How are we going to afford these loans?

[SoulinNeed]

I've been accepted into med school, and I'm very grateful. However, I'm looking at what my loan amount will be just when graduate and it'll likely be 180K-200K (and that's with help from my parents). And that doesn't include what it'll look like at the end of my residency, with interest accruing. I'm just wondering how anyone can afford to pay this back, while living a decent life? Especially considering that many of the "average salaries" that get thrown around are BS, imo. For instance, the average Anesthesiologist salary here in Chicago is reported as $340K. However, most open positions that I've seen are actually 200-250K. It seems the same with most positions. How are you guys planning on paying it back?

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[Doctor Strange]

A little at a time. 200-250K, even minus taxes and insurance will be more than enough to make minimum monthly payments. You might be paying for ten to fifteen years, but if you get to the end goal of "physician," there's very little chance that you won't be able to pay back your loans.

 

[AestheticGod]

If you pass medical school, chances are you will find a job pretty darn fast. You shouldn't have any problem paying back those loans after that time. Don't let it discourage you, after all, you're not some hipster doing art major in a private university. You WILL find a job to pay it off.

And congrats on getting accepted!

 

[Bacchus]

I've been accepted into med school, and I'm very grateful. However, I'm looking at what my loan amount will be just when graduate and it'll likely be 180K-200K (and that's with help from my parents). And that doesn't include what it'll look like at the end of my residency, with interest accruing. I'm just wondering how anyone can afford to pay this back, while living a decent life? Especially considering that many of the "average salaries" that get thrown around are BS, imo. For instance, the average Anesthesiologist salary here in Chicago is reported as $340K. However, most open positions that I've seen are actually 200-250K. It seems the same with most positions. How are you guys planning on paying it back?

You have to be frugal your first few years of practice. You also should pay back as much as possible in residency without having to live under the freeway with your patients.

 

[lykyamy00]

just remember... some of us wish our loans were going to be as low as 200,000! but we'll all pay it back one day! there are also a lot of 'loop holes' like making commitments to primary care or working at not for profit institutions for a certain number of years. i know a peds resident who is doing the not for profit thing. he said that after 10 years of paying/10 years of working at a not for profit, they'll forgive the rest of his loans.

 

[Mountaineer12]

There's always Income Based Repayment for people in lower paying specialties. It's a repayment plan that makes your payments some percent (can't remember) or you annual salary. It would take longer to pay back, but it's still an option. I wouldn't worry about loans, there will always be ways to work it out successfully.

 

[SoulinNeed]

There's always Income Based Repayment for people in lower paying specialties. It's a repayment plan that makes your payments some percent (can't remember) or you annual salary. It would take longer to pay back, but it's still an option. I wouldn't worry about loans, there will always be ways to work it out successfully.

I've done the math. Even people in lower paying specialties don't qualify for IBR.

 

[Bacchus]

I've done the math. Even people in lower paying specialties don't qualify for IBR.

You don't need IBR as an attending, you will have money to pay off your loans. IBR as a resident, yes.

 

[Geebeejay]

I've been accepted into med school, and I'm very grateful. However, I'm looking at what my loan amount will be just when graduate and it'll likely be 180K-200K (and that's with help from my parents). And that doesn't include what it'll look like at the end of my residency, with interest accruing. I'm just wondering how anyone can afford to pay this back, while living a decent life? Especially considering that many of the "average salaries" that get thrown around are BS, imo. For instance, the average Anesthesiologist salary here in Chicago is reported as $340K. However, most open positions that I've seen are actually 200-250K. It seems the same with most positions. How are you guys planning on paying it back?

Depending on your definition of a "decent life", you'll be able to repay these loans. There are people with comparable loans that don't make even close to a physician's salary.

 

[Brachyury]

I've done the math. Even people in lower paying specialties don't qualify for IBR.

Face-palm

You qualify for IBR in residency, and once you qualify, you are allowe to stay in IBR. Do a search to find out more about IBR

 

[Praefectus]

Look up the Public Service Loan Forgiveness program. When you work for 10 consecutive years in a public or non-profit hospital while making payments, all of your loans are erased. Residency counts towards those years too, so you could end up with only 3 years worth of payments as an attending before those loans are forgiven.

 

[SoulinNeed]

Face-palm

You qualify for IBR in residency, and once you qualify, you are allowe to stay in IBR. Do a search to find out more about IBR

Wait, really? Sounds too good to be true. Do you have to be in a non-profit setting?

 

[CsHead]

Wait, really? Sounds too good to be true. Do you have to be in a non-profit setting?

No.

 

[NDPitch]

Can we trade? I'll likely be 300k in debt after dental school

Some of my other counterparts will be 400k in debt because they have to finance the tuition AND the living expenses. At 180k, you'll be fine. Don't worry too much! Live frugally and don't go buy a BMW when you graduate. Being a medical professional isn't about how much debt you have or how much money you make, it's about the love for your work and the people you treat.

Be smart with your finances, don't withdraw a penny more than you have to, make your payments on time every month, pay more when you can, and you'll be good to go.

 

[Osteoth]

It'll suck for some time, but if you really want to be a physician you will make the sacrifices necessary to do so.

 

[nychila]

With $200-300k in loans, which will amount to close to half a million dollars with interest, is it even possible to choose primary care residencies as a specialty?

 

[kpcrew]

It'll suck for some time, but if you really want to be a physician you will make the sacrifices necessary to do so.

lol

 

[circulus vitios]

It'll suck for some time, but if you really want to be a physician you will make the sacrifices necessary to do so.

What's the big deal of spending half of your adulthood making $2500/month payments on student loans? You'll be a doctor, just think of all the gratification and prestige. That's got to be worth something, right?

 

[DrBowtie]

Wait, really? Sounds too good to be true. Do you have to be in a non-profit setting?

Correct, however what might happen is that your income might be great enough that your payment meets the upper cap of what your loan payment would have been for the standard 10yr repayment.

Example (numbers not true but used for illustation):
Your loans are 100k, your 10 year repayment plan is 120 payments of $1000.

On IBR your payments are X% of your income or the $1000 (what would have been your 10yr standard plan), whichever is lower.

 

[SoulinNeed]

Correct, however what might happen is that your income might be great enough that your payment meets the upper cap of what your loan payment would have been for the standard 10yr repayment.

Example (numbers not true but used for illustation):
Your loans are 100k, your 10 year repayment plan is 120 payments of $1000.

On IBR your payments are X% of your income or the $1000 (what would have been your 10yr standard plan), whichever is lower.

I get that, but the loans would still disappear after ten years of payment, right?

So, I could theoretically pay like $300 a month, through IBR, for five years (during my residency and fellowship), then pay $1000 (or whatever) a month for another five years (if I work at a non-profit hospital), and the loans would still disappear?

 

[Mountaineer12]

IBR loans don't disappear for 25 years.

 

[aurora90]

What's the big deal of spending half of your adulthood making $2500/month payments on student loans? You'll be a doctor, just think of all the gratification and prestige. That's got to be worth something, right?

so do you think people who need to pay for med school entirely through loans should just not go to med school then? looking at the average debt at graduation it seems like most people will be making high monthly loan payments..

 

[aurora90]

OP you should read this - http://blogs.medicine.iu.edu/med-money/2011/01/30/reflections-on-the-price-of-medical-school-admission-a-debt-crisis/

 

[circulus vitios]

so do you think people who need to pay for med school entirely through loans should just not go to med school then? looking at the average debt at graduation it seems like most people will be making high monthly loan payments..

Go to med school if you want. The debt is manageable. I just hate that idiotically flippant attitude of WELL IF U WANNA BE A DOKOTOR THEN ITS NOT RLY A BIG DEAL LOL ULL STILL BE RLY RICH

 

[CsHead]

I get that, but the loans would still disappear after ten years of payment, right?

So, I could theoretically pay like $300 a month, through IBR, for five years (during my residency and fellowship), then pay $1000 (or whatever) a month for another five years (if I work at a non-profit hospital), and the loans would still disappear?

The 10yr disappearing thing is PSLF...

The two are not the same. Anyone can get IBR, just need to fill out a couple forms when the time comes and submit.

And for PSLF, remember that everything that gets paid off after 120 payments is taxable... so remember that year might suck.

 

[SoulinNeed]

The 10yr disappearing thing is PSLF...

The two are not the same. Anyone can get IBR, just need to fill out a couple forms when the time comes and submit.

And for PSLF, remember that everything that gets paid off after 120 payments is taxable... so remember that year might suck.

Yeah, I get that. I'm saying, if I pay $300 a month through IBR for five years (during residency and fellowship), then spend another five years paying whatever I would have to pay a month afterwards while working at a non-profit hospital (which would qualify me for PSLF, right?), the loans get forgiven?

 

[Doudline]

What's the big deal of spending half of your adulthood making $2500/month payments on student loans? You'll be a doctor, just think of all the gratification and prestige. That's got to be worth something, right?

Yeah, what a big deal spending at most 15% of your starting income every year on repaying debts and still retaining 170K++ afterward, more than 5 times the average American salary.
Think about it, you won't be able to buy a small baroque castle in England or Italia to walk your dogs on evergreens! You're a doctor, for Christ's sake, not a ****in' peasant!

 

[Brachyury]

The 10yr disappearing thing is PSLF...

The two are not the same. Anyone can get IBR, just need to fill out a couple forms when the time comes and submit.

And for PSLF, remember that everything that gets paid off after 120 payments is taxable... so remember that year might suck.

The 10 year cancellation is not taxed; the 20 year cancellation is taxed

Also, I'm just going to repost something I wrote several months ago



Traditionally, government financial programs, when cancelled, tend to grandfather current particpants into the program if the law is changed.

A few things: if you and your spouse file seperately, your spouse's income will not need to be applied towards your IBR amount.

10% of elidgible income is your income minus pre-tax deutions and a predetermined poverty level. For example, if you make 250k and are a single, you substract 150% of the poverty level for a single person (I think its about 15k right now) and pretax deductions (i.e. savings accounts, health spending accounts public transit, etc). Thus on an income of 250, if you have 17k (the max that can go into 403/405 accounts for 2012), 15k for the poverty adjustment, and 3100 for your HSA, you will pay 10% of (250-17-15-3.1)= $21,490.

Now, not all people would have to pay $21,490 a year with a 250k salary. How? When you enter IBR (i.e. day one of residency) the governemnt calculates with interest how much would it cost for you to pay off all of your loans in 10 years: this amount is the ceiling of your payments. Therefore, even if you income greatly increases, you will pay either 10% of your income or the ceiling amount (you pay the lower one). For example, if you gradudated from a southern med school and left med school with 160k in loans, the total cost to pay the loan back in 10 years would be about 225k (or 22.5k a year). In the above scenario, 10% of your income is $21,490 and your ceiling is 22.5k, so you will pay $21,490. Let's say in two years you are promoted from an instructor to an assistant professor position, and your income increases to $285. Now, (285-15-17-3.1)*.1 = 25k. Therefore, for this year, you will pay the ceiling amount of 22.5k instead of 25k.

The only part of IRB I'm not sure of is that the rules were recently changed on whether you pay 15% of 10% of you income. I though any loan that originated on or after July 1, 2011 would be at 10%, and any loans before that were at 15% of income, however, the government may have changed the program to make all loans (current and future) at 10%. Hopefully someone can clarify this point.

 

[NickNaylor]

Yeah, what a big deal spending at most 15% of your starting income every year on repaying debts and still retaining 170K++ afterward, more than 5 times the average American salary.
Think about it, you won't be able to buy a small baroque castle in England or Italia to walk your dogs on evergreens! You're a doctor, for Christ's sake, not a ****in' peasant!

Retaining "$170k++ afterward" would require a not insignificant income considering you're paying probably ~30% in taxes. Your point is taken, but even the situation you mention is better than what the average physician will be in.

(sent from my phone)

 

[DrBowtie]

The 10 year cancellation is not taxed; the 20 year cancellation is taxed

Also, I'm just going to repost something I wrote several months ago



Traditionally, government financial programs, when cancelled, tend to grandfather current particpants into the program if the law is changed.

A few things: if you and your spouse file seperately, your spouse's income will not need to be applied towards your IBR amount.

10% of elidgible income is your income minus pre-tax deutions and a predetermined poverty level. For example, if you make 250k and are a single, you substract 150% of the poverty level for a single person (I think its about 15k right now) and pretax deductions (i.e. savings accounts, health spending accounts public transit, etc). Thus on an income of 250, if you have 17k (the max that can go into 403/405 accounts for 2012), 15k for the poverty adjustment, and 3100 for your HSA, you will pay 10% of (250-17-15-3.1)= $21,490.

Now, not all people would have to pay $21,490 a year with a 250k salary. How? When you enter IBR (i.e. day one of residency) the governemnt calculates with interest how much would it cost for you to pay off all of your loans in 10 years: this amount is the ceiling of your payments. Therefore, even if you income greatly increases, you will pay either 10% of your income or the ceiling amount (you pay the lower one). For example, if you gradudated from a southern med school and left med school with 160k in loans, the total cost to pay the loan back in 10 years would be about 225k (or 22.5k a year). In the above scenario, 10% of your income is $21,490 and your ceiling is 22.5k, so you will pay $21,490. Let's say in two years you are promoted from an instructor to an assistant professor position, and your income increases to $285. Now, (285-15-17-3.1)*.1 = 25k. Therefore, for this year, you will pay the ceiling amount of 22.5k instead of 25k.

The only part of IRB I'm not sure of is that the rules were recently changed on whether you pay 15% of 10% of you income. I though any loan that originated on or after July 1, 2011 would be at 10%, and any loans before that were at 15% of income, however, the government may have changed the program to make all loans (current and future) at 10%. Hopefully someone can clarify this point.

Edit: I wanted to add some more stuff

If you are thinking of doing IBR, your years in residency count towards your ten. Since pre-tax deductions, you can get creative with system. If you have a spouse that can support both of you, it's worth looking into maximizing your retirement savings. For example, if your salary is 52k, your pover adjustment is 22k (150% of poverty line for two people) and your max out your retirement (17k), your salary of 52-22-17= $1600 a year in loan payments. Once you leave residency, your could roll your retirement accounts into a single IRA and convert it to a Roth

The grandfathering would not apply in this case since the first people to do PSLF would be in Oct 2017.

 

[circulus vitios]

Yeah, what a big deal spending at most 15% of your starting income every year on repaying debts and still retaining 170K++ afterward, more than 5 times the average American salary.
Think about it, you won't be able to buy a small baroque castle in England or Italia to walk your dogs on evergreens! You're a doctor, for Christ's sake, not a ****in' peasant!

I'm lazy so I'll just copy and paste a previous post:

You people are so far removed from reality, it's hilarious.

$200k is about $130k take home depending on where you live, or about $11k a month. Grad PLUS loans are fixed at 7.9%. Let's say you do a 3 year residency and you don't make payments on your loans because money is going to be tight during residency. Assuming the loans compound annual -- which they don't, they compound several times daily, if I remember correctly -- that $300k turns into $376k at the end of your residency. To pay off interest alone on $300k at 7.9%, you need to pay nearly $2000 a month. As a senior resident you might pull down $55k a year or somewhere around $3500 a month after taxes. Your balance is going to grow to a maximum of $376k, probably more because interest is compounded more than annually, unless you live on literally $1500 a month.

Let's split $300k and $376k down the middle and assume your post-residency balance is $340k.

10 years: $4100/mo, $492k cumulative payments.
20 years: $2800/mo, $677k cumulative payments.
30 years: $2400/mo, $888k cumulative payments.
IBR: Depends on marital status, family size, state of residence, etc, but around $2400/mo for 25 years or until they are paid off, assuming IBR still exists in 25 years. The calculations are a little complex but I believe you will be making these payments for 25 years due to compounding interest. Cumulative payments will amount to $720k. If you work for a qualifying organization for 10 years and meet other criteria, you may be eligible for loan forgiveness.

Now figure in a longer residency program, or a higher loan balance, or an interest rate hike, or maybe even the discontinuation of income based repayment. It's not trivial or reasonable, and stupid intangibles like prestige have no bearing on financial obligations.

 

[circulus vitios]

Retaining "$170k++ afterward" would require a not insignificant income considering you're paying probably ~30% in taxes. Your point is taken, but even the situation you mention is better than what the average physician will be in.

(sent from my phone)

Run some numbers on paycheckcity.com and it's closer to 35%, maybe even 40% if you live in states like California.

 

[Brachyury]

The grandfathering would not apply in this case since the first people to do PSLF would be in Oct 2017.

No, the grandfathering would refer to people who entered IBR with the intent of PSLF

 

[DrBowtie]

No, the grandfathering would refer to people who entered IBR with the intent of PSLF

They are two separate programs. You apply for PSLF once you have proof of 120 qualifying payments. As I said, the first person to use PSLF would be in Oct 2017.

 

[Doudline]

Retaining "$170k++ afterward" would require a not insignificant income considering you're paying probably ~30% in taxes. Your point is taken, but even the situation you mention is better than what the average physician will be in.

(sent from my phone)

What? Of course I meant 170K after paying debts only, not accounting taxes.
Still, I'd feel pretty comfortable having a definite 100K take home starting salary (if we pretend that 200k raw = 130k net and that debts are paid).

 

[NickNaylor]

What? Of course I meant 170K after paying debts only, not accounting taxes.
Still, I'd feel pretty comfortable having a definite 100K take home starting salary (if we pretend that 200k raw = 130k net and that debts are paid).

Well "of course" to you isn't as obvious to those of us not inside your brain.

Again I agree with your point, though.

(sent from my phone)

 

[IlDestriero]

The salaries you read about are not BS. Though they may be a thing of the past in ~10 years thanks to the gov't. No anesthesiologist would work for 200k unless they were in an oppressive partnership track, seriously damaged goods, or part time, or in one comically bad university system. You can make that in the military, and military pay sux.
There's hope, though Mr. Hope & Change may snuff it out.

 

[circulus vitios]

What? Of course I meant 170K after paying debts only, not accounting taxes.
Still, I'd feel pretty comfortable having a definite 100K take home starting salary (if we pretend that 200k raw = 130k net and that debts are paid).

Debts are paid with post-tax income.

 

[Doudline]

Debts are paid with post-tax income.

You should get awards for making no point at all.

 

[Gut Shot]

The salaries you read about are not BS. Though they may be a thing of the past in ~10 years thanks to the gov't.

Do tell.

 

[Lokhtar]

A little at a time. This does not make it OK, but a lot of people are in a much worse situation regarding their ability to pay off their student loans (e.g lawyers).

 

[IlDestriero]

What do you want me to tell you. Medicare and medicaid will decline, or at least not increase with inflation. They may decide to decrease specialist reimbursement significantly. Bundled payments with performance/outcome related cuts are likely to come.
Full implementation of Obama care will "control" costs, that's politician speak for cut reimbursements. Insurance companies will lower reimbursement rates to make back some costs related to insuring those that they would have denied, no longer being protected by caps, etc. Private insurance is on the express train to destruction with Obama care. The plans will become increasingly unbearable and people will be forced to leave and eventually it will all collapse. Hopefully it will take another 20 years, so that we all can make some hay while the sun is shining. We won't be poor, but things will change for the worse, much worse for the specialists, and the public doesn't seem to like the 1% club very much, so they aren't going to have our back, even though for physicians pay with a decade of their lives and another decade off at the end due to stress. Cutting costs to the hospitals will put the barely above water community hospitals out of business, or force them to dramatically change the way they are functioning. And then there's the midlevels.
How do you take control of trillions of dollars of infrastructure to create a govt run health system, overcome competition with private insurance, etc. Its far too expensive to even consider.
Very true, ... unless ... you bankrupt them first.

 

[Brachyury]

A little at a time. This does not make it OK, but a lot of people are in a much worse situation regarding their ability to pay off their student loans (e.g lawyers).

Yeah, people like teachers, librarians, and social workers, y'know, the people IBR was intended for in the first place

 

[Arbor Vitae]

I plan on dying with massive amounts of government debt and leaving it all to the government to teach them a lesson.

 

[Gut Shot]

What do you want me to tell you. Medicare and medicaid will decline, or at least not increase with inflation. They may decide to decrease specialist reimbursement significantly. Bundled payments with performance/outcome related cuts are likely to come.

Still a gift horse.

Full implementation of Obama care will "control" costs, that's politician speak for cut reimbursements. Insurance companies will lower reimbursement rates to make back some costs related to insuring those that they would have denied, no longer being protected by caps, etc. Private insurance is on the express train to destruction with Obama care. The plans will become increasingly unbearable and people will be forced to leave and eventually it will all collapse. Hopefully it will take another 20 years, so that we all can make some hay while the sun is shining. We won't be poor, but things will change for the worse, much worse for the specialists, and the public doesn't seem to like the 1% club very much, so they aren't going to have our back, even though for physicians pay with a decade of their lives and another decade off at the end due to stress. Cutting costs to the hospitals will put the barely above water community hospitals out of business, or force them to dramatically change the way they are functioning. And then there's the midlevels.
How do you take control of trillions of dollars of infrastructure to create a govt run health system, overcome competition with private insurance, etc. Its far too expensive to even consider.
Very true, ... unless ... you bankrupt them first.

Obamacare is going to dump tens of billions into healthcare. Don't worry, we won't all be losers.

 

[circulus vitios]

You should get awards for making no point at all.

My point is you don't know what you're talking about. You pay make student loan payments with your post-tax income. A $200k/year income is about $10.8k a month post-tax. From that you pay the $2.5k a month IBR payments for 25 years. You don't pay $2500/month out of your $16.7k a month pre-tax income.

 

[kpcrew]

Yeah, what a big deal spending at most 15% of your starting income every year on repaying debts and still retaining 170K++ afterward, more than 5 times the average American salary.
Think about it, you won't be able to buy a small baroque castle in England or Italia to walk your dogs on evergreens! You're a doctor, for Christ's sake, not a ****in' peasant!

It's easy to be flippant about money you don't have that helps compensate for sacrifices that you haven't made. Let's see what your attitude is like once mommy and daddy aren't paying for tuition anymore and you have to pay your own bills.

 

[lobo.solo]

Is all about expectations. If you expect to live a Hollywood lifestyle then you're not gonna have a good time.

 

[notbobtrustme]

If you are waiting to pay off loans after residency, it'll be tough. IMO, moonlighting to pay off loans is almost a necessary evil at this point. 6.8% and 7.9% interest is no joke, considering that many of us have SMPs, undergrad and grad school debt ontop of medical school debt.

 

[SoulinNeed]

The salaries you read about are not BS. Though they may be a thing of the past in ~10 years thanks to the gov't. No anesthesiologist would work for 200k unless they were in an oppressive partnership track, seriously damaged goods, or part time, or in one comically bad university system. You can make that in the military, and military pay sux.
There's hope, though Mr. Hope & Change may snuff it out.

The vast majority of open positions I've researched in IL are in the 200-230 range.

It's just the truth.