Avg. debt after 4 years & annual salary as a resident

[Shejeboshease]

Neither my parents or I are paying for my medical school education...so i have to depend on student loan for both my tuition and daily expenses. By the end of four years, i'm going to have debt of about $225,000. I thoguht this is pretty common; but I'm surprised to know that the avg. debt for a medical school graduate is about $150,000. How is that possible? How do they pay for the rest of the tuition during the med shcool years (of course, unless they are going to a state school)?

With a debt of $200,000, you can pay back your loan with 2.82% interest in 10 years after med school with a total interest payment of about 30,000. This doesn't that bad, but for this to happen, we gotta pay 2,000 a month during our residency and fellowship years. Is that something possible for an avg. resident. With the same interest in 25 year plan, you end up paying a total interest of about 80,000 which is ridiculous. Is the avg. salary of a resident same regardless of the chosen specialty? I'm not sure whats the avg. salary of an internal medicine resident, but it would be almost impossible to make a loan payment of 2,000 a month.

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[Captain Fantastic]

I'm not sure whats the avg. salary of an internal medicine resident, but it would be almost impossible to make a loan payment of 2,000 a month.

My wife made high 30s to low 40s when she was an IM resident (2003-2006). After taxes and benefits are taken out of that check you're not going to be able to afford a $2000/mo payment. You've gotta pay rent, buy food, change the oil in your car that you're still paying for, etc.

You'll have to defer or ask for forbearance or consolidate/refinance your loans on a longer payout and eat the interest.

 

[Bacchus]

You're not alone. I'll have upwards of 55,000 by the end of undergrad plus then medical school. I'm a very fiscal person and hopefully that pays of during residency (assuming I get there) so that I can pay atleast something on my loans. If not, there is always deferment/forbearance and banks, despite popular belief, will help you out.

 

[randomedstudent]

Neither my parents or I are paying for my medical school education...so i have to depend on student loan for both my tuition and daily expenses. By the end of four years, i'm going to have debt of about $225,000. I thoguht this is pretty common; but I'm surprised to know that the avg. debt for a medical school graduate is about $150,000. How is that possible? How do they pay for the rest of the tuition during the med shcool years (of course, unless they are going to a state school)?

With a debt of $200,000, you can pay back your loan with 2.82% interest in 10 years after med school with a total interest payment of about 30,000. This doesn't that bad, but for this to happen, we gotta pay 2,000 a month during our residency and fellowship years. Is that something possible for an avg. resident. With the same interest in 25 year plan, you end up paying a total interest of about 80,000 which is ridiculous. Is the avg. salary of a resident same regardless of the chosen specialty? I'm not sure whats the avg. salary of an internal medicine resident, but it would be almost impossible to make a loan payment of 2,000 a month.

For most people it will not be feasible to begin paying back loans during residency. Remember your salary during residency is only low to mid 40k/year so after taxes you take home roughly 2700 or so a month (at least that's what my take home pay is). And yes salary is the same for all specialties during residency - it does vary slightly be location but only a couple thousand a year difference. If you have a spouse with a good job or a ton of savings (in which case you probably shouldn't have so many loans to begin with) you may be able to begin paying back. What most residents do is defer during residency. When you defer you are not required to make any payments until you finish residency, however interest will still accrue so you have the option of paying the interest or paying whatever you want really if you have a sudden windfall or something (haha, not likely). Most residents choose the 25-30 year repayment plan, but you can always pay off early when you start making "the big bucks" after residency. Remember, no matter what plan you choose, you are not bound by it, you can always pay off early. Although some financial experts would advise against this b/c your interest rate is most likely less than what you could get if you invested what you would have used to pay off early....anyway that's for another thread and I am not a financial expert so consult the finance forum for more info on that. But the bottomline is, no, you most likely will not be paying back any loans during residency.

 

[randomedstudent]

Oh and to answer your first question about amount of debt...well you essentially answered your own question - roughly half (if not more - there are A LOT of state schools in CA and TX) of med schools are state schools so most med students go to state schools (there are only 2 med schools in my state and both are state schools) so yes they will have lower tuition and thus less debt than people attending private schools. BTW, at my state school the average debt at graduation was $165,000 last year. And don't feel like you're alone with the debt - over 90% of my class took out loans for tuition and all expenses (there were a lucky few with rich parents or a ton of savings I suppose).

 

[hawk126]

Oh and to answer your first question about amount of debt...well you essentially answered your own question - roughly half (if not more - there are A LOT of state schools in CA and TX) of med schools are state schools so most med students go to state schools (there are only 2 med schools in my state and both are state schools) so yes they will have lower tuition and thus less debt than people attending private schools. BTW, at my state school the average debt at graduation was $165,000 last year. And don't feel like you're alone with the debt - over 90% of my class took out loans for tuition and all expenses (there were a lucky few with rich parents or a ton of savings I suppose).

For what it's worth, as a non-traditional student with a decent chunk of change saved, I still plan to finance school with debt. Historically, student loans have low interest rates, and since Uncle Sam capped education debt rates at 6.8%, chances are you're going to outperform in the market. So... rather than worrying about the accrual of interest during residency, I'd take the $ that you were planning on using to pay off your debt and fully fund your 401(k) and take your last shot to fully fund a Roth IRA (tax free accrual and withdrawal at age 59.5). To invest 200 grand in a professional education that will likely net $200,000 per year of income is not a bad rate of return, but then again I'm probably going to school in Texas so it's easy for me to say "fund school with debt". Just my $.02.

 

[Gut Shot]

and since Uncle Sam capped education debt rates at 6.8%

I believe it's 8.25%. Correct me if I'm wrong.

 

[apnea]

i'm a single parent, i have a 4 and a half year old daughter, and i'm planning on coming out of medical school about $400k in debt. That'll suck. A lot. But i'll be a doctor. There's not just a WHOLE lot i won't do to make that happen, and money is just money. i've lived in poverty for so long that, honestly, $40k/year may as well be millions. If i CLEAR $40k/year, that works out to about 3,300/month. After learning to live reasonably normally on about $1200/month, i honestly don't know what i'd do with all that damn money.

 

[EM_Rebuilder]

I did not read about everything in the thread, but unless you have an additional supplemental income, you cannot pay 2K a month plus live on residency salary.

I just got my first residency paycheck...after taxes and all, I got $2316.01 (per month!).

 

[mvenus929]

With regards to the lower average debt... some schools (like Cornell, I believe) have unit loans, where you take out loans up to a given point, and then they give you grants and whatnot to cover the rest of your tuition, fees, and living expenses. I think it's like $25K at Cornell, per year. Which would put you at a debt of about $100K. If you're lucky, like me, and don't have any undergrad debt, that's a pretty good deal.

And, of course, others have already answered how much you get paid during residency... about $40K. And while I'm not an expert at finance, you can probably sign up for a 30 year plan and pay it all off in 10 years, if you plan wisely enough. My mom's mortgage is already down like 5 years, and she bought the house like 3 years ago.

 

[RokChalkJayhawk]

I believe it's 8.25%. Correct me if I'm wrong.

I just took out a ton of money at 6.8%. I don't know what the "Cap" is though.

 

[Law2Doc]

I did not read about everything in the thread, but unless you have an additional supplemental income, you cannot pay 2K a month plus live on residency salary.

Agree. You will be making around $40k as a resident, increasing a couple of grand a year. That's enough to cover your living costs, car payment, etc but not enough to expect to to be putting much in the bank let alone expect to have $24k to "spare" on loans. Won't happen. Maybe you could pay a couple hundred a month, just to keep the debt manageable, but I wouldn't even plan on that. Last time I earned that range it was very much a paycheck to paycheck lifestyle.

 

[Bacchus]

I agree with what most say but feel you should be able to put some money on payments as far as debt goes. I plan on paying all of my UG staffords off through residency and defer everyting else til I'm done. Live wisely, be frugal and you "should" be fine. Eliminate the car hassle by driving something that has very little upkeep, no monthly payment, and great gas mileage (like my '90 Olds Cutlass 🙂).

 

[jason0618]

I agree with what most say but feel you should be able to put some money on payments as far as debt goes. I plan on paying all of my UG staffords off through residency and defer everyting else til I'm done. Live wisely, be frugal and you "should" be fine. Eliminate the car hassle by driving something that has very little upkeep, no monthly payment, and great gas mileage (like my '90 Olds Cutlass 🙂).

That's something I'm gonna have to work on. I've got an '06 Dodge Magnum with a hemi that I still owe Chrysler financial a nice chunk of money. Not sure how I'll deal with that when it comes time to get into med school.

 

[Law2Doc]

I agree with what most say but feel you should be able to put some money on payments as far as debt goes. I plan on paying all of my UG staffords off through residency and defer everyting else til I'm done. Live wisely, be frugal and you "should" be fine. Eliminate the car hassle by driving something that has very little upkeep, no monthly payment, and great gas mileage (like my '90 Olds Cutlass 🙂).

Depends on your costs obviously, but once you live at that income you will realize that it doesn't always stretch that far. $40k is going to be drastically reduced by federal, state and local taxes, FICA, FUTA, etc. Then rent in many areas can be quite pricey -- your strange resident hours and need to sleep on post-call days might make having roommates prohibitive. Utilities, car payments/insurance/gas, food. Pretty soon we are talking about a paycheck to paycheck existence.

 

[Bacchus]

Depends on your costs obviously, but once you live at that income you will realize that it doesn't always stretch that far. $40k is going to be drastically reduced by federal, state and local taxes, FICA, FUTA, etc. Then rent in many areas can be quite pricey -- your strange resident hours and need to sleep on post-call days might make having roommates prohibitive. Utilities, car payments/insurance/gas, food. Pretty soon we are talking about a paycheck to paycheck existence.

I can see where you're going. I've lived in Philadelphia for a year now with three roommates. I have spent some money but not too much. Of course, once you're by yourself then rent will be a bit more and your full share of utilities will probably be more than what you were paying but I don't see it exceeding $20,000. I'll see in a few years, I guess.

 

[littlealex]

A lot of the people either have family money or goto a cheap state school.

At a private school, without any aid your debt is probably around 240K at the end of it all. At a cheap public school, however, you can get away with only about 150k in debt.

 

[Law2Doc]

but I don't see it exceeding $20,000.

Well, your rent/utilities living alone is going to be a huge chunk of that on the east coast. But mainly, your resident salary after taxes isn't going to leave you as much as you think.
I suppose if you are eating Ramen or PB&J every night in a tiny studio apartment in a bad neighborhood watching TV with rabbit ears, getting by with cheap public transportation, and never making phone calls, you might have something left over to pay down a little debt. Most people choose to live a little nicer than that and pay the debt down when they get a "real" job. You will see.

 

[Bacchus]

Well, your rent/utilities living alone is going to be a huge chunk of that on the east coast. But mainly, your resident salary after taxes isn't going to leave you as much as you think.
I suppose if you are eating Ramen or PB&J every night in a tiny studio apartment in a bad neighborhood watching TV with rabbit ears, getting by with cheap public transportation, and never making phone calls, you might have something left over to pay down a little debt. Most people choose to live a little nicer than that and pay the debt down when they get a "real" job. You will see.

Haha, well I won't be sipping Cristal (except maybe on my acceptance day). I plan on making payments, who knows how substantial they'll be.

 

[hawk126]

I believe it's 8.25%. Correct me if I'm wrong.

You're right... I wasn't specific. The stafford rate (subsidized or unsubsidized) is capped at 6.8% and you can borrow up to $40,500 in stafford loans. The Graduate Plus loans are capped at 8.25%