Financial Issues and Debt

[craigmd]

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Hi. I'm 31 years old, and I'm going back to school this fall to catch up on my undergrad sciences so I can apply for med school.

I know that there will be tons of debt once I get out of medical school, but I'm concerned about our financial situation right now. We've got a pretty hefty load of credit card debt as well as a truck with high monthly payments that we can't get rid of b/c we're $10K upside down on it. Because of all this debt, we're a little concerned about our ability to keep paying our bills once I'm in med school.

So here's my question: If I were to settle on our credit cards, and turn in the truck to the financing company with the understanding that we can't afford the payments anymore . . . will this destroy our credit to the point that I won't be able to get the loans I need for school? Or are there other options I'm missing?

 

[DrMidlife]

I'm in a similar situation, having just completed a year of cancer treatment with no income. Filing bankruptcy would be extremely convenient. But unfortunately, if you want to go to med school, your credit rating matters.

Med school cost of attendance (COA) is currently covered by a combination of federal loans. If you have a family to support, you're highly likely to not make it under COA. So you'll need private loans to get through med school. Private loans require clean credit.

Unfortunately I think the "other option" is to wait to start school. And for the love of all that's holy, don't give up Texas residency and do everything you can to get into a TX school. You could save $100k or even $200k in long term debt.

Best of luck to you.

 

[nontrdgsbuiucmd]

Curious as to if TX med costs (total cost of attendance/COA per the school) can be paid by Stafford loans alone given how inexpensive some texas schools' are compared to most med schools. Stafford (subsidized + unsubsidized) will pay around 41K now, they are not credit based. Something to consider is that med school costs will go up every year and it's less than guaranteed that Stafford loan limits will similarly increase each year. As long as total COA stays under 41K per year, you'd be able to settle on credit card debt, declare bankruptcy, etc and still be fine for med school. Actually, this would probably not be a bad time to do it, as by the time you're done with residency, it'd be 7+ years later and the bankruptcy would be off your credit report just as you're earning enough to buy a house.

Grad plus loans are "private" med school loans that cover the amount over the 41K stafford loans. They do require credit, but you'd only be turned down for very specific things -- currently 90+ days past due, or a garnishment, default, or a few other specific things within the past 5 years. I'd check this out as carefully as possible now. There's always the military option, too if you're open to that as an alternative to not attending med school due to debt?