Family Income $130k. Financial aid possible?

[Syndicate]

Is it possible for me to get any institutional financial aid if my parents make a combined $130k before taxes? I know for FAFSA, I will qualify for the max $40k unsubsidized loan since I am a student making nothing. Is there also a $8k subsidized loan from FAFSA?

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[TheWeeIceMan]

I wouldn't count on any need based aid. Also, there are no subsidized loans for medical school.

 

[Syndicate]

I wouldn't count on any need based aid. Also, there are no subsidized loans for medical school.

Yes I know I won't receive any scholarships but many schools have no interest loans during school. I'm wondering if I would be able to qualify for those

 

[darklabel]

I wouldn't count on any need based aid. Also, there are no subsidized loans for medical school.

There's no subsidized loan for any grad program because they allocated those funds towards paying for the Pell Grant. (thanks Obama 🙄). Never heard of any school doing something like that since schools don't typically offer loans, the government does.

Also, very low likelihood of getting any financial aid including what you're asking for. Looks like its all loans baby loans.

 

[Bink]

There's no subsidized loan for any grad program because they allocated those funds towards paying for the Pell Grant. (thanks Obama 🙄). Never heard of any school doing something like that since schools don't typically offer loans, the government does.

Also, very low likelihood of getting any financial aid including what you're asking for. Looks like its all loans baby loans.

Some schools do give out institutional loans that have low interest rates and have other benefits like no interest accrual during medical school. From what I've seen they don't come close to covering tuition but every little bit counts.

 

[darkjedi]

You can certainly get merit based financial aid, but I wouldn't bet on need-based.

 

[PreMedOrDead]

You can certainly get merit based financial aid, but I wouldn't bet on need-based.

It sounds like this isn't the case, but if his parents were separated wouldn't he only need to file one of his parent's earnings? For example, if the father earned $120k and never contributed, but his mother was unemployed, need-based aid could be determined by his mothers?

This is a possibility for undergraduate loans, I know, but you generally have to file the exception.

 

[StBernardsRule]

There's no subsidized loan for any grad program because they allocated those funds towards paying for the Pell Grant. (thanks Obama 🙄). Never heard of any school doing something like that since schools don't typically offer loans, the government does.

Also, very low likelihood of getting any financial aid including what you're asking for. Looks like its all loans baby loans.

Wow I was unaware of this... gross.

 

[darkjedi]

It sounds like this isn't the case, but if his parents were separated wouldn't he only need to file one of his parent's earnings? For example, if the father earned $120k and never contributed, but his mother was unemployed, need-based aid could be determined by his mothers?

This is a possibility for undergraduate loans, I know, but you generally have to file the exception.

The people in the financial aid office are people and not just computers. If you make a case that one of your parents is estranged, they'll likely put more emphasis on the parent that raised you. It will depend of course on when your parents separated and the financial history of your family. Because each school has different algorithms and different amounts of money, it's impossible to predict how it would affect your aid. Just make sure that the financial aid office knows as much about your family's financial history as you are willing to divulge.

 

[darklabel]

Some schools do give out institutional loans that have low interest rates and have other benefits like no interest accrual during medical school. From what I've seen they don't come close to covering tuition but every little bit counts.

For undergrad yes I have also heard about this (and they're also backed by the US government) but I still can't find anything about institution provided loans throughout searching for Google and closest I can find it Perkins.
https://www.aamc.org/advocacy/meded/79232/federal_student_loans.html

However, I had an EFC of 0 and still didn't get Perkins loans, only unsubsidized and subsidized throughout my ugrad. Also had some aid from my school and Pell grant.

EDIT: It seems like it is possible. Hopefully I can qualify for it haha
https://www.aamc.org/services/first/first_factsheets/297572/awardletter.html

Btw, lots of valuable info in that for financial aid since I'll be starting medical school with ~40k in debt already 🙁

 

[knv2u]

.

 

[PreMedOrDead]

The people in the financial aid office are people and not just computers. If you make a case that one of your parents is estranged, they'll likely put more emphasis on the parent that raised you. It will depend of course on when your parents separated and the financial history of your family. Because each school has different algorithms and different amounts of money, it's impossible to predict how it would affect your aid. Just make sure that the financial aid office knows as much about your family's financial history as you are willing to divulge.

Lol of course. My financial situation is thankfully covered in full, for tuition at least. I was asking a hypothetical since I got aid from that during my undergrad.

 

[Syndicate]

So if my med school COA is ~$75k/year and I qualify for the max $40k/year unsubsidized federal loan, how the heck am I gonna get the other $35k? My parents have made it clear they won't be contributing towards my med school tuition/expenses. I'm currently still in college and I have no money saved up or anything. Should I look into private loans? I've heard from literally every financial aid officer at all my interviews say that AVOID private loans at all costs.

 

[darkjedi]

So if my med school COA is ~$75k/year and I qualify for the max $40k/year unsubsidized federal loan, how the heck am I gonna get the other $35k? My parents have made it clear they won't be contributing towards my med school tuition/expenses. I'm currently still in college and I have no money saved up or anything. Should I look into private loans? I've heard from literally every financial aid officer at all my interviews say that AVOID private loans at all costs.

You can take out GradPLUS loans up to your COA. The interest rate is a bit higher on the GradPLUS loans, but it still qualifies for loan forgiveness.

 

[deleted407021]

Hmm. Maybe the situation will improve by the time I attend. I'm assuming living expenses come from monthly allowance? Do most students take out private loans for med school?

 

[lovemango]

For undergrad yes I have also heard about this (and they're also backed by the US government) but I still can't find anything about institution provided loans throughout searching for Google and closest I can find it Perkins.
https://www.aamc.org/advocacy/meded/79232/federal_student_loans.html

However, I had an EFC of 0 and still didn't get Perkins loans, only unsubsidized and subsidized throughout my ugrad. Also had some aid from my school and Pell grant.

EDIT: It seems like it is possible. Hopefully I can qualify for it haha
https://www.aamc.org/services/first/first_factsheets/297572/awardletter.html

Btw, lots of valuable info in that for financial aid since I'll be starting medical school with ~40k in debt already 🙁

Many med schools do offer institutional aid, but the majority of these are based on need, especially the interest-free loans. To qualify for institutional aid, you generally have to include parental info on the FAFSA or school forms.

 

[TheWeeIceMan]

Hmm. Maybe the situation will improve by the time I attend. I'm assuming living expenses come from monthly allowance? Do most students take out private loans for med school?

No, most students use a combination of Stafford and Grad Plus loans to cover the full COA.

I'm not sure exactly what you mean by the situation improving in time, but if anything, the student loan situation will be getting worse.

 

[Syndicate]

No, most students use a combination of Stafford and Grad Plus loans to cover the full COA.

I'm not sure exactly what you mean by the situation improving in time, but if anything, the student loan situation will be getting worse.

Do I have to apply separately for grad plus or is it part of FAFSA?

 

[deleted407021]

No, most students use a combination of Stafford and Grad Plus loans to cover the full COA.

I'm not sure exactly what you mean by the situation improving in time, but if anything, the student loan situation will be getting worse.

Just being optimistic (naive), I suppose.

 

[Bink]

For undergrad yes I have also heard about this (and they're also backed by the US government) but I still can't find anything about institution provided loans throughout searching for Google and closest I can find it Perkins.
https://www.aamc.org/advocacy/meded/79232/federal_student_loans.html

A few med schools (BU, Einstein) have briefly discussed these institutional loans on the interview day. I don't think you're going to find the info from a public website unfortunately, so the only thing to do is fill out the financial aid forms and hope for the best (or call the financial aid department).

 

[Bacchus]

Many med schools do offer institutional aid, but the majority of these are based on need, especially the interest-free loans. To qualify for institutional aid, you generally have to include parental info on the FAFSA or school forms.

This. Low interest or interest free loans will be provided to those who demonstrate financial need. And, begrudgingly to everyone footing their own bill for medical school, parental income will be taken into account.

 

[SunsFun]

As far as I understand your expected family contribution (EFC) is going to be around 25k. Subtract that number from the cost of attendance and that will give you a rough estimate for the amount of aid you quality for.

http://b-i.forbesimg.com/troyonink/files/2013/09/2013-EFC-Table1218.png

 

[darkjedi]

As far as I understand your expected family contribution (EFC) is going to be around 25k. Subtract that number from the cost of attendance and that will give you a rough estimate for the amount of aid you quality for.

http://b-i.forbesimg.com/troyonink/files/2013/09/2013-EFC-Table1218.png

I believe EFC from parental contribution is automatically $0 for graduate students.

 

[SunsFun]

I believe EFC is automatically $0 for graduate students.

I just checked FAFSA and they specifically mention going into a medical school as a reason to disclose your family income as a professional student. I saw some previous year info from my state medical school and they also ask to either fill out parental info on FAFSA or fill out a separate form on your parental income and send it to them in order to be considered for need-based aid.

 

[WalSlave]

I didn't think you had to report your parent's income if you were filing independently and in grad school?

 

[SunsFun]

I didn't think you had to report your parent's income if you were filing independently and in grad school?

Neither did I but it appears that unless you're 30+, married with children, or in several other situations for at least some medical schools your parental income counts.

 

[ChemEngMD]

I didn't think you had to report your parent's income if you were filing independently and in grad school?

A bunch of schools require the NeedAccess application and all of your parent's info - regardless of how old you are.

I'm a graduate student and have been independent for quite some time, but my school's still want my parent's info.

 

[WalSlave]

A bunch of schools require the NeedAccess application and all of your parent's info - regardless of how old you are.

I'm a graduate student and have been independent for quite some time, but my school's still want my parent's info.

Excellent info. Thank you. I had no idea they cared about anything other than what was on your FAFSA. Certainly something to think about in my situation.

 

[Syndicate]

What if I've been accepted to school A (they don't need parent info on FAFSA) and school B (they need parent info on FAFSA) and I end up filling FAFSA with my parental info since school B needed it but both schools will use my same FAFSA form; will school A use my parental info when determining aid even though they said they dont "require" it?

 

[darkjedi]

I just checked FAFSA and they specifically mention going into a medical school as a reason to disclose your family income as a professional student. I saw some previous year info from my state medical school and they also ask to either fill out parental info on FAFSA or fill out a separate form on your parental income and send it to them in order to be considered for need-based aid.

The parental information in FAFSA can be used by the school to evaluate you for need-based financial aid that they themselves disburse. However graduate students automatically qualify for maximum federal loans (unless you're personally super rich or something) since it is assumed they are independent.

I personally don't fill out parental information in the FAFSA since I already submitted my parental information in Need Access when I was first accepted. My annual FAFSA renewal is basically me putting in $0 for the income and submitting.

 

[StBernardsRule]

So if my med school COA is ~$75k/year and I qualify for the max $40k/year unsubsidized federal loan, how the heck am I gonna get the other $35k? My parents have made it clear they won't be contributing towards my med school tuition/expenses. I'm currently still in college and I have no money saved up or anything. Should I look into private loans? I've heard from literally every financial aid officer at all my interviews say that AVOID private loans at all costs.

Am I wrong that if tuition is $55k/year and cost of living $20k/year (for $75k/year total) that your student debt will be somewhere in the ball park of $325-$350k after interest upon graduation?

OP I hope the very best for you, but does anyone else feel like taking on that much debt is kinda ridiculous?

 

[Syndicate]

Am I wrong that if tuition is $55k/year and cost of living $20k/year (for $75k/year total) that your student debt will be somewhere in the ball park of $325-$350k after interest upon graduation?

OP I hope the very best for you, but does anyone else feel like taking on that much debt is kinda ridiculous?

I do think it is ridiculous and I have honestly been questioning whether I should even go to medicine the last couple of weeks. I don't even know where I can find $75k in loans unless I touch private loans (which is a big no no according to all the financial aid people in all my interviews). My parents would not be able to help at all and I don't blame them (paid for all my Undergrad COA ~55k/year) and my sister is going to an ivy next year and they are paying the same amount for her so there's really nothing they can do for me. My parents income disqualifies me from a lot of the good low/no interest institutional loans and it certainly disqualifies me from any need based aid. Honestly, if I can go back 4 years in time, I would not have chose to go to medical school. But now that I have already invested the effort and money to apply get accepted and more importantly, since an alternative career is too late, I feel like I will have to go down this path. Don't get me wrong, being a doctor is my dream but I am not sure if I am willing to take $300k in loans and having to end up re-paying over half a million in student loan payments as a physician.

 

[nOchemallday]

I do think it is ridiculous and I have honestly been questioning whether I should even go to medicine the last couple of weeks. I don't even know where I can find $75k in loans unless I touch private loans (which is a big no no according to all the financial aid people in all my interviews). My parents would not be able to help at all and I don't blame them (paid for all my Undergrad COA ~55k/year) and my sister is going to an ivy next year and they are paying the same amount for her so there's really nothing they can do for me. My parents income disqualifies me from a lot of the good low/no interest institutional loans and it certainly disqualifies me from any need based aid. Honestly, if I can go back 4 years in time, I would not have chose to go to medical school. But now that I have already invested the effort and money to apply get accepted and more importantly, since an alternative career is too late, I feel like I will have to go down this path. Don't get me wrong, being a doctor is my dream but I am not sure if I am willing to take $300k in loans and having to end up re-paying over half a million in student loan payments as a physician.

1. Raman
2. Even if you go into peds (typically lowest paying physician) you're making $150k/yr (minus ~15k/yr malpractice). If you live smart through residency and your first 5 years of attending, you can easily pay off that 500k (350+interest). Alternatively you can do a loan forgiveness to take away over half of that 500k, and use the rest of your money for the non-federal loans.
3. Save up money during breaks and summers between now and attending med school. I worked 2 jobs in high school, you should have plenty of time to pick up 2 jobs over a summer. Everyone says enjoy the summer before you go to med school, but I'd rather reduce my interest beforehand. Plus you gotta do what you gotta do.
4. Consider programs like the FAP through the military (significantly better than HPSP).
5. If you hold multiple acceptances, seriously consider attending the cheaper (in-state) school.
6. Look into scholarships. Not many exist for graduate schools, but there are some out there.
7. There's a reason people say don't go into medicine for the money; but if you're smart with money it can actually be very rewarding financially (as per several evaluations throughout these forums).

 

[sazerac]

Am I wrong that if tuition is $55k/year and cost of living $20k/year (for $75k/year total) that your student debt will be somewhere in the ball park of $325-$350k after interest upon graduation?

OP I hope the very best for you, but does anyone else feel like taking on that much debt is kinda ridiculous?

Taking on that kind of debt is not ridiculous; it is an investment to become a doctor.

Paying off that debt, when there are numerous loan forgiveness programs available, is kinda ridiculous. It is extremely unlikely you will ever pay off that kind of debt with the income of a typical attending, unless you really like throwing away money for no practical purpose. With the Pay-As-You-Earn repayment plan that is a part of federal student loans, I doubt your monthly payments would even cover the interest on that size of loan, and then *poof* one day it's gone. You'll probably want to save a little for the forgiveness tax hit, but it will be much much smaller than actually paying off the loan.

Or you could live like a pauper graduate student into your mid-40's. Your choice.

 

[StBernardsRule]

I do think it is ridiculous and I have honestly been questioning whether I should even go to medicine the last couple of weeks. I don't even know where I can find $75k in loans unless I touch private loans (which is a big no no according to all the financial aid people in all my interviews). My parents would not be able to help at all and I don't blame them (paid for all my Undergrad COA ~55k/year) and my sister is going to an ivy next year and they are paying the same amount for her so there's really nothing they can do for me. My parents income disqualifies me from a lot of the good low/no interest institutional loans and it certainly disqualifies me from any need based aid. Honestly, if I can go back 4 years in time, I would not have chose to go to medical school. But now that I have already invested the effort and money to apply get accepted and more importantly, since an alternative career is too late, I feel like I will have to go down this path. Don't get me wrong, being a doctor is my dream but I am not sure if I am willing to take $300k in loans and having to end up re-paying over half a million in student loan payments as a physician.

There are other career options in the healthcare field that include much less debt you can look into, so don't feel like your education so far has been a waste. Lots of really good options actually.

FWIW, I too was in the "I plan on be an MD, but $350k+ debt is a very real number" camp so I decided to look into alternative careers and because of that found one I really like. Keep in mind a pretty high GPA and pretty high MCAT will get you lots of attention and even scholarships in some other professional schools (podiatry for example), so it may be worth considering that option.

 

[StBernardsRule]

Taking on that kind of debt is not ridiculous; it is an investment to become a doctor.

Paying off that debt, when there are numerous loan forgiveness programs available, is kinda ridiculous. It is extremely unlikely you will ever pay off that kind of debt with the income of a typical attending, unless you really like throwing away money for no practical purpose. With the Pay-As-You-Earn repayment plan that is a part of federal student loans, I doubt your monthly payments would even cover the interest on that size of loan, and then *poof* one day it's gone. You'll probably want to save a little for the forgiveness tax hit, but it will be much much smaller than actually paying off the loan.

Or you could live like a pauper graduate student into your mid-40's. Your choice.

You're referring to IBR or are there other programs?

I get that if it's impossible for you to pay off this debt you won't have to, but it just kind of blows my mind people will take on this kind of debt knowing full well that they likely won't even be able to (reasonably comfortably) pay it off. But then again I also understand how people who've always wanted to be an MD and have put in the work to become an MD feel as if they should get to be one. Just really sucks at how incredibly difficult it is to get into some public schools (CA for example) whereas private schools and OOS schools will run you $50k-$60k a year which will severely limit your career options (if you have $300k+ debt at 33, you're pretty much going to have to try to make a very lot of money).

 

[sazerac]

You're referring to IBR or are there other programs?

I get that if it's impossible for you to pay off this debt you won't have to, but it just kind of blows my mind people will take on this kind of debt knowing full well that they likely won't even be able to (reasonably comfortably) pay it off. But then again I also understand how people who've always wanted to be an MD and have put in the work to become an MD feel as if they should get to be one. Just really sucks at how incredibly difficult it is to get into some public schools (CA for example) whereas private schools and OOS schools will run you $50k-$60k a year which will severely limit your career options (if you have $300k+ debt at 33, you're pretty much going to have to try to make a very lot of money).

IBR is pre-Obama and required a larger and longer payment than the newer Obama-era PAYE program. A 10% tax on your income over the first 20 years of your residency/attending career (thanks, Obama) is only going to cost the typical physician $400,000 before all the student loans are forgiven. There's also the PSLF program but that is totally different with its own set of rules and requirements.

A physician who has $300k of debt at 33 (assuming you graduated med school at 26) will pay a small amount, less than 10% of your income, probably less than $2,000 a month, for about a dozen more years and then the loan is forgiven via PAYE.

You keep focusing on "paying the loan off" when the reality is that basically nobody who takes on a full student loan for medical school starting today will ever pay it off. Nor are they expected to. It's just not in the terms of the loan agreement anymore.

 

[I Love Cats]

I'm curious, what's a rough total income that would show up on a FAFSA that might make a school consider giving someone a need-based scholarship--if the need was purely based on finances alone? Anyone have an idea for a range or cutoff value?

 

[nOchemallday]

IBR is pre-Obama and required a larger and longer payment than the newer Obama-era PAYE program. A 10% tax on your income over the first 20 years of your residency/attending career (thanks, Obama) is only going to cost the typical physician $400,000 before all the student loans are forgiven. There's also the PSLF program but that is totally different with its own set of rules and requirements.

A physician who has $300k of debt at 33 (assuming you graduated med school at 26) will pay a small amount, less than 10% of your income, probably less than $2,000 a month, for about a dozen more years and then the loan is forgiven via PAYE.

You keep focusing on "paying the loan off" when the reality is that basically nobody who takes on a full student loan for medical school starting today will ever pay it off. Nor are they expected to. It's just not in the terms of the loan agreement anymore.

Looked into @sazerac and @StBernardsRule 's discussion a little more. Just some thoughts:

At least using estimates (6.8% interest on federal loans, $300K total debt ($75k/yr); all around very basic figures) from http://www.finaid.org/calculators/loanpayments.phtml, the "break-even" is ~$275-300k/year. As you begin your residency, if you anticipate making less than that, it's advantageous to participate in the PAYE program. Otherwise, it's advantageous to pay your own loans (more economically if in less than 20 years as anticipated by the PAYE program). It's hard to put exact figures on anything because each earning bracket would have it's own category for ideal repayment/forgiveness method. For the extremes on the earning scale: Primary Care (<150K), take the PAYE route. period. High paying (350k+) surgical specialties with long residencies/fellowships, very difficult to say. PAYE becomes more advantageous if you have a larger family. However, grace/forebearance (to live) through residency followed by smart (aka not minimum) repayment could save money over the 20 years despite the extended training.

The other thing to consider is that PAYE isn't a garuanteed insta-poof on your remaining debt. It seems to be the (general) case that the amount forgiven by PAYE at the end of the 20 years is still taxed after it is forgiven. Over the course of 20 years, this will likely be minimal in comparison to actually paying off the loan, but may give you a reason not to want an even lower monthly payment (<10% income).

 

[BestDoctorEver]

So if my med school COA is ~$75k/year and I qualify for the max $40k/year unsubsidized federal loan, how the heck am I gonna get the other $35k? My parents have made it clear they won't be contributing towards my med school tuition/expenses. I'm currently still in college and I have no money saved up or anything. Should I look into private loans? I've heard from literally every financial aid officer at all my interviews say that AVOID private loans at all costs.

You better become an ortho or a gas doc so you can repay that 300k...Lol. Med school is getting too expensive.

 

[Bacchus]

Then you have old farts like me who don't qualify for PAYE because we're pre-2007 Staffords 🙁. However, the IBR payment isn't bad. I pay about $440 a month. On an estimated attending's salary on IBR I'd pay roughly $1700 a month compared to standard repayment of $3700.

 

[StBernardsRule]

2. Even if you go into peds (typically lowest paying physician) you're making $150k/yr (minus ~15k/yr malpractice). If you live smart through residency and your first 5 years of attending, you can easily pay off that 500k (350+interest). Alternatively you can do a loan forgiveness to take away over half of that 500k, and use the rest of your money for the non-federal loans.

Can you show me your maths for this? Trying to financially educate myself today and this seems next to impossible, especially with taxes (and many state have state taxes as well).

 

[nOchemallday]

Can you show me your maths for this? Trying to financially educate myself today and this seems next to impossible, especially with taxes (and many state have state taxes as well).

I'm going to start with some big assumptions. Making sure this is known out the gate. I'm assuming single physician with taxable salary of $150k/yr. Marriage only makes it easier, and as long as spouse makes over 22k/yr per child, assume children are no additional cost. 22k figure is estimated cost per child per year for the first 18 years of child's life. I'm also making the assumption that you are going to rent and not buy a house (considering you are already $300K+ in debt and likely wont get another massive loan for a few years....although the case could be made that taking out a second mortgage to pay off loans by securing a lower interest rate on your mortgage is theoretically advantageous. Will not be discussed here.) Also, I'm considering no accrued debt or interest out of college. A BIG assumption, but compounding all of that interest on top of everything (for something incredibly variable like ~5-50K over 2,3,4? years...it gets very hectic very quick; at best I'll add an end note about paying this off "afterwards"). All of that said here's the proposal:

Begin med school @ Total Cost per year of 75k/year (tuition + fees + books + COL) rough estimate. Take out loans for 75k each year at compounding interest leaves you at ~308K debt starting residency.
Peds is 3 year residency. During residency apply for forebearance under medical residency manditory forebearance clause (assuming all criteria are met). The forebearance does not stop interest, just removes the minimum payment so you can have breathing room during residency.

All residencies pay similarly, ~40-50k/yr. Assuming 45k/yr: ~10k goes to income tax, social security, and medicare "off-the-top". 30k COL (extra $5k/year "spending money" vs med school). Leaves a minimum 5k/yr to combat interest of loans and prevent further acruement. Ideally this leaves us with ~300k or preferably just under 300k debt starting out as attending. More assumptions: assume salary and COL dependence on urban/rural is are comparable and can be controlled for. Also, assume average attending pediatrician average salary is $150k over first 5 years. (first 2 years lower, last 3 years equal to higher).

Based on these numbers, a pediatrician making $150k/yr pays $35293 in income tax (source: open information about tax brackets easily found on google), $7254 in social security (source: also google-able, rate of 6.2% of up to $117k income). $2175 into medicare at a 1.45% rate on entire taxable income (source: IRS). Estimated malpractice costs: 15k/year (very conservative estimate). This totals ~$60k "off-the-top" before you've touched a penny you've earned. That said, you're left with an outright $90k entirely disposable income. We've stated that you are renting, not owning your house, likely have a car payment (Civic's are cheap and reliable), food, personal expenses, business clothes. Single or Married with spouse earning >22k/child/yr + his/her own living expenses.

Most calculations will say that in order to live comfortably, one should pay ~10% of income per year to pay off student loans. If that were the case it would take you basically forever to pay off this much debt (hense why after 20 years of IBR/PAYE people still have to have large sums forgiven). At a COL of $30-35K/yr, yes low, but I would hardly call this "living like a pauper." Remember this is straight up COL not income. The respective income to have a COL of 30-35K/yr is ~40-45k annual salary...not great, but a LOT of people live comfortably on this (and remember, this is only for a matter of a few years vs being "bled" for 20 yrs). This amounts to $90k disposable minus 30k COL = $60k/yr ideal repayment rate (or a monthly repayment of $5k/month).

Using http://www.finaid.org/calculators/loanpayments.phtml at 300k debt with a 6.8% (grad PLUS/Stafford interest rate), it would take almost exactly 6 years to pay off at 5k/month. (9 years from graduating med school)

Needless to say I originally quoted 5 years attending, but 6 seems close to me.


As I later posted:

For the extremes on the earning scale: Primary Care (<150K), take the PAYE route. period. High paying (350k+) surgical specialties with long residencies/fellowships, very difficult to say. PAYE becomes more advantageous if you have a larger family.

The other thing to consider is that PAYE isn't a garuanteed insta-poof on your remaining debt. It seems to be the (general) case that the amount forgiven by PAYE at the end of the 20 years is still taxed after it is forgiven. Over the course of 20 years, this will likely be minimal in comparison to actually paying off the loan, but may give you a reason not to want an even lower monthly payment (<10% income).

PAYE is much more benificial to low income physicians with very high debt to the point that you might as well throw out all my numbers above because it's so much better to be "bled" for ~500/yr residency to 1-1.5k/month attending for 20 years (even if you have to pay taxes on your forgiven amount at the end) because it is less (saves 30k or more) versus the $308K + 60k interest you will pay in the 6/9 year plan as proposed above. Plus you can live even more "comfortably" or have a stay-at-home husband/wife, etc.

Feel free to question the numbers. There were a lot of assumptions.

EDIT: I seemed to have missed state income taxes in this whole jumble. (I'm from PA where it's flat-rate and low at that which takes out ~1500/yr residency and 4500/yr attending = 6extra months. ~6.5yrs).

 

[StBernardsRule]

I'm going to start with some big assumptions. Making sure this is known out the gate. I'm assuming single physician with taxable salary of $150k/yr. Marriage only makes it easier, and as long as spouse makes over 22k/yr per child, assume children are no additional cost. 22k figure is estimated cost per child per year for the first 18 years of child's life. I'm also making the assumption that you are going to rent and not buy a house (considering you are already $300K+ in debt and likely wont get another massive loan for a few years....although the case could be made that taking out a second mortgage to pay off loans by securing a lower interest rate on your mortgage is theoretically advantageous. Will not be discussed here.) Also, I'm considering no accrued debt or interest out of college. A BIG assumption, but compounding all of that interest on top of everything (for something incredibly variable like ~5-50K over 2,3,4? years...it gets very hectic very quick; at best I'll add an end note about paying this off "afterwards"). All of that said here's the proposal:

Begin med school @ Total Cost per year of 75k/year (tuition + fees + books + COL) rough estimate. Take out loans for 75k each year at compounding interest leaves you at ~308K debt starting residency.
Peds is 3 year residency. During residency apply for forebearance under medical residency manditory forebearance clause (assuming all criteria are met). The forebearance does not stop interest, just removes the minimum payment so you can have breathing room during residency.

All residencies pay similarly, ~40-50k/yr. Assuming 45k/yr: ~10k goes to income tax, social security, and medicare "off-the-top". 30k COL (extra $5k/year "spending money" vs med school). Leaves a minimum 5k/yr to combat interest of loans and prevent further acruement. Ideally this leaves us with ~300k or preferably just under 300k debt starting out as attending. More assumptions: assume salary and COL dependence on urban/rural is are comparable and can be controlled for. Also, assume average attending pediatrician average salary is $150k over first 5 years. (first 2 years lower, last 3 years equal to higher).

Based on these numbers, a pediatrician making $150k/yr pays $35293 in income tax (source: open information about tax brackets easily found on google), $7254 in social security (source: also google-able, rate of 6.2% of up to $117k income). $2175 into medicare at a 1.45% rate on entire taxable income (source: IRS). Estimated malpractice costs: 15k/year (very conservative estimate). This totals ~$60k "off-the-top" before you've touched a penny you've earned. That said, you're left with an outright $90k entirely disposable income. We've stated that you are renting, not owning your house, likely have a car payment (Civic's are cheap and reliable), food, personal expenses, business clothes. Single or Married with spouse earning >22k/child/yr + his/her own living expenses.

Most calculations will say that in order to live comfortably, one should pay ~10% of income per year to pay off student loans. If that were the case it would take you basically forever to pay off this much debt (hense why after 20 years of IBR/PAYE people still have to have large sums forgiven). At a COL of $30-35K/yr, yes low, but I would hardly call this "living like a pauper." Remember this is straight up COL not income. The respective income to have a COL of 30-35K/yr is ~40-45k annual salary...not great, but a LOT of people live comfortably on this (and remember, this is only for a matter of a few years vs being "bled" for 20 yrs). This amounts to $90k disposable minus 30k COL = $60k/yr ideal repayment rate (or a monthly repayment of $5k/month).

Using http://www.finaid.org/calculators/loanpayments.phtml at 300k debt with a 6.8% (grad PLUS/Stafford interest rate), it would take almost exactly 6 years to pay off at 5k/month. (9 years from graduating med school)

Needless to say I originally quoted 5 years attending, but 6 seems close to me.


As I later posted:

PAYE is much more benificial to low income physicians with very high debt to the point that you might as well throw out all my numbers above because it's so much better to be "bled" for ~500/yr residency to 1-1.5k/month attending for 20 years (even if you have to pay taxes on your forgiven amount at the end) because it is less (saves 30k or more) versus the $308K + 60k interest you will pay in the 6/9 year plan as proposed above. Plus you can live even more "comfortably" or have a stay-at-home husband/wife, etc.

Feel free to question the numbers. There were a lot of assumptions.

EDIT: I seemed to have missed state income taxes in this whole jumble. (I'm from PA where it's flat-rate and low at that which takes out ~1500/yr residency and 4500/yr attending = 6extra months. ~6.5yrs).

TY for the post.

 

[Chipster.]

I do think it is ridiculous and I have honestly been questioning whether I should even go to medicine the last couple of weeks. I don't even know where I can find $75k in loans unless I touch private loans (which is a big no no according to all the financial aid people in all my interviews). My parents would not be able to help at all and I don't blame them (paid for all my Undergrad COA ~55k/year) and my sister is going to an ivy next year and they are paying the same amount for her so there's really nothing they can do for me. My parents income disqualifies me from a lot of the good low/no interest institutional loans and it certainly disqualifies me from any need based aid. Honestly, if I can go back 4 years in time, I would not have chose to go to medical school. But now that I have already invested the effort and money to apply get accepted and more importantly, since an alternative career is too late, I feel like I will have to go down this path. Don't get me wrong, being a doctor is my dream but I am not sure if I am willing to take $300k in loans and having to end up re-paying over half a million in student loan payments as a physician.

I thought people had mentioned this to you already, but maybe not: GradPLUS loans will take you from the 40k mark to whatever the COA is for your school. This is what almost everyone does who goes to a school that is more expensive than what the Direct Stafford Loan gives. The GradPLUS loan is not a bad option at all as far as loans go. It was covered in the BU financial aid presentation and if you still have the folder they gave us, the powerpoint is somewhere in there. I strongly suggest you read it over because it seems like you didn't really listen the first time around.

 

[Mad Jack]

If you have 12 siblings, you'd fall into the 200% of federal poverty level category and be eligible for aid at many schools. Tell your parents to get to work.