MD & DO How long to pay back student loans?

[IlDestriero]

I would think long and hard about relying on government forgiveness for the 1% club earning 5-10x the average family income. It's the lowest hanging fruit of all to cut and would be cheered by the public for "making the rich pay their fair share".



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Il Destriero

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[jhamaican]

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.

If only things were so simplistic.

I have invested heavily over paying more than the minimum on my loans and it has worked out quite nicely.

If you think you can get more than the return on your loan through investing go for it. If not, pay off those loans.

 

[Menander's Bust]

Here is my plan, maybe naive. I'll have let's say 300,000 in debt. Let's say I make 200,000 right out of residency. I'll net 70% of that, which comes out to 11,667 per month. So I live off of 7,500 a month, which I think is very comfortable and use the remaining 4,166 to pay off debt. At that rate it will be paid off in 6 years.

 

[ACSurgeon]

Here is my plan, maybe naive. I'll have let's say 300,000 in debt. Let's say I make 200,000 right out of residency. I'll net 70% of that, which comes out to 11,667 per month. So I live off of 7,500 a month, which I think is very comfortable and use the remaining 4,166 to pay off debt. At that rate it will be paid off in 6 years.

You won't net 70%

 

[Hakuna Matata]

Here is my plan, maybe naive. I'll have let's say 300,000 in debt. Let's say I make 200,000 right out of residency. I'll net 70% of that, which comes out to 11,667 per month. So I live off of 7,500 a month, which I think is very comfortable and use the remaining 4,166 to pay off debt. At that rate it will be paid off in 6 years.

Don't forget about all the interest accruing during residency (it really adds up) and while you're paying your loans. But in general I agree with your plan, it's what I intend to do.


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[IlDestriero]

Your plan is sound. You won't do as well as you think after tax, and don't forget to max out retirement.
Figure out what your big splurge item is and go do that (big trip, 2 year old CPO M3, killer stereo/surround sound system w/ monster flat screen, etc.), get a real bed, then crush the debt with all the rest. You can take nice trips a couple times a year, but go Caribbean vs Bora Bora, or split a room with a buddy at Vail vs a JR suite at the Four Seasons in Jackson Hole. All that adds up. And every dollar you put away is less interest and an earlier debt free timeline. My only debt is my house that I could sell in a few weeks if I wanted to. That feeling is priceless.


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Il Destriero

 

[Stagg737]

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?

Another time when REPAYE isn't as good of an option that I forgot is if you have a small amount of federal debt. For example, I'll be graduating with about 40k in fed loans. If I do the 10 year IBR or REPAYE plans, I'd be paying back around $450/mo in residency and pay a total of around 52k in total debt. If I do the 10 year graduated plan, my first payment would only be around $250/mo and my last payment at year 10 would be around $750/mo (which I'd likely pay much, much more than that as soon as I made attending money, so that amount is kind of irrelevant). My total repayment would be around 56k.

So with a graduated plan I'd be paying around $200 less per month during residency, and would only pay a total of 4k more if I decided to just make minimum payments for the full 10 years. $200/mo may not sound like that much, but for people with families or those in expensive areas, it can make a difference. So for someone with relatively little debt wanting to pay the minimum back during residency then just pay it all down immediately once they make an attending salary, a graduated repayment plan is a better deal than IBR or REPAYE.

 

[Johan90]

No more than 15 years