So it looks like i will be in 200k+ debt, would anyone like to share stories on how long they took to pay off their debt or what they have heard?
How long to pay off debt?
- Thread starter jpt369
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I think it's common to defer to the end of residency and in the meantime buy a house and at the end of it use the/any equity in the house to pay off the student loans since the house loan is tax deductible.
Just what I've heard, by no means do I know exactly how to go about this or how feasible it is.
Just what I've heard, by no means do I know exactly how to go about this or how feasible it is.
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I was using the financial aid loan calculator and the amount of debt I'd be in is mind boggling. The published reports for Western/COMP average debt is 168,000, but this is really misleading. If tuition is 43,000 / year X 4 years = 172,000 of principal debt. However, when you add the capitalized interest over a period of 10 years, it becomes ~ 245,811 . Mind you, this is not including any additional loans carried about for the cost of living. Can somebody chime in and quell my anxiety over this exorbitant debt I'm putting myself in?
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We wont be able to defer during residency anymore.
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Ya that's gonna be a problem....
No idea what I'm gonna do besides make the minimum payments.
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Well I suppose it's better to pay it off as early as possible. I foresee my quality of life as a resident as really sad.
You DO NOT have to start making payments in residency. Although economic deferment is being done away with, you will still have option of Forbarence. Let's not cause mass histeria here!
The bottomline is that you will not have to make payments in residency if you dont want to.
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LOL...
My best advice as a pre-med is to go to a financial consultant (not the free one at like wachovia) and discuss the best manner in paying it back.
As for paying during residency, I think it best to NOT go into forbearance, you can choose the income-sensitive repayment plan, so that payment is a lot more reasonable because it is calculated off the residency salary. Once residency is completed then you could select a different payment plan.
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Lets assume you graduate with $200k. Then make the minimum payments during residency (basically the interest on this).
Now you get your job, say you start at $170k/yr.
With 35% taxes you will have a monthly take-home pay of $9,200.
Paying $5,000/month will take you 3.9 years to repay.
Bottom line -> Live on a resident budget for another 4 years and then you are off the hook.
Loan Calculator
Loan Balance: $200,000.00
Adjusted Loan Balance: $200,000.00
Loan Interest Rate: 7.80%
Loan Fees: 0.00%
Loan Term: 3.9 years
Minimum Payment: $5,000.00
Monthly Loan Payment: $5,000.00
Number of Payments: 47
Cumulative Payments: $232,375.29
Total Interest Paid: $32,375.29
Now you get your job, say you start at $170k/yr.
With 35% taxes you will have a monthly take-home pay of $9,200.
Paying $5,000/month will take you 3.9 years to repay.
Bottom line -> Live on a resident budget for another 4 years and then you are off the hook.
Loan Calculator
Loan Balance: $200,000.00
Adjusted Loan Balance: $200,000.00
Loan Interest Rate: 7.80%
Loan Fees: 0.00%
Loan Term: 3.9 years
Minimum Payment: $5,000.00
Monthly Loan Payment: $5,000.00
Number of Payments: 47
Cumulative Payments: $232,375.29
Total Interest Paid: $32,375.29
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Sure, choose forbearance. Hell you can even borrow more money while in residency! Great idea
All of these options are not viable. Yes, l you do have to make some payments when you'll be in residency, unless you are a mad man.
Keep in mind your program in residency will pay for some of the expenses normal docs would have to pay, like malpractice, so that's huge for you soon to be surgeons/OBGYNs. So in some ways you'll save money 🙄
It takes the average student 10 years to pay off their debt (that's from the AMA website). Don't fret, it'll be paid off eventually. A lot of us won't be making 170k after residency (I sure won't), but relax, you'll have an exit interview when you graduate and they'll lay it out for you. Remember: it's not like you're the only one!
And yes, the mean debt load is misleading, but that's only because the mean is not an accurate measurement here. Particularly in DO schools these days, a lot of people are going with military scholarship for example, so their debt is 0. So if two people graduate a class, one with HPSP and the other with normal debt of $200k, the average loan there is 100k. The median debt is far more helpful, and you'll find that to be in the region of $220k for a lot of schools. I've calculated closer to 250 myself with interest when I graduate. The actual amount I'll pay to the banks will be close to 300k, maybe more
At the end of the day, we'll be able to have a rewarding job and pay off our loans eventually. Not doing HPSP means I get to stay at home and be with my family, and we'll learn together how to live with minimal monetary thrills. Livin rough for a few more years isn't so bad when you have that sort of support 👍
I'm supporting a family and I'm going to be around $300K in debt upon graduation.
There's no real answers to the op's question because quite simply it's a matter of working hard and paying off the debt over about 10 years, maybe longer.
I know of people who moonlight during residency. It seems crazy with the already-long work hours, but they do it, maybe two ER shifts a month or a couple of days a month in an OMM clinic (for DO's) which can add up to some significant money.
Also, once you are in practice, you can moonlight. It can add $50K to your annual salary which should help you pay down your debts faster.
Meanwhile, like they say, live like a student now so you won't have to live like a student later (at least, not too much later, we hope).
There's no real answers to the op's question because quite simply it's a matter of working hard and paying off the debt over about 10 years, maybe longer.
I know of people who moonlight during residency. It seems crazy with the already-long work hours, but they do it, maybe two ER shifts a month or a couple of days a month in an OMM clinic (for DO's) which can add up to some significant money.
Also, once you are in practice, you can moonlight. It can add $50K to your annual salary which should help you pay down your debts faster.
Meanwhile, like they say, live like a student now so you won't have to live like a student later (at least, not too much later, we hope).
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I think we might be attending the same school in the fall, but my debt is going to be identical. It seems like most people are around 200K. and I definitely need to take out loans for everything.... very scary
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My fiancee and I will be in debt close to $650k after loans from undergrad and graduate school. So like I said, you're not the only one
Also realize that unless you're going to CCOM, there are more expensive schools you could of attended!!
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Holy Crap!!! 650?!?!?
I can never again bitch about my student loans knowing this...
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and the 172000 doesn't include the intrests over 4-year period.
Holy crap! This thread scared the **** out of me. For my undergrad, I paid for EVERYTHING out of my pocket. I had to work 90 hours a week though. I am definitely not a loan/debt man. I don't know how I am going to handle this.
Fortunately, my wife(Speech Pathologist) graduates in Summer 09. She'll have a job after that. I be working until I get accepted to med school so we'll have some savings.
A couple of my cousins and a friend went to med school in Pakistan. Med school tuition=$500. Room and board=$0(Lived with relatives). Other expenses= no more than $2000. I am jealous!
Fortunately, my wife(Speech Pathologist) graduates in Summer 09. She'll have a job after that. I be working until I get accepted to med school so we'll have some savings.
A couple of my cousins and a friend went to med school in Pakistan. Med school tuition=$500. Room and board=$0(Lived with relatives). Other expenses= no more than $2000. I am jealous!
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I'll be around $250K in debt with undergrad and med school when I'm done.
I'm planning on living like a pauper for a while.
I'm planning on living like a pauper for a while.
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Dentistry runs in the 200k's, easily. I've talked to several dentists and they recommend extending/consolidating the loans for 30 yrs. A few years ago interest rates were 3.0%. (Hopefully rates decrease, soon!) The money that you would have paid your student loans with, goes to a safe 7%+ investment.
Remembering, student loans are a 'good' debt. 😀
Remembering, student loans are a 'good' debt. 😀
There are a few threads about this in the finance forum. Anyone interested should check them out.
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I will be around $340,000 in debt after everything is said and done (this includes my interest to date, my undergrad loans and interest and my mph loans and interest). The amount seems daunting so I have been talking to various people since I started this adventure. One of best pieces of advice I received, and the one I am planning on following, is such: live like you are a resident even AFTER you have finished you residency for a period of five years using the extra money to pay down your loans.
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Whoever told you that must have been very wise. None of this let's invest the difference of pmt x with consolidation and pmt y with without consolidation...that's just foolish. Dave Ramsey is the man to listen to to put a fire under you to get out of debt.
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I keep hearing that the interest on student loans is tax deductible. Any truth to this?
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Not the amount of student loans that we're taking out.
I also have read on many school's websites that the average graduate indebtedness is ~140,000-160,000, but whenever I talk to anyone in medical school they say that they're looking more at around 250,000-300,000. Is this because medical schools include HPSP students, who graduate debt-free, into their average? If this is the case then it is quite misleading and should be changed to give potential applicants an honest look at what they're getting themselves into.
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Yes
Couldn't agree more, see my previous post on using the median instead
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You guys are making me feel better about mine. No undergrad debt, so the absolute worst case scenario for me is like 200k. I will probably get a little help, so it may be closer to 150k.
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Yes, you are able to deduct up to $2500 of interest paided to qualified student loans. There is an income limit though so you won't be able to take advantage of this as an attending (but you should be able to take advantage of it as a resident/fellow)
Check out this website from the IRS which will describe this in more details
http://www.irs.gov/taxtopics/tc456.html
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That number is very misleading. I am a 3rd year at WesternU/COMP and I've not got any family support nor any previous savings before starting med school. Some students at the school have significant family assistance, that is why that number is so "low."
I borrowed according to the 'cost of attendance,' this means tuition plus living expenses, transportation, books, etc. I did not ask for any money above what the school's budget dictates.
As of this semester I am at $200k and change. This does not include accrued interest on the unsubsidized portion of my loans (federally subsidized loans do not cover the entire cost of attendance.) I will end up borrowing an additional ~$65k next year for a grand total borrowed principle of $260k.
I actually just used this online calculator: http://apps.collegeboard.com/fincalc/sla.jsp
Which showed me that my payments after residency will be around $3200 per month for 10 years to pay off the principle plus $100k interest.
Again, any other student who is coming in with no other financial assistance will have at least as much debt as I will have when complete if not more due to tuition increases, increased cost of living, etc.
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Interest on student loans is NOT tax deductible if you make more than $90k year...and that's family income, so if you are married then your spouse's income is added to your's for that calculation.
Catch 22....even if you made that little as a physician and could deduct, you wouldn't be able to afford your payments (assuming you are in the >$200k range)
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I don't mean to be insulting to you personally, but the amount of misinformation out there on this stuff is astounding. I know because I once believed the same stuff!
Legislation enacted during the Bush years forever eliminated the cushy option of reconsolidating student loans at a lower rate. The rate you borrow at is the rate you are locked into for life. The best you can do is blend the rate of higher and lower rate loans when consolidating. The lowest rate you can get is on federal loans at 6.8%. Grad plus loans run over 7%. Last time I checked the prime rate was through the floor, at a record low, yet my student loans will not fluctuate one iota. Next year I will still have to borrow at 6.8%.
Keep in mind too that there isn't a single osteopathic medical school with a cost of attendance low enough that you won't need to take unsubsidized and higher rate loans.
"Student debt is good debt" is rapidly becoming an obsolete phrase except in the sense that it allows you to pursue a career with higher income. But when I can get a mortgage for ~4-5% then my student loans don't look so awesome anymore.
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True, there are negatives, but there are some positives with consolidating that debt and paying it over 30 years. Yes, the long-term interest costs of your debts would increase considerably, but the reduced monthly payments can be very useful in the early stages. I'm gonna need a new car by then, for example, and the reduced payments could make that more affordable. Besides, I can still choose to pay more than the minimum without penalty and shorten the life of the loan as well as the total interest paid. But, if I really need the extra cash there one month-- it's there for me to use. And, just having one bill to pay monthly makes it really simple. It could improve your credit score as well. I currently have 18 open accounts that would go down to one with consolidation.
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I just had my exit interview. I made a very conservative estimate (hopefully doing a spine fellowship). If I make 500k with 50% towards taxes, Ill still be making 250k. Thats like 21k a month. This loan nonsense becomes a non-issue. I am pleased.
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Error #1 in your calculation: If you're earning 500k a year, your taxes aren't going to be 50%. Do the math again, using a marginal rate of 70% like it was 30 years ago. Back to the future, and all.
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I'm glad to hear things are going well for you Buckeye. I am confused though: are you estimating (conservatively as you say) to make 500k a year after your fellowship?? If so, congratulations! Is that PM&R?
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No, ortho spine.
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I love how you mentioned my error as if you had a whole list of them, and then somehow only managed to get one on there.
Nice work👍
The current marginal tax rate for salaries greater than 372k is 35%. Why would I assume that the tax rate will be back up to 70+ percent?
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God I hope not. The thought of my hard work being ripped away at 70% to fund medicaid-abusing trash and underachieving schools makes my stomach turn.
I'd probably go mercenary and volunteer to be Kim Jong-Il's personal physician. 😀
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35% is just the Federal tax rate (which, BTW, is going to be increased to 39.6% next year)...add to that 7.65% FICA, state taxes (eg. 3.4% here in IN...dbl digits in states lik CA and NY), county taxes (eg. Income, property, sales, auto
11.5% in Indianapolis)...well over 50%...
and as a physician if you think you'll be keeping more than half your income you're delirious.
you'll be a top income earner and supporting the masses...get used to it.
and as a physician if you think you'll be keeping more than half your income you're delirious.
you'll be a top income earner and supporting the masses...get used to it.
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Your number of 50% is closer than what others here are saying. I did some quick number crunching here to give a rough estimate
With the tax cuts set to expire in 2011, the tax rate will be moving up to 39.9% (at least at the income he will be making, others will still be close to this). Keep in mind that this is federal taxes, you also have to add things in like social security, medicare (7.65% combined for both) and state taxes (which is 4.35% in MI for this income bracket).
This puts it at 51.9% of your income being taken from you. 👎
-I got these numbers from a quick google search
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Everyone should get married to someone with a decent job. We're currently living on my wife's salary, and plan to continue that through residency. Most of my (meager) residency pay will go toward paying off my student loans, which will hopefully take a HUGE chunk out of them. At 40k/year *4 years = 160k of my debt (~250k) paid off before I even get an attending salary. Then we're going to subtract whatever amount is left from my first year attending pay. So it works out that we live on:
Med School: 60k/yr.
Residency: 60k/yr.
1st Yr Attending: 60k+(~200k-100k) = 160k
2nd Yr Attending: 60k+(~200k) = 260k and debt free.
Works for me. Go find a mate people!!!
Also don't forget that many jobs also offer some form of student debt repayment as part of the incentive package. Check the Merritt Hawkins surveys for more info on that.
Med School: 60k/yr.
Residency: 60k/yr.
1st Yr Attending: 60k+(~200k-100k) = 160k
2nd Yr Attending: 60k+(~200k) = 260k and debt free.
Works for me. Go find a mate people!!!
Also don't forget that many jobs also offer some form of student debt repayment as part of the incentive package. Check the Merritt Hawkins surveys for more info on that.
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Well, you can't claim you are a democrat and then say you don't want to support the masses. I really don't have any problem with that. Ok, even with 70% taken away, the loans still aren't an issue - which was the original point.
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Not to turn this into a political debate, but:
It's not so much the masses I have a problem with supporting. Did you know that we just spent >$300,000 on that stupid NYC flyover photoshoot?
300 Grand. For a picture of Air Force One flying around NYC. I could have done that in Photoshop in about 10 minutes for a whole lot cheaper.
As far as supporting the masses: I see both sides. It's true that there are many reasons for people to mooch of the gov't...many of them (such as mental illness) legit.
Unfortunately, there are many unscrupulous people who mooch when they are PERFECTLY capable of working. I have a "friend" (and I use that term very loosely) who collected unemployment for over a year because she just wanted to sit at home and get high.
I have another friend who grew up in the worst neighborhood in town, with a poor, single mother. Worked his butt off in school, went to law school, and wound up in some powerful political positions making good money.
I myself come from humble beginnings. I grew up in a trailer. My family doesn't have money. I spent years working retail. Then, I decided to make something of myself and stop wasting my life. And here I am...in medical school.
I'm sick of hearing people say whine that they can't "do it". There are so many opportunities in this country that it's crazy.
Also, while I'm kind of a fan of universal health care, but how are we planning to not pay for the care of what Americans do to destroy themselves. I don't want to pay for someone else's lung cancer after a 50 pack year hx of smoking. Or an 800lb guys quadruple bypass. Not the taxpayers' responsibility. Aren't Americans already too unaccountable for their own actions. We order coffee then sue when we spill it on ourselves and it burns us. WTF?!?!?
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Oh dear, hear we go again...
The point is, if you have health insurance in hte US, you already pay for the teritary/end of life treatment for all of those conditions now. That's why health insurance is not affordable: the later you treat a disease, the more expensive it is.
Using universal healthcare to pay for other people's preventative care (smoking cesation, pap smears, exercise programs, etc). Now THAT'S cheaper
