a mortgage payment of ~1400/mo (225K loan @6.5% over 30yrs), you are probably looking at 144K/yr min.

What state are you expecting to buy a home in?

 

[saradoor]

What state are you expecting to buy a home in?

Desertland (Texas), where else can I afford one for so little in 7-10 yrs?

Seriously here is the average home price index report: http://www.ofheo.gov/media/pdf/1q06hpi.pdf

 

[rup47]

I'm completing my TG Loans By Web process to get my student loans. One of the steps is to use their calculator to estimate what salary you need to repay the debt level.

Now, my state school's estimated total student cost is pretty average (I think?) at less than $40,000. I'm aiming to borrow $5,000 less than that per year. This is what the calculator spouted back out:





What kind of whacked out system is this? It is expecting a medical graduate to be earning over $240,000 immediately after graduation for ten straight years. Who the hell can do this? No one!! At least no one who didn't need to take out the loans in the first place.

It's just baffling our country would have this kind of system in place that makes it virtually impossible for new doctors to live and practice here.

140,000 of debt is nothing. I'll probably have roughly 250,000 - 300,000 after residency. But I'm not all that worried. I did the 10 yr repayment calc based on 300,000 debt and it worked out to something like 3000/month.

I figure that is roughly 36,000/yr. Assuming I'm making at least 150,000 after residency (so figure 110,00 take home after taxes) That i'll still have a substancial money left over to live on.
And if need be I could always consolidate and repay over a longer period until I was making more money.

PS.
Depending on what specialty you go in to you may be able to pull in 240,000 after residency or close to it.

 

[shoal]

140,000 of debt is nothing. I'll probably have roughly 250,000 - 300,000 after residency. But I'm not all that worried. I did the 10 yr repayment calc based on 300,000 debt and it worked out to something like 3000/month.

I figure that is roughly 36,000/yr. Assuming I'm making at least 150,000 after residency (so figure 110,00 take home after taxes) That i'll still have a substancial money left over to live on.
And if need be I could always consolidate and repay over a longer period until I was making more money.

PS.
Depending on what specialty you go in to you may be able to pull in 240,000 after residency or close to it.

Have you been taxed before? You are way too optomistic on the amount of money you will be taking home after taxes. By my calculations (rough), if tax rate is similar to what I am experienced at 60k. Your take home will be roughly 100k. Not to mention, malpractice or that 36k/yr you are paying on your loan. Take those two items out and now you are at 50k/year or so. Add house payments (2k/mon), car payments... and you see what the problem is here. you are basically down to 15k/yr to live on.

I think this is why a large percentage of docs are in the 20-30 year loan repayment.
I plan to be in the same 250-300k debt load as well. But hopefully, I'll be making more than 150k

 

[saradoor]

Have you been taxed before? You are way too optomistic on the amount of money you will be taking home after taxes. By my calculations (rough), if tax rate is similar to what I am experienced at 60k. Your take home will be roughly 100k. Not to mention, malpractice or that 36k/yr you are paying on your loan. Take those two items out and now you are at 50k/year or so. Add house payments (2k/mon), car payments... and you see what the problem is here. you are basically down to 15k/yr to live on.

I think this is why a large percentage of docs are in the 20-30 year loan repayment.
I plan to be in the same 250-300k debt load as well. But hopefully, I'll be making more than 150k

Don't go into medicine for $$$ (or for respect or because your parents want you to). Do it because you want to!

My buddy who graduated from a top law school just got a sign on bonus that is more than my tuition+fees for the next 4 yrs!

 

[Sporky]

Don't go into medicine for $$$ (or for respect or because your parents want you to). Do it because you want to!

My buddy who graduated from a top law school just got a sign on bonus that is more than my tuition+fees for the next 4 yrs!

You have all made excellent points, but you have all now also glimpsed the sword of damocles' over the medical profession. What other field of endeavour requires its students to accumulate massive debt and then spends the rest of their lives trying to sue them out of any possible way of repaying? Or worse, the government of the country in which you are serving questioning every procedure and reducing your payments based on some arbitrary figure.

Physicists don't face this, as I have a close friend who just published his thesis and he doesn't have more than $50,000 in debt and will probably make in the neighborhood of $250 K this year. Neither do Chemists, or Pharmacists for that matter. None should enter medicine for money, as saradoor aptly stated, but if new physicians like yourselves do not take control of the medical profession, and continue to allow third party payers, lawyers and politicians to dictate your (and hopefully my) lives, then we will all end up earning $60,00 per year as a government employee. While I am in no way trying to become a doctor for money, is it really worth all of the effort if you have to struggle financially for the rest of your life? I think it is not.

Just my .02 centavos.