At What Point Does Medical School Not Make Financial Sense?

[DrRobert]

Having recently finished residency with $250K of student loan debt (luckily I had no debt from undergrad), I'd have to say that with today's tuition it wouldn't make financial sense to become a physician.

In my opinion, anything over $250K is too much of a risk. Physician salaries are on the chopping block and sooner or later the axe will come down on us.

I just don't see how people can feel comfortable carrying around that much debt without a guarantee that you will be able to pay it back.

And it's worth mentioning that you can't default on student loans, even if you declare bankruptcy or disability.

I'm somewhat amused at people who say they'll just live like a resident their entire lives... old car, small apartment, no vacations, cheap food, etc. All that hard work and liability for that lifestyle?

With medical school tuition continuing to skyrocket with no end in site, at what point does it become economically unfeasible to become a physician?

I think we're almost there.

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[turkeyjerky]

I recall reading an article about med school debt, in JAMA I think, a couple years ago that extrapolated out the rise in tuition vs salaries. They found that, by the year 2031, all of a newly graduated primary care physician's salary would go to to servicing their debt. Now, since it's clearly not feasible for one to spend their entire salary paying off their debt, I'd argue that we either already have, or will within a couple of years, hit the point where it is not feasible to go to a private medical school and pursue primary care.

Along the same line of thinking, I'd go so far as to argue that it doesn't make strictly financial sense to pursue medicine at all, unless you're opting for one of the highly paid specialties.

 

[DrRobert]

Along the same line of thinking, I'd go so far as to argue that it doesn't make strictly financial sense to pursue medicine at all, unless you're opting for one of the highly paid specialties.

I agree that primary care is already not feasible if you plan on graduating with more than $250K in loan debt.

But if you think that specialists are immune, then I think you are mistaken. Specialists are not making as much as they did in the past, and all physician salaries are posed to take a hit under Obamacare.

It wouldn't surprise me at to see 95% of ALL physician salaries below $250K/year in the next 10 years. After taxes that's around $150K take home.

 

[turkeyjerky]

I agree that primary care is already not feasible if you plan on graduating with more than $250K in loan debt.

But if you think that specialists are immune, then I think you are mistaken. Specialists are not making as much as they did in the past, and all physician salaries are posed to take a hit under Obamacare.

It wouldn't surprise me at to see 95% of ALL physician salaries below $250K/year in the next 10 years. After taxes that's around $150K take home.

Yeah, I agree w/ you on that. I was referring to the situation as it is now, at this very moment. I'd be very wary about pursuing medicine if it means that much debt. However, I do think it's very difficult to predict future salaries, I agree with you on the general point of decreased overall, but, as to specifics, I don't think anyone has any idea.

FYI, one interesting tidbit is that the rule of thumb that financial advisors toss around is that your educational debt shouldn't exceed one year's income.

 

[PharmBound2011]

FYI, one interesting tidbit is that the rule of thumb that financial advisors toss around is that your educational debt shouldn't exceed one year's income.

that tidbit is only true in the lower wages. Anyone making 200k can certainly 'afford' to live off 100k and allocate the other half of his/her salary to loans for severall years if need be and still live a very comfortable lifestyle.

 

[DrRobert]

that tidbit is only true in the lower wages. Anyone making 200k can certainly 'afford' to live off 100k and allocate the other half of his/her salary to loans for severall years if need be and still live a very comfortable lifestyle.

Hello? Why doesn't anyone want to acknowledge taxes in these discussions? $200K is not $200K after federal income tax, state income tax, property tax, Medicare tax, FICA tax, etc.

 

[VCU07]

Hello? Why doesn't anyone want to acknowledge taxes in these discussions? $200K is not $200K after federal income tax, state income tax, property tax, Medicare tax, FICA tax, etc.

Very true. I think your discussion is a very real one...one which I am faced with currently. After a series of bad or unlucky (call it what you will) events, I had to take a leave of absence. I am in my first year and had my heart set on primary care. One of the issues that led me to take a leave of absence was that my wife lost her job. This not only takes away our living funds, but would have led me to take out grad plus loans to support her, my daughter, and myself. The financial aid office at my school calculated it all out for me and told me I would be somewhere in the 400k range upon graduation if I cont. on and take out the additional for living expenses (this takes into account my undergrad and grad loans)!
I just don't know what to do. I have always wanted to do this, but at what cost do I do it? There needs to be a cap on tuition and additional programs that allow for those wanting to persue medicine to pay back their debt. I have my Pharm.D and make good money. I understand the opportunity cost with leaving pharmacy to enter medicine and I decided to live with it prior to applying to medical school. Do you as an attending or anyone else have an opinion on how to handle my situation? Would I realistically be able to pay back 400K plus? or should I give up the dream?

 

[bigmike7104]

"Her net take-home pay after all expenses (including malpractice and student loans) is approximately $37,000 per year."

That's how much this family doctor in this article claims she has left over, that's crazy.

 

[DoctwoB]

300k in debt over 30 year repayment program is a 2k month payment, or 24k of after tax income (There is a student loan interest deduction, but only for low income earners), assuming 6.8% interest rate, leading to ~700k paid back.

Thats a lot of money to pay back, but is certainly "doable." even 50k/year (600k debt) loan repayment is "doable," the question is when is it no longer worth it. That isn't a hard and fast cut-off, that varies person to person, and also depends on how much you could make in the next best alternative (opportunity cost).

 

[GH253]

It makes more sense now than ever. Your debts will be wiped out by inflation.

 

[hithere3387]

It makes more sense now than ever. Your debts will be wiped out by inflation.

Correct me if I'm mistaken, but I'm under the impression that the fed is currently trying to battle deflation. I've read that inflation will not likely be a concern for years due to the state of the economy.

 

[GH253]

Correct me if I'm mistaken, but I'm under the impression that the fed is currently trying to battle deflation. I've read that inflation will not likely be a concern for years due to the state of the economy.

The Fed is lying to conceal the magnitude of the problem. Look at the prices of commodities- that is the first sign of massive inflation beginning to take hold. They babble about the threat of deflation to justify creating more inflation.

 

[MOHS_01]

Correct me if I'm mistaken, but I'm under the impression that the fed is currently trying to battle deflation. I've read that inflation will not likely be a concern for years due to the state of the economy.

Mixed environment with major asset classes such as housing and speculative real estate experiencing deflationary pressures... while commodities and consumers goods are feeling the effects of inflationary pressures. In short, it's a double whammy for folks like you and me.

It makes more sense now than ever. Your debts will be wiped out by inflation.

Not true for us. Actually, not true at all. Debts, unless defaulted upon or otherwise liquidated, are not "wiped out" by inflation. The relative cost may decrease, but only if your income keeps pace with inflation -- something that most certainly will not happen for doctors given our reliance upon MC pricing. We will be ravaged by inflation just like any other fixed income dependent group.

300k in debt over 30 year repayment program is a 2k month payment, or 24k of after tax income (There is a student loan interest deduction, but only for low income earners), assuming 6.8% interest rate, leading to ~700k paid back.

Thats a lot of money to pay back, but is certainly "doable." even 50k/year (600k debt) loan repayment is "doable," the question is when is it no longer worth it. That isn't a hard and fast cut-off, that varies person to person, and also depends on how much you could make in the next best alternative (opportunity cost).

I'm not sure that your assumptions are sound; first of all, the amount of interest that you are allowed to deduct is fairly small, and with a principle of >250k that amount will be surpassed after the second month of the calendar year. Better yet, if your household is bringing in over a certain amount (something like 350k for a family AGI) your deductions are phased out.

that tidbit is only true in the lower wages. Anyone making 200k can certainly 'afford' to live off 100k and allocate the other half of his/her salary to loans for severall years if need be and still live a very comfortable lifestyle.

Who in the **** anointed you the economic czar over how people should live and spend their money? Yet another example of a third party observer taking undue liberty to presume that they can judge or otherwise determine how their fellow citizen should live. Guess what you can do with that assumption...

 

[Coastie]

A very wise post..and one that all on SDN should take heed of..

It depends on one's situation. Will they be the sole bread winner? Does the spouse also have this tremendous debt? Where do they plan to live as an attending?

Once you hit 250k, if you are the sole bread winner, you better have some realistic expectations as to lifestyle post residency..and plan accordingly. If you're in primary care, you better have a good business head on your shoulders so you can rake in the money...which they can do relative to a specialist if they are smart.

I'd say that $250k is where it starts to be pushin it..

Having recently finished residency with $250K of student loan debt (luckily I had no debt from undergrad), I'd have to say that with today's tuition it wouldn't make financial sense to become a physician.

In my opinion, anything over $250K is too much of a risk. Physician salaries are on the chopping block and sooner or later the axe will come down on us.

I just don't see how people can feel comfortable carrying around that much debt without a guarantee that you will be able to pay it back.

And it's worth mentioning that you can't default on student loans, even if you declare bankruptcy or disability.

I'm somewhat amused at people who say they'll just live like a resident their entire lives... old car, small apartment, no vacations, cheap food, etc. All that hard work and liability for that lifestyle?

With medical school tuition continuing to skyrocket with no end in site, at what point does it become economically unfeasible to become a physician?

I think we're almost there.

 

[benjee]

Very true. I think your discussion is a very real one...one which I am faced with currently. After a series of bad or unlucky (call it what you will) events, I had to take a leave of absence. I am in my first year and had my heart set on primary care. One of the issues that led me to take a leave of absence was that my wife lost her job. This not only takes away our living funds, but would have led me to take out grad plus loans to support her, my daughter, and myself. The financial aid office at my school calculated it all out for me and told me I would be somewhere in the 400k range upon graduation if I cont. on and take out the additional for living expenses (this takes into account my undergrad and grad loans)!
I just don't know what to do. I have always wanted to do this, but at what cost do I do it? There needs to be a cap on tuition and additional programs that allow for those wanting to persue medicine to pay back their debt. I have my Pharm.D and make good money. I understand the opportunity cost with leaving pharmacy to enter medicine and I decided to live with it prior to applying to medical school. Do you as an attending or anyone else have an opinion on how to handle my situation? Would I realistically be able to pay back 400K plus? or should I give up the dream?

Well, if you did this 20 yrs ago, I would say it's worth it cuz that time there was a big difference in the income but now, it depends on one's situation and obamacare which has a big impact in this field not only primary care but in specialties.If you really believe medicine is your life, then go for it even you end up 400K plus debt cuz it eventually will pay off. since you have a child, I would also consider the education fund for your child and your own retirement fund besides health insurance cost when you and your partner get older. yup, it's going to be a tough situation down the road.

 

[benjee]

Hi VCU07,
One more point to mention here. I am sure you are aware of the salary of a RPH these days is higher than a practicing primary care MD who is board certified . If you really luv medicine reguardless the income, spending at least 7 years of your prime productive lifetime,then go for it.

 

[IvyHopeful20]

Well, if you did this 20 yrs ago, I would say it's worth it cuz that time there was a big difference in the income but now, it depends on one's situation and obamacare which has a big impact in this field not only primary care but in specialties.If you really believe medicine is your life, then go for it even you end up 400K plus debt cuz it eventually will pay off. since you have a child, I would also consider the education fund for your child and your own retirement fund besides health insurance cost when you and your partner get older. yup, it's going to be a tough situation down the road.

Can you tell me which part of Obamacare you think will have a 'big impact' on physician salaries?

 

[IvyHopeful20]

Don't forget about PSLF

 

[benjee]

Can you tell me which part of Obamacare you think will have a 'big impact' on physician salaries?

Please take a look at the other thread --ObamaCare: You Get What You Pay For .

 

[VCU07]

Hi VCU07,
One more point to mention here. I am sure you are aware of the salary of a RPH these days is higher than a practicing primary care MD who is board certified . If you really luv medicine reguardless the income, spending at least 7 years of your prime productive lifetime,then go for it.

Thanks for your replies. I completely understand the opportunity cost...something I thought of way in advance of starting med school. Not sure about the RPH salaries. They def. have not gotten any better in this economy. Nevertheless, my primary concern is whether or not I would be able to pay back a loan of 400K. I have read up on the PH loan forgiveness and that seems like an option. I just wanted some different opinions/options. Also, I will def. have to read up on how Obamacare will impact medicine.

 

[benjee]

Thanks for your replies. I completely understand the opportunity cost...something I thought of way in advance of starting med school. Not sure about the RPH salaries. They def. have not gotten any better in this economy. Nevertheless, my primary concern is whether or not I would be able to pay back a loan of 400K. I have read up on the PH loan forgiveness and that seems like an option. I just wanted some different opinions/options. Also, I will def. have to read up on how Obamacare will impact medicine.

I thought you mentioned you have pharm D and make good money. That's what I meant the salary you were making was higher than that of a primary care MD at least in 2010 . As long as you know these facts before you invest more time , energy and money in medicine field, then go for it. 400K loan is doable but it will be rough.

 

[MOHS_01]

Thanks for your replies. I completely understand the opportunity cost...something I thought of way in advance of starting med school. Not sure about the RPH salaries. They def. have not gotten any better in this economy. Nevertheless, my primary concern is whether or not I would be able to pay back a loan of 400K. I have read up on the PH loan forgiveness and that seems like an option. I just wanted some different opinions/options. Also, I will def. have to read up on how Obamacare will impact medicine.

400k? Do they use cigs in debtors prison? I'll smuggle you a couple cartons...

 

[Lokhtar]

Please take a look at the other thread --ObamaCare: You Get What You Pay For .

Um, that's not from ObamaCare. Those are medicare cuts, approved signed and sealed by the Republican budget hawks.


And they are delayed by Congress every year. The guy who wrote that article is simply and flat out lying.

 

[Coastie]

Hi VCU07,
One more point to mention here. I am sure you are aware of the salary of a RPH these days is higher than a practicing primary care MD who is board certified . If you really luv medicine reguardless the income, spending at least 7 years of your prime productive lifetime,then go for it.

This isn't true..

 

[Coastie]

Can you tell me which part of Obamacare you think will have a 'big impact' on physician salaries?

The single payer part..the medicare for all part..the cuts that are coming part...the noctor rise part..

I'm not sure if this question would help or hurt you in your quest to become an "ivy".

 

[IvyHopeful20]

The single payer part..the medicare for all part..the cuts that are coming part...the noctor rise part..

Haha, exactly. None of them in ObamaCare. People need to debate the bill, not a bogeyman bill that exists only in their nightmares.

 

[MOHS_01]

Haha, exactly. None of them in ObamaCare. People need to debate the bill, not a bogeyman bill that exists only in their nightmares.

Hey sage,

Please share your thoughts on ACOs, the expansion of Medicaid ranks, the IPAB, and what their net effect will be on physician reimbursement. Thanks.

 

[IvyHopeful20]

Hey sage,

Please share your thoughts on ACOs, the expansion of Medicaid ranks, the IPAB, and what their net effect will be on physician reimbursement. Thanks.

Err, My post was attacking 'single payer' and 'medicare for all', which is not what the bill says. I'm happy to discuss the things that are actually in the bill.

So since you mentioned a few, here are my thoughts:

1. ACO - The fee for service system is broken and is partly (though not wholly by any means) responsible for high cost of healthcare as well as partly responsible for the disparities in physician reimbursement across specialties. Are ACOs the answer? That depends on their implementation. You can chop payments for ACOs as readily as you can chop them for FFS, but the hope it it'll get different actors to work more closely together and result in an overall decrease in spending. Of course, individuals within ACOs can still utilize the FFS system, and it's unknown if this is the right solution. There are actually very good arguments against it, and there might be other better solutions. One thing is clear, to me at least, is that FFS is broken and while we won't get rid of it completely it's worth trying a more hybrid system out to see what happens.
2. IPAB - They can recommend changes but their power will depend on the administration and their willingness to use political capital to cut the budget. In other words, don't count on them doing anything unpopular like slashing services in a major way. You think a congressman will vote to enact an IPAB recommendation if their opponent can run an ad attacking 'medicare cuts'? Don't count on it. Unlike the ACO, which may have a chance of working, I'm not really paying much attention to these guys.
3. The expansion of medicaid will now cover families upto 133% of the poverty level. Studies have shown that it will allow more people to have insurance rather than get people to switch from private insurance to medicaid. If in fact the bill remains unchanged until 2014, there will be a massive influx of otherwise healthy (i.e young) people into the ranks of the privately insured, driving up demand and more than offsetting any expansion of medicaid ranks. This is a more fluid situation because if the Republicans do succeed in removing the health insurance mandate, then it is likely that physician salaries will drop because now you'll have a large number of medicaid patients and not that many new private insurance patients.

 

[bronx43]

Um, that's not from ObamaCare. Those are medicare cuts, approved signed and sealed by the Republican budget hawks.


And they are delayed by Congress every year. The guy who wrote that article is simply and flat out lying.

Not to mention his phantom "free" market, where consumers purchase care from a system with a tightly controlled supply of providers...

 

[bigmike7104]

"if the Republicans do succeed in removing the health insurance mandate, then it is likely that physician salaries will drop because now you'll have a large number of medicaid patients and not that many new private insurance patients."

I think it's likely they will. It's not constitutional for the government to force someone to buy health care, and at the very least states have the power to over ride the bill under the 10th amendment. So I wouldn't count on that part staying.

 

[Coastie]

Haha, exactly. None of them in ObamaCare. People need to debate the bill, not a bogeyman bill that exists only in their nightmares.

hey pre-med...good luck with your future. Seriously. You'll need it, thanks to chairman maobama's plan. Sounds to me like you'll be a perfect fit for any of the "ivies" you're hoping for..

 

[IvyHopeful20]

hey pre-med...good luck with your future. Seriously. You'll need it, thanks to chairman maobama's plan. Sounds to me like you'll be a perfect fit for any of the "ivies" you're hoping for..

See, I was giving my opinion on what was actually on a bill and I love the fact that you posted this response.

The reason America is pretty much going to end up with a single payer system within twenty to thirty years is because of uncompromising caricatures like yours, where people ignore half a trillion dollars worth of unpaid medical spending (Bush's Prescription Drug plan), while going all 'DOWN WITH SOCIALISM' on a paid expansion of private insurance.

Keep on keepin' though. It's working out fantastically for you guys. It may result in an election or two, but that's really irrelevant because it's going to have no effect on actual policy. That has already been achieved.

I'm seriously rooting for you guys. It's beautiful to see the self-destruction. Like electing guys who've been for cutting Medicare spending and instituting things like a deductible and then literally the first speech when they're running is to distance themselves from any cutting of any Government healthcare spending (Rand Paul). It's funny how much people trash the big gubbment and yet become the staunchest defenders of every entitlement program as soon as they realize people like to hate buzzwords like 'Big Government' but love the services that the big government provides (Medicare, Social Security).

Five years, and the right will be claiming they wrote Obamacare. Oh, wait, they already started (claiming that high risk insurance pool was their idea).

 

[cbrons]

Don't confuse the right with the republicons. I realize for such a worthless parrot like you it would be hard to differentiate. When all you have in your arsenal is talking points, you have nothing of any value to most people on here.

Sent on the Sprint® Now Network from my BlackBerry®

 

[IvyHopeful20]

Don't confuse the right with the republicons. I realize for such a worthless parrot like you it would be hard to differentiate.

Well, these "republicons", as you put it, are the ones who got elected. So if and until that changes, that's exactly who we need to be talking about.

When you manage to elect a single person in the senate who is the equivalent of Ron Paul (Rand Paul is not it, as I mentioned above), then maybe we'll talk.



Good luck with electing a medicare cutting guy to the Senate or the Presidency though. Better hope its a state without seniors.