Good Books About Handling Med School Debt?

[BobA]

As I prepare to head to residency, I've started thinking about how to best handle my 200K of educational debt.

Can anyone recommend a good book about this subject?

Thanks!

---

Members don't see this ad.

 

[econstudent]

bump, i'm curious to find this out as well.

 

[McGillGrad]

Unfortunately, there is no book that will teach you the most effective (and seemingly common sense) methods to manage your debt while living a semi-comfortable life.

Off the top of my head (and my former life working in hedge funds), this would be an ideal time to lock in low interest rates by restructuring all of your debt. Considering that the banking industry is usually wary in this economic climate, you just happen to belong to a tiny minority of borrowers who have a 99% payback rate (...physicians, that is...)

With your debt locked into 1-3% per annum, you are allowed to breathe easy for 20-25 years. You can pay the minimum towards your debt and use excess funds to invest in guaranteed growth vehicles that will offset any interest you are paying for your debt...and you may even come out ahead in less than a decade.

 

[subtle1epiphany]

Unfortunately, there is no book that will teach you the most effective (and seemingly common sense) methods to manage your debt while living a semi-comfortable life.

Off the top of my head (and my former life working in hedge funds), this would be an ideal time to lock in low interest rates by restructuring all of your debt. Considering that the banking industry is usually wary in this economic climate, you just happen to belong to a tiny minority of borrowers who have a 99% payback rate (...physicians, that is...)

With your debt locked into 1-3% per annum, you are allowed to breathe easy for 20-25 years. You can pay the minimum towards your debt and use excess funds to invest in guaranteed growth vehicles that will offset any interest you are paying for your debt...and you may even come out ahead in less than a decade.

I don't quickly grasp financial concepts, but didn't the way Stafford Loans work change a couple years ago?

Before this change you had a variable interest with a max it could reach, and the ability to consolidate many loans from many lenders into a larger single loan and lock in a new current rate.

Now the Staffords are set when they are issued at the going rate, and so aren't variable. However, my understanding is that while consolidation would lump the older multiple loans into a single one, the rates don't change or lock at the new low.

Is this a correct concept or am I misunderstanding the situation?

I've got tons of debt, I consolidated before they changed the Stafford policies, but would love to re-consolidate all my debt into a single loan with a now lower rate, if possible. It would make my future easier.

 

[misery]

Unfortunately, there is no book that will teach you the most effective (and seemingly common sense) methods to manage your debt while living a semi-comfortable life.

Off the top of my head (and my former life working in hedge funds), this would be an ideal time to lock in low interest rates by restructuring all of your debt. Considering that the banking industry is usually wary in this economic climate, you just happen to belong to a tiny minority of borrowers who have a 99% payback rate (...physicians, that is...)

With your debt locked into 1-3% per annum, you are allowed to breathe easy for 20-25 years. You can pay the minimum towards your debt and use excess funds to invest in guaranteed growth vehicles that will offset any interest you are paying for your debt...and you may even come out ahead in less than a decade.

where is this loan i'll gladly take it

 

[JonnyG]

I don't quickly grasp financial concepts, but didn't the way Stafford Loans work change a couple years ago?

Before this change you had a variable interest with a max it could reach, and the ability to consolidate many loans from many lenders into a larger single loan and lock in a new current rate.

Now the Staffords are set when they are issued at the going rate, and so aren't variable. However, my understanding is that while consolidation would lump the older multiple loans into a single one, the rates don't change or lock at the new low.

Is this a correct concept or am I misunderstanding the situation?

I've got tons of debt, I consolidated before they changed the Stafford policies, but would love to re-consolidate all my debt into a single loan with a now lower rate, if possible. It would make my future easier.

I would hold off on consolidation for a few months or even till after defferement because of the talk of changes to student loans in DC. Particularly about lowering the rate again with all the stuff thats about to hit the fan when students have to try to get loans for next year soon, something will be forced to happen.

 

[BobA]

where is this loan i'll gladly take it

It's a loan that's only available to hedge fund manages, current bank executives, and the CEO's of car companies.

 

[McGillGrad]

I keep forgetting that the average medical student has little insight into finance and accounting.

It is not a loan, it is restructuring your debt. I am not talking about the "debt consolidation" you find online. I am talking about using the fact that you are in the most attractive banking bracket. Physicians are offered preferred loan packages for a few important reasons:
1). The bank that loans the money is most used as the primary bank
2). Physicians are guaranteed to receive a steady income
3). Someone is making money off of the interest you will pay, so why not this bank

where is this loan i'll gladly take it

 

[McGillGrad]

Consolidation is an option, but it is not the ideal option. LIBOR is still dropping, so it should be at 1% in a few quarters.

Restructuring is more favourable, although consolidation will save money,too.

I would hold off on consolidation for a few months or even till after defferement because of the talk of changes to student loans in DC. Particularly about lowering the rate again with all the stuff thats about to hit the fan when students have to try to get loans for next year soon, something will be forced to happen.

 

[BobA]

Consolidation is an option, but it is not the ideal option. LIBOR is still dropping, so it should be at 1% in a few quarters.

Restructuring is more favourable, although consolidation will save money,too.

What do you mean by "restructuring"?

 

[dragonfly99]

Mcgill,
with respect,
I think you are wrong with regard to the availability of 1-3% debt restructuring plans for the average resident physician in the US. I don't know anyone who has been able to do such a thing. Maybe I just don't understand what you are talking about with "restructuring", but if you are talking about "private banking" type relationships, the banks generally are not interested unless/until the person is an attending. If I am wrong, please correct me with more specific information.

I think the 6.8% student loan rate is about the best they are going to get at this point. I believe the other poster was correct about the changes in the availability of loan consolidation. Folks like me were able to consodilate our student loans at around 3% a few years ago, but that option I don't believe is around any more. Banks are not chomping at the bit to restructure debt for the average resident physician. They will, however, loan you MORE money if that is what you desire. However, the interest rate on those personal loans is around 9-11% last time I checked. You can still get a "physician loan" mortgage, but the interest is going to higher than with a traditional mortgage someone would get with 20% down payment, and also some of the "doctor loan" mortgage programs now require 5% down payments whereas they used to require none.

 

[McGillGrad]

What do you mean by "restructuring"?

Restructuring is different from consolidation insomuch that consolidation is simply packaging all of your debt into one lump sum and then paying it off at a slightly discounted interest rate from a secondary lender.

Restructuring debt is usually associated with corporate finance or rebuilding personal credit through negotiating overdue debt repayment that would otherwise go down as uncollected.

Restructuring your debt is using strategic financial methods to package your debt along with your banking and investing through your banker. It is not something you find advertised openly by your banks (for obvious reasons). It is a significant advantage to have a history with your financial institution, but you can propose this to any lender. It is something akin to a 'consumer proposal' without the bankruptcy association.

If you go to any consolidation website, they offer you something like 5-6% now, even though the US prime rate is at 3.25% (and was ~7% a year ago). There will be a new prime rate in a couple of weeks, so if it drops again, then you are in a good position.

 

[BobA]

Restructuring is different from consolidation insomuch that consolidation is simply packaging all of your debt into one lump sum and then paying it off at a slightly discounted interest rate from a secondary lender.

Restructuring debt is usually associated with corporate finance or rebuilding personal credit through negotiating overdue debt repayment that would otherwise go down as uncollected.

Restructuring your debt is using strategic financial methods to package your debt along with your banking and investing through your banker. It is not something you find advertised openly by your banks (for obvious reasons). It is a significant advantage to have a history with your financial institution, but you can propose this to any lender. It is something akin to a 'consumer proposal' without the bankruptcy association.

If you go to any consolidation website, they offer you something like 5-6% now, even though the US prime rate is at 3.25% (and was ~7% a year ago). There will be a new prime rate in a couple of weeks, so if it drops again, then you are in a good position.

Don't you usually need something of value to borrow against (like a house) when you're "restructuring" that way?

 

[mmag]

If you consolidated before the fixed 6.8% rate took effect, I would recommend against consolidating again.
If you reconsolidated all of your loans, your new rate would be the proportional average of the included loans. Say if you had 10k at 4% and 10k at 6% then after consolidation it'd become 20k at 5%.
You do get to have the benefit of just one loan bill per month. However you lose the ability to pay off each individual loan. Say you owe that 20k total. If you can pay back 10k, if you didn't consolidate, you can pay off your 6% 10k loan first and let the 4% 10k loan sit. If you consolidated, you'd pay off 10k of your total 20k but your remaining 10k would be at 5%.

 

[mdx2x]

Unfortunately, there is no book that will teach you the most effective (and seemingly common sense) methods to manage your debt while living a semi-comfortable life.

Damn... maybe a financial career changer here could help us out?

 

[dragonfly99]

Don't you usually need something of value to borrow against (like a house) when you're "restructuring" that way?

That is my understanding as well. If you HAVE money/assets, then yes, you can probably get a private banker to work with you.

Show me a case of your typical graduating med student in his late 20's, with <10k in asses, and a 150k or 200k in debt at 6.8%, and then show me the private banker who wants to let him "restructure" that at 3% or something. That's just not something I've ever seen or heard of. Again, I'm totally willing to be proved wrong...it would be awesome if this was something that was easy to do. However, I've just never seen nor heard of this. What would be the bank's motivation to do this? You could say it's the hope of future income/investements from the physician, but my experience is that the private bankers really don't care about you unless your family has money (i.e. you already have lots of assets and savings despite having been to med school) and/or you are already an attending with a good salary.

 

[maceo]

im 199k at 6.5% 30 year term

Ill be paying this after my retirement

anyone know how i can refinance my student loan for a lower interest rate since mine is too f**** ing high even if i reconsildated.. Im strongly considering.. just not paying my loan for like 10 months right before the default and then paying it... repeat times 30 years..

 

[mercaptovizadeh]

im 199k at 6.5% 30 year term

Ill be paying this after my retirement

anyone know how i can refinance my student loan for a lower interest rate since mine is too f**** ing high even if i reconsildated.. Im strongly considering.. just not paying my loan for like 10 months right before the default and then paying it... repeat times 30 years..

It says you're an attending. I'm assuming your pay is at least 150,000, but perhaps even 200,000. Assuming you take home around 70,000 net income, that comes to around 6000 dollars a month. You could dedicate 2000-3000 dollars per month for your loans. I haven't done the math, but that should probably pay off in 15 years? Hardly retirement.

 

[medicinesux]

I am afraid there are no comprehensive books on this topic.....YET. If you ask me, people are still deep in slumber while med and dental schools continue to jack up tuition with no end in site. My jaw was on the floor after looking at PENN Dental School's most recent estimated expenses:

2008-2009 Expense Budget​

Year 1
Year 2
Year 3
Year 4​

Tuition

$53,990
$53,990
$53,990
$53,990​

General Fee

2,000
2,000
2,000
2,000​

Room and Board

13,965
15,356
15,356
13,965​

Books and Supplies

1,050
1,050
1,050
1,050​

Miscellaneous

4,725
4,988
**7,166
6,220​

Instrument Mgt. Service

*6,496
5,346
5,092
4,850
​

Technology Fee

536
536
536
536​

Clinical Apparel

166
166
710
645​

-------
-------
-------
-------​

Total

$82,928
$83,432
$85,900
$83,256​

83 thousand dollars?!?! What the Eff? That is nearly TWICE the median annual income in this country!

But don't fret, there is a 200K and up club you can join in the pre-allopathic forum:

http://forums.studentdoctor.net/showthread.php?t=604965

Reading through that thread, I am in awe of how so many premeds have no idea or any iota of comprehension of what it is going to take to pay back such monstrous sums. But have no fear...as long as there are others like me than everything will be fine! Just tell that to the millions of homeowners who insanely overleveraged themselves and are now being tossed out of their McMansions by their local sheriff. Motto of the story- IF EVERYONE ELSE IS DOING IT DOESN'T MEAN YOU SHOULD OR THAT IT IS OK.


We are entering unchartered territory with skyrocketing student loans in an economic environment where the unemployment rate is rocketing out into the stratosphere while medical reimbursements are plummeting. Even if our economy was booming and the DOW was pushing 20,000, I would be very concerned for my financial future if I was trying to pay down 250K with nationalized healthcare looming. Welcome to our next bubble. The pop is going to be deafening.

 

[BobA]

For what it's worth I've found the following resource:
http://www.aamc.org/programs/first/laymansguide/start.htm

 

[blabbyblab]

Personal Finance for the New Physician -- Money Management for Residency and Beyond

This is a pretty good resource. Lots of solid, common-sense advice packed into around 150 pgs. Does not provide and quick fix but emphasizes importance of contributing to retirement early on, avoiding unnecessary expense in residency, and making the most of your loans in regards to taxes etc.

 

[sirus_virus]

No help here, just like to leave my usual message:

Selling medical degrees or any degree for that matter for >150K is a fraud, and the perpetrators need to be held accountable.

 

[Old_Mil]

With your debt locked into 1-3% per annum...

I seriously doubt anyone graduating this year has med school debt at that % rate. 6% if not a bit higher is more in line with things these days...

For most of us, our vacation home will be framed and hanging on our wall for 30 years.