Debt load at which HPSP becomes worth it for primary care?

[sleazye]

---

Members don't see this ad.

It's generally accepted on this board that HPSP is never worth it for the money alone. However, with constantly rising costs of attendance and unsubsidized loans, there must be a theoretical point at which the HPSP becomes a good deal, especially for primary care physicians. Just for fun, wondering at what point you would rather do HPSP than assume massive debt. My own situation is such that as an OOS student my COA is estimated at 120k/year, which includes 90k/year tuition plus costs of living for a likely estimated total of ~500k, making HPSP look like a better deal every day...

 

[Perrotfish]

https://forums.studentdoctor.net/threads/the-skyrocketing-value-of-the-hpsp-scholarship.1003915/

It's generally accepted on this board that HPSP is never worth it for the money alone. However, with constantly rising costs of attendance and unsubsidized loans, there must be a theoretical point at which the HPSP becomes a good deal, especially for primary care physicians. Just for fun, wondering at what point you would rather do HPSP than assume massive debt. My own situation is such that as an OOS student my COA is estimated at 120k/year, which includes 90k/year tuition plus costs of living for a likely estimated total of ~500k, making HPSP look like a better deal every day...

I tried to lay the math out in this post:
https://forums.studentdoctor.net/threads/the-skyrocketing-value-of-the-hpsp-scholarship.1003915/

 

[68PGunner]

PCPs nowadays make 200K/yr on average. Your debt level better be close to $500K in order just to break even as a HPSPer assuming that you go into primary care. Average interest rate for student loan is about 6.0%. I haven't even taken into account loan forgiveness yet. Do the calculation yourself if you wish. However, HPSP for financial reason is still a no go.

 

[HighPriest]

At $120,000/year, it's probably worth it in most cases for someone definitely going into primary care. With regards to a numerical inflection point: that's been discussed on the board many times with regards specifically to primary care income.

 

[sleazye]

https://forums.studentdoctor.net/threads/the-skyrocketing-value-of-the-hpsp-scholarship.1003915/



I tried to lay the math out in this post:
https://forums.studentdoctor.net/threads/the-skyrocketing-value-of-the-hpsp-scholarship.1003915/

Your thread is one that inspired this one. It's definitely worth it for me from a purely financial standpoint. Considering an optimistic yearly civilian salary of 220k I'd still come out around 300k ahead with HPSP, not to mention I'd be able to help support my family during school and training. The question is whether the all the BS that comes with milmed is worth that amount of money. The verdict is still out in my case, was hoping to hear from others.

Relying on IBR to discharge 400-500k seems like a big gamble to take with the current attitudes of those in DC regarding entitlements and social programs. I'm afraid those programs would get cut in the next 10-20 years leaving me holding the bag.

 

[deleted772858]

Your thread is one that inspired this one. It's definitely worth it for me from a purely financial standpoint. Considering an optimistic yearly civilian salary of 220k I'd still come out around 300k ahead with HPSP, not to mention I'd be able to help support my family during school and training. The question is whether the all the BS that comes with milmed is worth that amount of money. The verdict is still out in my case, was hoping to hear from others.

Relying on IBR to discharge 400-500k seems like a big gamble to take with the current attitudes of those in DC regarding entitlements and social programs. I'm afraid those programs would get cut in the next 10-20 years leaving me holding the bag.

Authors of posts like this, usually have their mind already set, usually inclined towards taking the scholarship, regardless of the multiple posts mentioning the other variables in play.

 

[Perrotfish]

PCPs nowadays make 200K/yr on average. Your debt level better be close to $500K in order just to break even as a HPSPer assuming that you go into primary care. Average interest rate for student loan is about 6.0%. I haven't even taken into account loan forgiveness yet. Do the calculation yourself if you wish. However, HPSP for financial reason is still a no go.

Um, what?

If you take out 500K in loans that means at the end of residency, at a 6% interest rate you actually owe about 700K., or 175K/year of payback

But that's not what you pay to get rid of the loans. The loans also keep compounding during your payment plan. So over a 10 year plan at 6% you actually need to pay back $931K, or $232 K/year of the scholarship

But that's not what you need to earn to pay back the loans. Remember student loan payments are basically non-deductible and are paid with after tax dollars. If you're paying 30% of your income between state and local taxes you would actually need to earn 1328K, or 332 K/year, just to pay back the loans

But that's not what you need to make to break even. The HPSP scholarship pays 25K/year during medical school (including the signing bonus), approximately 30K/year more than civilian residencies during residency, and an average of 110K/year during payback. Keep in mind you pay a much lower tax rate on those dollars than you would on your dollars earned after a civilian residency. So if you want to actually earn enough to break even you would need to earn all of that back AND earn complete pay back the loans in the first year of residency. If you took out 500K in loans you would need to earn about 2,200K, or 550K/year, just to just break even with the HPSP scholarship

Finally remember that to break even with HPSP, you need to find this dream job right out of residency. At least in Primary care salaries tend to rise with your first three years of experience, and then level off. The first three years are generally the lowest paid, and the worst work environment, in your entire career.

 

[Perrotfish]

The question is whether the all the BS that comes with milmed is worth that amount of money. The verdict is still out in my case, was hoping to hear from others.

Asking 'Is the worth it' is counterproductive, every person here will have a different opinion. I think you would have a better time understanding what the BS is, and how a military practice compares to a civilian practice, and then making your own decision. Do you understand what a GMO tour is? What deployments entail? Do you understand just how bad our EMR and infrastructure are? Do you understand where you might get told to live?

 

[HighPriest]

I agree with that. It's going to depend upon who you are and what you actually do go in to, and how you're going to react to the towering inferno of smoldering BS that is military medicine - all things that, frankly, you won't really know until it's happening to you. Kind of like prison rape, I mean who knows maybe you'll like it.
But the real questions are: do you understand what can happen and how are you going to feel about it when it's over?
You can only answer one of those now.

 

[sleazye]

Asking 'Is the worth it' is counterproductive, every person here will have a different opinion. I think you would have a better time understanding what the BS is, and how a military practice compares to a civilian practice, and then making your own decision. Do you understand what a GMO tour is? What deployments entail? Do you understand just how bad our EMR and infrastructure are? Do you understand where you might get told to live?

Yes, I do understand, at least as well as an outsider can. I've spent hours on this board, I have a good idea what the path entails. Like I said, I'm not sure if I am going to do it, and while I appreciate everybody's advice, only I can really make the decision. Maybe it wasn't clear in the OP but I was hoping to come at the age old question from a different angle to generate some reflection from those who have done the HPSP in hopes of finding that theoretical tipping point scenario at which the BS would be preferable to, for example, 1 million of debt at age 40 while supporting a family. As I said, for me that point is somewhere around 500k.

 

[sleazye]

Authors of posts like this, usually have their mind already set, usually inclined towards taking the scholarship, regardless of the multiple posts mentioning the other variables in play.

I'm actually most likely not going to do the scholarship. Was intended to be a "for fun" thought experiment thread to find out at what debt point those who hated milmed would do it again, not a thread to help me make my decision.

 

[deleted480308]

to really do that math, you have to assign a cash value to "can be sent to a desert and face increase risk of dying", and "my wife gets told where we live every so many years"

there is more to "worth it" than just $

 

[Ziehl-Neelsen]

My own situation is such that as an OOS student my COA is estimated at 120k/year, which includes 90k/year tuition plus costs of living for a likely estimated total of ~500k, making HPSP look like a better deal every day...

90k in tuition alone per year!?! That's insane. What medical school is this?

The first answer is simple--don't go there. Attend a more reasonably priced medical school. If that school is your only acceptance, I would apply again next cycle making sure to choose schools who don't have Rumpelstiltskin setting the tuition. If you can't get into a cheaper school, I would seriously consider not going to medical school. You mention a family, so I presume you have a steady job/career. If that job/career will lead to a 6 figure salary within the next 3-5 years and doesn't make you feel like Prometheus on a daily basis, I can honestly tell you that a career as a physician is not worth it.

It's generally accepted on this board that HPSP is never worth it for the money alone. However, with constantly rising costs of attendance and unsubsidized loans, there must be a theoretical point at which the HPSP becomes a good deal, especially for primary care physicians.

A timely question. It just so happens that Jim Dahle over at the WCI just penned a column on this exact topic: http://whitecoatinvestor.com/maximum-student-loan-debt-to-salary-ratio/

I tend to agree with Jim. The absolute maximum ratio of student loan debt/expected salary is 2. Beyond that, if you're still committed to the physician thing, I think indentured servitude programs like HPSP or the Indian Health Service Scholarship are the only choices for a financially prudent individual.

Asking 'Is the worth it' is counterproductive, every person here will have a different opinion. I think you would have a better time understanding what the BS is, and how a military practice compares to a civilian practice, and then making your own decision. Do you understand what a GMO tour is? What deployments entail? Do you understand just how bad our EMR and infrastructure are? Do you understand where you might get told to live?

These are important things to consider before signing on the dotted line. To paraphrase an old saying about Trigeminal Neuralgia: "Military Medicine won't kill you, but it may make you wish you were dead."

And while Perrotfish mentions many things you need to understand and consider, the biggest thing that you need to consider is that you may not even get to practice your desired specialty due to the unique circumstances of the military match.

I went to medical school with lots of Mormons who already had 2+ kids and stay-at-home wives by the time they started medical school. As a group they were split about 50/50 with regard to whether they had taken loans or HPSP. At the outset these individuals had aspirations for minimally to moderately competitive specialties with the majority wanting residencies in primary care or Ob/Gyn and a few wanting slightly more competitive residencies like EM. But then 3rd year hit and 3 of the Mormon guys with slightly above average board scores and a class rank in the top third decided that ophthalmology was more interesting to them than a career in primary care. 1 of this triumvirate was USAF HPSP and ended up not matching into Ophtho, and because he found the idea of a transitional year and GMO tour unpalatable for family reasons, he ended up scrambling into one of the open USAF FP residency slots at an undesirable location. Then March rolled around and the other 2 of the triumvirate matched to (lower tier) civilian ophthalmology residencies.

Now I was friendly with the Mormons (mostly due to a childhood and adolescence spent as a Boy Scout), but match day the year I graduated from medical school coincided with the Feast of St. Patrick, so I wasn't about to join all the Mormon families at Chuck E. Cheese after the match day festivities were over (I wanted to get drunk and pick fights with people wearing orange). I wonder who was happier at Chuck E. Cheese that day? The Mormon who was debt free and headed to an FP residency at Scott AFB in Mascoutah, IL or the 2 Mormons with 300k+ in debt headed to ophthalmology residency?

If you choose the military in lieu of 500k debt in order to go to medical school and things don't break your way, don't be bitter.

 

[Perrotfish]

Yes, I do understand, at least as well as an outsider can. I've spent hours on this board, I have a good idea what the path entails. Like I said, I'm not sure if I am going to do it, and while I appreciate everybody's advice, only I can really make the decision. Maybe it wasn't clear in the OP but I was hoping to come at the age old question from a different angle to generate some reflection from those who have done the HPSP in hopes of finding that theoretical tipping point scenario at which the BS would be preferable to, for example, 1 million of debt at age 40 while supporting a family. As I said, for me that point is somewhere around 500k.

As a PCM my tipping point would be a 250K advantage towards the military, mostly due to the risk of deployment. Keep in mind, though, that the best practice environment in the military is primary care. Its still not a great place to work (lots of admin, lots of bosses, horrific EMR, no real control over your work environment or schedule, and a completely thankless environment) but it also has some advantages over most civilian practices (only 20 patients per day, no insurance related hassles, a clear formal process and financial support for picking up new skills, strong subspecialist telemedicine support, an extra 2 weeks off/year from all of the federal holidays, and you're integrated with your radiology department and lab). Most of all I see an adequate number and range of patients in my specialty to keep my skills up, which is not something many of my procedural peers can say unless they moonlight.

to really do that math, you have to assign a cash value to "can be sent to a desert and face increase risk of dying", and "my wife gets told where we live every so many years"

there is more to "worth it" than just $

To be fair, my wife got told where to live by first the medical school selection process and then the match. My military payback was just one more iteration of that, and not really much different than if I had done a fellowship.

The deployment thing, however, is pretty much unique to the military.

 

[jabreal00]

I did HPSP and I think that I did come out ahead financially speaking compared to my peers. I am an internal medicine based specialist, one of the higher paying ones. I had a 3 year HPSP scholarship. I did medical school in the early 2000s. I had one year of loans of about 50K. My interest rates were dirt low; 1.65%. It took me 10 years to pay it back, basically my whole time in the military (nothing aggressive but above the minimum). I came out of the military with zero debt. I have a very healthy savings as well as retirement account. I am making 2.5x what I was making in the military.

However, there are intangibles that one does not factor in. I was separated for 2 years from my wife due to orders (she was also active duty). I had some pretty dreadful assignment locations. I do feel like some of my youth was robbed (mid 20s to early 30s). I am now in my late 30s and finally starting to enjoy living in a location that I want to be in and all the amenities associated with it. I love not having to ask for permission to go on a weekend trip or an overseas vacation. I don't have the fear of the ax dropping for a new reassignment location or an abrupt call up for deployment. I know of people having weeks notice to PCS to a new location and uproot their family in the middle of the year because there is a sudden opening or need.

Would I do HPSP again, I am not sure. I however, would not try to dissuade anyone because the experiences are variable. I am grateful for the training as well as the opportunity to give back. Financially I feel ahead of my peers. However there is a period of time in my life I can't get back when I was stuck in terrible locations. It's life I guess. There is no such thing as easy street.

 

[Cooperd0g]

As a civilian chances are you're going to have to move for residency anyway. Comparing that to the military move for residency is moot. For primary care, specifically family med and internal medicine, the likelihood of training straight through even in the navy is pretty high. For the Air Force in the army your of training straight through in pediatrics, family medicine, and internal medicine is high. One utilization tour is going to be three years. You are likely to be able to extend one more year to finish out a four year HPSP contract. The long-term detractors of being in the military are inarguable for those who don't have the personality for it. In reality a large portion of people could train straight through for primary care and only do one move outside of what would be done in the civilian world. For that they would get free med school, paid more during residency, and slightly underpaid in her first four years as an attending. It really isn't a bad deal compared to a expensive private school tuition. Even if you have to split those four years of pay back over two locations with the move in between, it isn't that huge of deal as long as you know the possibility ahead of time.

 

[68PGunner]

Um, what?

If you take out 500K in loans that means at the end of residency, at a 6% interest rate you actually owe about 700K., or 175K/year of payback

But that's not what you pay to get rid of the loans. The loans also keep compounding during your payment plan. So over a 10 year plan at 6% you actually need to pay back $931K, or $232 K/year of the scholarship

But that's not what you need to earn to pay back the loans. Remember student loan payments are basically non-deductible and are paid with after tax dollars. If you're paying 30% of your income between state and local taxes you would actually need to earn 1328K, or 332 K/year, just to pay back the loans

But that's not what you need to make to break even. The HPSP scholarship pays 25K/year during medical school (including the signing bonus), approximately 30K/year more than civilian residencies during residency, and an average of 110K/year during payback. Keep in mind you pay a much lower tax rate on those dollars than you would on your dollars earned after a civilian residency. So if you want to actually earn enough to break even you would need to earn all of that back AND earn complete pay back the loans in the first year of residency. If you took out 500K in loans you would need to earn about 2,200K, or 550K/year, just to just break even with the HPSP scholarship

Finally remember that to break even with HPSP, you need to find this dream job right out of residency. At least in Primary care salaries tend to rise with your first three years of experience, and then level off. The first three years are generally the lowest paid, and the worst work environment, in your entire career.

Assuming tuition is 50K w/ your stipend being 25K, the HPSP total benefit is about 300K. As a BC doc in FM, you are underpaid by about 100K by netting a measly 120K. That's is 400K in lost income. So yes I would not even consider the financial aspect of HPSP until COA hits 500K over four year.

You can include all stuffs like taxes and PX to console yourself over the prospect of locking yourself to Uncle Sam to cheap labor for min four years. All of those stuff in my opinion are negligible.

 

[68PGunner]

As a PCM my tipping point would be a 250K advantage towards the military, mostly due to the risk of deployment. Keep in mind, though, that the best practice environment in the military is primary care. Its still not a great place to work (lots of admin, lots of bosses, horrific EMR, no real control over your work environment or schedule, and a completely thankless environment) but it also has some advantages over most civilian practices (only 20 patients per day, no insurance related hassles, a clear formal process and financial support for picking up new skills, strong subspecialist telemedicine support, an extra 2 weeks off/year from all of the federal holidays, and you're integrated with your radiology department and lab). Most of all I see an adequate number and range of patients in my specialty to keep my skills up, which is not something many of my procedural peers can say unless they moonlight.


To be fair, my wife got told where to live by first the medical school selection process and then the match. My military payback was just one more iteration of that, and not really much different than if I had done a fellowship.

The deployment thing, however, is pretty much unique to the military.

Complete bullet point hogwash. We have a report in the preallo forum with a dude seeing about 18 pts/day working 4.5 days/wk making 250K a year while taking 8 weeks of vacation. I have heard similar stories from other PC docs out there.

You don't deal w insurance bs in the civilian world. They have the billing department for that.

 

[Perrotfish]

Assuming tuition is 50K w/ your stipend being 25K, the HPSP total benefit is about 300K. As a BC doc in FM, you are underpaid by about 100K by netting a measly 120K. That's is 400K in lost income. So yes I would not even consider the financial aspect of HPSP until COA hits 500K over four year.

You can include all stuffs like taxes and PX to console yourself over the prospect of locking yourself to Uncle Sam to cheap labor for min four years. All of those stuff in my opinion are negligible.

You're just failing at basic math. I wrote out the answer for you and I don't think you've even read it. Which is average, I guess, that's exactly how people end up thinking that 500K in student debt makes sense to take out. They think they need to pay back 500K, and have no conception that they'll probably end up needing to earn 1.5-2 million just for their loan.

I didn't mention the PX, or even the 150K value of the GI bill. I went over two things: taxes and the interest on your debt. If 'those stuff' are in your opinion negligible, then your opinion is wrong. 'Those stuff' are two thirds of the money you need to earn to pay back your student loans.

For every dollar you borrow in medical school at 6%, just assume you need to earn three pre-tax dollars after residency to pay it back. If you understand that simple rule you understand medical student loans.

 

[Perrotfish]

You don't deal w insurance bs in the civilian world. They have the billing department for that.

Yes, yes you do. You don't deal with collections, but you do deal with the fact that each of the 8 plans you see has different, and equally arbitrary, rules about what you can and can't order. Blue cross doesn't cover omnicef. AETNA needs a preauthorization that takes 10 minutes for any imaging. Medical always requires a CT before an MRI, no exceptions. The foster care system has a separate insurance system for foster care children. No one covers the formula for milk protein allergy, but there is a special program through the manufacturer you can apply to... Its a f-ing nightmare. Even if you're lucky enough to work for Kaiser, and have just one insurance plan to learn, it is an insurance plan with numerous hard and soft stops designed to minimize utilization of expensive procedures and drugs.

Military insurance is very simple: order anything you want, and money is no object. Want an MRI on that knee? Of course! Derm consult for your acne? Right away Sir or Ma'am! How many PT sessions are you authorized? As many as you want, forever! We also have a staff chiropractor, because even fake **** is covered. And every UTI needs a $500 bottle of omnicef because its someone else's money anyway. Its not a good system for cost control but as a PCM it's awesome.

 

[sleazye]

90k in tuition alone per year!?! That's insane. What medical school is this?

The first answer is simple--don't go there. Attend a more reasonably priced medical school. If that school is your only acceptance, I would apply again next cycle making sure to choose schools who don't have Rumpelstiltskin setting the tuition. If you can't get into a cheaper school, I would seriously consider not going to medical school. You mention a family, so I presume you have a steady job/career. If that job/career will lead to a 6 figure salary within the next 3-5 years and doesn't make you feel like Prometheus on a daily basis, I can honestly tell you that a career as a physician is not worth it.



A timely question. It just so happens that Jim Dahle over at the WCI just penned a column on this exact topic: http://whitecoatinvestor.com/maximum-student-loan-debt-to-salary-ratio/

I tend to agree with Jim. The absolute maximum ratio of student loan debt/expected salary is 2. Beyond that, if you're still committed to the physician thing, I think indentured servitude programs like HPSP or the Indian Health Service Scholarship are the only choices for a financially prudent individual.



These are important things to consider before signing on the dotted line. To paraphrase an old saying about Trigeminal Neuralgia: "Military Medicine won't kill you, but it may make you wish you were dead."

And while Perrotfish mentions many things you need to understand and consider, the biggest thing that you need to consider is that you may not even get to practice your desired specialty due to the unique circumstances of the military match.

I went to medical school with lots of Mormons who already had 2+ kids and stay-at-home wives by the time they started medical school. As a group they were split about 50/50 with regard to whether they had taken loans or HPSP. At the outset these individuals had aspirations for minimally to moderately competitive specialties with the majority wanting residencies in primary care or Ob/Gyn and a few wanting slightly more competitive residencies like EM. But then 3rd year hit and 3 of the Mormon guys with slightly above average board scores and a class rank in the top third decided that ophthalmology was more interesting to them than a career in primary care. 1 of this triumvirate was USAF HPSP and ended up not matching into Ophtho, and because he found the idea of a transitional year and GMO tour unpalatable for family reasons, he ended up scrambling into one of the open USAF FP residency slots at an undesirable location. Then March rolled around and the other 2 of the triumvirate matched to (lower tier) civilian ophthalmology residencies.

Now I was friendly with the Mormons (mostly due to a childhood and adolescence spent as a Boy Scout), but match day the year I graduated from medical school coincided with the Feast of St. Patrick, so I wasn't about to join all the Mormon families at Chuck E. Cheese after the match day festivities were over (I wanted to get drunk and pick fights with people wearing orange). I wonder who was happier at Chuck E. Cheese that day? The Mormon who was debt free and headed to an FP residency at Scott AFB in Mascoutah, IL or the 2 Mormons with 300k+ in debt headed to ophthalmology residency?

If you choose the military in lieu of 500k debt in order to go to medical school and things don't break your way, don't be bitter.

Great post, I appreciate it. I don't want to derail too much but I'll give you a little of my situation. I'm fully aware that at this point it's completely on me if I buy the ticket and take the ride. I've been debating about actually attending med school for awhile now. I've been in pharmacy for years and work a lot of shifts as a per diem at 4 different hospitals so I'm able to gross roughly 150-160k. From a purely financial standpoint, I'd probably break even by going to medical school. Truth be told, I don't really care about money past the point that it supports my family. I'm not materialistic, I don't care about luxury cars, name brands etc that most people pursuing a field that demands delayed gratification lust over. My reason for switching is personal satisfaction, I hate pharmacy. I really enjoy medical science and have self studied pathology for years anyway because I enjoy it and in a lot of ways it helps me be a better pharmacist. It's just frustrating to not be able to directly apply the knowledge. Not to mention the dismal future for pharmacists.

I got into MSU-CHM (MD program). It's the only MD option I have at this point, and the only one I'm really considering because my whole family lives nearby which will provide support with childcare, etc. I could reapply and go elsewhere but don't really want to d/t family situation.

 

[68PGunner]

You're just failing at basic math. I wrote out the answer for you and I don't think you've even read it. Which is average, I guess, that's exactly how people end up thinking that 500K in student debt makes sense to take out. They think they need to pay back 500K, and have no conception that they'll probably end up needing to earn 1.5-2 million just for their loan.

I didn't mention the PX, or even the 150K value of the GI bill. I went over two things: taxes and the interest on your debt. If 'those stuff' are in your opinion negligible, then your opinion is wrong. 'Those stuff' are two thirds of the money you need to earn to pay back your student loans.

For every dollar you borrow in medical school at 6%, just assume you need to earn three pre-tax dollars after residency to pay it back. If you understand that simple rule you understand medical student loans.

The only tax saving you get is from your bah and bas, which is like 2-3K a year. Negligible in my opinion. I don't even pay attention to your interest rate calculation with the assumption that I will live like a resident and pay back those loan 1st 4 yrs of practice. Again, your financial based decision for HPSP wasn't very well thought out.

 

[68PGunner]

Yes, yes you do. You don't deal with collections, but you do deal with the fact that each of the 8 plans you see has different, and equally arbitrary, rules about what you can and can't order. Blue cross doesn't cover omnicef. AETNA needs a preauthorization that takes 10 minutes for any imaging. Medical always requires a CT before an MRI, no exceptions. The foster care system has a separate insurance system for foster care children. No one covers the formula for milk protein allergy, but there is a special program through the manufacturer you can apply to... Its a f-ing nightmare. Even if you're lucky enough to work for Kaiser, and have just one insurance plan to learn, it is an insurance plan with numerous hard and soft stops designed to minimize utilization of expensive procedures and drugs.

Military insurance is very simple: order anything you want, and money is no object. Want an MRI on that knee? Of course! Derm consult for your acne? Right away Sir or Ma'am! How many PT sessions are you authorized? As many as you want, forever! We also have a staff chiropractor, because even fake **** is covered. And every UTI needs a $500 bottle of omnicef because its someone else's money anyway. Its not a good system for cost control but as a PCM it's awesome.

This is funny. I know military med and this isn't as simple as you make it to be. Have fun saluting to your nurse boss at work everyday.

 

[Perrotfish]

The only tax saving you get is from your bah and bas, which is like 2-3K a year. Negligible in my opinion. I don't even pay attention to your interest rate calculation with the assumption that I will live like a resident and pay back those loan 1st 4 yrs of practice. Again, your financial based decision for HPSP wasn't very well thought out.

No, the scholarship is untaxed. That's the tax savings, not the stupid 5K from BAH. If you took out a 500K loan, you would need to pay it back with post-tax dollars. So you would need to earn 750K to pay back that 500k. Get it?

I'm also guessing you are never going to understand the whole compound interest thing. Do you get, at least in theory, that you pay more for a loan than the amount that you borrow ? Or are you one of those guys who has all maxed out credit cards?

This is funny. I know military med and this isn't as simple as you make it to be. Have fun saluting to your nurse boss at work everyday.

Do you get that I am an attending in a military hospital and do actually know how this works? That I know what I can order because I order it every single day? I feel like you're just trolling at this point.

 

[68PGunner]

No, the scholarship is untaxed. That's the tax savings, not the stupid 5K from BAH. If you get a 500K scholarship, you would need to pay it back with post-tax dollars. So you would need to earn 750K to pay back that 500k. Get it?

I'm also guessing you are never going to understand the whole compound interest thing. Do you get, at least in theory, that you pay more for a loan than the amount that you borrow?

Do you get that I am an attending in a military hospital and do actually know how this works? That I know what I can order because I order it every single day? I feel like you're just trolling at this point.

It is funny that you talk to me about compounding interest considering that I am a nontrad who had a finance background while returning an average of 15% on my annual investment for over a decade. Funny. Whatever... That tax thing is negligible considering that there are so many ways for me to shield my assets and other stuff.

Let's get to your income tax thing now. You were right that I haven't taken it into account. However, with a 220-230 K, I would probably pay about 18% tax with the current tax laws giving me a take home of about 190K assuming that FICA and Medicaid taxes are equivalent since there is a cap at about 110-120K. I don't know the exact amount off the top of my head, since the military 120K salary will also be at the cap. If you utilize the same tax laws, you will probably take home 105-110K excluding FICA and Medicaid taxes. In that case, it is 80K per year. Still not a wise financial decision considering that you gave your freedom for it.

I worked with an attending in the military. You have to follow a certain protocol before ordering a MRI. LOL at ordering a random MRI for a dude showing up to your office with knee pain after a run.

 

[68PGunner]

As for PT order, you can only order a certain amount before you get feedback from the PT about the current treatment plan. If the service member doesn't show any sign of progress in a timeframe, you will not be ordering more PT sessions. Basically, the PT has to justify to Tricare about the efficacy of the treatment considering the service member progress and injury.

How do I know this? I was a pt who talked to both my doc and PT over the insurance thing.

 

[68PGunner]

No, the scholarship is untaxed. That's the tax savings, not the stupid 5K from BAH. If you took out a 500K loan, you would need to pay it back with post-tax dollars. So you would need to earn 750K to pay back that 500k. Get it?

I'm also guessing you are never going to understand the whole compound interest thing. Do you get, at least in theory, that you pay more for a loan than the amount that you borrow ? Or are you one of those guys who has all maxed out credit cards?



Do you get that I am an attending in a military hospital and do actually know how this works? That I know what I can order because I order it every single day? I feel like you're just trolling at this point.

Your stipend and signing bonus are taxed.

 

[Perrotfish]

I worked with an attending in the military. You have to follow a certain protocol before ordering a MRI. LOL at ordering a random MRI for a dude showing up to your office with knee pain after a run.

As for PT order, you can only order a certain amount before you get feedback from the PT about the current treatment plan. If the service member doesn't show any sign of progress in a timeframe, you will not be ordering more PT sessions. Basically, the PT has to justify to Tricare about the efficacy of the treatment considering the service member progress and injury.

How do I know this? I was a pt who talked to both my doc and PT over the insurance thing.

You are, again, a civilian medical student who is lecturing a military attending about what being a military attending is like. I place these orders all the time, I know how our insurance and orders work, and I promise you that you are wrong.

I suspect that your physician was trying to teach you clinical indications for physical therapy and MRIs, and why we should not continue PT forever or order an MRI for every runner with knee pain. I don't get an MRI for every kid with knee pain, because that would not be good medical care. That being said, as a provider, if I want one, I get one. I hit a button in in AHLTA, and I have ordered the MRI, or authorized PT. There is no one who double checks my work, there is no 'protocol' that I follow beyond hitting that button, and there isn't even any mechanism in place to ding me if I over utilize these orders. I do need to renew the PT orders every 6 months, but the renewal process is, again, hitting a single button in AHLTA and there is no one in Tricare that I need to justify my order to. This is why Tricare costs are so out of control, but again as a provider its a nice insurance to work with.

It is funny that you talk to me about compounding interest considering that I am a nontrad who had a finance background while returning an average of 15% on my annual investment for over a decade.

BTW I always love when people on the Internet casually mention that they have a higher rate of return on their investments than Warren Buffett. Sure you do.

 

[68PGunner]

BTW I always love when people on the Internet casually mention that they have a higher rate of return on their investments than Warren Buffett. Sure you do.

Warren Buffett is his prime can hit 20-30% return easily especially with a smaller portfolio. His return is pitiful nowadays bc he manages billions of $$$. If you actually read his stuff like I do, you would know.

 

[Perrotfish]

Warren Buffett is his prime can hit 20-30% return easily especially with a smaller portfolio. His return is pitiful nowadays bc he manages billions of $$$. If you actually read his stuff like I do, you would know.

Well its good to know you can beat the markets so easily.

 

[deleted772858]

Warren Buffett is his prime can hit 20-30% return easily especially with a smaller portfolio. His return is pitiful nowadays bc he manages billions of $$$. If you actually read his stuff like I do, you would know.

😆

 

[SeminoleFan3]

Agree with ParrotFish. I'm also a military attending, and order what I want. No push back from MRIs, meds, PT, etc. Lack of insurance issues is one of the (only?) nice things about military medicine.

 

[dwb8p]

Perrotfish and SeminoleFan are correct with regard to availability of MRI and CT examinations, at least at the large military medical centers. As a radiology resident, I get a stack of about 30 MR and CT requests every day depending on what service I am covering, from a variety of "providers" ranging from subspecialty surgeons to primary care PAs/NPs and even physical therapists and audiologists. I have to protocol every single exam (ie. specify which sequences for the technologist to obtain and whether to give contrast). I can tell you that virtually all studies get approved (> 95%) unless the study is clearly not indicated or not safe.

 

[Cooperd0g]

Don't we have moderators to help keep personal fights, particularly ones not even meaningful to the topic, out of these threads?

 

[pgg]

Don't we have moderators to help keep personal fights, particularly ones not even meaningful to the topic, out of these threads?

I have no power in this forum, but I don't see a problem with the above exchange.


Edit to add - If anyone ever has a question about whether a post or thread needs moderator action, use the "report" link. It's free and guarantees that moderators and site admins will look at it. Action may or may not be taken, and may or may not be apparent if it is, but all reported posts get looked at.

 

[WernickeDO]

Don't we have moderators to help keep personal fights, particularly ones not even meaningful to the topic, out of these threads?

Our moderator is just a simple caveman. Our world frightens and confuses him.

 

[jabreal00]

The only tax saving you get is from your bah and bas, which is like 2-3K a year. Negligible in my opinion. I don't even pay attention to your interest rate calculation with the assumption that I will live like a resident and pay back those loan 1st 4 yrs of practice. Again, your financial based decision for HPSP wasn't very well thought out.

Don't forget about state income tax. Many in milmed don't pay state income tax. I didn't for the 11 years I was in the military. I was more than comfortable with the salary I made while on active duty. I never moonlighted either. Thing about the military most live below their means. I still have and drive the car I bought when I was an intern, many moons ago. I think for primary care the military is a legitimate avenue if one is purely looking at it financially. They'll come out ahead especially if they just do one utilization tour and complete their 4 year obligation. This calculation assumes they live below their means and do not take out additional loans while in medical school or during residency.

The advise people give is one has to think carefully about joining the military solely for financial reasons. Assuming they do residency plus pay back it could be 7 or 8 painful years. It would be more if fellowship is added. The culture is not for everyone. There are some drab assignments, especially for primary care. Operational medicine (assigned to a line unit) is pure tragedy. Outside of the training environment skills can atrophy. Many of those 65 and above are no longer seen at the MTF because they are medicare eligible. This rule impacts primary care more because 65 year and above can still get specialty care at the MTF. My first duty assignment after fellowship, on my clinic days I was seeing up to 17 patients a day (mostly healthy active duty troops or their dependents). I also had to see inpatient consults at some point during my clinic or procedure blocks (the civilian provider refused because it was not in their contract). I often had 12+ hour days. I still made the same salary and bonus as the 05 or 06 who is stationed at an overmanned post and has an abundance of administrative time and more procedure blocks.

 

[pgg]

The only tax saving you get is from your bah and bas, which is like 2-3K a year. Negligible in my opinion. I don't even pay attention to your interest rate calculation with the assumption that I will live like a resident and pay back those loan 1st 4 yrs of practice. Again, your financial based decision for HPSP wasn't very well thought out.

To pay off a 6%, 500K loan (Perrotfish's example that you quoted) in 4 years requires an $11,742 per month payment. Even with that accelerated payment plan, the cost still includes another $63K of interest.

So that's $140,910 in payments per year ... if you add, say, $60K of after-tax money to spend on "living like a resident" then you need $200K of after-tax money. If you're MFJ living in a high tax state like California that requires an income of about $318,000 W2.

That's $318K
- $80K in federal taxes (effective rate just over 25%)
- $12K in payroll taxes, 6.2% for the first $118,500 plus 1.45% medicare (no cap)
- $25K in state taxes

Note this leaves ZERO room for any retirement savings or investing. Why don't we go ahead and make the assumption that if you're motivated and responsible enough to pay off student loans in 4 short years, you're not going to leave tax-deferred saving space unused. Even if all you've got available is a sad little employer 401(k) with an $18K limit, now you need an income of $336K.


A couple of bold assumptions you're making:

#1 That one can count on finding a W2 position paying $336K right out of residency, regardless of specialty. Remember, pre-meds don't know what specialty they'll end up in. For every successful ENT or ortho spine surgeon in the world, there are 10 premeds who think that's their destiny but wind up in attainable but lower paying specialties.

#2 That after spending med school and residency working like a dog and living in near poverty, that you'll choose to keep living that way despite a fat $336K salary. And that your family will be up for extending the poverty ride too. Be honest. 9/10 people can't do that.

Could you? Well, you're a "finance guy" who supposedly made 15% year over year, year after year just by being a clever Warren Buffet baller in the stock market, so assuming that actually happened and you're not exaggerating your gains or conveniently forgetting about losses, then you're a risk taker. So, why pay the loans back at an accelerated rate at all? You're a "finance guy" ... why pay back a loan accruing 6% when you can earn 15% in the market? Be honest. You wouldn't do it either.


The simple, real world truth is that to pay off a $500K loan in four years, the young doctor needs a job around $400K, leaving about $100K post-tax, post-401k, post-loanpayment in order to live a little bit above the resident lifestyle.

Now. How many doctors exit residency and walk into $400K+ W2 positions? How many premeds would you advise to bet that's what their future holds?

(For a 1099 contractor position the roughly equivalent contract is about $458K, which assumes a $53K pre-tax contribution to a SEP-IRA instead of the $18K 401(k) ... but doesn't account for health insurance costs, malpractice premiums, or other W2 benefits. Probably need $500K+ 1099.)


Still think $500K in loans is no big deal?


As for your assessment of the tax advantages of being a military physician being "like $2-3K per year" ... what? Even if you don't cherrypick the high BAH of San Diego or DC, you're still probably looking at a minimum $1.5 - 2K/month BAH most places. No fed/payroll taxes on that is somewhere around $6K of tax savings. Then there's no state tax to pay ... not just on the BAH but on the entire paycheck. For a residence in CA that's easily a $10K+ benefit depending on the size of the underlying paycheck.

Since we're talking about people who do their time and get out, I won't get into the details of the tax implications of a military retirement, and the value of pre-tax employer contributions to defined benefit plans. But for those who stay, it's low-7-figure value with a 6-figure tax benefit.


God knows I'm not here trying to talk people into joining the military, but if you're going to make arguments based on math, you've got to do the math correctly. The numbers are what they are. (Unless Congress changes them in the 8+ years between our premed's matriculation and graduation from residency ... adding even more risk to the equation.)

 

[Cooperd0g]

Just a point of clarification about state income taxes in the military: you will pay the state income taxes based upon the state that you claim. Some states don't have any income tax. Some don't collect income tax from people who are active duty, but stationed outside of the state. Others collect the income tax regardless.

The problem is that when many new ascensions join they get back advice. "Claim Texas or Florida because they don't have state income tax." While DFAS will let you do that, it isn't legal. You should be claiming the state where you are a legal resident. States define that by having a driver's license, vehicle registration, voter registration, or some mix of those things. So if you have California driver's license, vehicle registration and vote there, but claim Florida on your LES then you are committing state tax evasion. Will you be caught? With most states, probably not. But some might bounce they license stuff against the tax filings and get curious. With California - they probably will. Those bastards sent me a bill for three years of backed income taxes because I bought a motorcycle there while stationed in their state even though it was titled and registered in Flordia, I had a Florida license at the time and voted in Florida. That took months for them to get off my back and I had to show years of old LESs to get it to happen.

 

[68PGunner]

To pay off a 6%, 500K loan (Perrotfish's example that you quoted) in 4 years requires an $11,742 per month payment. Even with that accelerated payment plan, the cost still includes another $63K of interest.

So that's $140,910 in payments per year ... if you add, say, $60K of after-tax money to spend on "living like a resident" then you need $200K of after-tax money. If you're MFJ living in a high tax state like California that requires an income of about $318,000 W2.

That's $318K
- $80K in federal taxes (effective rate just over 25%)
- $12K in payroll taxes, 6.2% for the first $118,500 plus 1.45% medicare (no cap)
- $25K in state taxes

Note this leaves ZERO room for any retirement savings or investing. Why don't we go ahead and make the assumption that if you're motivated and responsible enough to pay off student loans in 4 short years, you're not going to leave tax-deferred saving space unused. Even if all you've got available is a sad little employer 401(k) with an $18K limit, now you need an income of $336K.


A couple of bold assumptions you're making:

#1 That one can count on finding a W2 position paying $336K right out of residency, regardless of specialty. Remember, pre-meds don't know what specialty they'll end up in. For every successful ENT or ortho spine surgeon in the world, there are 10 premeds who think that's their destiny but wind up in attainable but lower paying specialties.

#2 That after spending med school and residency working like a dog and living in near poverty, that you'll choose to keep living that way despite a fat $336K salary. And that your family will be up for extending the poverty ride too. Be honest. 9/10 people can't do that.

Could you? Well, you're a "finance guy" who supposedly made 15% year over year, year after year just by being a clever Warren Buffet baller in the stock market, so assuming that actually happened and you're not exaggerating your gains or conveniently forgetting about losses, then you're a risk taker. So, why pay the loans back at an accelerated rate at all? You're a "finance guy" ... why pay back a loan accruing 6% when you can earn 15% in the market? Be honest. You wouldn't do it either.


The simple, real world truth is that to pay off a $500K loan in four years, the young doctor needs a job around $400K, leaving about $100K post-tax, post-401k, post-loanpayment in order to live a little bit above the resident lifestyle.

Now. How many doctors exit residency and walk into $400K+ W2 positions? How many premeds would you advise to bet that's what their future holds?

(For a 1099 contractor position the roughly equivalent contract is about $458K, which assumes a $53K pre-tax contribution to a SEP-IRA instead of the $18K 401(k) ... but doesn't account for health insurance costs, malpractice premiums, or other W2 benefits. Probably need $500K+ 1099.)


Still think $500K in loans is no big deal?


As for your assessment of the tax advantages of being a military physician being "like $2-3K per year" ... what? Even if you don't cherrypick the high BAH of San Diego or DC, you're still probably looking at a minimum $1.5 - 2K/month BAH most places. No fed/payroll taxes on that is somewhere around $6K of tax savings. Then there's no state tax to pay ... not just on the BAH but on the entire paycheck. For a residence in CA that's easily a $10K+ benefit depending on the size of the underlying paycheck.

Since we're talking about people who do their time and get out, I won't get into the details of the tax implications of a military retirement, and the value of pre-tax employer contributions to defined benefit plans. But for those who stay, it's low-7-figure value with a 6-figure tax benefit.


God knows I'm not here trying to talk people into joining the military, but if you're going to make arguments based on math, you've got to do the math correctly. The numbers are what they are. (Unless Congress changes them in the 8+ years between our premed's matriculation and graduation from residency ... adding even more risk to the equation.)

I agree with every points on your post, which is why the HPSP becomes more financially attractive if the total COA over 4 years is close to $500K, similarly to the COA of dental schools nowadays. In contrast, even at private medical schools, the total COA over 4 years is about $300K, which includes tuition and living cost. Assuming that it balloons to $360-380K at the end of residency, it is hardly a game changer considering that you are making 80-100K more as a FM civilian doc over your military peers.

 

[68PGunner]

I did the calculation myself. If you take out the full loan to pay the total COA over four years at $300-320K and account into the tax bomb by using the REPAYE option over 20 years, the real interest rate would be 2.2-2.4%/year while assuming everything over $450K is taxed at the 40%. However, we know that inflation will increase the total compensation of docs along with a higher tax bracket. Yup, it is still not a good financial deal for medical students.

I can't say about PSLF but PAYE will be available because it is written into the loan agreement for current students now.

 

[68PGunner]

As for your assessment of the tax advantages of being a military physician being "like $2-3K per year" ... what? Even if you don't cherrypick the high BAH of San Diego or DC, you're still probably looking at a minimum $1.5 - 2K/month BAH most places. No fed/payroll taxes on that is somewhere around $6K of tax savings. Then there's no state tax to pay ... not just on the BAH but on the entire paycheck. For a residence in CA that's easily a $10K+ benefit depending on the size of the underlying paycheck.

The Army doesn't have nice assignments with 2.0-3.5K/month BAH. They have dumps that cost about 1.4-1.7K/month BAH. With an extra $250-350/month BAH, you get a tax free income of about 20K/year. Now, I already made the argument that financially savy docs in general only pay about 18-22% in federal tax, which is not hard if you make a reasonable amount of babies (3-4 kids) and max out your deductions in every category. With those metrics, my upper limit number of $3K is a lot closer to your $6K mark.

 

[Perrotfish]

The Army doesn't have nice assignments with 2.0-3.5K/month BAH. They have dumps that cost about 1.4-1.7K/month BAH. With an extra $250-350/month BAH, you get a tax free income of about 20K/year. Now, I already made the argument that financially savy docs in general only pay about 18-22% in federal tax, which is not hard if you make a reasonable amount of babies (3-4 kids) and max out your deductions in every category. With those metrics, my upper limit number of $3K is a lot closer to your $6K mark.

A financially savy doc has at least 3 kids at the end of residency?

 

[68PGunner]

A financially savy doc has at least 3 kids at the end of residency?

Why are you hating on procreation? If he or she can afford it, why not? WCI actually encourages the act of marriage and baby making.

 

[pgg]

which is not hard if you make a reasonable amount of babies (3-4 kids)

I know it's not what you meant, but LOL'ing at the notion of doctors having kids for financial reasons. 🙂

If I didn't have kids I'd be suffocating under all the loose cash in the house.

 

[Gastrapathy]

A financially savy doc has at least 3 kids at the end of residency?

Absolutely. Kids later are way more expensive. you start to think they need private school, tennis coaches, etc. get the nest empty early.

 

[ArmyTiger]

Just a point of clarification about state income taxes in the military: you will pay the state income taxes based upon the state that you claim. Some states don't have any income tax. Some don't collect income tax from people who are active duty, but stationed outside of the state. Others collect the income tax regardless.

The problem is that when many new ascensions join they get back advice. "Claim Texas or Florida because they don't have state income tax." While DFAS will let you do that, it isn't legal. You should be claiming the state where you are a legal resident. States define that by having a driver's license, vehicle registration, voter registration, or some mix of those things. So if you have California driver's license, vehicle registration and vote there, but claim Florida on your LES then you are committing state tax evasion. Will you be caught? With most states, probably not. But some might bounce they license stuff against the tax filings and get curious. With California - they probably will. Those bastards sent me a bill for three years of backed income taxes because I bought a motorcycle there while stationed in their state even though it was titled and registered in Flordia, I had a Florida license at the time and voted in Florida. That took months for them to get off my back and I had to show years of old LESs to get it to happen.

Change your license and registration to your duty assignment, then. Your home of record is where you plan to end up after you finish your active duty career. If your plans change based on job availability, so be it. Plus, shouldn't be hard to cycle through Tennessee, Texas, Alaska, or Washington in your military career, making it an actual HoR.

Sent from my Pixel XL using SDN mobile

 

[Perrotfish]

Absolutely. Kids later are way more expensive. you start to think they need private school, tennis coaches, etc. get the nest empty early.

I'm guessing your spouse is stay at home? Because I think 100 hours/week of a nanny through all of residency seems more expensive than a tennis coach.

 

[colbgw02]

Change your license and registration to your duty assignment, then. Your home of record is where you plan to end up after you finish your active duty career. If your plans change based on job availability, so be it. Plus, shouldn't be hard to cycle through Tennessee, Texas, Alaska, or Washington in your military career, making it an actual HoR.

Sent from my Pixel XL using SDN mobile

To clarify, your home of record is the point from which you entered active duty, at least as the military sees it, and it rarely changes for officers. The concept that we're talking about is domicile, which we frequently also call residency, and it can change many times. For military personnel, it is the location to which you intend to return after completing your active duty service. Intent is a heavy burden for the states to prove legally, which is why so many people in the military take advantage of claiming a state with no income tax. Should you ever be called upon to demonstrate your intent, then it's important that you have done many of the things others have listed in that state: register a car, carry a driver's license, hold a medical license, file a tax return (if applicable), etc. Legally, the single biggest factor is probably where you're registered to vote, but the simplest thing a servicemember could do is probably draft a last will & testament with instructions to have it executed in the state of your choosing. All that takes is a trip to JAG and telling them what state you want.

 

[Mad Jack]

Many would consider their souls priceless. Only sign up if you want to serve- no amount of money you could possibly save by going HPSP can make what you give worth the sacrifice of serving isn't what you want.