How much is too much to borrow?

[osli]

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Pretty open ended question since specialty salaries and malpractice vary so much, but I didn't want to post a poll and limit potential responses. The economics of borrowing a lot of money have to be considered and I am curious what others think is reasonable and unreasonable.

So maybe put a specialty or expected salary with your idea of a "too much" cap on borrowing. Like $100,000 is the max for FP that is reasonable. Or maybe you think $250,000 is no problem for FP. With tuition and fees at some schools approaching $200,000 a total of $300,000+ is almost a necessity if there aren't other sources of income (parents, spouse) for living expenses. Is $300,000 a crazy number? $400,000? At some point a high paying specialty is required just to pay back loans in a reasonable or acceptable timeframe.

 

[Law2Doc]

Pretty open ended question since specialty salaries and malpractice vary so much, but I didn't want to post a poll and limit potential responses. The economics of borrowing a lot of money have to be considered and I am curious what others think is reasonable and unreasonable.

So maybe put a specialty or expected salary with your idea of a "too much" cap on borrowing. Like $100,000 is the max for FP that is reasonable. Or maybe you think $250,000 is no problem for FP. With tuition and fees at some schools approaching $200,000 a total of $300,000+ is almost a necessity if there aren't other sources of income (parents, spouse) for living expenses. Is $300,000 a crazy number? $400,000? At some point a high paying specialty is required just to pay back loans in a reasonable or acceptable timeframe.

Just bear in mind that just because you "want" to go into a high paying specialty doesn't mean you will be able to get into a high paying specialty. Competition in med school is far more fierce than college, as everyone who gets in is pretty much a B+ student or better. Many people find themselves all of a sudden very average (or below) in med school, and some of the more competitive residencies may be out of reach for many. Thus don't count on the above average salary until you determine whether you are above average. Given that, I'd have to say you will have a tough time paying off more than $300,000+ unless you plan on staying single and living on PB&J.

 

[QofQuimica]

I would like to stay under $100k, since I'm going into academic medicine.

 

[TRuss]

I am also going to try and stay under 100k. Btw, Law2doc is very right, my uncle finished med school and his residency about 8 years ago. He was able to pay everything off, but he is also single, and i am sure he has eaten more then one pb&j. He is doing spectacular now though, but he is umm.... whats the word. ridiculously smart, and he was an engineer prior to becoming a doctor, so he already had a good start on life before entering med school

 

[Napoleon4000]

Listen, anything good is going to be time consuming and probably expensive. Don't listen to too many people here (including me). For some reassurance, the NIH offers Loan Repayments for individuals willing to serve in underserved areas. Additionally, the NIH likewise offers loan repayment if you decide to do research there. So during or after medical school you can do research at NIH, get a stipend, WORK at NIH and have a bunch of it paid off for every year of research. This will be especially good for you if you decide to go into academia. The same goes for working in underserved areas...though I know less about this. But do look into it. I hate it when people try to be so damn pessimistic during this challenging process. Good luck. Work hard and try to get the specialty of your dreams! And the debt will be worth it...trust me.

 

[osli]

People always talk about "100K" but I honestly don't see how that's possible without being previously wealthy, being supported (for living expenses) by parents, have a spouse making significant income, or are granted prodigous financial aid (whether through the school, military, public health, etc.).

I suppose everyone who isn't facing significantly higher numbers falls into one of those categories.

 

[Doctor Bagel]

People always talk about "100K" but I honestly don't see how that's possible without being previously wealthy, being supported (for living expenses) by parents, have a spouse making significant income, or are granted prodigous financial aid (whether through the school, military, public health, etc.).

I suppose everyone who isn't facing significantly higher numbers falls into one of those categories.

or someone with a cheap state school and no prior debt. even then, it would be tight these days because the cheaper state schools are around $15k. if you don't have help with living expenses, i don't see how you could borrow less than $30k a year. right now, i'm trying to make it work where i can stay within that $189k maximum limit on staffords (this also includes my $45k from law school).

at one of my interviews, the director of admissions told us we'd be fine if we kept our debt level below $150k. the absurd thing was that his school's tuition is $36k, and they seem to have no grants or scholarships.

 

[neovenom]

i used to have under 100k as my goal, because i was going to attend a state school with a tuition of around $10,000 a year. turns out that with all the extra fees, it becomes $15,000, and the number increases to $19,000 for your second and third years. so when you add in living expenses, i find it impossible to borrow under 30-34k a year. and this is in georgia of all states, which has a low cost of living!

 

[DrMom]

You shouldn't borrow more than you actually need to pay for tuition and basic living expenses. This # is going to vary from person-to-person & situation-to-situation.

I have a family & a kiddo in a private school. My family lost my income when I went to school, so some of this had to be made up for with loans. Also, my husband got laid off while I was in school so for a while we had to borrow for our entire living expenses. Even with all of this, I have some young, single classmates who borrow more than I do & live very well.

The key to remember is that you will have to pay back all of the loans with interest. They are nothing to take lightly.

 

[pseudoknot]

Even with all of this, I have some young, single classmates who borrow more than I do & live very well.

Most schools I've seen allow something like $16-18k for living expenses. How can that translate to living "very well?"

 

[DrMom]

Most schools I've seen allow something like $16-18k for living expenses. How can that translate to living "very well?"

They're borrowing significantly more than that with private loans. My school is pretty generous in certifying us for them. We have to give them some kind of *reasonable* need, but there's nobody checking up on it. I have multiple classmates who have bought new cars with loan $...but with some other reason listed for the loan $ need. Also, we're in a low cost of living area, so expenses are signifcantly lower than many other areas.

I'm not complaining at all. We're all gonna have to pay our loans back, so its no skin off my back. I just go back to the fact that it makes the most sense to only borrow what you really need b/c the loans and interest add up really quickly.

 

[MeowMix]

Listen, anything good is going to be time consuming and probably expensive. Don't listen to too many people here (including me). For some reassurance, the NIH offers Loan Repayments for individuals willing to serve in underserved areas.

I think you are talking about NHSC loan repayment. Indian Health Service is also an option. Most loan repayment programs will give you $20-30K for each year of service, max. You will still have to make payments on the $180,000 balance of your loans or however much you have. This loan payment is a huge amount of money when you are making $30-40K as a resident, especially if you want to have your partner stay home and take care of your kids because you're working 80 hrs/week.

Do not underestimate the effect of this big a debt on your life. It's a really big deal.

 

[Doctor Bagel]

I think you are talking about NHSC loan repayment. Indian Health Service is also an option. Most loan repayment programs will give you $20-30K for each year of service, max. You will still have to make payments on the $180,000 balance of your loans or however much you have. This loan payment is a huge amount of money when you are making $30-40K as a resident, especially if you want to have your partner stay home and take care of your kids because you're working 80 hrs/week.

Do not underestimate the effect of this big a debt on your life. It's a really big deal.

but can't you always defer your loans during residency? as for the nhsc program, i thought they paid up to $50k a year, which is not too shabby considering you're making a full physician salary on top of the repayment. in four years of service, you could knock out the bulk of your loans.

i agree that it's nothing to take lightly, but if you've got no option but to borrow lots of money, i think it will still work out.

 

[Napoleon4000]

I participated in this program at the NIH. Trust me...I know what I'm talking about. Ok. And $35k a year is not too shabby, plus the benefits of working at NIH. They offer a similar program for undergraduates. Same deal: for each year they cover your tuition you spend a year at NIH.

http://www.lrp.nih.gov/

Again, to the original poster listen with a grain of salt.
NIH Loan Repayment Programs are a vital component of our nation's efforts to attract health professionals to careers in clinical, pediatric, health disparity, or contraceptive and infertility research.

In exchange for a two or three-year (for Intramural General Research) commitment to your research career, NIH will repay up to $35,000 per year of your qualified educational debt. In addition, the NIH will make corresponding Federal tax payments for credit to your Internal Revenue Service tax account at the rate of 39% of each loan repayment to cover your increased Federal taxes. The NIH may also reimburse any increased state or local taxes and/or additional increased Federal taxes (where the Federal tax payments were not sufficient to fully cover your increased Federal taxes) that you incur as a result of your LRP benefits.

Medical school is an investment just like having a 401k. Most minors don't think too far ahead. It's ok to incurr debt, believe you will do it when you buy a car, buy a house. Unless Mom and Pop pay for everything or you are a trust fund baby.

 

[osli]

Well, obviously salary plays a large part in the equation. A family practice or IM doctor who has either relatively low or even provided malpractice might make, say, 120K/yr as a rough ballpark average. His ability to pay 50K/yr loan repayment after taxes (net ~75K/yr after taxes) is obviously greatly reduced.

A surgical or IM specialty, or derm, anest., opth. etc. providing perhaps 200K/yr gross after malpractice (~120 after taxes) leaves room for a 50K/yr loan repayment and still affords a life a little more comfortable than pb&j.

The big question, then, is what specialty we are talking about. Once a comfortable level of living has been established after residency (say, 50K/yr after taxes for living expenses), the rest can go towards loan payments. If net salary goes up just 20K/yr, that's a huge difference in the amount of loan principal that can be paid off in 10 years (or whatevr your magic number is).

Of course, FP and IM have NHSC scholarships, but are those available as "after the fact" offers? Meaning, if you find in school that you're just not going to be competitive for a high profile specialty, is it too late to take advantage of offers to serve in an underserved rural area in primary care and have some 200K knocked off of your debt?

Additionally, I know of some local hospitals and practices in rural/underserved areas that have been known to extend the equivalent of a signing bonus to a good physician for coming to that area... essentially an offer to take a lot of the debt burden away in exchange for a multi-year committment to the area.

 

[osli]

btw - I'll check out the NIH thing, it does sound interesting.

 

[Doctor Bagel]

Of course, FP and IM have NHSC scholarships, but are those available as "after the fact" offers? Meaning, if you find in school that you're just not going to be competitive for a high profile specialty, is it too late to take advantage of offers to serve in an underserved rural area in primary care and have some 200K knocked off of your debt?

Additionally, I know of some local hospitals and practices in rural/underserved areas that have been known to extend the equivalent of a signing bonus to a good physician for coming to that area... essentially an offer to take a lot of the debt burden away in exchange for a multi-year committment to the area.

the nhsc loan repayments are "after the fact." basically, you get a job in a qualifying underserved area and apply to get the loan repayment deal. you can check out the job bank at their website -- it's not too shabby if you don't mind living in a rural area. getting an nhsc scholarhsip before starting school is really competitive these days and has the downside of committing to primary care before you even start school. the loan repayment seems win-win to me.

as for rural communities and hospitals paying you, that definitely happens, too. my brother does primary care in a small town and has a deal where the city pays $20k a year towards his loans. it's worse than nhsc, but it's enough to cover your full debt load for a year.

 

[osli]

the nhsc loan repayments are "after the fact." basically, you get a job in a qualifying underserved area and apply to get the loan repayment deal. you can check out the job bank at their website -- it's not too shabby if you don't mind living in a rural area. getting an nhsc scholarhsip before starting school is really competitive these days and has the downside of committing to primary care before you even start school. the loan repayment seems win-win to me.

That is interesting. My previous browsing around the nhsc site had only turned up the "entering med school" deal where you made the committment (signed in blood, with 3X financial penalty for renigging, no less) prior to matriculating and then went on to enjoy the tuition + stipend benefits. In my case, I am from and want to live and practice in a rural area. 90% of my state is underserved, so finding a qualifying location within reasonable distance from family and friends isn't much of a problem. So any "after the fact" deal that helps with loan repayment is very appealing.

I'm interested in several specialties, but coming from a mechanical engineering background ortho is highly appealing as it suits my interests and prior knowledge best and I feel like I may have the best chance at making substantial contributions to that field. However, as competitive as it is (and med school in general), I think its wise to look at the bigger picture and have a plan to pay back whatever the number is with primary care positions as well.

 

[Doctor Bagel]

That is interesting. My previous browsing around the nhsc site had only turned up the "entering med school" deal where you made the committment (signed in blood, with 3X financial penalty for renigging, no less) prior to matriculating and then went on to enjoy the tuition + stipend benefits. In my case, I am from and want to live and practice in a rural area. 90% of my state is underserved, so finding a qualifying location within reasonable distance from family and friends isn't much of a problem. So any "after the fact" deal that helps with loan repayment is very appealing.

I'm interested in several specialties, but coming from a mechanical engineering background ortho is highly appealing as it suits my interests and prior knowledge best and I feel like I may have the best chance at making substantial contributions to that field. However, as competitive as it is (and med school in general), I think its wise to look at the bigger picture and have a plan to pay back whatever the number is with primary care positions as well.

i had the wrong data -- they pay $25k a year for two years and then have the option to renew each year for $35k. it sounds like you could potentially get all your loans paid off if you stayed in a place long enough. here's their website.

http://nhsc.bhpr.hrsa.gov/join_us/lrp.cfm

 

[MeowMix]

I participated in this program at the NIH. Trust me...I know what I'm talking about.

Sorry, I unintentionally blew off this program because of the research commitment; I don't think of it when I think of the classic "loan repayment for underserved area" programs. I'm sure it would be great for people who are interested in research work.

The point I really wanted to make is that we hear "loan repayment" and we think, great, a few years and it will all be paid off. But in some programs, it could take 10 years to pay off a $200K debt.

 

[osli]

The point I really wanted to make is that we hear "loan repayment" and we think, great, a few years and it will all be paid off. But in some programs, it could take 10 years to pay off a $200K debt.

That's not bad if you already wanted to work in that area (geographical area... you may or may not have wanted to work in that "specialty"). Or, just a couple of years knocking off 50K from a loan would make a difference as well. Anyway, good to know there are a few options if one doesn't manage to be competitive for a higher paying specialty. Most of the things I am interested in have pretty good salaries, but not all - pediatrics being the prime example.

 

[Mr. Adventure]

Wow, what an awesome thread. I'd never heard about these programs until now. Are there any other loan repayment programs that don't require military service? Thanks!!