Financing med school--why the concern?

[mshheaddoc]

Ok, here's the deal. If you want to be a doctor you have to go to medical school and take out loans. If you want to go out of state or to private it will cost more. If you think going to a big name school will get you a better residency spot, you may be mistaken. Therefore, if you don't want as high a loan debt then go to a cheaper school. Even if it isn't as competitive to gain acceptance, it will still have competitive students with whom you'll be competing for AOA status (which increases your chance for landing a prime residency position moreso than graduating middle of the class at "prestigious school of your choice"), however there may be less overall numbers of competitive students with which you'll be competing.

Now, to the payment issues. Don't sweat it. You will qualify for financial hardship and after consolidating your loans (private loans may not be consolidated-at least it's not in your best interest to do so) you can defer throughout residency or go into forbearance. Interest will accrue, but you can pay while in deferement (sp?) if you wish. As said earlier any repayment towards goverment loan interest is tax deductable.

I will say this as well: you will make more than 30K in residency, but the plans to repay the loans quickly as outlined above is foolish.

First of all if you make 200K year after residency and your loan debt is say, 125K not including interest accrued during deferrement, your monthly repayment will probably be approximately 1300-2300/month over 20-30 years.
Keys to remember are this:
-Interest rates will be locked at consolidated rate which is less than 6%
-These loans are eaten by the government if you die (ie: nobody is responsible).
-You will want/need to buy a house/car or take care of family (ie: children)
-you can earn >6% by investing money conservatively (usually 7-10% return)

It is STUPID to try and repay your government loans immediately. Do repay private loans quickly-including Credit cards. Save some money first and then once you have emergency funds and other private debts paid you knock them out. Bottom line-take out the loans necessary for you to get your education.

I don't mean to be trite, but this is reality.
How do I know?
I'm a resident.

Hope this helps.

First off, this is the best post I had seen in this thread. Concise and to the point.

Only thing to add is this ... you have NO guaranty of forbarence of private and gov't loans. If you have a spouse making money they ALSO count their income.

Also when consolidating private loans, most all of them (depending on if your private loans were fixed/variable, would most likely be a variable rate. Pay them off FIRST.

I know a few people who WILL be at least $200K in debt. Most of them went to private schools in a city. It can and will happen. Alot of people take the cheaper schools due to this factor. Some don't have a choice so remember what the definition of "average and mean" are.

Am I worried? Yes but my first choices are state schools and I'm fiscally responsible enough to budget accordingly.

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[thesauce]

It is simply not true that you can't defer payment of loans through residency. Sallie Mae came and spoke to us during med school orientation and told us that you can. In fact, your subsidized loans continue not to gain interest.

 

[TheMightyAngus]

The worst thing about the cost of med school is that, more likely than not, it's going to effect what specialty you pursue. Those Che Guevara types who plan on treating the poor and improving the third world, most likely will never be able to afford to do it. Damn shame. Viva la revolucion.

 

[Darth Asclepius]

I thought you can defer interest through residency too,

The problem is that the bulk on med school loans don't even defer interest while in school. Payment is deferred, but not interest. The first $8500 per year can be subsidized Stafford loans, the rest is racking up interest the whole time you're in school and residency, substantially increasing the amount of debt you'll end up repaying.

info on subsized loans

 

[mshheaddoc]

It is simply not true that you can't defer payment of loans through residency. Sallie Mae came and spoke to us during med school orientation and told us that you can. In fact, your subsidized loans continue not to gain interest.

Feel free to believe Sallie Mae. Here's the link to FEDERAL loans. You are NOT guaranteed economic hardship by ANY means. This is a common misconception. Feel free to search this forum as there are a few people who didn't "qualify" for economic hardship. Yes, most do but I'm just warning you not all of them do. Someone posted that they were off by $10 and STILL had to make payments during residency.

Here's the link to AMA definition of economic hardship

What is the Economic Hardship Deferment?
Economic Hardship Deferment is an option that allows borrowers to defer payment on their federal student loans for up to three years if they meet certain eligibility requirements. During the deferment, the federal government continues to pay the interest on the subsidized portion of the resident's loan portfolio. Interest on the unsubsidized portion of the borrower's portfolio continues to accrue during this time.

Also the "formula" they use is on that page too!

 

[mshheaddoc]

The problem is that the bulk on med school loans don't even defer interest while in school. Payment is deferred, but not interest. The first $8500 per year can be subsidized Stafford loans, the rest is racking up interest the whole time you're in school and residency, substantially increasing the amount of debt you'll end up repaying.

info on subsized loans

ESPECIALLY if most of your loans are private But luckily you can get some private fixed loans out there.

 

[OSUdoc08]

ESPECIALLY if most of your loans are private But luckily you can get some private fixed loans out there.

I'm not quite clear on why one would need private loans.

You can qualify for $44,500 in federal loans. How much does some of you guys' schools cost?

 

[mshheaddoc]

I'm not quite clear on why one would need private loans.

You can qualify for $44,500 in federal loans. How much does some of you guys' schools cost?

Because some people are footing the bill that needs MORE than that a year. The private and out-of-state schools are usually about $35K a year AT LEAST. Some are supporting families and cant live off of $9K which I would even find a little hard to do.

It also depends on what you are eligible for per your school. It varies from school to school. I'm sure you remember that article about pikesville that was discussed on here and the welfare cases. You can only get financial FEDERAL AID for up to the amount of your schools budget.

 

[OSUdoc08]

Because some people are footing the bill that needs MORE than that a year. The private and out-of-state schools are usually about $35K a year AT LEAST. Some are supporting families and cant live off of $9K which I would even find a little hard to do.

It also depends on what you are eligible for per your school. It varies from school to school. I'm sure you remember that article about pikesville that was discussed on here and the welfare cases. You can only get financial FEDERAL AID for up to the amount of your schools budget.

I go to an out-of-state public school, but I am single. I chose to make my career a priority at this point in my life. If I wasn't single, I would ensure that my wife worked to help with monetary support.

 

[mshheaddoc]

I go to an out-of-state public school, but I am single. I chose to make my career a priority at this point in my life. If I wasn't single, I would ensure that my wife worked to help with monetary support.

That's great. You are young enough to do that obviously. You aren't the general public therefore you can't really look down on those who entered the profession later in life and have an established family. Additionally, as I said, there are schools which require a HIGHER COL (like say east coast cities of NYC/Philly/Boston for example). As for the spouse, many of them do work but in this day and age, one salary can't get you far with 3 kids (IF you have already established your residence - meaning you own the house, kids need daycare, etc)

You're paying your $32K and living off $13K a year. Not all of us can afford to do that. That's my only point in why I mentioned private loans.

 

[Saluki]

I am kind of freakin out about taking out 200 + thousand dollars in loans. It's very unsettling. I really want to work for an organization like doctors w/o borders once I get my degree, but I feel like I am going to have to have a private practice for 10 + years just to get rid of all of my debt. Are there any special loan forgiveness programs for people who want to go into international non- profit work? Anyone have any suggestions?

If you're a Christian, there's a group called Project Medsend that will pay your debts if you're doing medical work through any one of ~30 different organizations, mainly Christian missions groups. If you're not, I'm not sure what options there are. Of course you could always do something like the military and then go into Doctors without Borders once you finish your commitment....