Calculated actual COA and very sad

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little_giant

little_giant

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I just calculated the actual value in loans I'm going to be taking (including from undergrad and interest compounded every year for all loans) for med school and I'm just devastated...

$370K??? And my in-state option is $360K??? And this is with a realistic budget that is less than the school's posted COA.

I recommend you all to actually calculate this too because by golly I sure did underestimate those interest numbers over just 4 years!!!!! Just interest accrual over 4 years alone came out to be over $50K... holy jeez I knew med school would be expensive but I thought I'd pay less than $300K since the tuition x4 never came close to $300K
 
little_giant said:
I just calculated the actual value in loans I'm going to be taking (including from undergrad and interest compounded every year for all loans) for med school and I'm just devastated...

$370K??? And my in-state option is $360K??? And this is with a realistic budget that is less than the school's posted COA.

I recommend you all to actually calculate this too because by golly I sure did underestimate those interest numbers over just 4 years!!!!! Just interest accrual over 4 years alone came out to be over $50K... holy jeez I knew med school would be expensive but I thought I'd pay less than $300K since the tuition x4 never came close to $300K
Click to expand...

Well, once you factor in undergrad + medical school, it adds up. Scholarships are low unless it’s need based or you’re awesome and are able to get merit scholarships.

Does your school not offer any subsidized loans where interest accrues after graduation? Also, I was almost positive the federal government had subsidized loans but now that I’m looking, I don’t see that option and I only see unsubsidized loans from the government. Anybody else can speak on this?
 
datboi_58 said:
Well, once you factor in undergrad + medical school, it adds up. Scholarships are low unless it’s need based or you’re awesome and are able to get merit scholarships.

Does your school not offer any subsidized loans where interest accrues after graduation? Also, I was almost positive the federal government had subsidized loans but now that I’m looking, I don’t see that option and I only see unsubsidized loans from the government. Anybody else can speak on this?
Click to expand...
Subsidized loans are only allowed for undergrad, which is what I have. No subsidized for grad schools.
You can only take out unsubsidized (~6%) and PLUS loans (~7%) for med school
 
little_giant said:
I just calculated the actual value in loans I'm going to be taking (including from undergrad and interest compounded every year for all loans) for med school and I'm just devastated...

$370K??? And my in-state option is $360K??? And this is with a realistic budget that is less than the school's posted COA.

I recommend you all to actually calculate this too because by golly I sure did underestimate those interest numbers over just 4 years!!!!! Just interest accrual over 4 years alone came out to be over $50K... holy jeez I knew med school would be expensive but I thought I'd pay less than $300K since the tuition x4 never came close to $300K
Click to expand...
You'll make it back as a doctor
 
The interest is about half of what you estimated. Not sure how you calculated it but I used my trusty HP 10bii financial calculator.
 
jamaica jan sun princess said:
The interest is about half of what you estimated. Not sure how you calculated it but I used my trusty HP 10bii financial calculator.
Click to expand...
?? What was your principal?

I did 40,500 in unsubsidized each year + X amount in PLUS depending on school.
6.1% interest each year

Most people will take the same amount of unsubsidized (the max) as I will so this will be applicable for most:

For Just Unsubsidized
Start Yr1: $40,500
End of Yr 1: $42,971. (~$2.5K interest)
Start Yr2: $40,500 + 42,971 = New principal of 83,471.
End Yr2: $88,562 (~$5K interest)
Start Yr3: 40,500 + 88562 = New principal of 129,062
End Yr3: $136,935 (~$7.9K interest)
Start Yr4: $177,435
End Yr4: 188,259 (~$10.8K interest)

Total Interest accrued on just unsubsidized = 2.5 + 5 + 7.9 + 10.8 = $26.2K

My PLUS came out to be almost identical since the interest is a little higher but the starting principal was a little lower so I'll x2

Total interest accrued on all graduate school loans = 26.2 * 2 = over $50K

Please let me know if I did the math wrong, because I sure hope I did lol
 
little_giant said:
?? What was your principal?

I did 40,500 in unsubsidized each year + X amount in PLUS depending on school.
6.1% interest each year

Most people will take the same amount of unsubsidized (the max) as I will so this will be applicable for most:

For Just Unsubsidized
Start Yr1: $40,500
End of Yr 1: $42,971. (~$2.5K interest)
Start Yr2: $40,500 + 42,971 = New principal of 83,471.
End Yr2: $88,562 (~$5K interest)
Start Yr3: 40,500 + 88562 = New principal of 129,062
End Yr3: $136,935 (~$7.9K interest)
Start Yr4: $177,435
End Yr4: 188,259 (~$10.8K interest)

Total Interest accrued on just unsubsidized = 2.5 + 5 + 7.9 + 10.8 = $26.2K

My PLUS came out to be almost identical since the interest is a little higher but the starting principal was a little lower so I'll x2

Total interest accrued on all graduate school loans = 26.2 * 2 = over $50K

Please let me know if I did the math wrong, because I sure hope I did lol
Click to expand...
Interest does not capitalize on unsubsidized loans until after graduation. My principle is currently ~240k in my 4th year and 26k of interest. This includes both plus and unsubsidized. I have no loans from undergrad so all my loans are solely from medical school. I am not sure of a calculator to use but I just wanted to let you know your estimate seems really high for interest
 
medstar11 said:
Interest does not capitalize on unsubsidized loans until after graduation. My principle is currently ~240k in my 4th year and 26k of interest. This includes both plus and unsubsidized. I have no loans from undergrad so all my loans are solely from medical school. I am not sure of a calculator to use but I just wanted to let you know your estimate seems really high for interest
Click to expand...

So the interest accrues but does not capitalize until residency?

In that case..
Start Yr1: $40,500
End of Yr 1: $42,971. (~$2.5K interest)
Start Yr2: $40,500 + 40,500 = New principal of 81000.
End Yr2: $85,942 (~$4.9K interest)
Start Yr3: 40,500 + 81,000 = New principal of 121,500
End Yr3: $128,911 (~$7.4K interest)
Start Yr4: $40,500 + 121,500 = New principal of 162,000
End Yr4: $171,882 (~$9.8K interest)

Interest accrued on unsubsidized loans = $24.6K

Still is close to the original number I posted..

Did I do something wrong?
 
medstar11 said:
Interest does not capitalize on unsubsidized loans until after graduation. My principle is currently ~240k in my 4th year and 26k of interest. This includes both plus and unsubsidized. I have no loans from undergrad so all my loans are solely from medical school. I am not sure of a calculator to use but I just wanted to let you know your estimate seems really high for interest
Click to expand...

Unsubsidized loans begin accruing interest immediately. Subsidized loans are interest free until after graduation.


little_giant said:
?? What was your principal?

I did 40,500 in unsubsidized each year + X amount in PLUS depending on school.
6.1% interest each year

Most people will take the same amount of unsubsidized (the max) as I will so this will be applicable for most:

For Just Unsubsidized
Start Yr1: $40,500
End of Yr 1: $42,971. (~$2.5K interest)
Start Yr2: $40,500 + 42,971 = New principal of 83,471.
End Yr2: $88,562 (~$5K interest)
Start Yr3: 40,500 + 88562 = New principal of 129,062
End Yr3: $136,935 (~$7.9K interest)
Start Yr4: $177,435
End Yr4: 188,259 (~$10.8K interest)

Total Interest accrued on just unsubsidized = 2.5 + 5 + 7.9 + 10.8 = $26.2K

My PLUS came out to be almost identical since the interest is a little higher but the starting principal was a little lower so I'll x2

Total interest accrued on all graduate school loans = 26.2 * 2 = over $50K

Please let me know if I did the math wrong, because I sure hope I did lol
Click to expand...

I wasn't sure how much your cost of attendance is, so I went with my state school's $65,000 a year for 4 years.

The tricky part is that interest begins accruing when the loans are disbursed. Often, half of the year's loans are disbursed is July and the other half in January.

Honestly, including the loan origination fee(4% I think) and depending on the cost of attendance, you might hit $50,000 total. As Goro said though, it's very manageable to pay off $350,000 when you're pulling in $200,000 plus after residency.

After residency you have options like Public Service loan forgiveness or refinancing for a much lower interest rate. Refinanced at 4%, it would take 10 years of $43,000 per year to pay off $350,000.
 
jamaica jan sun princess said:
Unsubsidized loans begin accruing interest immediately. Subsidized loans are interest free until after graduation.




I wasn't sure how much your cost of attendance is, so I went with my state school's $65,000 a year for 4 years.

The tricky part is that interest begins accruing when the loans are disbursed. Often, half of the year's loans are disbursed is July and the other half in January.

Honestly, including the loan origination fee(4% I think) and depending on the cost of attendance, you might hit $50,000 total. As Goro said though, it's very manageable to pay off $350,000 when you're pulling in $200,000 plus after residency.

After residency you have options like Public Service loan forgiveness or refinancing for a much lower interest rate. Refinanced at 4%, it would take 10 years of $43,000 per year to pay off $350,000.
Click to expand...

My state school ends up around $72K/year I think.

I guess that's true. $200K --> $130K after taxes in some cities. And then -43K = Income of 93K per year. Can live comfortably on that
 
Probably unhelpful, but I is a huge advantage to be married/partnered with someone who works. The Grad Plus loan is worse than the unsubsidized, and with my wife working we'll be able to avoid taking any of that which significantly reduces principal and interest.
 
athorcommens said:
Probably unhelpful, but I is a huge advantage to be married/partnered with someone who works. The Grad Plus loan is worse than the unsubsidized, and with my wife working we'll be able to avoid taking any of that which significantly reduces principal and interest.
Click to expand...
Wow!! That sounds like an ideal situation
 
I'll also be around $350K in the hole after my 4 years. Living modestly during school and residency will be the best way to minimize debt. That said, federal IDR plans will make it very manageable over time. Don't lose hope 🙂
 
Last edited by a moderator:
little_giant said:
I just calculated the actual value in loans I'm going to be taking (including from undergrad and interest compounded every year for all loans) for med school and I'm just devastated...

$370K??? And my in-state option is $360K??? And this is with a realistic budget that is less than the school's posted COA.

I recommend you all to actually calculate this too because by golly I sure did underestimate those interest numbers over just 4 years!!!!! Just interest accrual over 4 years alone came out to be over $50K... holy jeez I knew med school would be expensive but I thought I'd pay less than $300K since the tuition x4 never came close to $300K
Click to expand...

Can you live with your parents while commuting? It might save you some money.
 
CheeseCucumberSandwich said:
Oh no I am sorry to hear that friend! What's your gameplan though for tackling this? Have you spoken to a financial advisor at your school?
Click to expand...
No! I havent committed to any school yet and no one contacted me about talking to a financial advisor (I dont know what they can even tell me... "be frugal on housing and food"???)

I made a realistic budget though for housing, food, fees, tuition, insurance, transportation, etc. so that I can take out the least amount of loans as possible (less interest). Looking for housing now that's within my budget.
 
little_giant said:
No! I havent committed to any school yet and no one contacted me about talking to a financial advisor (I dont know what they can even tell me... "be frugal on housing and food"???)

I made a realistic budget though for housing, food, fees, tuition, insurance, transportation, etc. so that I can take out the least amount of loans as possible (less interest). Looking for housing now that's within my budget.
Click to expand...
Dang... what's worse is that you won't be making any big bank yet to pay them off.

Do you have a part-time job that you could start putting some savings in a CD account?
 
CheeseCucumberSandwich said:
Dang... what's worse is that you won't be making any big bank yet to pay them off.

Do you have a part-time job that you could start putting some savings in a CD account?
Click to expand...
No.. I was looking for a job this year and then the COVID thing sort of derailed that. But I am thinking about working some side jobs during med school to at least provide some pocket money!
 
little_giant said:
No.. I was looking for a job this year and then the COVID thing sort of derailed that. But I am thinking about working some side jobs during med school to at least provide some pocket money!
Click to expand...
Take a look at your Student Handbook. Many schools require permission from Student Affairs for any off-campus (non-tutoring) work. Others restrict it entirely.
 
CheeseCucumberSandwich said:
Why? Is it because they want their students to be entirely focused on medical studies?
Click to expand...
The odds of repeating a year seem to go up a lot when medical students work.
Whether it is association or causation, the better part of valor is to avoid it.
 
This makes sense. Althoguh sheesh how are these people supposed to make money?

I highly encourage everyone who is in UNDERGRAD to earn money during breaks to save for med school.

gyngyn said:
The odds of repeating a year seem to go up a lot when medical students work.
Whether it is association or causation, the better part of valor is to avoid it.
Click to expand...
 
little_giant said:
My state school ends up around $72K/year I think.

I guess that's true. $200K --> $130K after taxes in some cities. And then -43K = Income of 93K per year. Can live comfortably on that
Click to expand...
And this is why so many students can not afford to go into primary care.
Correcting your match $130-43 = $87
Add a similar size mortgage and property taxes and deduct another $40k/yr
Car pmt and insurance $6k/yr
401k @Max contribution ~$20k
Balance is $21k for food, fun, and any other expense. Better hope your employer pays your health insurance.

If non-primary care, add $50k-$200k more salary starting gross number and you see how manageable it gets.

If you want primary care, you can still do it! Read about the re/PAYE and other Income based repayments planned offered that have different forgiveness options.
 
Mr.Smile12 said:
Don't forget to add tuition increases every year of schooling, maybe 3-5% each year. Yes, you'll be able to pay it back if you are smart about spending.
Click to expand...
So... where does all of this money go to? Do the admissions committee get such a large check from these students that they can drive around in BMWs and Mercedes-Benz (kidding...).
 
proudofmykids said:
And this is why so many students can not afford to go into primary care.
Correcting your match $130-43 = $87
Add a similar size mortgage and property taxes and deduct another $40k/yr
Car pmt and insurance $6k/yr
401k @Max contribution ~$20k
Balance is $21k for food, fun, and any other expense. Better hope your employer pays your health insurance.

If non-primary care, add $50k-$200k more salary starting gross number and you see how manageable it gets.

If you want primary care, you can still do it! Read about the re/PAYE and other Income based repayments planned offered that have different forgiveness options.
Click to expand...
If it's in the city, I'd probably just rent an apartment instead of taking out a mortgage to save some money. But regardless living in a big city like NYC or LA with a family and being a just graduated attending is just financially terrible.

Whats the 401k Max contribution btw?
 
little_giant said:
If it's in the city, I'd probably just rent an apartment instead of taking out a mortgage to save some money. But regardless living in a big city like NYC or LA with a family and being a just graduated attending is just financially terrible.

Whats the 401k Max contribution btw?
Click to expand...
401k is a tax free retirement savings plan you would want to contribute to so you can gain as much tax deferred growth as possible.

In nyc if married with a kid, easy to spend $4K+ a month on rent for 2br ;-(
 
If you have a lot of debt and chose primary care, your best bet is to live in a state with moderate to low state income tax and 1+ hours from a major city. The money goes further and you usually make a little more away from large cities.

For example, living in Virginia making $225,000:

If single and no dependents and after maxing out 401K($19,500) you would take home $11,501 a month after tax. If you had $350,000 in student loan debt(at 6.5% interest), it would take 10 years at $3,974 a month to pay it back. The median home value in VA is $285,000, which is about $1225 a month(before taxes and insurance, with 10% down payment). After mortgage and loans, you'd have $6,302 to use for other living expenses, hobbies, vacations, etc.

Lots of variables, this is just to provide an idea.

EDIT: And just to provide some perspective, the median household income in 2018 in the US is $63,179
 
We keep mentioning a 10-year repayment plan, but how many physicians repay everything in 5 years or less and live OK during this time?
I think Dr. Antonia Webb said he paid his $500K Georgetown med loans back in 2 years after residency which sounds amazing but I dont think if this is possible (hes ortho and probably made 400k+ starting).
 
little_giant said:
We keep mentioning a 10-year repayment plan, but how many physicians repay everything in 5 years or less and live OK during this time?
I think Dr. Antonia Webb said he paid his $500K Georgetown med loans back in 2 years after residency which sounds amazing but I dont think if this is possible (hes ortho and probably made 400k+ starting).
Click to expand...

Whats your definition of "living OK"?
 
little_giant said:
We keep mentioning a 10-year repayment plan, but how many physicians repay everything in 5 years or less and live OK during this time?
I think Dr. Antonia Webb said he paid his $500K Georgetown med loans back in 2 years after residency which sounds amazing but I dont think if this is possible (hes ortho and probably made 400k+ starting).
Click to expand...

So say you refinance that $350,000 in loans with a bank at 4.5% interest for 5 years. Your monthly payment would be $6,525. So that hypothetical $6,302 after mortgage and loan payments would become $3,751. You'd basically be living on a resident's income.

There are other options too, like picking up shifts(locums) at an urgent care or hospital. I think you could make $100 after tax at an urgent care. Doing two 12 hour shifts a month would bring in around $30,000.
 
jamaica jan sun princess said:
So say you refinance that $350,000 in loans with a bank at 4.5% interest for 5 years. Your monthly payment would be $6,525. So that hypothetical $6,302 after mortgage and loan payments would become $3,751. You'd basically be living on a resident's income.

There are other options too, like picking up shifts(locums) at an urgent care or hospital. I think you could make $100 after tax at an urgent care. Doing two 12 hour shifts a month would bring in around $30,000.
Click to expand...
This is helpful thank you!
So as long as I can pay at least the accrued interest during my residency, a 5 year repayment doesnt sound too bad.

Actually just kidding, seems like the accrued interest during residency years will be ~$17,000/yr (med school + undergrad at 4.5%). Doesnt seem like I can afford to pay that off with a 50K pre-tax income
 
little_giant said:
This is helpful thank you!
So as long as I can pay at least the accrued interest during my residency, a 5 year repayment doesnt sound too bad.

Actually just kidding, seems like the accrued interest during residency years will be ~$17,000/yr (med school + undergrad at 4.5%). Doesnt seem like I can afford to pay that off with a 50K pre-tax income
Click to expand...

You would want to switch to the REPAYE plan while in residency. You wouldn't accrue much interest on that plan.

www.nerdwallet.com

REPAYE: How It Works and Whom It's Best For - NerdWallet

Revised Pay As You Earn, or REPAYE, will be replaced by a new plan called SAVE this fall. In the meantime, REPAYE is available to most federal student loan borrowers and can limit payments to 10% of your discretionary income.
www.nerdwallet.com www.nerdwallet.com
 
jamaica jan sun princess said:
You would want to switch to the REPAYE plan while in residency. You wouldn't accrue much interest on that plan.

www.nerdwallet.com

REPAYE: How It Works and Whom It's Best For - NerdWallet

Revised Pay As You Earn, or REPAYE, will be replaced by a new plan called SAVE this fall. In the meantime, REPAYE is available to most federal student loan borrowers and can limit payments to 10% of your discretionary income.
www.nerdwallet.com www.nerdwallet.com
Click to expand...
The 20-25 year repayment sounds pretty terrible though
 
Alright guys and gals, lets chill out for a minute. I love that we're all doing the math and realizing just how much med school is going to cost us. Its definitely something more people ought to be doing. But lets re-examine repayment and why its not all gloom and doom.

Let's get two thing out of the way first:
1. If you choose a lower monthly payment plan, you have the option to make additional payments or refinance altogether at another. This gives you flexibility to make more payments lower down the road when you are able to afford them. If you choose an aggressive plan right out of the gates, your monthly payment will be higher and you must make that payment every month.
2. If you choose a lower monthly payment (and a longer repayment period), you will pay more money in total over the long run. But you also will have more money on hand in the present. Sure you could pay it off sooner, but you will also lose out on opportunity costs that have real value too. You might decide to save up for a house and a start a family instead. In this sense, a lower monthly payment is better option now since you need the money now. Whether or not an opportunity is worth it is one of the decisions that actually have no right answer. And actually, the total amount you pay might be larger, but we cannot take that number at face value (see math below)

Stand by for some math. Sorry this is going to be a long post.

Edit: see my next post
 
Last edited by a moderator:
little_giant said:
The 20-25 year repayment sounds pretty terrible though
Click to expand...

You don't have to wait that long to pay it back, but the interest subsidy during residency would be well worth it.

Overall, just know that there are a multitude of options that allow even the lowest paid specialty to live comfortably and pay off a large loan balance.
 
little_giant said:
I just calculated the actual value in loans I'm going to be taking (including from undergrad and interest compounded every year for all loans) for med school and I'm just devastated...

$370K??? And my in-state option is $360K??? And this is with a realistic budget that is less than the school's posted COA.

I recommend you all to actually calculate this too because by golly I sure did underestimate those interest numbers over just 4 years!!!!! Just interest accrual over 4 years alone came out to be over $50K... holy jeez I knew med school would be expensive but I thought I'd pay less than $300K since the tuition x4 never came close to $300K
Click to expand...
This illustrates why I think a year of employment would be a requirement for med school. Not picking on you, LG, but most pre-meds are clueless where money matters are concerned.

You'll make it back as a doctor.

Working during medical school is a recipe for failing out or having to repeat a year. I have seen this first hand....I had one student who thought that he could still maintain his old consulting job. Failed OMSI and had to repeat it.
 
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