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I realized this has been discussed before but couldn't find any recent posts regarding this. Currently an incoming M1 into a school with 50k/year tuition. Estimating 20k/year living expenses, I would have to take out ~280k in loans (160k from the Stafford unsub at 6.0% interest and the rest from Grad plus at 7.0%). I am absolutely terrified of this! During my work as a scribe, I have had EM physicians tell me that they are still paying back loans (and to not go into medicine, which is totally another story), and these physicians are well into their 40's. Does it really take this long, especially for a lucrative speciality such as EM??? Are people able to pay some back during residency or just pay off the growing interest? I'm obviously going into medicine with a genuine interest to help others through health but can't ignore this financial situation blindly...

Assuming 280k taken out in loans, would someone be able to estimate the final amount paid back and within how long?

Thanks for your help!
 

Staphylococcus Aureus

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I'm amazed that, while my classmates agree we have "so much debt" almost no one has done the math. The average debt for current DO students (without assistance or payments) on their first day as an attending will easily be >300k, if not 400k, and that's WITHOUT undergrad debt. Theoretically there could easily be some MS1s right now that will have over million dollars in debt (expensive private undergrad + private or OOS med school + no assistance +/- masters degree).
 
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OP
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I'm amazed that, while my classmates agree we have "so much debt" almost no one has done the math. The average debt for current DO students (without assistance or payments) on their first day as an attending will easily be >300k, if not 400k, and that's WITHOUT undergrad debt. Theoretically there could easily be some MS1s right now that will have over million dollars in debt (expensive private undergrad + private or OOS med school + no assistance +/- masters degree).
Right! Med students that I have asked all tell me not to worry about this now, but I feel its important to be aware. It honestly stresses me out more to not know. I also know so many people that have done biomed masters, and I can't rack my brain on why they don't care about their debt situation (assuming they took out loans)..
 

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First year DO student here. at an OOS school with a ridiculously high tuition.

Most people in my class that I bring this up to, respond very non-chalantly about it and say something along the lines of: oh don't worry about that now, we'll cross that bridge when we get there.

Uh, no thanks.

I luckily didn't need loans for UG, but i'm taking them out for these 4 years. Slightly over borrowed this first financial aid term, but I think for next year I'm going to be much more stringent with how much I take out.
 

mistafab

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Yes it is a huge amount, and the grad plus climbed interest from 6.7% to 7% in just one year so expect that to keep getting higher.

There was a chart on medscape that showed that many physicians are still paying down student loans into their 40's. I think that is a bad strategy and I will be aggressively paying down my debts post residency. During residency, however, my primary goal is to pay off the interest (at 7% on around 300k we are talking about 21k from a 50-58k salary). It is an astronomical sum, however paying off even 16k a year is a big help for when you finish residency. I'll then try to tackle my loans in 3-4 years of aggressive debt payment post-residency.

Anyway, that is my strategy. The loans are freaking huge and they do freak me out. I would advise that if there is any way you can take a "loan" from a family member for any amount that you do so. 5k here or 5k there is a huge help so long as they understand it will be paid back in 8 years. You can even pay them interest at 5% and it would still save you a lot of money in the long run
 

CornFed

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Strongly suggest checking out the White Coat Investor --> The White Coat Investor - Investing And Personal Finance for Doctors

I thought his book on Amazon had great examples of physicians paying off their loans in 3 or 4 years post-residency. He also gives good advice on how to live frugally throughout med school. I will definitely be putting his advice to work this year as an M1. REMEMBER: It's much easier to live poor while you're young than to live poor when you're old.
 

Stagg737

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Right! Med students that I have asked all tell me not to worry about this now, but I feel its important to be aware. It honestly stresses me out more to not know. I also know so many people that have done biomed masters, and I can't rack my brain on why they don't care about their debt situation (assuming they took out loans)..
The loan calculator above is a great tool. Let's examine your situation. If you put in a 8% interest rate (likely higher than what you'll actually have) and assume you won't be paying loans back as a resident for 4 years with a 10 year repayment plan once you're an attending, you'll end up paying back $3,397/mo ($40,764/year) for a total of $407,660 in loan repayments.

Now, that number sounds really scary, and for most Americans should be terrifying, but lets break things down from an attending's standpoint. Chances are, you'll be able to pull in around 200k/yr coming out of residency regardless of what field you enter with the potential to earn A LOT more if you enter one of the more lucrative fields. Making 200k, you'll pay around 44k in federal income tax (this is assuming no deductions, dependents, etc), so that comes down to 156k. Depending on what state you live in, state taxes, malpractice, and other expenses can bring that down a lot more (California for example will suck you dry) or not much more at all (some states like WA or TX pay no income taxes). So we'll say your total take-home will be $135k.

So now that we've got an estimate on take-home after expenses that are mostly out of your control, we can start talking about your decisions and repayment. Many docs will decide they're tired of living like a resident and choose that 10 year plan. That way they're taking home around $95k/year, which is about twice what they were taking home as a resident after taxes are accounted for. They choose to carry the debt because they feel like living a little after killing themselves through med school and residency. On the other hand, let's say you decide to not start a family yet, not buy a house or a nice car, and decide you want to live like a resident for a few more years and pay off your debt aggressively. So you set aside 50k/year for living expenses (still living pretty well since this is about what the average American makes before taxes) and throw the rest of that $85k you're making at your debt. By doing this, you'll not only cut down on the time needed to pay off that debt, you're cutting down on the total amount you owe by paying off your interest sooner. With this plan, you'd pay off 400k in debt (it will end up being much, much less than that) in 5 years easily. If you go on that loan calculator and change the loan term to 5 years, your total debt will be $340,643, which actually only comes out to paying back 68k/year. Using all 85K, you could pay off your loans in 4 years. So while those gigantic numbers seem terrifying, when you put it in perspective it's not nearly as scary.

Note: I should say these are all estimates meant to give a general idea. This isn't accounting for investments, retirement funds, or those trying to support a family. Either way, it's still not as terrifying to someone who understands the finances as it is to someone in their early 20's just trying to figure out how to be financially independent. I'll also add that many docs choose to use their money for investments or other funds instead of paying down the debt because they'll make more money than the interest they'll owe. If your hospital offers to match what you put into a 401k, or you want to invest in certain funds (stealth IRAs, Roth/back-door Roth IRAs, etc), you'll make more than you'll lose in interest, making it a better investment in the long run.


Yes it is a huge amount, and the grad plus climbed interest from 6.7% to 7% in just one year so expect that to keep getting higher.

There was a chart on medscape that showed that many physicians are still paying down student loans into their 40's. I think that is a bad strategy and I will be aggressively paying down my debts post residency. During residency, however, my primary goal is to pay off the interest (at 7% on around 300k we are talking about 21k from a 50-58k salary). It is an astronomical sum, however paying off even 16k a year is a big help for when you finish residency. I'll then try to tackle my loans in 3-4 years of aggressive debt payment post-residency.

Anyway, that is my strategy. The loans are freaking huge and they do freak me out. I would advise that if there is any way you can take a "loan" from a family member for any amount that you do so. 5k here or 5k there is a huge help so long as they understand it will be paid back in 8 years. You can even pay them interest at 5% and it would still save you a lot of money in the long run
To each their own, but there are reasons (as stated above), to delay paying off debt in favor of starting to build a retirement account earlier. Additionally, I don't think attempting to pay back too much during residency is the best idea. If you can pay some back, great! Do it. However, before you start trying to cut into your debt too much, build up a bit of a financial safety net (the more the better, but somewhere between 5-10k is a good start) before dumping your money into loan repayment. Crazy stuff can come up in life, and having some money socked away so you aren't financially screwed can go a long way to alleviate some of that stress.

To the family loan statement, maybe. A good general rule for life is that you don't borrow money from family or close friends. However, if someone is willing to help then there are some ground rules everyone should set before any money is ever exchanged:

1. Never borrow more than they are capable of providing. This may seem like common sense, but if another person has to go into debt in order to provide your loan, don't do it. Anything you borrow should be money that they are able to produce readily and easily. Preferably, it shouldn't be more than they'd be willing to completely lose. If something happens (medical illness, failure from school, etc) and you somehow become unable to pay back the loan, the last thing you want is to not only screw yourself over, but the people you love. Additionally, if you were to die or have something terrible happen, most fed loans will forgive the debt (unless your parents were co-signers) and they'll foot the bill. If that happens after you borrowed from parents, guess who's stuck with the bill. Also, if you're borrowing from people you know, it puts the added pressure on you to not drop out and to potentially push yourself further down a path you may end up hating. It's a lot easier to walk away when you're screwing over Uncle Sam than when you'd be screwing over family.

2. Don't be completely reliant on those loans. This is the other side of the coin mentioned in the first point. If that is your only source of finance, and they somehow become unable to provide it, you're screwed. Schools aren't going to say "Oh, your parents can't pay for this semester, that sucks, here's a free semester." They're going to say "Oh, your parents can't pay for this semester, that sucks, how are you going to pay?" When you can't, they'll say see ya. That goes for landlords, car payments, and really anyone you'd owe money to. So if your loaner ends up being unreliable, you'll end up owing them whatever you borrowed with no means to actually pay it back. With fed loans, this isn't an issue. Maybe your loans will get disbursed a little late, but schools expect this and understand this.

3. By far the most important point is to MAKE A CONTRACT with anyone you borrow from. It doesn't matter if it's the gov, loan sharks inc., your rich uncle Donald, or even your parents. You need to have a written agreement that outlines as many possible aspects of the loan as you can think of before any money exchanges hands. On the borrowing side, this should outline how much you're borrowing, when you'll get each disbursement, what you're using the money for, what happens if you need more money for some reason, what the interest rate will be if there is one, and a total amount for the loan or at least a general formula for determining this. On the repayment side, it should include when repayment will start, how often you'll be making payments, how much each of those repayments will be, how many years are expected to pay off the loan, what will happen if you cannot continue with your career/education and if there are certain circumstances where they'll forgive all or part of your loan, conditions for grace periods, what happens if you miss payment(s), as well as what happens if there is a breach of contract and what the results of that breach will be (ie if lender decides to stop lending or the borrower refuses to repay the loan). If there is a spouse or family involved with the borrower, they also need to be included. If you were to die, would your spouse be responsible for paying your family back? If so, how much? If you can't pay it back for some other reason, can the lender go after your spouse for repayment? Etc.

A lot of this may sound like overkill when borrowing from family, but you want to have everything laid out as well as possible in case something does happen. You don't want there to be misunderstandings or any gray areas that will lead to unnecessary conflict. If something happens, you should be able to point out exactly what the result will be. By doing so it both creates clear expectations and makes everyone aware of the outcome to cut down on animosity or problems with the actual relationship outside the loan. Family loans should also only be taken from people who you feel are reasonable and mature as people and with money. If you've got a rocky relationship with the person you're borrowing from, you're just setting yourself up for more stress and problems than you need to in terms of the loan.
 
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Dr. Mantis Tobogan

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Does anyone know if it is possible to pay extra on income-based repayment plans, specifically REPAYE? Because if so, I'm struggling to see why anyone would want to do a different plan, since REPAYE offers the lowest "required" monthly payment and has the subsidy benefits for times like residency. Am I missing something here?
 
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Does anyone know if it is possible to pay extra on income-based repayment plans, specifically REPAYE? Because if so, I'm struggling to see why anyone would want to do a different plan, since REPAYE offers the lowest "required" monthly payment and has the subsidy benefits for times like residency. Am I missing something here?
You can always schedule additional payments, and they're actually good because outside of "required" payments, additional payments go ONLY towards your principal balance, not principal + interest. Towards the beginning of a loan repayment you're mostly paying off interest, so making extra payments is a great way to keep the principal moving down towards the beginning of the repayment period.
 
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Stagg737

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Does anyone know if it is possible to pay extra on income-based repayment plans, specifically REPAYE? Because if so, I'm struggling to see why anyone would want to do a different plan, since REPAYE offers the lowest "required" monthly payment and has the subsidy benefits for times like residency. Am I missing something here?
There are qualification criteria. Under the REPAYE plan, your 10 year repayment rate would have to be less than the standard 10-year repayment rate which some people don't qualify for. The other issue is that you'll have the same interest rate either way, so the only real difference is the minimum required payment. By doing REPAYE instead of normal loans, you're not paying loans off any faster and just extending your debt.

The subsidy of REPAYE only exists for loans which were subsidized, so if you're carrying loans from UG it's a valid option. However, it won't make a difference for medical school loans as subsidized loans are no longer offered for medical school.
 

Jabbed

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You can always schedule additional payments, and they're actually good because outside of "required" payments, additional payments go ONLY towards your principal balance, not principal + interest. Towards the beginning of a loan repayment you're mostly paying off interest, so making extra payments is a great way to keep the principal moving down towards the beginning of the repayment period.
Are you 100% sure about this? I've heard very different things about this and I've never spoken to anyone that's successfully done this.
 

Jabbed

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There are qualification criteria. Under the REPAYE plan, your 10 year repayment rate would have to be less than the standard 10-year repayment rate which some people don't qualify for. The other issue is that you'll have the same interest rate either way, so the only real difference is the minimum required payment. By doing REPAYE instead of normal loans, you're not paying loans off any faster and just extending your debt.

The subsidy of REPAYE only exists for loans which were subsidized, so if you're carrying loans from UG it's a valid option. However, it won't make a difference for medical school loans as subsidized loans are no longer offered for medical school.
REPAYE subsidizes 50% of the difference between your accrued interest on UNSUBSIDIZED loans and your monthly payment.

If you make minimum payments your effective interest rate will be a fraction of what it is on paper.
 
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IlDestriero

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Anyone can aggressively pay down their debt in just a few years time as an attending. Keep a resident type lifestyle, modest expenses, one splurge trip or something and crush the debt every month. If you fear it, plan to conquer it. 5 years, 10 if you're a bit spendy. 20+ if you're a moron.


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Stagg737

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REPAYE subsidizes 50% of the difference between your accrued interest on UNSUBSIDIZED loans and your monthly payment.

If you make minimum payments your effective interest rate will be a fraction of what it is on paper.
Interesting. So does this require you to enter repayment during residency as opposed to deferring? I tried to use the FAFSA loan repayment calculator for OP's situation. It stated OP wouldn't qualify for REPAYE plans with his/her given situation and I'm not sure why.
 

Jabbed

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Interesting. So does this require you to enter repayment during residency as opposed to deferring? I tried to use the FAFSA loan repayment calculator for OP's situation. It stated OP wouldn't qualify for REPAYE plans with his/her given situation and I'm not sure why.
Yes, you have to be making payments in order to qualify. Halving your effective interest rate is unfortunately too good to be true.
 
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What repayment plan are you on? Your monthly payments are less than your accrued interest?
I'm currently in school so they're in deferment, but in my previous career I was on standard repayment and made extra payments all the time to pay off my UG loans. Currently I make monthly payments to cover the interest that is accruing while in deferment - I called my loan servicer to ask how much, it changes with each new disbursement. The extra I pay now pays down the principal, which counteracts the interest accruing while in deferment. When the loans are not in deferment, it just acts as a principal-only payment.
 

Dr. Mantis Tobogan

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There are qualification criteria. Under the REPAYE plan, your 10 year repayment rate would have to be less than the standard 10-year repayment rate which some people don't qualify for. The other issue is that you'll have the same interest rate either way, so the only real difference is the minimum required payment. By doing REPAYE instead of normal loans, you're not paying loans off any faster and just extending your debt.

The subsidy of REPAYE only exists for loans which were subsidized, so if you're carrying loans from UG it's a valid option. However, it won't make a difference for medical school loans as subsidized loans are no longer offered for medical school.
To address the first point, this is untrue. In fact, one of the things that the REPAYE information warns you of, is that if your income is at a certain level it may exceed the amount that you would pay under a 10 year plan. At which point you could remove yourself from this plan.

To your second point, yes there are interest subsidies that are for subsidized loans, but there are also unsubsidized subsidies (haha an oxymoron, I know), where the gov't would pay for 50% of your interest while in negative amortization.

To explain my original point with an ex
Yes, you have to be making payments in order to qualify. Halving your effective interest rate is unfortunately too good to be true.
Assuming a salary of $50,000 as a resident, and $300,000 in debt at an average of 6%...

One's monthly payment would be: ~$266

One's yearly interest would be $18,000

So effectively you would have $18,000 - (266 x 12) = $14,808 in unpaid interest on the year. Half gets subsidized, so $7,404.

So add back in the payments one made...$10,596, which means your actual interest rate on the original $300,000 was 3.5%.

Granted that means your total debt has gone up, but at "nearly" half the interest rate.
 
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336,000 in debt currently. Intern psych resident. Im using repaye, as I think its the best option for now. I will probably use repaye now during residency, and pay more aggressively once I'm out. Plan is to have it paid off 12 or so years after residency. Well see how close I get..
 

Espressso

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Dumb question here.. but is it smart to make random payments whenever you can while you're still in school? Or should you just borrow as minimally as possible, refrain from making any payments during school, and start paying it off immediately after school is over?
 

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Dumb question here.. but is it smart to make random payments whenever you can while you're still in school? Or should you just borrow as minimally as possible, refrain from making any payments during school, and start paying it off immediately after school is over?
Dr Conrad Fischer stated in one of the Kaplan Physiology Step 1 videos that people who went to medical school were those who couldn't do mathematics. The way he delivered the punch line was hysterical being the theatrical instructor he was.

When you have debt, your first priority is always, first and foremost to pay it off as soon as possible. Wear the same underwear and socks for 2 days, skimp on household furnishings, eat at home instead of restaurants, eat lean meals, forgo cable / satellite TV and bundled internet connection, buy clothing, furniture, cookware, presents, etc at second hand stores and have lots of intimacy with your husband/ wife / significant other to pass the time when you are not working. Yup my husband and I are doing all of these things to pay our (my) loans off expeditiously. For my last home mortgage I owned, I paid double the monthly payment for a few years until I finally sold the house for medical school and actually came out in the black.

In general pay off all loans ahead of time if at possible and these include home mortgages, car loans, credit card bills, student loans, personal loans, etc.
 
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Stagg737

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To address the first point, this is untrue. In fact, one of the things that the REPAYE information warns you of, is that if your income is at a certain level it may exceed the amount that you would pay under a 10 year plan. At which point you could remove yourself from this plan.

To your second point, yes there are interest subsidies that are for subsidized loans, but there are also unsubsidized subsidies (haha an oxymoron, I know), where the gov't would pay for 50% of your interest while in negative amortization.

To explain my original point with an ex


Assuming a salary of $50,000 as a resident, and $300,000 in debt at an average of 6%...

One's monthly payment would be: ~$266

One's yearly interest would be $18,000

So effectively you would have $18,000 - (266 x 12) = $14,808 in unpaid interest on the year. Half gets subsidized, so $7,404.

So add back in the payments one made...$10,596, which means your actual interest rate on the original $300,000 was 3.5%.

Granted that means your total debt has gone up, but at "nearly" half the interest rate.
The first point was a quote straight off of fedloan's .gov website, so I'm going to go with them on that.

Nice breakdown though. As jabbed said, it seems like the catch with REPAYE is you have to actively be in repayment to use the plan and many residents choose to enter deferment while they have lower salaries. Im unfamiliar with REPAYE, as I paid off my UG debt before graduation, but it sounds like the way to go if you can make payments during residency.
 

medstar11

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I would highly recommend talking with a financial advisor who specializes in physician finances. I am lucky enough to have my brother who works at a firm with a ton of physician clients so we are already devising a plan on best way to get them paid off as fast as possible including making payments in residency. Physicians as a whole are supposedly terrible at money management so it is worth it to speak to someone who has experience with these sizes of loans and earning potentials. Overall live well below your means for a few years as attendings and you can make substantial payments. This includes plans on having families during med school or residency.


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Jabbed

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To address the first point, this is untrue. In fact, one of the things that the REPAYE information warns you of, is that if your income is at a certain level it may exceed the amount that you would pay under a 10 year plan. At which point you could remove yourself from this plan.

To your second point, yes there are interest subsidies that are for subsidized loans, but there are also unsubsidized subsidies (haha an oxymoron, I know), where the gov't would pay for 50% of your interest while in negative amortization.

To explain my original point with an ex


Assuming a salary of $50,000 as a resident, and $300,000 in debt at an average of 6%...

One's monthly payment would be: ~$266

One's yearly interest would be $18,000

So effectively you would have $18,000 - (266 x 12) = $14,808 in unpaid interest on the year. Half gets subsidized, so $7,404.

So add back in the payments one made...$10,596, which means your actual interest rate on the original $300,000 was 3.5%.

Granted that means your total debt has gone up, but at "nearly" half the interest rate.
But not half! One of the things that bothers me about this though is that it somewhat removes the incentive for moonlighting (higher minimum payment) and aggressively paying off your loans.
 
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Yes it sucks. Yes it's a lot of money. But it's a means to an end. If you don't take out the loans, you don't get to become a doctor. So why bother stressing? I had $350k when I graduated, plus $30k in interest. I'll be doing IBR payments in residency because I can't afford any more than that. Which means a massive amount of interest continuing to accrue during residency. By the time I'm an attending I estimate I'll be close to $450k. Eesh. It's unfathomable and overwhelming, to say the least.
But let's say you want to pay this off in 10 years (450k at 6.8% of continuing interest). That's a loan payment of about $5,200/mo. Crazy. Assuming your salary is $150k after taxes, that's $12,500/mo that you're bringing home. So after your loan payment, you're still bringing in 7,300/mo. Which is pretty darn good (it's a lot better than residency!). So yes I understand the stress-- believe me I freak out about it often. But we will get it all paid off eventually and still have a pretty good lifestyle in the meantime.


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medstar11

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@medstar11 can you elaborate on how to seeking good advice?
My best advice is to find a financial advisor in your area and call and ask if they have experience working with either residents or attending physicians and student loans. I also am a huge fan of financial advisors who try to help teach people about financial independence rather than just tell you what you should be doing without explaining why. I am a huge fan of Dave Ramsey and his outlooks on debt and financial independence so I like to start on his website under the investors page. You can then search for advisors in your area and again call and ask if they have experience working with physicians and student loans. There are very few other occupations that have our load of debt but also our future salary. It is a unique opportunity but starting now may help you figure out how you can shave some of those loan dollars off now to help in the future.
 

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Dr Conrad Fischer stated in one of the Kaplan Physiology Step 1 videos that people who went to medical school were those who couldn't do mathematics. The way he delivered the punch line was hysterical being the theatrical instructor he was.

When you have debt, your first priority is always, first and foremost to pay it off as soon as possible. Wear the same underwear and socks for 2 days, skimp on household furnishings, eat at home instead of restaurants, eat lean meals, forgo cable / satellite TV and bundled internet connection, buy clothing, furniture, cookware, presents, etc at second hand stores and have lots of intimacy with your husband/ wife / significant other to pass the time when you are not working. Yup my husband and I are doing all of these things to pay our (my) loans off expeditiously. For my last home mortgage I owned, I paid double the monthly payment for a few years until I finally sold the house for medical school and actually came out in the black.

In general pay off all loans ahead of time if at possible and these include home mortgages, car loans, credit card bills, student loans, personal loans, etc.
I respect your plan, and the vast majority of non financially savvy doctors (and Americans in general for that matter) would be wise to adhere to this advice.

That said, the above is not true. Debt is only a problem for those that don't know how to manage it, and forgoing wealth in favor of eliminating debt is overall a suboptimal strategy assuming a favorable interest rate (17% on a credit card is not favorable). Having student loan debt for 20 years seems daunting for most, but once-upon-a-time when I was a financial advisor I routinely advocated for the most prolonged repayment plan possible. Many of my clients earned far more income than they dreamed possible, because they allowed the money they earned to work for them instead of paying down debt accruing interest at rates barely above inflation. $500k in loans eventually becomes pretty trivial when you have liquid assets in the millions.

Of course, this isn't as easy as just day trading penny stocks in your free time, but I would encourage folks to learn more about financial planning -- potentially taking a course in some advanced cash flow models -- instead of just listening to Dave Ramsey's lazy "NEVER GO INTO DEBT" mantra.
 

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I would encourage folks to learn more about financial planning -- potentially taking a course in some advanced cash flow models -- instead of just listening to Dave Ramsey's lazy "NEVER GO INTO DEBT" mantra.
Totally agree with the bolded.

I havent a clue who Dave is.

Im all for using a lender's money to make money. But right now as medical students, most don't have that luxury. I for one did not use bank or Federal loans for medical school. Instead I relied on other avenues and those were smarter for me.

Cheers!
 

InvestingDoc

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I realized this has been discussed before but couldn't find any recent posts regarding this. Currently an incoming M1 into a school with 50k/year tuition. Estimating 20k/year living expenses, I would have to take out ~280k in loans (160k from the Stafford unsub at 6.0% interest and the rest from Grad plus at 7.0%). I am absolutely terrified of this! During my work as a scribe, I have had EM physicians tell me that they are still paying back loans (and to not go into medicine, which is totally another story), and these physicians are well into their 40's. Does it really take this long, especially for a lucrative speciality such as EM??? Are people able to pay some back during residency or just pay off the growing interest? I'm obviously going into medicine with a genuine interest to help others through health but can't ignore this financial situation blindly...

Assuming 280k taken out in loans, would someone be able to estimate the final amount paid back and within how long?

Thanks for your help!
You can pay it off pretty quick, especially if you avoid life style inflation and specialize.

Everyone else has given you great responses with links to calculators so I'll just give you my anecdotal response.

I started with ~100k in loans and I'm now working as a hospitlaist. I could have written a check to pay off my loans about 8-9 months post graduation working as an attending but didn't since I refinanced to a 3.3% rate. I'm not risk averse so I've been putting my money in index funds instead of paying down debt and maxing retirement accounts. I've been lucky so far since my rate of return in this bull market has been about 14% to date. Since jobs are plentiful and cash flow is not a serious concern I'm on a plan to pay them off by 1/2020 with no rush to write that check at this time.

OP, be as frugal as you can but don't forget to live a little and enjoy the ride. Medicine is a long road. You cant eat beans and rice and not go out for 7+ years while in training. You will pay them off if you make it a priority. Many of these docs who have not paid them off yet while being an attending more than 10 years have most likely not made them a priority at all.
 

mvenus929

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You can always schedule additional payments, and they're actually good because outside of "required" payments, additional payments go ONLY towards your principal balance, not principal + interest. Towards the beginning of a loan repayment you're mostly paying off interest, so making extra payments is a great way to keep the principal moving down towards the beginning of the repayment period.
Not true. Most loan financiers state explicitly that additional payments first go towards fees, then unpaid interest, then principal. If you've caught up on your interest (for subsidized loans), then yes, additional payments go towards principal. But that is not the case for most residents.

The first point was a quote straight off of fedloan's .gov website, so I'm going to go with them on that.

Nice breakdown though. As jabbed said, it seems like the catch with REPAYE is you have to actively be in repayment to use the plan and many residents choose to enter deferment while they have lower salaries. Im unfamiliar with REPAYE, as I paid off my UG debt before graduation, but it sounds like the way to go if you can make payments during residency.
I'm not sure why anyone would not enter an income based plan during residency, unless their family was so large, or the cost of living so high where they were, that they didn't have any additional income. Even if PSLF doesn't continue, if something happens and you only make the minimum payments for 20 years, you get forgiveness. Most residents I know are in one of the income based plans.
 

ACSurgeon

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I would highly recommend talking with a financial advisor who specializes in physician finances. I am lucky enough to have my brother who works at a firm with a ton of physician clients so we are already devising a plan on best way to get them paid off as fast as possible including making payments in residency. Physicians as a whole are supposedly terrible at money management so it is worth it to speak to someone who has experience with these sizes of loans and earning potentials. Overall live well below your means for a few years as attendings and you can make substantial payments. This includes plans on having families during med school or residency.


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Med school doesn't make you money-stupid. You don't need a financial advisor to tell you to wait on buying a $100k car and million $ home until after you've paid back your loans and put some money away for retirement.

Financial advisors do like to tell doctors who dumb we are with money and how much we need them.
 
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Not true. Most loan financiers state explicitly that additional payments first go towards fees, then unpaid interest, then principal. If you've caught up on your interest (for subsidized loans), then yes, additional payments go towards principal. But that is not the case for most residents.



I'm not sure why anyone would not enter an income based plan during residency, unless their family was so large, or the cost of living so high where they were, that they didn't have any additional income. Even if PSLF doesn't continue, if something happens and you only make the minimum payments for 20 years, you get forgiveness. Most residents I know are in one of the income based plans.
As far as I'm aware, you're no longer allowed to defer loans during residency like you could in the past-- except the initial 6mo grace period following graduation. So your options are some sort of payment plan (like IBR, etc) or you can go into forbearance (which is stupid unless you truly don't have the money to afford even IBR, PAYE, REPAYE).


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Mad Jack

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I realized this has been discussed before but couldn't find any recent posts regarding this. Currently an incoming M1 into a school with 50k/year tuition. Estimating 20k/year living expenses, I would have to take out ~280k in loans (160k from the Stafford unsub at 6.0% interest and the rest from Grad plus at 7.0%). I am absolutely terrified of this! During my work as a scribe, I have had EM physicians tell me that they are still paying back loans (and to not go into medicine, which is totally another story), and these physicians are well into their 40's. Does it really take this long, especially for a lucrative speciality such as EM??? Are people able to pay some back during residency or just pay off the growing interest? I'm obviously going into medicine with a genuine interest to help others through health but can't ignore this financial situation blindly...

Assuming 280k taken out in loans, would someone be able to estimate the final amount paid back and within how long?

Thanks for your help!
Did you factor in origination fees? They're typically one percent of the loan value.
 

Mad Jack

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I respect your plan, and the vast majority of non financially savvy doctors (and Americans in general for that matter) would be wise to adhere to this advice.

That said, the above is not true. Debt is only a problem for those that don't know how to manage it, and forgoing wealth in favor of eliminating debt is overall a suboptimal strategy assuming a favorable interest rate (17% on a credit card is not favorable). Having student loan debt for 20 years seems daunting for most, but once-upon-a-time when I was a financial advisor I routinely advocated for the most prolonged repayment plan possible. Many of my clients earned far more income than they dreamed possible, because they allowed the money they earned to work for them instead of paying down debt accruing interest at rates barely above inflation. $500k in loans eventually becomes pretty trivial when you have liquid assets in the millions.

Of course, this isn't as easy as just day trading penny stocks in your free time, but I would encourage folks to learn more about financial planning -- potentially taking a course in some advanced cash flow models -- instead of just listening to Dave Ramsey's lazy "NEVER GO INTO DEBT" mantra.
There is a downside though- if you still have debt you can't retire early unless your assets can obliterate your debt, nor can you take a lengthy sabbatical without accruing substantial compound interest as a result.
 
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Azete

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There is a downside though- if you still have debt you can't retire early unless your assets can obliterate your debt, nor can you take a lengthy sabbatical without accruing substantial compound interest as a result.
All good points, but even most of the interns that worked for us would be able to accrue assets that dwarfed the average med student debt on half the salary of a doctor. In my experience many very smart people end up oversimplifying their finances because they're basically unaware of the options available to them. And on the flip side, many very dumb people end up thinking they know more than they do and quickly sign themselves up for financial suicide.

I could pay for my entire medical education out of pocket right now, but I still choose to take the full COA in loans because of how advantageous they currently are to the borrower.
 

medstar11

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Med school doesn't make you money-stupid. You don't need a financial advisor to tell you to wait on buying a $100k car and million $ home until after you've paid back your loans and put some money away for retirement.

Financial advisors do like to tell doctors who dumb we are with money and how much we need them.
Looks like someone needs to find a new financial advisor if you think this is all they do...
 

FLgator123

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how do these 10 year forgiveness plans I hear about work. If you went into a primary care field and worked in the appropriate area, is it possible? Anyone know of someone who has done this?
 

IslandStyle808

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All good points, but even most of the interns that worked for us would be able to accrue assets that dwarfed the average med student debt on half the salary of a doctor. In my experience many very smart people end up oversimplifying their finances because they're basically unaware of the options available to them. And on the flip side, many very dumb people end up thinking they know more than they do and quickly sign themselves up for financial suicide.

I could pay for my entire medical education out of pocket right now, but I still choose to take the full COA in loans because of how advantageous they currently are to the borrower.
If I may ask, how are you investing/utilizing the money you have currently while in school?
 
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how do these 10 year forgiveness plans I hear about work. If you went into a primary care field and worked in the appropriate area, is it possible? Anyone know of someone who has done this?
Google PSLF. No one has cashed in on these yet because the program started in 2007. So the first wave of people will be this year. We'll see how it plays out. And the main thing is you have to be making your payments on time and working at a non-profit (which most hospitals are, but some aren't).


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Azete

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If I may ask, how are you investing/utilizing the money you have currently while in school?
Sure. Outside of some residual shares I still own from my previous company, most of my money right now has been withdrawn from equities. Up until the beginning of summer I was about 70% equities, 15% real estate, 10% high-risk (mostly startups and cryptocurrencies), and 5% cash. I'm now 15% equities, 40% real estate (all non-US except the house I live in), 20% high risk, and 25% cash. I intend to use most of my cash to buy foreign debt if/when market conditions turn favorably. I anticipate 15-20% of my investments to be written off as losses at some point (which I'll use advantageously later for accounting purposes), and ~5% to return me >20x at maturity. The rest will likely return me an average of 8-11% annually, most of which will be used to cover living expenses.

I wish I could give more specifics, but I'd like to maintain my anonymity here.
 
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IslandStyle808

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Sure. Outside of some residual shares I still own from my previous company, most of my money right now has been withdrawn from equities. Up until the beginning of summer I was about 70% equities, 15% real estate, 10% high-risk (mostly startups and cryptocurrencies), and 5% cash. I'm now 15% equities, 40% real estate (all non-US except the house I live in), 20% high risk, and 25% cash. I intend to use most of my cash to buy foreign debt if/when market conditions turn favorably. I anticipate 15-20% of my investments to be written off as losses at some point (which I'll use advantageously later for accounting purposes), and ~5% to return me >20x at maturity. The rest will likely return me an average of 8-11% annually, most of which will be used to cover living expenses.

I wish I could give more specifics, but I'd like to maintain my anonymity here.
I understand, thank you for telling me what you can.
 

Stagg737

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I'm not sure why anyone would not enter an income based plan during residency, unless their family was so large, or the cost of living so high where they were, that they didn't have any additional income. Even if PSLF doesn't continue, if something happens and you only make the minimum payments for 20 years, you get forgiveness. Most residents I know are in one of the income based plans.
I agree, if you can make payments you absolutely sure. However, IBR and REPAYE are not the same thing which is what was initially being asked about. Also, I think relying on forgiveness 20 years down the road is always a bad idea. Using a IBR loan calculator, a debt of 300k after residency (less than what OP would have) with an adjust gross income of 175k and 6.8% interest rate would come out to monthly IBR payments of around 1,900/mo or almost 23k/year. Multiply that times 20 years and you're paying 460k and will likely have debt left over afterwards. I was under the impression it was 25 years before loans were forgiven, if that's the case you're paying back 575k before forgiveness. That's all assuming that whatever is left over is eligible to be forgiven.

There are plenty of other loan forgiveness options, I just think it's a bad decision to rely on any debt to be forgiven if it's not part of a direct forgiveness contract like those signed when working at underserved locations.
 

Azete

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I agree, if you can make payments you absolutely sure. However, IBR and REPAYE are not the same thing which is what was initially being asked about. Also, I think relying on forgiveness 20 years down the road is always a bad idea. Using a IBR loan calculator, a debt of 300k after residency (less than what OP would have) with an adjust gross income of 175k and 6.8% interest rate would come out to monthly IBR payments of around 1,900/mo or almost 23k/year. Multiply that times 20 years and you're paying 460k and will likely have debt left over afterwards. I was under the impression it was 25 years before loans were forgiven, if that's the case you're paying back 575k before forgiveness. That's all assuming that whatever is left over is eligible to be forgiven.

There are plenty of other loan forgiveness options, I just think it's a bad decision to rely on any debt to be forgiven if it's not part of a direct forgiveness contract like those signed when working at underserved locations.
The above is only true if you borrowed before 2014, in which case the terms are a bit different.

For all borrowers after 2014, using the same figures as above, the monthly payment would be $1308. The total balance paid would be ~$450k if you started making payments after residency -- but if you begin during residency your total payment would be significantly lower (since on a $55k resident's salary, with no dependents, the monthly payment would only be $308), with the exact amount depending on the duration of chosen residency/fellowship.
 
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