Go into debt for medical school?

Med School Insiders
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Most sensible route?

  • Go straight to medical school

    Votes: 48 98.0%

  • Take gap years

    Votes: 1 2.0%
  • Total voters
    49
xnfs93hy

xnfs93hy

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Hello, all. I'm going to be taking my MCAT this year. I'm also a rising senior in college. I suppose you could say that I'm a non-traditional student. I took a number of years off before college in order to help my parents fund my college education. During that period of time, I worked in a skilled trade and did well enough financially to cover the cost of school. I will be graduating with an engineering degree completely debt-free.

If I am lucky enough to get accepted into medical school, I'd like to be able to pay for it in cash. The thing is, I do not want to take any more time off from school. I'm beginning to think that there is really no other way to do this than by taking out student loans for professional school. Sure, I suppose that I could take a few gap years off and work during that time, but I've already done that for undergrad. I want to pursue medicine and do so without debt, but at the same time I don't want to finish medical school when I'm 30. Not that there's anything wrong with that.

Is it worth going into student loan debt for medical school or would I be better off working for a few years and then apply to professional school and be able to pay it off in cash?
 
Financially, are you going to benefit by working 4 years as an engineer and losing 4 years of a physicians salary? Probably not. Even if you have the interest of student loans accruing over the course of med school, you can 50-100k more a year as a starting physician than a starting engineer (I think that's being pretty conservative, too). If you have some other avenue of making money that you were planning on doing, then maybe it will be.

If you want to pursue this other career for a few years before you plunge into medicine, then it might be worth it for your life experience. But, if you are just going to drudge through a couple years as an engineer to have less debt, it's definitely not worth it.
 
Internationalinterest said:
People afraid of debt and investing are people that do not understand money and will probably never be rich.
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I'm not afraid of investing. I just hope that the investment in medical school will be worth it in the long run. That's all.
 
Donald Juan said:
Financially, are you going to benefit by working 4 years as an engineer and losing 4 years of a physicians salary? Probably not. Even if you have the interest of student loans accruing over the course of med school, you can 50-100k more a year as a starting physician than a starting engineer (I think that's being pretty conservative, too). If you have some other avenue of making money that you were planning on doing, then maybe it will be.

If you want to pursue this other career for a few years before you plunge into medicine, then it might be worth it for your life experience. But, if you are just going to drudge through a couple years as an engineer to have less debt, it's definitely not worth it.
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Thank you for the advice. Yes, my initial plan was to work for a few years with the hope that I would have less debt coming out of medical school.
 
xnfs93hy said:
I'm not afraid of investing. I just hope that the investment in medical school will be worth it in the long run. That's all.
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It will either the the best or worst investment one can make.
 
I think if you have enough money to pay tuition with cash, it's better to use that for investment. Kinda like buying a house and not paying it off with cash up front.
 
If you're a rising senior and you're taking the MCAT this year...won't you have a gap year anyways? I can't imagine taking additional years off to work as an engineer would pay off in the long run financially or professionally (financially because physician salaries are higher and professionally because every year residency matches just get harder, and you definitely might have a harder time getting into med school too if you tack on a few more years, especially doing non-traditional work).
 
hoihaie said:
I think if you have enough money to pay tuition with cash, it's better to use that for investment. Kinda like buying a house and not paying it off with cash up front.
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I would have enough money to pay off medical school tuition in cash if I worked using my undergraduate degree for a while, yes. But, there's also the opportunity cost that you have to think about. That's what I'm grappling with.
 
Cash-for-Gold-sign-holders.png

Try cash for gold
 
tick_tock400 said:
If you're a rising senior and you're taking the MCAT this year...won't you have a gap year anyways? I can't imagine taking additional years off to work as an engineer would pay off in the long run financially or professionally (financially because physician salaries are higher and professionally because every year residency matches just get harder, and you definitely might have a harder time getting into med school too if you tack on a few more years, especially doing non-traditional work).
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Yes, I will have a gap year, regardless. I don't see how it would be more difficult to get into medical school by tacking on a few more years, though. I know a gal in her thirties who is a third year med student. She was non-trad.
 
Dude no. Take out the loans like all the rest of us, youre definitely not alone in the loans.
 
every year you put off medical school is a year in the future you won't be earning a physician's salary. i don't know what job you're planning on working, but it definitely isn't paying you 200k+
 
Since nobody has said this outright, I will: OP, the great majority of medical students in the country take out substantial amounts of loans. Last I heard, the average graduate indebtedness nationwide was ~$170-180k. It is perfectly normal to take out loans to pay for medical school.
 
How old are you? Losing out on potential physician income wouldn't be worth it IMO. I'm assuming you're around 25. It may take you 5-7 more years to make and save enough money to completely fund medical school (assuming you get a well-paying engineering job, which isn't impossible). Do you wanna apply when you're 30+ or now and then you could be starting residency when you're 30ish?

(I made a big assumption that you're around 25 lol, but my point is clear I think)

Edit: people do matriculate post-twenties, but it's not the most ideal path I'm sure. If you've got the stats, motivation and opportunity to just go and get it over with, then do it now via loans.
 
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hoihaie said:
I think if you have enough money to pay tuition with cash, it's better to use that for investment. Kinda like buying a house and not paying it off with cash up front.
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Why do you say this out of curiosity? I suppose it would depend upon the direction of the market and how much the medical school costs because some private schools will result in crazy amounts of interest. There are some schools that will result in $400,00+ debt (COA) by the end of graduation at around 6.5%(conservatively) interest. That would result in $26,000 in just interest payments during residency. If you could by a house or invest that $400,000 so the rate of return is more than 6.5% then that would be a smart financial decision, but this is not a guarantee. There is also the possibility of working in a program that offers loan forgiveness, but not everybody is willing to make that type of commitment.
 
Is it worth it? Depends on who you ask.

Would you be better off working for a few years and paying cash? Absolutely not.
 
Thank you all for the responses. My in-state medical school's (M.D.-granting) tuition is $37,615. Multiplied by four, that gives $150,460. I'm not sure if this is average in terms of cost of attendance. The general consensus here seems to be that I should take out loans for professional school. I did some calculations this morning, and while I would be able to save $150k with an engineering job, I think I may decide against doing so. Many of you have pointed out the opportunity cost that I will incur if I go that route. Taking the plunge into medical school with loans will, indeed, be a smarter financial move. While it is certainly nice to be completely debt-free, saving up for a few years will not pay off in the long-run. I ran some hypothetical figures through Excel and plotted them on a graph. The curves show that I will actually net more over the long-term if I go straight to medical school. I assumed $50,000 net by working full-time as an engineer and $100,000 net by working full-time as a physician. These are fairly conservative estimates, and the "go straight to medical school" curve still spikes much higher than my "debt-free" curve. The opportunity cost of not going to medical school straight away is just too great.
 
gettheleadout said:
Since nobody has said this outright, I will: OP, the great majority of medical students in the country take out substantial amounts of loans. Last I heard, the average graduate indebtedness nationwide was ~$170-180k. It is perfectly normal to take out loans to pay for medical school.
Click to expand...

Thank you for this figure. I'm looking at approximately $150k (not counting interest) coming out of medical school.
 
xnfs93hy said:
I would have enough money to pay off medical school tuition in cash if I worked using my undergraduate degree for a while, yes. But, there's also the opportunity cost that you have to think about. That's what I'm grappling with.
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Annual COA at my school (tuition $30K) is about $58K, and I think we're on the cheap end. Straight out of undergrad, I don't know what job you'll find that will leave you an extra $58K/year after your current cost of living, so working for a few years and then being able to borrow nothing seems pretty unlikely, unfortunately.

Long-term, going straight to med school's probably the better financial plan. But working for a year or two so you have a bit of savings and don't go broke in the application/interview/moving process isn't a bad idea, either.
 
.
 
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xnfs93hy said:
Hello, all. I'm going to be taking my MCAT this year. I'm also a rising senior in college. I suppose you could say that I'm a non-traditional student. I took a number of years off before college in order to help my parents fund my college education. During that period of time, I worked in a skilled trade and did well enough financially to cover the cost of school. I will be graduating with an engineering degree completely debt-free.

If I am lucky enough to get accepted into medical school, I'd like to be able to pay for it in cash. The thing is, I do not want to take any more time off from school. I'm beginning to think that there is really no other way to do this than by taking out student loans for professional school. Sure, I suppose that I could take a few gap years off and work during that time, but I've already done that for undergrad. I want to pursue medicine and do so without debt, but at the same time I don't want to finish medical school when I'm 30. Not that there's anything wrong with that.

Is it worth going into student loan debt for medical school or would I be better off working for a few years and then apply to professional school and be able to pay it off in cash?
Click to expand...

I had a similar belief when I first thought of taking a couple of gap years. I thought that paying off some UG loans/saving up some cash first would be the best plan. I ended up taking them, but it was more for personal reasons than for financial. I was able to save a significant amount of my income due to my living circumstances, but even with what I've saved, I know it cost me some money. I don't regret my decision because it let me live my life as a "normal" 20-something before taking the med school plunge.
 
Here's what I'm doing with the benjamins I saved for medical school (for cost of living, that is): I'm putting myself on an annuity that invests the majority of my money and gives me a monthly allowance. Interest accrues even though I'll deplete the account eventually. It isn't ideal but it's better than sitting on a large lump sum.
 
Don't waste time working to save up for med school if you know you want to go for sure. Take a gap year or two if you want it or need it, but saving to pay cash for med school is a terrible idea since you're cutting years off what you could be earning and are pushing back your life.
 
xnfs93hy said:
Thank you all for the responses. My in-state medical school's (M.D.-granting) tuition is $37,615. Multiplied by four, that gives $150,460. I'm not sure if this is average in terms of cost of attendance. The general consensus here seems to be that I should take out loans for professional school. I did some calculations this morning, and while I would be able to save $150k with an engineering job, I think I may decide against doing so. Many of you have pointed out the opportunity cost that I will incur if I go that route. Taking the plunge into medical school with loans will, indeed, be a smarter financial move. While it is certainly nice to be completely debt-free, saving up for a few years will not pay off in the long-run. I ran some hypothetical figures through Excel and plotted them on a graph. The curves show that I will actually net more over the long-term if I go straight to medical school. I assumed $50,000 net by working full-time as an engineer and $100,000 net by working full-time as a physician. These are fairly conservative estimates, and the "go straight to medical school" curve still spikes much higher than my "debt-free" curve. The opportunity cost of not going to medical school straight away is just too great.
Click to expand...

Exactly. The simplest explanation is that by the time you are 40, you will have worked XX number of years and spent YY number of years in medical school. This is true in either scenario, with the work years either being AFTER medical school or BEFORE. The work years AFTER medical school pay so much more than the work years BEFORE medical school that the answer is much easier to visualize.
 
I'm going to throw this out here even though it's somewhat contradictory to the whole get-into-school-now mantra:

I graduated college in 2012 and will only be entering med school this year. In these three years I managed to save a comfortable amount of cash for cost of living expenses over the next 4 years. The relief I feel to have cash on hand is tremendous. I know that I've saved enough to take care of many issues life may throw at me and this gives me peace of mind loans never could.

If you need a security blanket to feel like a human being, what the hell - take a year off and save/invest aggressively just for that. I'm tremendously lucky to have a family with means to make my schooling a little easier, but I feel so much better to have my savings as well.

Not everything in life hinges on the shortest point from A to B. Sometimes you must takes a detour to save your sanity.
 
kthxbai said:
I'm going to throw this out here even though it's somewhat contradictory to the whole get-into-school-now mantra:

I graduated college in 2012 and will only be entering med school this year. In these three years I managed to save a comfortable amount of cash for cost of living expenses over the next 4 years. The relief I feel to have cash on hand is tremendous. I know that I've saved enough to take care of many issues life may throw at me and this gives me peace of mind loans never could.

If you need a security blanket to feel like a human being, what the hell - take a year off and save/invest aggressively just for that. I'm tremendously lucky to have a family with means to make my schooling a little easier, but I feel so much better to have my savings as well.

Not everything in life hinges on the shortest point from A to B. Sometimes you must takes a detour to save your sanity.
Click to expand...

OP is already working for a year. Additionally higher income=less aid for these purposes so building up a solid amount of cash can be slightly counter productive. If the OP can be frugal while working a year or two and in school, this is a no brainer.

The other thing that's different between you and the OP is that the OP has already taken time before college and is further delaying terminal education. These things add up a lot. If the OP takes another 5 years to work, they're going to be pushing things back further yet again. While it might have made sense for you to take a total of 3 gap years (I took 5 because of life happening), the OP will have taken about 12... It doesn't make sense if you're already set on med school.
 
It depends a lot on what your personal situation is, but unless you are extremely wealthy, chances are not good that you're going to may for medical school in cash. Unless you get a scholarship, the cost for 4 years of medical school can run in the range of $150,000-$200,000 or more. Doctors make enough money to pay this sort of debt off with relative ease compared to most people, while working before school (as an engineer I assume?) won't be as productive in reaching that amount in savings alone, if you factor in the costs of living while working. Plus, applying to medical school is an arduous process which requires a lot of time, money and attention. If you take years off from school, will your MCAT score still be viable? Are you guaranteed to get a high enough MCAT to get into medical school in the first place? (the answer is no.) It is more difficult to get accepted to medical school than it is for a doctor to pay off student loans - so I think it will be a greater net gain for you to apply sooner rather than later and try for that acceptance rather than trying to save up enough money to pay for schooling you're not guaranteed to get. Hope that made sense.

You could potentially work during one or two gap years to pay for your applications and maybe reduce the amount of loans needed, but I don't think you should try and save up for the full cost before applying.
 
I understand having your feet on the ground, and paying attention to finances, but I am so glad to be starting on this path. I took several gap years and though they gave me great opportunities to learn, I have been yearning to start learning medicine! Sometimes a person doesn't get accepted right away, or family matters require their attention, but I wouldn't recommend postponing a medical career one second longer then required if it is what you truly love!

(alright, you may now carry on with the careful numerical analysis! 😉 )
 
This question depends entirely on how much you make. Take however much you can save and multiply it by ~1.48 (6% interest over ~8 years). Is this number higher than what you could save as a doctor? Or lower?

If you're making 120k, and are interested in primary care, it may be higher. If you're making 70k it will be lower.


Generally speaking you'll come out ahead starting medical school earlier but there are exceptions.
 
I would apply to medical school now for a few reasons:

1) Many schools offer some sort of financial aid. The more you save up before starting the less need based air you will qualify for. It's a system that doesn't always reward those who work hard but that's the system. Better to start now with less savings (most schools take about 30% of your savings in tuition payments per year) and then apply for all the need based grants and scholarships your can find.
2) Debt can be handled easily if you pay close attention to costs and repayment options. Current low interest rates (won't stay that way forever) allow you to refinance at 2-4% with DRB and other providers after graduation if you wanted to go into community practice. If you went with a low paying specialty in a public system (like pediatrics at a university hospital), you could do the 10 year Public Service Loan Forgiveness Program. These further minimize the total tuition expense once taking opportunity cost into account.
3) You'll likely earn far more money as a doctor than an engineer in most cases. If you are really concerned about debt then choosing a specialty like radiology, derm, anesthesia, ortho, or even emergency medicine, surgery, neurosurgery etc can make much more of a difference. ***The most important thing about medical school debt is to keep expenses as low as possible while in school, then choose a repayment plan that makes sense for your career path, and finally and most importantly- to live like a resident for the first few years as an attending. Living on 60k per year with a 300k salary allows you to save over 200k per year towards loans. That can make a serious dent in even a very large student debt situation.
4) If you have some really marketable skills consider working on the side while in medical school. I did it, and I have a few other friends who did as well. First and second year were rigorous, but if you are good at studying and can get a good hourly rate for your time in your other profession you can make a real dent in expenses. Third year of medical school with clerkships was incredibly busy, but 4th year has lots of time off for electives, travel etc. It's important not to work too hard or you'll get burned out but there is always a balance.

It's not something to be afraid of, but I do think that the staggering costs associated with medical education are something to respect and pay close attention too.

A few great resources to get your started:
http://whitecoatinvestor.com/
http://www.bogleheads.org/forum/index.php
http://www.emp.com/wealth-management-videos
https://studentloans.gov/myDirectLoan/mobile/repayment/repaymentEstimator.action
 
Even if I had the money straight up to pay for med school, I would still probably try to max out the Stafford loans. That's because the loan rates and terms are actually pretty favorable for the student. In the past few years you would have been able to make more investing than the loan rates cost. You could also potentially buy real estate and be paying into equity that will be growing every year instead of paying rent into the dead abyss. Not to mention the loan forgiveness program.

As someone else mentioned, those who are financially savvy and those who are able to build something from nothing wouldn't think twice about intelligently taking loans and investing. To just say no outright to either is incredibly unwise because you can effectively be throwing money away.
 
darkjedi said:
In the past few years you would have been able to make more investing than the loan rates cost.
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It is still a risk as nobody knows if the rate of return will remain so high over the next several years. When the fed raises interest rates (which might happen soon) there could be a slow down in the market where the rate of return is less than the interest rate on student loans.

darkjedi said:
those who are financially savvy and those who are able to build something from nothing wouldn't think twice about intelligently taking loans and investing.
Click to expand...

Plenty of these people lost significant amounts of their money in the financial crisis. Those who are financially savvy do not always win. It would suck to have the money to pay for medical school, but instead invest the money while taking out loans only to lose your money on the market.
 
kthxbai said:
I'm going to throw this out here even though it's somewhat contradictory to the whole get-into-school-now mantra:

I graduated college in 2012 and will only be entering med school this year. In these three years I managed to save a comfortable amount of cash for cost of living expenses over the next 4 years. The relief I feel to have cash on hand is tremendous. I know that I've saved enough to take care of many issues life may throw at me and this gives me peace of mind loans never could.

If you need a security blanket to feel like a human being, what the hell - take a year off and save/invest aggressively just for that. I'm tremendously lucky to have a family with means to make my schooling a little easier, but I feel so much better to have my savings as well.

Not everything in life hinges on the shortest point from A to B. Sometimes you must takes a detour to save your sanity.
Click to expand...
You have a lump sum saved that you will use over 4 years ONLY for living expenses? Are you loaning out tuition then I suppose? You'd be better off budgeting all your lump sum up front towards tuition/living in your first year(s), saving yourself from the loan interest. It would be silly to loan money at 7% when you have the same amount available sitting in the bank.
 
Dude, the only reason(s) someone should take a gap year are suggested below:
1. You are poor, and you want to get a job to support family
2. You are confused because med school isn't right for you at present
3. You don't have qualifications (ex: clinical hours, prereqs)
4. You think that life has more waiting for you before med school (probably you saw dalai lama in your sleep calling you to climb mountains and fly like an eagle)
 
amad01 said:
You have a lump sum saved that you will use over 4 years ONLY for living expenses? Are you loaning out tuition then I suppose? You'd be better off budgeting all your lump sum up front towards tuition/living in your first year(s), saving yourself from the loan interest. It would be silly to loan money at 7% when you have the same amount available sitting in the bank.
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My loan will come from family, so it will be interest free. I didn't volunteer that information because I didn't see a reason to, but your suggestion certainly makes a lot of sense if I were relying on the government.
 
amad01 said:
It would be silly to loan money at 7% when you have the same amount available sitting in the bank.
Click to expand...

That's not true if you could get more than 7% investing that money instead. My rents could have loaned me tuition but told me to take out loans so they could invest the money instead. Long-term a 7% ROR may or may not be reasonable depending on your portfolio, but in their case that apparently made more sense.
 
If we are talking purely financially, the decision is obvious in going straight to medical school (granted that you get accepted in the first place). 1 yr of delayed matriculation is not just 1 yr of lost physician-income. It's 1 yr of lost PEAK physician income. Depending on what specialty you do, that could be anywhere from a net $200k-400k cash. Let's be conservative and say you are losing $200k cash. That's a brand new Mercedes Maybach S600, or w/e toys/things float your boat (I'm using cars as an example bc I like cars). If you take the gap year, you will always be 1 Mercedes Maybach S600 poorer than if you had gone straight to medical school. Look at it this way and maybe it will make your decision easier. Again, I am only speaking purely financially.
 
xnfs93hy said:
Thank you all for the responses. My in-state medical school's (M.D.-granting) tuition is $37,615. Multiplied by four, that gives $150,460. I'm not sure if this is average in terms of cost of attendance.
Click to expand...
The cost of attendance isn't just tuition; it includes rent, food, travel expenses, health insurance, textbooks, etc. My in-state MD school's tuition is 31k/year, but the COA is 61k/year. Just something to keep in mind as you do calculations.
Also, while it's safest to assume that you'll have to pay full-price, there is always a chance you'll get a need-based or merit-based scholarship.
 
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cactus8910 said:
The cost of attendance isn't just tuition; it includes rent, food, travel expenses, health insurance, textbooks, etc. My in-state MD school's tuition is 31k/year, but the COA is 61k/year. Just something to keep in mind as you go calculations.
Also, while it's safest to assume that you'll have to pay full-price, there is always a chance you'll get a need-based or merit-based scholarship.
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Ah, I see. Thanks for the clarification.
 
Money now is always worth more than money later.

If the financial aspect of professional school is worrisome to you, then you should just go to work now and avoid becoming a physician altogether.

Why?

Because beyond the cost of medical school alone, you finish it only to end up in a job (residency and fellowship) that lasts between 3 and 10 years that pays below what a good engineering job will pay (depending on location and year of training, residents typically make between 50k and 65k a year). And most residents and fellows do not start repaying their student loans until they become attendings, so the debt is just accumulating interest during that time. So not only do you start in a 6 figure hole, you spend a significant amount of time with a poor salary, accumulating debt and missing out on the the 7+ years of earnings you would have gotten as an engineer.

Now this argument is more profound because you're looking at engineering, which generally provides some of the highest initial salaries out of undergraduate education available. The argument is different, and probably favors med school and debt, if you were going into a teaching career or becoming a social worker or something else where the average physician salary is 4-5x the annual salary instead of just double.

Other things to consider if you're truly debt averse...military service and rural/underserved location loan repayment programs. These do exist, they do erase your debt, the military even provides you with a stipend during medical school, but they come with the caveat that you may need to go into a primary care field in order to trigger. As a pediatric subspecialist I know several people who delayed fellowship, working as general pediatricians so they could complete their commitments. It wasn't what they wanted to do, but they made a financial decision that worked for them.
 
I have ran simulations on engineering salary vs a specialist's salary. Specialist wins out on lifetime earnings, around the time when he is 50.
 
Pasmal said:
That's not true if you could get more than 7% investing that money instead. My rents could have loaned me tuition but told me to take out loans so they could invest the money instead. Long-term a 7% ROR may or may not be reasonable depending on your portfolio, but in their case that apparently made more sense.
Click to expand...
I said sitting in a bank... show me a savings account with 7%+ interest.
 
amad01 said:
I said sitting in a bank... show me a savings account with 7%+ interest.
Click to expand...

I made the assumption that because it's idiotic to have money just sitting in a bank (apart from a little emergency cash) unless you're about to 1) spend it or 2) invest it, that you weren't implying it would just be left there otherwise. Apologies!
 
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