Going to Med School in Debt

[Heal&Teach]

Hello folks,

Need a little bit of advice. Not so much advice, b/c I've got limited options. I'd moreso like to hear from folks who are in a similar situation or who know folks in a similar situation (not everyone goes into school debt free, so throw me a bone here ). Didn't do an advance search, so if there was a thread on this in the past, please feel free to refer me to it.

My situation is this: I've been accepted to med school, but unfortunately, working full time for two years has not eliminated my "commercial" debt (i.e., credit card victim here). I am ready to start school this fall, but I am concerned b/c i don't want to end up in a more stressful situation, as concentrating on school will be more than enough stress to hold me down.

I thought about deferring for one year, but then I have to think about a few things, including whether or not I'll incur more debt since my loan payments will kick in (which shouldn't be too much of an issue since I have the option of moving back home) or whether I'll generate enough to make even more of a dent in my debt (might get a full time and a part time job) - and of course, this is contingent on whether or not I can find a job (the market is pretty rough right now, but with experience, I might be okay). Private loans won't help the problem since I'd be transferring my debt from one source to another, unless I have one of my parents (who aren't really financially equipped to do this). And b/c I worked this year, I don't qualify for any economic disadvatage loans, although I didn't make that much. I am thinking of just going to school and living cheap, but even the most frugal living may not help me.

I know that there is a light at the end of the tunnel, but this is difficult b/c this is something that is not going to go away anytime soon. Medical school is my decision, and technically, I don't have to go, but I've worked a long time for this, and I refuse to let this fall through the cracks - money has prevented many people from even applying and making it this far, and I'm not giving this up.

I would appreciate any input from this contingency of wise students.

Thanks a bunch,
H&T

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[Vincristine]

I'm wondering how much debt you're talking about. I came to medical school with $46K of undergrad educational debt ($30K was private loans). I know your's is credit card debt, but if you can grab a couple extra grand in loans for med school to pay off your credit card debt, you'll likely be ahead of where you are now AND ahead of me. Financial aid for medical school is much more lienient given that they expect you to borrow money for living expences. Therefore, it wouldn't be too difficult to secure extra loan money (most liklely private) to pay off your cc debt. I highly recommend citibank student loans.

Even though it's cc debt, if it's less than $10k, I'd say try to "transfer" it by taking out additional student loans because if you have no undergrad debt, anything less than $20K is really not a big deal. The bigger question is whether you've changed your spending habits and will not continue to accrue more credit card debt......

 

[Heal&Teach]

Hi keraven,

Thanks so much for your response.

The debt is just a little less than $10K. I only have $10K undergraduate debt, but went to grad school, so I've got an additional $40K, for a total of $50K. That is the thing that worries me, that later on, I will have to borrow private loans anyway with the cap of $138,500 on graduate debt. I got into state schools, so the total debt may not be as bad - not worried about that. That'll certainly get paid off. I don't know, I'm just more concerned about first year more than anything, the greatest time of adjustment. I don't want to get sidetracked by anything, esp. not finances.

H&T

 

[mpp]

The cumulative maximum of Stafford loans for medical school is $189,125, so you've got a bit more (about $50,000 more) to play with.

 

[Heal&Teach]

Thanks for your response as well mpp. But this makes me wonder: does this mean that the amount that I didn't spend for college count toward my overall loan allowance as well (thus explaining the $38,500 max per year borrowed)?

 

[mpp]

Not sure what you mean, but each medical student can borrow up to $38,500 in Stafford loans of which $8,500 may be subsidized. The $189,125 cumulative total is for all Stafford loans: undergrad, graduate, and medical school.

 

[Vincristine]

mpp, where did you find your number? I was looking at things just yesterday for someone on the FA forum. On the Direct Loans website, I too found the $138.5K lifetime max for grad school (which includes undergrad loans)......it would be great if I was wrong.

 

[Heal&Teach]

Actually, the lifetime max is $189,125. There is a cap on the graduate portion of the loan at $138,500. I wondered whether or not the portion I didn't use during undergrad (since there is a max of $46K in Stafford loans, and I used under $10K) would be transferred to my total allowance in graduate debt (since $38,500 per year for 4 years - pending you take out the full amount each year - is much more than $138,500).

 

[Leforte]

As a person who is graduating in a few weeks, and has taken nothing but student loans, I can assure you that you can take out more than $138k - I think I'm near $180k - only $12k of which is a private loan (the residency relocation loan). The rest is federal. Also, I know of several classmates who have $200k. Not sure what proportion is federal vs private in their cases, however. I, too, came to med school with CC debt - We get disbursed $8500 per semester to live off of - very easy to do. The rest can be used to bring down your CC debt. If you are so inclined, you can also get a small part-time job, too. I worked for Kaplan/Princeton review and made $22 per hour teaching MCAT and $16 per hour teaching SAT. It was easy money, with minimal preparation.

For some reason, I thought med students were allowed to have more debt than the figures I've read here... Somewhere in the neighborhood of $220k. I don't have any sources, just recall, but am sure a quick call to Sallie Mae's 1-800 # would clarify that issue for those interested.

Also, while federal Sub/Unsub are limited to ~$38k per year, there is also Perkins ($5k per year) and other options for those that qualify.

As far as current year income and next years financial aid qualification, a good financial aid officer should be able to get you qualified for next year, as you will have no income then and can do an adjustment to the FAFSA figures.

The only thing I would worry about, if it applies, is whether your tuition/expenses can be covered with federal money alone (some places it cannot). In such case, you'd need a private loan, and credit issues come up. Ask your financial aid office what the projected package is for next year and if you anticipate needing private loans. If so, pull your credit report, and start working on making sure your score is cool with private lenders.

 

[Heal&Teach]

Very helpful information Leforte, very much appreciated.

 

[Wednesday]

Hey H & T,

Two ideas:

Would you be able to consolidate your credit card debt through a debt consolidation service? I know you can do it with higher amounts. If you do this you usually have to get rid of your credit cards (a tad annoying) but they work with the credit card companies to lower your interest rates so you can pay off the debt faster and pay less over the long run. It really does help a lot. Usually then you pay a monthly amount and you would be able to budget for it (and pay more when you could).

Another idea is to talk to the financial aid office at the school where you will be attending. I know that our financial aid office even helps the residents at our hospital figure out their payment options once they start residency (even if they didn't go to our school). They might be really helpful.

It might be difficult to get private loans with bad credit, but will probably be okay with just some debt (as long as you haven't defaulted on anything). Again a question for financial aid.

You shouldn't have to worry about school debt while you're in school anyway, which is good.

Good luck!

 

[beriberi]

I know my lender (T.H.E.)--who actually gives me its staffords, will allow up to 235K total educational debt. 10K in credit card debt would be a poor reason to go to medical school or not.

 

[doc05]

H&T --

your debt is not all that impressive. just start med school already. you ain't getting any younger.

 

[orthoman5000]

I've got a question about using private loans to pay off credit cards. Is is possible to get private student loans that exceed your cost of attendance? I've got a pretty good amount of credit card debt (about equal to the OP), and I'm taking out the max right now (I'm in medical school). My monthly living allowance is just not adequate when I'm making a car payment and making minimum payments on the credit cards.

I'm considering CC consolidation. How will this affect my credit rating? Anyone have a certain credit consolidation agency that they would reccommend?

 

[Heal&Teach]

Again, thanks for all of the input! And yes, doc05, I'm not getting any younger and I do need to get on with it.

Orthoman, I can't answer the private loans question, but I can talk about CC consolidation. I am consolidated with a company that is no longer accepted clients (probably b/c they've been sued ridiculously for fraud, but I haven't had problems with them and my payments to creditors have remained intact). I believe that debt consolidation stays on your record for about 5 yrs (akin to bankruptcy), and I'm not quite sure how that scar is perceived. But I do know that some programs do not allow you to apply for additional credit while you are on the programs.

Also, you can check the credibility of the debt consolidation companies you're interested through researching the agencies through the Better Business Bureau. The BBB has an excellent site on how to choose a credit counseling agency: http://www.dc.bbb.org/go.html?location=http://www.bbb.org/alerts/article.asp?ID=291. Whichever the agency you choose, make sure that they are able to do one simple thing (not mentioned on the BBB site): give you an end date.

I didn't know any of this information when I initially started with this company well over a year ago. While some of my debt is disappearing, at the current rate, I probably won't get rid of this debt until after I get out of medical school (and I don't have an end date to justify this). Best of luck finding a company that's right for you.

H&T