MD Entering M1: FA + CC conundrum

[SSDGM]

So, I'm in a weird predicament that I feel really ashamed to admit here (please go easy on me). I don't have the financial-aid know-how to figure this one out.

BAD NEWS: Basically, I have tons of credit card debt. Some cards, some consolidated personal lines of credit, etc. I'm working on it. I was irresponsible right out of undergrad, I've had some costly health problems, and I haven't always navigated sticky situations with financial prowess. I work 60 hours/wk (and have for the past 1.5 years), I have a (free) banker through my bank who I've been working with for two years, but...it's still a lot. And it's not going to go away in the next two months before I start school. It's all starting to hit me now that...I have no way to make credit card payments during school (I'm entering with zero savings, no spouse, no family that has any way to help financially, etc).

GOOD NEWS: I've been awarded a full-tuition academic scholarship at my med school (I still have to pay room and board and fees and all that, but, thankfully, all of my tuition is covered by this scholarship).

I've been in contact with my school's financial aid office. They've advised me to:

-find a cheaper apartment (working on it)
-consolidate my personal debts (already have for most, working on the rest)

I explained that even if I do that, with a $900 room and board budget, it's still not possible for me to have rent, food, gas money, and make personal debt monthly payments. To that they say, yes, but it's a start...at least there's less you have to come up with. Less to worry about. But.......that's not a full solution. I can't spend the next two months in this constant state of worry about how I'm not even going to keep my head above water financially once my current jobs end and school begins. I guess I thought it'd be like undergrad, where I had all these loans I didn't need because I had these academic scholarships that covered almost everything and that, when I didn't have $ to pay for monthly expenses, I could tap in to those loans. But the financial aid office tried to explain to me how my COA starts off the same, but then my scholarship is added, so now my COA is lower so I'm going to get less loans since I can't borrow over COA (I think that's the gist). I've done so much reading online, I'm trying to educate myself about how graduate school loans are different, but I don't get it. And I don't get it when my (1 person) financial aid department explains it to me. And no one seems to know what I need to do now.

Did I screw myself over? Am I at a point where I have to choose medical school or declaring bankruptcy?

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[mvenus929]

How much debt are we talking?

 

[chaim123]

So, I'm in a weird predicament that I feel really ashamed to admit here (please go easy on me). I don't have the financial-aid know-how to figure this one out.

BAD NEWS: Basically, I have tons of credit card debt. Some cards, some consolidated personal lines of credit, etc. I'm working on it. I was irresponsible right out of undergrad, I've had some costly health problems, and I haven't always navigated sticky situations with financial prowess. I work 60 hours/wk (and have for the past 1.5 years), I have a (free) banker through my bank who I've been working with for two years, but...it's still a lot. And it's not going to go away in the next two months before I start school. It's all starting to hit me now that...I have no way to make credit card payments during school (I'm entering with zero savings, no spouse, no family that has any way to help financially, etc).

GOOD NEWS: I've been awarded a full-tuition academic scholarship at my med school (I still have to pay room and board and fees and all that, but, thankfully, all of my tuition is covered by this scholarship).

I've been in contact with my school's financial aid office. They've advised me to:

-find a cheaper apartment (working on it)
-consolidate my personal debts (already have for most, working on the rest)

I explained that even if I do that, with a $900 room and board budget, it's still not possible for me to have rent, food, gas money, and make personal debt monthly payments. To that they say, yes, but it's a start...at least there's less you have to come up with. Less to worry about. But.......that's not a full solution. I can't spend the next two months in this constant state of worry about how I'm not even going to keep my head above water financially once my current jobs end and school begins. I guess I thought it'd be like undergrad, where I had all these loans I didn't need because I had these academic scholarships that covered almost everything and that, when I didn't have $ to pay for monthly expenses, I could tap in to those loans. But the financial aid office tried to explain to me how my COA starts off the same, but then my scholarship is added, so now my COA is lower so I'm going to get less loans since I can't borrow over COA (I think that's the gist). I've done so much reading online, I'm trying to educate myself about how graduate school loans are different, but I don't get it. And I don't get it when my (1 person) financial aid department explains it to me. And no one seems to know what I need to do now.

Did I screw myself over? Am I at a point where I have to choose medical school or declaring bankruptcy?

For graduate school - Total Cost of Attendance = Scholarships + Grants + Loans + Parental Contribution, and you can't go above the Cost of Attendance. So if Cost of Attendance is 90K, and you got 50K in scholarship, that means you can take out a maximum of 40K in loans. The school can't just give you as much money as you want, unfortunately.

 

[The Unburnt]

I'm just a lowly incoming M1 but I've talked to a lot of med students about financial aid and I know the financial aid office is allowed to increase your COA for extenuating circumstances. I've heard of this being done for people who have families and need more money to live on, people who had unexpected car troubles they couldn't fit into their budget, and people who didn't budget well and ended up stuck in another part of the country with no money to get home (I'm not making this up). I'm not sure if your situation will qualify for an increase but you should inquire about it. The least they can do is say no.

On another note, every budget for medical schools I was accepted to had wiggle room in certain places. For example, the school I plan on attending has about $2500 budgeted for books, which from talking to med students is just extra pocket money since you don't need to buy that many physical textbooks due to online copies/powerpoints/library. Hopefully you have some unanticipated wiggle room like that.

Not sure what your situation is but you should definitely look into getting roommates if possible as that might bring your rent down a lot. Maybe you can carpool with them as well and that will save some money on gas or take the bus if your town has a good bus system.

Sorry if this isn't helpful at all, just thought I'd throw some stuff out there. Good luck!

 

[intubesteak]

You can take more than the COA. It may not be the same federal loans but it can be done easily, and you should do it ASAP to pay off the CC debt. Whatever interest rate they give you is better than CC debt.

 

[operaman]

Depending on your state of residence, you could consider a strategic default. That’s just a fancy way of saying you stop paying your bills but don’t declare bankruptcy. There are some states that don’t allow unsecured creditors to garnish wages or bank accounts, so they rarely bother with taking defaulters to court because there’s no way for them to enforce any judgement.

If it were me and I lived in one of those states, I’d try to open a few credit cards now while my credit was still decent so you have credit available, and then i would sinply stop paying on all existing debt. It would tank my credit but those blemishes could only stay on a credit report for 7 years compared with 10 years for a bankruptcy. You’d be quasi debt free and have a beautiful credit report about the time you finish training.

 

[DiscusKeeper]

Unless I'm missing something, you should have WAY more than you need in access to federal loans since your tuition is being paid for by a scholarship. You should still be able to take out the max amount based on the school's cost of attendance, but since you're not paying tuition, your actual cost of attendance is much less (thus the excess in loans). Sit down and make a budget for your expenses, including things like credit card payments. Take out loans accordingly.

It's gonna suck if you have to make credit card payments with federal loan money, but you will have a good earning potential and shouldn't accumulate too much debt from med school since your tuition is being paid for.

 

[ortnakas]

Unless I'm missing something, you should have WAY more than you need in access to federal loans since your tuition is being paid for by a scholarship. You should still be able to take out the max amount based on the school's cost of attendance, but since you're not paying tuition, your actual cost of attendance is much less (thus the excess in loans).
.

Unfortunately doesn’t work like that. Your financial aid cannot exceed cost of attendance, except in extreme circumstances as described above, and I don’t know if previous debt qualifies. If the school’s COA is $80K, and OP has a scholarship for $40K, he/she can now only borrow $40K; borrowing the extra $40K that a scholarship is covering isn’t allowed (no “double dipping”). Scholarships reduce your borrowed total.

 

[DiscusKeeper]

Unfortunately doesn’t work like that. Your financial aid cannot exceed cost of attendance, except in extreme circumstances as described above, and I don’t know if previous debt qualifies. If the school’s COA is $80K, and OP has a scholarship for $40K, he/she can now only borrow $40K; borrowing the extra $40K that a scholarship is covering isn’t allowed (no “double dipping”). Scholarships reduce your borrowed total.

Did not realize that. Thanks for the info!

 

[JermanH]

I'm in a similar boat as you in terms of CC debt. Your best bet is to get a private loan with lower interest cost than your CC debt. Get a plan that ranges over the next 4-6 years...I know you'll end up paying much more in the long run, but it's not worth living in a cardboard box and on rice on beans for the next 4 years. Obviously don't spend frivolously, and try to pay off more than your debt if you can. It totally sucks, but there's really no other option :/

I hate how medical schools really punish those who are from a lower income...I wasn't "poor" enough to qualify for the FAP program, But I wasn't rich enough to have covered the cost of applications even with a full time job...so here I am with a mountain of CC before I've even opened my first medical book.

They should at least let us borrow as much as we wanted. It's not like we're not going to be in a mountain of debt at the end of this anyway. What's a mother few ks on top of it all?

 

[intubesteak]

Unfortunately doesn’t work like that. Your financial aid cannot exceed cost of attendance, except in extreme circumstances as described above, and I don’t know if previous debt qualifies. If the school’s COA is $80K, and OP has a scholarship for $40K, he/she can now only borrow $40K; borrowing the extra $40K that a scholarship is covering isn’t allowed (no “double dipping”). Scholarships reduce your borrowed total.

You can get federal loans above COA for a lot of reasons. Ones I looked into personally were extra $ for health insurance, and also a car. Didn't end up doing it but they were available. Life happens and there are options to get more loan money.

 

[JermanH]

You can get federal loans above COA for a lot of reasons. Ones I looked into personally were extra $ for health insurance, and also a car. Didn't end up doing it but they were available. Life happens and there are options to get more loan money.

Not true. Some schools are extremely strict on increasing loan $. For example my school only allows it for child care and medical emergencies. They don’t allow it for anything else.

 

[darknecrosforte]

They let you increase loans for "out-of-pocket", but self-care expenses like eye exams, glasses, health/dental insurance premiums. They also let you get your budget increased for licensing exam costs. You need receipts. They may let you increase your budget for exam prep courses, as well. If you just so happen to be paying for any of these anyways, might as well increase your loans to triage.

 

[intubesteak]

Bottom line you need to talk to financial aid at your school and see what they are able to do

 

[mistafab]

You need to listen to between 3-5 Dave Ramsey podcasts to get you into the right state of mind before you start thinking about what you are going to do.

Once he slaps you across the face with some reality, you’ll figure out a better solution than the ones you are contemplating. Hopefully, you won’t feel so up against a wall.

Best of luck.

 

[darknecrosforte]

You need to listen to between 3-5 Dave Ramsey podcasts to get you into the right state of mind before you start thinking about what you are going to do.

Dave DOES ask "who's the doctor?" regarding many call-ins talking about outrageous student loans so this could potentially backfire in this specific case.

 

[djtallahassee]

Dave DOES ask "who's the doctor?" regarding many call-ins talking about outrageous student loans so this could potentially backfire in this specific case.

I was just listening to DR and cases with doctors. He still slaps them across the face! It’s even sadder when he ask the question and they say they are to doctors.

OP financial aid and/or tell us how much credit card debt to get any idea on what to advise