Entering med school with CC debt

[sbuxaddict]

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How can you manage paying off credit card debt in medical school?
Even if you can pay the minimum each month, with APR rates so high for introductory cards, wouldn't you end up paying a lot more in the long run?

 

[DrMidlife]

There's no consideration in student lending for consumer debt. You can't go ask for a budget increase because you have payments on credit cards or on a car. The living expenses you are budgeted in your school's cost of attendance can only be increased for things like childcare or medical bills or educational expenses.

Whether you can manage credit card debt during med school depends on:
- the balance on your credit card(s)
- your ability to set, and live within, a budget
- your tolerance for being in consumer debt
- your access to paid employment during med school and/or during breaks
- your access to other sources of money during school (such as parents)

You can get a look at your school's cost of attendance to see what you're expected to live on, and do your calculations from there. Note that it's normal for a med school to cover only 9 out of 12 months of the first two years of med school. So consider whether you have other sources of income to cover the summers, or if you have to use the 9 month budget to cover 12 months.

Best of luck to you.

 

[Brent8927]

Talk with your financial aid department--my school allows a budget increase for car payments, car insurance, healthcare costs, parking, furniture, moving expenses for first year, and a few others. If you have any of those, you can ask for a budget increase (if your school allows it, there's wide variation among schools) and then use that loan money (usually private loans) to pay off your credit card.

I would pay off the credit cards ASAP, so if you can't get a budget increase or you don't have any or enough eligible expenses, then do your best to come up with a budget that leaves money left over to pay of that card.

 

[dpmd]

Kicking the starbucks habit would go a long way to helping you pay off your CC debt. Also, live cheaply with roommates (hell, maybe even with someone actually sharing the same bedroom-I know people who did that in college as well as had people living in the living room so that the rent was split into smaller shares), use coupons and store brands to reduce your eating expenses (and don't eat out), read at the library instead of buying books (I did this throughout med school even though I could afford to buy stuff), don't buy clothes unless absolutely necessary and shop at thrift stores or discount stores. Although, I think a lot of people could avoid having credit card debt by doing the above but they just don't and accept the consequences of paying pack a ton more money or eventually file for bankruptcy.

 

[DrMidlife]

Talk with your financial aid department--my school allows a budget increase for car payments, car insurance, healthcare costs, parking, furniture, moving expenses for first year, and a few others. If you have any of those, you can ask for a budget increase (if your school allows it, there's wide variation among schools) and then use that loan money (usually private loans) to pay off your credit card.

Getting a private loan has nothing to do with a cost of attendance budget increase. With federal loans you can't get cost of living increases for consumer debt. Private loans are not eligible for any of the federal repayment plans that are absolutely critical to us newbies who are graduating with $250k+ in student loan debt.

 

[sbuxaddict]

There's no consideration in student lending for consumer debt. You can't go ask for a budget increase because you have payments on credit cards or on a car. The living expenses you are budgeted in your school's cost of attendance can only be increased for things like childcare or medical bills or educational expenses.

Whether you can manage credit card debt during med school depends on:
- the balance on your credit card(s)
- your ability to set, and live within, a budget
- your tolerance for being in consumer debt
- your access to paid employment during med school and/or during breaks
- your access to other sources of money during school (such as parents)

You can get a look at your school's cost of attendance to see what you're expected to live on, and do your calculations from there. Note that it's normal for a med school to cover only 9 out of 12 months of the first two years of med school. So consider whether you have other sources of income to cover the summers, or if you have to use the 9 month budget to cover 12 months.

Best of luck to you.

That's what I figured. When I went to Accepted Students they said that Financial Aid depends on the estimated COA determined by the school. You can't borrow above that for the federal loans.

Talk with your financial aid department--my school allows a budget increase for car payments, car insurance, healthcare costs, parking, furniture, moving expenses for first year, and a few others. If you have any of those, you can ask for a budget increase (if your school allows it, there's wide variation among schools) and then use that loan money (usually private loans) to pay off your credit card.

I would pay off the credit cards ASAP, so if you can't get a budget increase or you don't have any or enough eligible expenses, then do your best to come up with a budget that leaves money left over to pay of that card.

That's interesting, do they allow that change into the estimated living costs?

Kicking the starbucks habit would go a long way to helping you pay off your CC debt. Also, live cheaply with roommates (hell, maybe even with someone actually sharing the same bedroom-I know people who did that in college as well as had people living in the living room so that the rent was split into smaller shares), use coupons and store brands to reduce your eating expenses (and don't eat out), read at the library instead of buying books (I did this throughout med school even though I could afford to buy stuff), don't buy clothes unless absolutely necessary and shop at thrift stores or discount stores. Although, I think a lot of people could avoid having credit card debt by doing the above but they just don't and accept the consequences of paying pack a ton more money or eventually file for bankruptcy.

The screenname came from when I was in a Starbucks during MCAT studying, but duly noted haha.

Thanks for the advice.

 

[Brent8927]

That's interesting, do they allow that change into the estimated living costs?

First off, I just want to say dpmd has great advice, and that's the place to start. But yes, many programs will allow you to apply for a budget increase. At my school they allow an increase to cover car payments, car loans, car insurance, parking (other than school parking), moving costs, furniture, healthcare bills. There might be a few others they allow, but that's all I can think of.

As DrMidlife points out, credit card debt is not something you can get additional funds for, so you would have to justify the extra money you need another way. That's what our financial aid offer tells us--I got married but you can't get money for a wedding/honeymoon (FYI it was a budget wedding) but my financial aid officer worked with me to find things I could get money for so that I had enough to cover the wedding costs.

I've applied for budget increases at my school and they've always worked with me and approved things that are approvable. At least at my school the extra aid comes in the form of school-certified private loans, but I've heard of other schools that are able to get federal loans for their students (which would be far preferable, though my private loans are all at 2-4%, granted they're variable rates)

There's great variability between financial aid departments and how much they'll help you. My medical school has it's own financial aid department at the school, so we don't have to talk with the undergrad financial aid people.

You first step if you're even thinking about applying for more loans is to talk to your financial aid officer to see if it's possible at your school. But even if you do take out more loans, absolutely do whatever you can to reduce your costs wherever you can. You don't want to skimp on things that might be needed (some schools really require a car in the clinical years--but you can probably get by without one for the first two years), but if you can find good people to share an apartment (and potentially a room) with, then move in with them.

I found the following blog has some really helpful posts on saving money:

http://www.mrmoneymustache.com/

Another quick/easy way to save money is to ditch the smartphone if you have one and are paying for your own plan. You really don't need one in medical school. I didn't, as well as one of my friends. And older ipod touch or pocketbooks do everything you need. Computers located throughout the hospital do the rest. Or, if your contract is over, look at the post above and you can get a basic bare-bones plan for as low as $10. (that one won't work for most people, but they and the other companies have more affordable plans than the main wireless companies, and they use the same network).

Anyway, I had a number of friends who didn't even take the full cost of attendance--if you live like them, then just borrow the full cost your first and maybe second year so you can pay off the consumer debt asap. Really, try as much as possible to borrow as little as possible. You don't know where the future of healthcare is going and the odds are loan forgiveness won't be around for us to benefit from (it may, but it'd be foolish to count on it), and if you do have to get private loans those don't have the benefits of federal loans (though they can be deferred in residency). Still, the rates can go way up on those private loans...

I hope that helps a bit.

 

[plage noire]

I'm curious about the overlap between credit card debt (which isn't factored into COA) and medical bills (which is factored in) - I have credit card debt that is entirely made up of medical bills (had to use my credit cards to pay for past treatments that I otherwise couldn't afford). I wonder whether there's any way to include this or whether it's denied outright for being "pre-existing" in a sense... Does anyone have any experience with this?

 

[DrMidlife]

I'm curious about the overlap between credit card debt (which isn't factored into COA) and medical bills (which is factored in) - I have credit card debt that is entirely made up of medical bills (had to use my credit cards to pay for past treatments that I otherwise couldn't afford). I wonder whether there's any way to include this or whether it's denied outright for being "pre-existing" in a sense... Does anyone have any experience with this?

Yep - you need to get your school's exact definition of approved medical expenses. You'll likely find that if the medical expense is not incurred during the school year, you can't get a budget increase for it.

In my case I had to show the medical bill with dates of service, and the exact method of payment for that bill. It made no difference if I paid cash or put it on a credit card. Unfortunately if you paid a medical bill with a credit card a while back, then there's no longer any medical aspect of your credit card bill - it's just payments toward consumer debt.

School financial aid offices are just following federal and state law with this, but you should still get your school to tell you exactly where you stand, as soon as you can.

Best of luck to you.

 

[plage noire]

Thanks Dr. Midlife. Yeah, it makes sense. Worth asking but I'd be surprised if it was approved as well. I should mention that currently this is for attending a post-bac and not for med school yet. But from everything I've read, I should do everything possible to get this paid off before med school when I REALLY won't have any time to work.

 

[The White Coat Investor]

How can you manage paying off credit card debt in medical school?
Even if you can pay the minimum each month, with APR rates so high for introductory cards, wouldn't you end up paying a lot more in the long run?

One of the best resources I know of for people carrying credit card debt is Dave Ramsey. Your local Christian churches will offer classes, he has books available at your local library or you can just listen to his radio show or podcasts.

To be honest, credit cards aren't for credit. Using them for credit is a huge financial mistake. The way to pay them off is to eat nothing but beans and rice and spend nothing until the debt is gone. Of course, that's a different lifestyle than what brought the debt in the first place. I can't imagine carrying 18%+ debt throughout the 7+ year medical training pipeline. Trading it for student loan debt may be a little better, but not by much. The good news is the lessons you'll learn paying it off will help you minimize your student loan debt.