Debt Stress

[Red Beard]

Just a little heads up from my recent meeting with my financial aid advisor...

I am a first year at a private school, borrowing money from Stafford and Grad Plus for the full cost of my education. At our school, we have a meeting with our financial aid counselor during the first semester where they crunch numbers for us, giving us a clear idea of what we will be dealing with when we are done with training. Here's the rough numbers in my case, and they will be comparable to most folks at a private medical school (DO or MD):

Total borrowed over 4 years: ~$220,000

Assuming a 10 year repayment schedule:

Total interest paid: ~$90,000
Total to be repaid over 10 years: ~$315,000
Monthly payments: ~$2600/month

Now, assuming I consolidate and repay over 30 years:

Total interest paid: ~$310,000!!!
Total to be repaid over 30 years: $530,000!
Monthly payments: ~$1500/month

Now, I want to go into family medicine. And have a family. And eventually not have to rent a place to live.

Wish me luck...

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[djnels01]

Just a little heads up from my recent meeting with my financial aid advisor...

I am a first year at a private school, borrowing money from Stafford and Grad Plus for the full cost of my education. At our school, we have a meeting with our financial aid counselor during the first semester where they crunch numbers for us, giving us a clear idea of what we will be dealing with when we are done with training. Here's the rough numbers in my case, and they will be comparable to most folks at a private medical school (DO or MD):

Total borrowed over 4 years: ~$220,000

Assuming a 10 year repayment schedule:

Total interest paid: ~$90,000
Total to be repaid over 10 years: ~$315,000
Monthly payments: ~$2600/month

Now, assuming I consolidate and repay over 30 years:

Total interest paid: ~$310,000!!!
Total to be repaid over 30 years: $530,000!
Monthly payments: ~$1500/month

Now, I want to go into family medicine. And have a family. And eventually not have to rent a place to live.

Wish me luck...

That is seriously SCARY! I am (was?) considering something in primary care like FP, but after seeing those numbers, and after the recent medicare reimbursement cuts, I am wondering if doing IM (or something that is largely procedure based) would be "financially wiser" - while still allowing me to stay true to my desire to do primary care...

Thanks for the numbers. Best of luck to you... and all of us

 

[JonnyG]

you would be a ***** if you actually paid this back especially since you are going into primary care. Going some where that needs docs will most likely include tuition reimbursement. These places aren't int he middle of no where. Throughout PA a family practice doctor can get a 100000 towards loan repayment every three years or so (depends on your contract) This is in addition to you salary. Those that have trouble paying it back do not look around for the bext deals or consider it beneath them to work anywhere but a top notch facility in a huge city with a ton of doctors already present

 

[Vox Animo]

I'm with you there, i will be around 300K debt if i'm lucky.

But if you have skills that are sought after, you probably could get some practices to help pay them back.

Or just move the the mountains of mexico, be the town doctor, drink good tequila and never pay them pack. Global economy my ass.

 

[rgerwin]

Who spends 30 yrs paying off medical school loans? Pay just interest during residency, live cheap. When you geta real job live cheap another 2 years and pay off most of the loans.

 

[raidermedic]

Who spends 30 yrs paying off medical school loans? Pay just interest during residency, live cheap. When you geta real job live cheap another 2 years and pay off most of the loans.

Grads from a two years ago were able to lock in a insane low rate so it makes sense for them to pay over 30 years. Unfortunately rates are for stafford are now locked at 6.8. Because of that it's kind of a personal decision now as to whether you would rather pay off your loans in the short term and have no have no financial foundation or to start building that foundation while managing loans over 30 years. Me personally I will be going the 30 year route.

 

[nowooftickets]

I thought I heard the democrats are planning to lower the interest rates on students loans back down to 2-3% if they win back a lot of house/senate seats.

 

[JonnyG]

I thought I heard the democrats are planning to lower the interest rates on students loans back down to 2-3% if they win back a lot of house/senate seats.

even if they dont there is a recession every 10 years or so which will drop interest rates again and you take a private loan to pay them off.

 

[ImNoSuperman]

LOL... it's so interesting to hear fellow med students stressing out over finances. A little advice passed down to us at OUCOM during one of our "Business of Medicine" lectures at the beginning of the year: you are going to go into debt, get over it! For FP and other primary care fields, there are always programs like NHSC after you get done with residency and they can pay back your loans. OR, you can live on a resident's salary for the first four years or so after residency and have your loans paid off in no time!!! Even if you keep about 40-50k a year, that is doing pretty well compared to a lot of people in this country. Even so, let's not worry about this yet.

 

[Buckeye(OH)]

LOL... it's so interesting to hear fellow med students stressing out over finances. A little advice passed down to us at OUCOM during one of our "Business of Medicine" lectures at the beginning of the year: you are going to go into debt, get over it! For FP and other primary care fields, there are always programs like NHSC after you get done with residency and they can pay back your loans. OR, you can live on a resident's salary for the first four years or so after residency and have your loans paid off in no time!!! Even if you keep about 40-50k a year, that is doing pretty well compared to a lot of people in this country. Even so, let's not worry about this yet.

Lets not worry about this yet?


Thats exactly how people get caught with their pants down - they don't have a plan.


The more you stay on top of every aspect of your finances, they better off you'll be. Instead of sitting back and saying - yup, Im in debt, and thats fine because my school told me so!!


Until they start back your loans - I wouldn't take to heart to much what my administration or anyone else told them.

 

[ImNoSuperman]

Lets not worry about this yet?


Thats exactly how people get caught with their pants down - they don't have a plan.


The more you stay on top of every aspect of your finances, they better off you'll be. Instead of sitting back and saying - yup, Im in debt, and thats fine because my school told me so!!


Until they start back your loans - I wouldn't take to heart to much what my administration or anyone else told them.

That's not what I meant, Buckeye. You DO need to stay on top of your finances, but alot of people are deterred from picking a particular area of medicine because they are worried about paying off their loans. Or, they are so scrupulous with thier money (which isn't a bad thing) that they'd rather starve for a week than take out an extra $100. And it was a physician who's been there and done that that does our Business of Medicine lectures, not the administration... AND he's an FP... AND he has a very comfortable life with a family.
All I'm trying to say is that despite what people have posted in other threads about not being able to make enought to live on and pay back loans at the same time, or having to pay it back over 20 or 30 years is BS. Live like a resident for four or five years after residency and get them paid off pronto; then you waon't have to worry about paying a million dollars in interest on $200k.

 

[It'sElectric]

If I'm not mistaken, the interest you pay towards your loans is tax-deductible each year (at least it was for undergrad). Thus, it's not like you have to live in the poor house for ten years (no matter what field you go into). I think a lot of people get stressed out about it, because they had big plans of a Beamer, $400,000 home, and all of the extra perks RIGHT out of residency. That's just not realistic, and the sooner you accept that, the sooner you'll understand that debt can and will be managed. Living off of $60,000 AFTER taxes is not impossible even with a wife and a few kids. Manage your debt early on by doing all that is necessary to take care of your loans early and you can eventually live the life you always dreamed of.

The trap that doctors often fall into is buying EVERYTHING right out of the starting gate and not even taking a second to think about investments. Be smart with your money, invest wisely, etc. and you won't have to work as hard or as long.

 

[ImNoSuperman]

If I'm not mistaken, the interest you pay towards your loans is tax-deductible each year (at least it was for undergrad). Thus, it's not like you have to live in the poor house for ten years (no matter what field you go into). I think a lot of people get stressed out about it, because they had big plans of a Beamer, $400,000 home, and all of the extra perks RIGHT out of residency. That's just not realistic, and the sooner you accept that, the sooner you'll understand that debt can and will be managed. Living off of $60,000 AFTER taxes is not impossible even with a wife and a few kids. Manage your debt early on by doing all that is necessary to take care of your loans early and you can eventually live the life you always dreamed of.

The trap that doctors often fall into is buying EVERYTHING right out of the start gate and not even take a second to think about investments. Be smart with your money, invest wisely, etc. and you won't have to work as hard or as long.

Listen to this guy... he knows the truth.

 

[Vox Animo]

Living off of $60,000 AFTER taxes is not impossible even with a wife and a few kids. Manage your debt early on by doing all that is necessary to take care of your loans early and you can eventually live the life you always dreamed of.

The trap that doctors often fall into is buying EVERYTHING right out of the starting gate and not even taking a second to think about investments. Be smart with your money, invest wisely, etc. and you won't have to work as hard or as long.

In some fields, you start at around 80K after residency, so 60K after taxes is what you start with. NOw think about paying off 30-40K a year in loans assuming you have no outside help, and you aren't living so comfortably.

 

[Doctor Bagel]

In some fields, you start at around 80K after residency, so 60K after taxes is what you start with. NOw think about paying off 30-40K a year in loans assuming you have no outside help, and you aren't living so comfortably.

What fields are those? The only thing I've heard about where salaries would be that low would be peds in a really desirable location. Even fp docs and internists average around $150k/year.

 

[It'sElectric]

In some fields, you start at around 80K after residency, so 60K after taxes is what you start with. NOw think about paying off 30-40K a year in loans assuming you have no outside help, and you aren't living so comfortably.

As Exlawgirl already said, the number of physicians making that kind of money is incredibly few and far between - they're outliers. Furthermore, I would hope that anyone in that situation would also have some sort of loan repayment incentive, which is fairly common. You're giving the absolute extreme worst case scenario, which isn't even hardly indicative of what's really going on. Roughly 150K is what I'm going by, and from speaking with current physicians, this is NO stretch whatsoever.

 

[jhug]

I thought I heard the democrats are planning to lower the interest rates on students loans back down to 2-3% if they win back a lot of house/senate seats.

yea, and then they'll raise our taxes and keep cutting our reimbursements so, while we pay 2% interest, we are netting 40K...nothing like being an intern again

 

[yadayadadude]

If I'm not mistaken, the interest you pay towards your loans is tax-deductible each year (at least it was for undergrad).

This is true, but probably won't apply to most doctors. The rule is that up to $2500 in student loan interest payments is tax deductible IF you make less than $50K (or $100K, married filing jointly). A partial deduction is allowed for incomes under $65K (or $130K). So, if you have a terrible income (for a doc) you can save something like $700 on your income taxes each year. Yee-haw.

 

[It'sElectric]

This is true, but probably won't apply to most doctors. The rule is that up to $2500 in student loan interest payments is tax deductible IF you make less than $50K (or $100K, married filing jointly). A partial deduction is allowed for incomes under $65K (or $130K). So, if you have a terrible income (for a doc) you can save something like $700 on your income taxes each year. Yee-haw.

Thanks for the info. Let's just say I didn't make more than 50K last year (first year out of undergrad) so I was able to deduct it all, which was nice for a poor person.

 

[czanetti]

So we shouldn't be concerned if we are likely to be around 260,000 in debt???? Not at all?

 

[It'sElectric]

So we shouldn't be concerned if we are likely to be around 260,000 in debt???? Not at all?

It's not a matter of being concerned or not. If you are completely unconcerned, then I would have to assume that you have no plan to handle the debt, let alone a basic understanding of what it takes to rid yourself of that kind of debt. What I'm trying to say is that there is absolutely 0 reason to actively stress about it. If you fully understand what the debt means and what it takes to manage it, then you won't be stressing about it on a regular basis.

There are a number of ways to handle the debt in an efficient and intelligent manner. Pay off interest while in residency (if at all possible), live relatively frugal during residency and upon finishing your residency for at least 5 or so years afterwards. All of this doesn't include loan repayment programs that many jobs will offer.

The majority of this really equates to something that SOOOOOO many Americans have lost sight of: LIVE WITHIN OR EVEN BELOW YOUR MEANS. I don't know if it's the Baby Boomer generation's fault, or what, but so many Americans have been living well above their means and resultantly, they have little to no savings. Social Security and even most pension plans will essentially be dead in the future, and it will be everyone's own personal responsibility to save for the future.

Ok, my rant has gone on long enough.

 

[bkpa2med]

The majority of this really equates to something that SOOOOOO many Americans have lost sight of: LIVE WITHIN OR EVEN BELOW YOUR MEANS.

Make smart investments and definately live within your means. But the problem with that is that states like mine, New York, have extremely high cost of living and you may not be able to save that much. That's why I'm going to look for a better state with low cost of living and make investments.

For example, if you buy an average home in New York and put $100k downpayment, your mortgage will most likely be hovering $3500 or so per month. Plus your loan payment say $1500, that's $5k there for nothing. Meanwhile in Fort Worth Texas you can buy a home with putting $40k down and having a mortgage of $900.

My last word of advice would be just manage your finances in a smart manner and really live within your means until you feel comfortable.

 

[olliemctuffy]

Yes, but then you have to live in Texas. Remember the top three selling points of real estate: Location, location, location.

I'm assuming some of the 200k+ debt people are taking on is financed by forgivable or very low interest loans from state governments or medical societies, etc. In my case, simply choosing to practice in the state that gave me these loans will immediately cut my total debt by about 1/4 (if I do primary care). If not, I will be a resident for at least 6 years (not fun) and be making alot more money at the end so it won't matter.