.0667 percent = .000667. Did you mistakenly write percent or did you do your calculations with wrong interest rate? Did you include present value in these calculations? 50k today is not the same value as 50k in 15 years. Did you consider residency as well and the effect this will have on their debt?
I agree it's worth it but I think it becomes worth it at a much later time than age 38 if average person graduates med school at like 26-27 and then graduates residency at 30-32ish.
These analyses end up being pretty complex by the time you incorporate present value, taxes and loan amortization. Something to think about though is that for your 50k /yr out of HS grad, they are racking up 50k at present value in earnings( minus tax) while the med student is paying 50+k/yr for med school, not to mention their undergrad unless they had a scholarship . Even in the event of a scholarship, the 50k out of HS person is still destroying them in the short term while they are making + value while the undergrad is at best neutral (and realistically negative with various living expenses at minimum).
The difference is then magnified when you look at what that money could have done invested ( or at least partially). This time period elapses 8+ years, a lot of people take gap years, research years, maybe an extra undergrad year . Then you have residency which is another 3-8 yr period where the person is probably making around 50k, but they still have that extremely high loan interest of almost 17k per year alone. So realistically they will be pretty lucky to even cover the interest in that period.
Another thing is that even after you get that attending money, you're taxed at a higher rate compared to the 50k per person. So that difference in income isn't as large at it appears to be at first glance.
I would guess that in that scenario it would probably end up be "worth" it financially at least 10 years later than your forecasted 38 in a truly accurate scenario.
You're
right, 6.66 percent. And I did maybe make the numbers slightly too convenient, so I recalculated with some investments. I created three people, HS Student, Medical Student A, Medical Student B.
HS Student makes 50,000 dollars, and pays only federal income tax at 18%. The remaining money is annually invested as a 50:50 split between investments at 3.33% (housing, small yield funds...) and 7% (stock market). Each year they also spend 10,000 dollars erroneously and see no return.
Medical Student A accrues 300,000 dollars in debt, and it takes them until age 34 to pay off their debt (6-8 years out of medical school). Only after being debt free can they invest. They then follow the same investment portfolio as HS Student; however, they are taxed at 33% at the federal level. They exceed the net worth of HS Student at age 37 ( three years out of debt). Additionally the Medical Student spends 20,000 dollars erroneously and sees no return.
Medical Student B is the same as Medical Student A, but they are not debt free until age 38 (10-12 years out of medical school). Otherwise they follow Medical Student A. Their net worth exceeds HS Student by age 41 (again 3 years out of debt).
Notice that neither student utilizes a debt repayment plan and pays the amount of their debt off in full with interest.
I didn't crunch the dentist's numners, but they would likely be similar, and once again I took many shortcuts (but I am not a financial analyst).
By no means am I stating that this is 100% accurate and can be taken literally, but IMO, no matter which way you look at it, the average doctor will far outgain the general population, and physicians also report a very high level of job satisfaction (that's what really matters).
All I'm trying to do here is crusade against the blabocrat who this thread is named after. He gets kicks off of belittling others. He needs to go away; he isn't as great as he thinks he is.
