How Long Does It Take to Pay off Your Debt?

[QofQuimica]

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We have been having endless discussions round and round in the pre-med and med forums about how much debt is "ok" for medical students to take on. But one of the things that clouds the issue is that we don't have a very good handle on how long it takes physicians to pay the loans back. Would some of you who are residents and attendings be willing to comment on this? How much money did you have to borrow for school? How long did/will it take you to pay it back? Would you say that your debt load has severely, somewhat, or minimally affected your lifestyle after you got out of school and/or residency? If you would have had an opportunity to go to a lower-ranked school for free versus paying out the nose to go to a highly-ranked school, would you have done it, even if you're interested in a career in academic medicine? Any financial advice for multiple acceptees who are choosing among schools? Thanks in advance from some of us current pre-med and med students. 🙂

 

[penguins]

We have been having endless discussions round and round in the pre-med and med forums about how much debt is "ok" for medical students to take on. But one of the things that clouds the issue is that we don't have a very good handle on how long it takes physicians to pay the loans back. Would some of you who are residents and attendings be willing to comment on this? How much money did you have to borrow for school? How long did/will it take you to pay it back? Would you say that your debt load has severely, somewhat, or minimally affected your lifestyle after you got out of school and/or residency? If you would have had an opportunity to go to a lower-ranked school for free versus paying out the nose to go to a highly-ranked school, would you have done it, even if you're interested in a career in academic medicine? Any financial advice for multiple acceptees who are choosing among schools? Thanks in advance from some of us current pre-med and med students. 🙂

This type of topic has been discussed endlessly and there is no real way to answer this.
Respectfully, it all depends on you. You will be making lifestyle choices during medical school and residency that will effect this. I took out extra money a couple semesters to spend a week in Rio and another year I spend Christmas in Rome. I will pay for it later. Some interns buy luxury cars right away, others continue to drive the toyota like me.
There is really no way to predict how long it will take you because it depends on so many factors. Extra income from spouse, kids to spend on, wadrobes to keep up, cars, house, etc, etc, etc.
I mean, do you always buy used textbooks or get the shiny pretty ones still in their wrappers?

Most likely, it will take at least several years to pay off after residency and maybe twenty. It is a reflections of how you lived while accruing the debt and then how you live while repaying the debt. It is impossible to predict. I figured... I am taking out all this money for school... why not take out some extra and have some fun. I chose that in med school while some people I know saved every penny in med school and now that they are in residency are buying new cars and taking vacations, etc.
All boils down to the choices you make at every step of the way.

The school you choose depends on a lot too. Some will tell you to not limit yourself and go to the expensive school others will say it is all the same in the end so go cheaper. Whatever is important to you is what you should do. Name, reputation, elitism or saving money with less stress because you have a family to provide for in the meantime?

 

[moranwoods]

It will take you 23 years and 8 months.

 

[KidDr]

We have been having endless discussions round and round in the pre-med and med forums about how much debt is "ok" for medical students to take on. But one of the things that clouds the issue is that we don't have a very good handle on how long it takes physicians to pay the loans back. Would some of you who are residents and attendings be willing to comment on this? How much money did you have to borrow for school? How long did/will it take you to pay it back? Would you say that your debt load has severely, somewhat, or minimally affected your lifestyle after you got out of school and/or residency? If you would have had an opportunity to go to a lower-ranked school for free versus paying out the nose to go to a highly-ranked school, would you have done it, even if you're interested in a career in academic medicine? Any financial advice for multiple acceptees who are choosing among schools? Thanks in advance from some of us current pre-med and med students. 🙂

I agree that for some people it's helpful to have actual numbers in front of you, so here goes:

I went to my state school, parents helped a little but mostly I was on my own, and I was very careful with how I spent my money...though still had fun, took a few trips, etc.

Total $$ owed after 4 years = $100,000 (overall I had about 40% subsidized and 60% unsubsidized loans, and this amount includes ~$3000 of interest accrued on unsubsidized loans while I was still in school)

I consolidated all $100,000 right after I graduated, and locked in at 2.6% interest (lucky for me I graduated when interest rates were like the lowest they'd ever been), on a 30 year repayment plan.

I started paying within a few months of graduating. I'm paying $260/month for the first 4 years of repayment, then about $470/month for the next 26 years.

In the end I'll have paid ~$160,000 total in principle + interest. And that's at TWO and a half percent interest...which is almost unheard of.

The thing is, $470 a month, especially in 10 years, isn't much. And in the year 2034, when I make my final payment, it'll probably cost $470 to fill my car up with gas, so on the one hand this is "cheap" money.

But I "only" have $100,000 in debt, and I consolidated at a very very low interest rate, and that probably won't happen again for many years. Keep in mind that people who graduated only 4 years before me consolidated at around 8%. It could be this high again in a few years. This can have a big effect on your monthly payments...google a loan calculator and plug the numbers...

I had a choice between my (decently-ranked, ~top 20-30) state school and a (higher-ranked) private school that would have left me with probably $200,000 in loans. I am SO SO happy that I decided to go to my state school...I can't imagine having to pay more than double what I am right now in monthly payments. Cause a resident's salary isn't that great (I take home about $2400/month), and while you may be able to qualify for economic hardship and defer paying on your loans until after residency (though be careful relying on this, because I know people who thought they would qualify and didn't), this just causes you to accrue more interest in the long run and extend your repayment period.

I'm not saying there's anything wrong with private med schools, but I do think it's worth really taking a look at what it actually means to borrow $200,000 (or more) in the long run. Yes physicians make decent money, but having this kind of debt WILL affect you in the future and it will weigh on you...and it's not a bad idea to make it *one* of your considerations when choosing a med school. I hope this helps!!

 

[Tinsley]

Actually interest rates laws are chaning on July 1st, 2006. The stafford loans no longer are at a variable rate. They are locked in at 6.7% for inschool and I believ .5% higher for repayment until Congress decides otherwise. It would be wise to consolidate any loan money this year as this current rate will never be available again.

 

[KidDr]

Here's a really helpful loan repayment calculator:
http://www.accessgroup.org/calculators/loan_repay.htm

 

[Solideliquid]

Here's a really helpful loan repayment calculator:
http://www.accessgroup.org/calculators/loan_repay.htm

What percentage of your overall income should you commit for loan repayment?

PS> Any chance in hell that loan re-payment is tax deductable? At least partially?

 

[lilycat]

What percentage of your overall income should you commit for loan repayment?

PS> Any chance in hell that loan re-payment is tax deductable? At least partially?

Some of the interest is, but only for a certain number of years -- I want to say 5, but I might be wrong...

 

[Porphyria]

There's something I can't understand. If someone owes 200k, and is making 150k/year, why don't they just live like a student for another 2 years and pay off the whole enchilada, thereby saving up to 100k in interest and 30 years of making payments?

 

[Solideliquid]

There's something I can't understand. If someone owes 200k, and is making 150k/year, why don't they just live like a student for another 2 years and pay off the whole enchilada, thereby saving up to 100k in interest and 30 years of making payments?

taxes

 

[madcadaver]

There's something I can't understand. If someone owes 200k, and is making 150k/year, why don't they just live like a student for another 2 years and pay off the whole enchilada, thereby saving up to 100k in interest and 30 years of making payments?

If you have borrowed money at 2.6%, struggling to pay it back quickly would be pretty stupid. Unless you could not figure out how to make more than 2.6% investing your extra money.

 

[madcadaver]

And taxes.

 

[KidDr]

If you have borrowed money at 2.6%, struggling to pay it back quickly would be pretty stupid. Unless you could not figure out how to make more than 2.6% investing your extra money.

exactly. yes, and taxes!!!

 

[fishmonger69]

who cares how long. rate of inflation is higher than the rate on my loans. i'll certainly be paying these off over 30 years.

 

[Tinsley]

I plan to pay my money back very very slowly (at least the portion that is locked in at 2.87 percent). If you subtract the rate of inflation from the interest rate you get a "true" interest rate. Seeing as that is either 0 or even negative for that 2.87 percent, it makes little to no sense to pay off my loans early. I will be saving that extra money (that I didn't repay), investing it and hopefully making 7% at least on it.

 

[Porphyria]

Interest rates are around 6% now, not 2.6. How do taxes factor in? What do you mean invest the "extra money"? I'm assuming all the borrowed money was spent on tuition and living expenses. Sorry, I'm confused.

 

[OUsooner]

As a business major in undergrad I look at the bottom line a little closer than many of my fellow classmates (although I am not as skilled as some of the posters here, many a Warren Buffet in this group).
It has been entertaining to listen to many of my classmates talk about how fast they want to pay off their loans. I understand paying back the private loans but the stafford $$$, which many of us 4th yrs have locked in at 2.87 is essentially interest free when paid off over 30 yrs (against inflation - before people jump all over me). Why not "keep" this money as long as possible????

 

[Porphyria]

So is it a different story for those of us that are MSIIs or I's that have consolidated 100k at 4.5 and will borrow another 100k at 6.5 or so?

 

[CameronFrye]

So is it a different story for those of us that are MSIIs or I's that have consolidated 100k at 4.5 and will borrow another 100k at 6.5 or so?

Yeah, if your interest rate is up over 6, it muddies the water somewhat. The historical return on stocks is still greater than that (over 30 years, a well-diversified portfolio should produce at least 8%), but if you pay off the loan quicker you are locking in a 6% "return" on your money. Each person has to assess their own tolerance for risk and make a decision.

 

[KluverBucy]

As a business major in undergrad I look at the bottom line a little closer than many of my fellow classmates (although I am not as skilled as some of the posters here, many a Warren Buffet in this group).
It has been entertaining to listen to many of my classmates talk about how fast they want to pay off their loans. I understand paying back the private loans but the stafford $$$, which many of us 4th yrs have locked in at 2.87 is essentially interest free when paid off over 30 yrs (against inflation - before people jump all over me). Why not "keep" this money as long as possible????

fuk...it doesn't take a business major to realize this concept, however, it does take someone with a fair amount of common sense.

now that i've expressed a little angst, i'm off to continue more research on the meaning of life...and that my friends is plastic. discuss amongst yourselves the usefulness of plastic in our lives today 😉

 

[medlaw06]

good question by the OP...

Anyways, I have $237,000 debt from med and law schools and the exact breakdown of sub and unsub, I don't recall.....

However, I plan on paying it back IN AS LONG AS IT TAKES!!! I know that I am essentially wasting money down the drain becuase of extra interest, but it also means lower monthly payments....but, NOT TO SOUND MORBID, but there's another thing that people forget or don't thikn about....DEATH!! No, I am NOT suicidal...No, I am NOT crazy...just looking at things from a different perspective.....I am just waiting to get grilled on this one.... 😍 😍

Now, what I mean about the whole death things is that educational debt is forgiven upon your death...and as far as I can remember (NOT 100% sure), it is NOT transferred to your spouse (and if it is, then I am pretty sure that there are measures against this)...And, let's face it....no one knows how long they are gonna live...you could get run over/shot/accident/etc tomorrow, and recent study did show that physicians have a shorter lifespan than the average population (stress?)....so, where am I going with this.....

push off the payments as long as you can with as little money per month AS LONG AS YOU ARE CERTAIN THAT YOU CAN PAY IT OFF BY 30 YEARS (if not, off to jail you go OR give up the yatch...can't claim bankruptcy either after 30 years since you have assets, OR you can protect your assets but be screwed over the rest of your life in terms of loans and such)....the issue of death is obviously as arbitrary as being disabled, or anything else...but the reality is is that we never know when we are gonna say bye-bye....and as you get older, health becomes more of an issue and I have seen physicians in their 50s and such have massive MIs....

no....I am not planning to die anytime soon or even in the next 30 years (I hope), but the reallity is whether I will or not is uncertain....and yes, I will continue to make payments every month to0 reduce my % loans every X payments so I don;t have to pay AS much in interest....

AHHHHH...I am SO NOT EXPLAINING MYSELF correctly....but I think (I hope) you can get SOME sense of what I am TRYING to say....is my thinking "strange".....yes, it is....is this an "odd" factor....yes, it is....is it something that you should consider....well, that's up to you.....

AND LASTLY....IF something happens to me, and there still is lets say $50,000 left that I have to pay....well, that's just my way of sticking it to the man!!!! 😍 😀

OH PLEASE...OH PLEASE, don't grill me too much on this....


yes, there are obviously counterarguments to this: pay early and reduce the amount of $$ in interest, pay early so you can start saving for kids' education, pay early to have the headache off your mind. These are ALL VALID points, but to each their own....

 

[Arctic Char]

i too am a bit green as far as this goes, so bear with me . ..

taxes . . . ? say i'm salaried at $150,000/year, what would i be taking home each month? i hope at least around $7K. thus, couldn't i double my payments of, say, $470/month up to $1,000/month? i don't see this as a such a huge sacrifice, in fact, it makes perfect sense - assuming my estimate of take-home pay is accurate . . . please.

so, i guess i've long assummed i would take the "pay 'em off quick" strategy. the earlier i get em done, while still putting into investments, the earlier i retire - assumming good returns on said investments.

or am i making too many assummptions? damnit, i hate it when i do that.

btw - KidDr, thanks for your intelligible post, you helped put things in perspective in a way that no one else has had the patience to do. its appreciated.

 

[KidDr]

i too am a bit green as far as this goes, so bear with me . ..

taxes . . . ? say i'm salaried at $150,000/year, what would i be taking home each month? i hope at least around $7K. thus, couldn't i double my payments of, say, $470/month up to $1,000/month? i don't see this as a such a huge sacrifice, in fact, it makes perfect sense - assuming my estimate of take-home pay is accurate . . . please.

so, i guess i've long assummed i would take the "pay 'em off quick" strategy. the earlier i get em done, while still putting into investments, the earlier i retire - assumming good returns on said investments.

or am i making too many assummptions? damnit, i hate it when i do that.

btw - KidDr, thanks for your intelligible post, you helped put things in perspective in a way that no one else has had the patience to do. its appreciated.

Thanks for the kudos, I'm glad it was helpful.

In response to your 1st question--I think assuming a take-home pay of 7k a month on a $150,000 salary is pretty safe, as it assumes you're paying 44% in taxes, which should be about right.

What you do with that extra money depends on a number of things. For the sake of this arguement, assume you have 2 choices--either you invest it or you pay extra on your loans. In my case, my loans are consolidated at 2.6% (so they're charging me 2.6% interest), but even a very conservative estimate on an investment return is around 5% (which is interest I GAIN). So it makes more sense for me to invest the extra money, and stretch out my loan payments for as long as possible, because in the long run I'll make 2.4% extra on that money. I'm not sure I'm explianing this well, so I apologize. Someone who's much better versed in economics can feel free to step in here too, because I'm not sure that it's a straight math equation like that (5%-2.6%=2.4%), but you get the idea.

However, if you end up having to consolidate your loans around 6%, or if you have other high interest loans, it's more difficult. If you think you can get a consistent 10% return on your investments, it's still going to be worth it to stretch out your loan payments for as long as possible (i.e., 30 years). But while there are a lot of funds that will likely give you 10% return over a long period of time, it's less of a guarantee than something around 5% (which you can practically get with a CD/MM fund/etc). In these cases it's probably a good idea to talk with a financial advisor, and you may end up deciding that it's more worthwhile to use your extra money to pay off your loans.

 

[Arctic Char]

Thanks for the kudos, I'm glad it was helpful.

In response to your 1st question--I think assuming a take-home pay of 7k a month on a $150,000 salary is pretty safe, as it assumes you're paying 44% in taxes, which should be about right.

What you do with that extra money depends on a number of things. For the sake of this arguement, assume you have 2 choices--either you invest it or you pay extra on your loans. In my case, my loans are consolidated at 2.6% (so they're charging me 2.6% interest), but even a very conservative estimate on an investment return is around 5% (which is interest I GAIN). So it makes more sense for me to invest the extra money, and stretch out my loan payments for as long as possible, because in the long run I'll make 2.4% extra on that money. I'm not sure I'm explianing this well, so I apologize. Someone who's much better versed in economics can feel free to step in here too, because I'm not sure that it's a straight math equation like that (5%-2.6%=2.4%), but you get the idea.

However, if you end up having to consolidate your loans around 6%, or if you have other high interest loans, it's more difficult. If you think you can get a consistent 10% return on your investments, it's still going to be worth it to stretch out your loan payments for as long as possible (i.e., 30 years). But while there are a lot of funds that will likely give you 10% return over a long period of time, it's less of a guarantee than something around 5% (which you can practically get with a CD/MM fund/etc). In these cases it's probably a good idea to talk with a financial advisor, and you may end up deciding that it's more worthwhile to use your extra money to pay off your loans.

financial advisors . . .yeah, but they probably charge interest too.

what you're saying sounds logical, and its very clear, but one major factor is the size of the principle - that of the loan and the investments. i.e. 5% gain on an investment i'm slooowwlly building (say, 1-2K per month) can't overcome 2.6% added on to a principle debt of $150,000. at least, not until the investment matures after years of disciplined investing.

right?

 

[Poety]

I have the same debt as medlaw - bout 257K in private and stafford. I consolidated 189K with sallie mae at 4.75%, the rest is private and they will consolidate privates at the end of this month.

I chose the graduated plan - at 860/mos for 5 years after residency graduation increasing to 1300. after the 5 years. I may pay a crap load of interest, but I intend on investing most of my money and buying/selling lots of real estate on the side so essentially - if you can keep your payment low, don't worry about the overall cost, and just accept it - and use the money you keep to earn more, you're ahead of the game either way - as medlaw said too, loans are forgiven (not transferable to anyone) upon your death.

 

[Arctic Char]

I have the same debt as medlaw - bout 257K in private and stafford. I consolidated 189K with sallie mae at 4.75%, the rest is private and they will consolidate privates at the end of this month.

I chose the graduated plan - at 860/mos for 5 years after residency graduation increasing to 1300. after the 5 years. I may pay a crap load of interest, but I intend on investing most of my money and buying/selling lots of real estate on the side so essentially - if you can keep your payment low, don't worry about the overall cost, and just accept it - and use the money you keep to earn more, you're ahead of the game either way - as medlaw said too, loans are forgiven (not transferable to anyone) upon your death.

thats the most encouraging thing i have ever read about loans/debt. let's hope rates are reasonable in the future.

 

[KidDr]

financial advisors . . .yeah, but they probably charge interest too.

what you're saying sounds logical, and its very clear, but one major factor is the size of the principle - that of the loan and the investments. i.e. 5% gain on an investment i'm slooowwlly building (say, 1-2K per month) can't overcome 2.6% added on to a principle debt of $150,000. at least, not until the investment matures after years of disciplined investing.

right?

This is very true, and that's why I probably shouldn't have made it sound like it's a simple equation like I did (i.e., 5%-2.6%=2.4%). However, there's also inflation to consider, which over 30 years will be a major factor. I have no idea how to calculate this out to figure out exactly how much of a factor this would be depending on your initial loan value and consolidated interest rate (this is where an advisor could help). But it helps me to think of it like this--I'll be paying back my 2000-era loans with 2030 "dollars." My loan payment, as a percentage of my take home pay, will consistently decrease as inflation increases. I think I used this example before--in 2030, for all I know, it could cost $470 to fill up my gas tank (or buy the weekly groceries), which is what my loan payment will also cost. Paying $470 in 2030 is going to feel like paying a lot less than it does now.

 

[Arctic Char]

My loan payment, as a percentage of my take home pay, will consistently decrease as inflation increases. .

i see your point. strange . . . its the most pessimistic wishful thinking i've ever seen. lets just hope reimbursements are commensurate with inflation as well. again, thanks for spelling things out

cheers

 

[Ross434]

i see your point. strange . . . its the most pessimistic wishful thinking i've ever seen. lets just hope reimbursements are commensurate with inflation as well. again, thanks for spelling things out

cheers

hahaha, yeah, and your salary will also consistantly decrease as inflation increases.

 

[tridoc13]

We have been having endless discussions round and round in the pre-med and med forums about how much debt is "ok" for medical students to take on. But one of the things that clouds the issue is that we don't have a very good handle on how long it takes physicians to pay the loans back. Would some of you who are residents and attendings be willing to comment on this? How much money did you have to borrow for school? How long did/will it take you to pay it back? Would you say that your debt load has severely, somewhat, or minimally affected your lifestyle after you got out of school and/or residency? If you would have had an opportunity to go to a lower-ranked school for free versus paying out the nose to go to a highly-ranked school, would you have done it, even if you're interested in a career in academic medicine? Any financial advice for multiple acceptees who are choosing among schools? Thanks in advance from some of us current pre-med and med students. 🙂

Don't know if this site has been posted yet, but the AAMC has a very comprehensive website that goes into great detail about loans, repayment, financial planning, etc. The url is http://www.aamc.org/students/financing/debthelp/laymansguide/start.htm

 

[i61164]

To everyone that thinks they can make a higher interest rate by investing, don't forget that investment income is taxed by the IRS. For example, say your loan has a 6% interest rate and you think you can make 8% with your investments. When you cash out the investments you will probably pay 40% of your gains to the man. Therefore, it is not clear that you are better off by investing unless you invest "tax-free," like a Roth IRA, but you can only put $3,000 per year in those. Now, if your loan interest rate is 3% then you will probably do better by investing. Don't forget though that you can lose money by investing too (even in real estate).

If you pay down the loan ahead of schedule, you will save money on interest. This is a guaranteed way to come out ahead financially. A bird in the hand is better than two in the bush, especially when the IRS takes half of all the birds in the bush.

I'm not saying that you can't do well investing, but you have to be lucky and your returns have to be much higher than the interest rate on your loan if you want to come out ahead. Also watch out for brokerage fees, hot stocks, and companies that cook their books (enron, worldcom, tech stocks ring any bells?).

 

[dawg44]

Nearly all of the hospitals I am talking with will pay my loans off lock stock and barrel to be on staff for 3-4 years. Those kind of deals are all over the place. You can just ask for the money up front as a signing bonus as well. Like alot of people have said in this forum I think it makes more sence to use your money and put it in investments or your home at 6% interest and build equity than to pay off loans locked in at 2.8%.

 

[DrJekyll918]

good question by the OP...

Anyways, I have $237,000 debt from med and law schools and the exact breakdown of sub and unsub, I don't recall.....

However, I plan on paying it back IN AS LONG AS IT TAKES!!! I know that I am essentially wasting money down the drain becuase of extra interest, but it also means lower monthly payments....but, NOT TO SOUND MORBID, but there's another thing that people forget or don't thikn about....DEATH!! No, I am NOT suicidal...No, I am NOT crazy...just looking at things from a different perspective.....I am just waiting to get grilled on this one.... 😍 😍

Now, what I mean about the whole death things is that educational debt is forgiven upon your death...and as far as I can remember (NOT 100% sure), it is NOT transferred to your spouse (and if it is, then I am pretty sure that there are measures against this)...And, let's face it....no one knows how long they are gonna live...you could get run over/shot/accident/etc tomorrow, and recent study did show that physicians have a shorter lifespan than the average population (stress?)....so, where am I going with this.....

push off the payments as long as you can with as little money per month AS LONG AS YOU ARE CERTAIN THAT YOU CAN PAY IT OFF BY 30 YEARS (if not, off to jail you go OR give up the yatch...can't claim bankruptcy either after 30 years since you have assets, OR you can protect your assets but be screwed over the rest of your life in terms of loans and such)....the issue of death is obviously as arbitrary as being disabled, or anything else...but the reality is is that we never know when we are gonna say bye-bye....and as you get older, health becomes more of an issue and I have seen physicians in their 50s and such have massive MIs....

no....I am not planning to die anytime soon or even in the next 30 years (I hope), but the reallity is whether I will or not is uncertain....and yes, I will continue to make payments every month to0 reduce my % loans every X payments so I don;t have to pay AS much in interest....

AHHHHH...I am SO NOT EXPLAINING MYSELF correctly....but I think (I hope) you can get SOME sense of what I am TRYING to say....is my thinking "strange".....yes, it is....is this an "odd" factor....yes, it is....is it something that you should consider....well, that's up to you.....

AND LASTLY....IF something happens to me, and there still is lets say $50,000 left that I have to pay....well, that's just my way of sticking it to the man!!!! 😍 😀

OH PLEASE...OH PLEASE, don't grill me too much on this....


yes, there are obviously counterarguments to this: pay early and reduce the amount of $$ in interest, pay early so you can start saving for kids' education, pay early to have the headache off your mind. These are ALL VALID points, but to each their own....

wow med school AND law school??? that explains this post...i dont blame you for thinking like this...im surprised you're still around 😉 😀

 

[Doctor~Detroit]

bump

. . . if we can get it back on topic . . .

 

[The JockDoc]

As an MS1 right now, this is a worrisome topic for me. I'll have around 240k in debt with 6.8/8.5% interest rates to pay off - and that's just med school. Unfortunately, it seems like a lot of my classmates dont seem to be too worried about this impending financial burden, which is going to be significant.

I think the trouble is that the docs just coming out of residency have both less interest and tuition than current or new medical students. This gives new med students the image that they wont have to worry much about loans when they get out. Unless you've got some help, 240k of debt with 3% interest is a party compared to 240k with the interest rate that I (and everyone else in med school right now) have, which essentially means I need to pay it off as quickly as possible. Combine that with the miniscule increases in physician salary, and it could be a real problem by the time I actually get paid enough to deal with the loan. It is going to be interesting to see what happens to the new docs who get to pay off loans with their enormous interest rates.

 

[FutureOph123]

I think there are two schools of thought on this issue: 1)Keep your options open--the people who say go to the best school no matter what 2)Save the cash; your career won't be affected. I think for the 80% of physicians that go into specialties that are not competitive; it definitely makes more sense to go to the cheaper school. For the 20% that do go into a competitive specialty, I think it mostly did not matter for them where they were, but there are probably 25% of them (5% of the total md population) that is going into academics or just into a competitive field that would not have made it to their desired career outcome without the better school. So... do you want to "cover your bases" and risk the financial effects of a highly ranked school and suffer the consequences of debt, or go with the assured benefit of a cheaper school. After finishing 4 years of med school, I would lean towards the cheaper school as long as it is "solid."

 

[blanche]

I would tend to agree with the last poster's advice, but keep in mind that it is different if you are carrying undergrad loans or not. I was fortunate not to (i picked the 'cheap less prestiguous' school then) so I decided that if there was a time to splurge on name and reputation, this was it.

However, free ride versus no ride is another ballgame. 20k/year state school vs 35 k/year well-known school might not be such a difference in the end in terms of debt payment. what i mean is, you might very well likely be on a 30 yr payment plan for both. in both cases you will defer during residency, then start paying after 3+ years. in that case the difference in final cost, while substantial in terms of final sum, may not be so much when you look at it in terms of monthly payments for 30 years ($600 v $900/mo, let's say). i'm not sure that makes the more expensive school 'harder' to pay off.

One last thing--it may be hard to guess what's 'solid' as a premed, they are probably spewing alot over in the premed forum but remember MOST schools are very good, some are great and at the end of the day you have to assume some are well known/respected for a reason (forget USNews ranking btw..)

 

[Dunce]

hahaha, yeah, and your salary will also consistantly decrease as inflation increases.

Is it strange that I imagined that comment in a speech bubble coming from your avatar?

 

[Doctor~Detroit]

great extra input. i especially appreciate the idea that interest rates are over twice what they were several years ago, not to mention that tuition keeps on rising faster than inflation.

my own situation (as an ms0) is that i'm choosing between two schools of roughly equal quality. after a four-year residency, the principal + interest at one school will be about 200k, and about 330k at another. i like the location and the students i've met at the more expensive school better, and i'm fairly sure i'd be happier there. but i'm hesitant that it would be worth the extra 130k of debt in the long run. right now, i'm interested in a specialty that would pay about 200k per year.

 

[Gabujabu]

Quick question: given the fact that student loan interest rates are 6.5/8.5% right now, would it be possible to consolidate at a lower rate, or would that not be feasible right now? With the 8.5% rate on Grad Plus loans, I simply cannot think of any investment that, post-tax, could beat paying down this beast of a loan., since paying off the loan would be a riskless proposition. Even with the 6.5% loans, you would have to take on a lot of risk to beat this return post-tax. Capital-gains tax is currently ~20% if I am not mistaken.

 

[AmoryBlaine]

Debt is scary, scary, scary. I agree. I'm probably going to be in the $200k club like some of you.

I have said this before and I will say it again: a medical education is a GREAT investment.

I am not looking forward to making loan payments for 30 years, although I might have to do it. But if I get a decent job in my field of choice (EM - very middle of the road in terms of pay) I can reasonably expect to make $200k+ per year.

Yes I'm going to have to pay taxes, yes I know I will have expenses, but I am going to have alot of money in my pockets here in a few years and most of the rest of you are too!

 

[The JockDoc]

Debt is scary, scary, scary. I agree. I'm probably going to be in the $200k club like some of you.

I have said this before and I will say it again: a medical education is a GREAT investment.

I am not looking forward to making loan payments for 30 years, although I might have to do it. But if I get a decent job in my field of choice (EM - very middle of the road in terms of pay) I can reasonably expect to make $200k+ per year.

Yes I'm going to have to pay taxes, yes I know I will have expenses, but I am going to have alot of money in my pockets here in a few years and most of the rest of you are too!

This can be a short sighted statement with the present interest rates. You dont make a lot of money if you also owe a lot of money. For example, if you get all the loans you can and take out 56k/year for medical school (which is a common figure for many students, esp at my school), which maxes out the federal loans at 6.8% and adds on a private loan (assuming the PLUS loan) at 8.5%, you will owe 270k at graduation.

If you tack on 4 years of forbearance (usually its 3 i believe, but lets assume 4 for simplicity's sake because your residency may take that long), you will owe 360k by the time you see your first doctor paycheck. Since you will want to pay this off as quickly as possible becuase of how much higher the interest is compared to inflation, and the best performing safe stocks (returning 6-10% variably), it will cost you $7k a month over 5 years (84k/year), or $4.2k(~50k/yr) over 10 years to pay this off.

There are plenty of docs that don't make 200k/year. But lets say you do. $200k base salary translates into 11k/month after taxes (salary.com). This means that your take home salary is 4k/month ($48k/year, essentially resident's wages) if you pay it off in 5 years, or 6k/month in 10 (take home is 72k/year). These numbers don't include any payments to 401k, investments, mortgages, etc. And you're not even eligible for a Roth IRA anymore becuase your salary is too high.

The doctor salary wont put you in the van down by the river, but I don't know whats "GREAT" about these numbers either. 200k is not a big income when you think about how much you may owe.