how to manage student debt

[Debt Free Doctor]

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I'm pretty new to SDN. I was told by one of my readers to come here and share my experience on how to manage student debt since I'm a mere pgy1 who's unfortunately attended the #2 most expensive medical school in the US but fortunately with a current net worth of -28k and a total student loan of $733 dollars.

I attended an Osteopathic Medical school, tuition/fees alone cost more than 230k, plus high cost of living in the area I attended college and medical school.

I did not win the lottery.

I simply was highly motivated to not be trapped in student debt and started managing/miminizing student debt even before starting medical school. I have a young child as med student, and worked 2 jobs but I think what helped me the most was staying on top of / actively managing my debt from day 1 of medical school.

I learned from Wingedscapula that website/blogs are not allowed on SDN, but he asked me to share my experience by posting/answering messages individually as he believes this a topic that needs to be addressed more on SDN, and in general.

I hope that my experiences and lessons learned could be helpful to some of you. I believe that since we have already chosen a consuming career, that demands our focus, energy, and youth; we, least of all people, should be burried alive with high interest student debt.

I hope that we all put our information and tips together and help one another to rise above these stifling financial burdens that no doctors in other countries have ever faced.

I'm willing to share what I have learned and found helpful in mimizing student debt and building positive networth. I am also excited to hear what you have done to control your debt and live a normal life 🙂

I'm currently a pgy1, preliminary medicine intern @ an university hospital. I love what I do and will love what I do next year even more, because that's my true passion. I have dreams and ambitions outside of medicine as well and would like to secure financial freedom in the next decade or two...

So that one day I can work for free and spend more time with my family. Call me a dreamer, but so far I've exceeded every financial goal I have set since 2007.

I think if I can manage to have nearly no student loan, anyone else can too.

 

[pathologyDO]

How exactly did/are you managing your debt? I must have missed that part. Working 2 jobs before going to med school? That is 2 years of physician salary and that could easily be more money to pay forward than any job you could work before med school.

I'm sorry but I'm kind of ticked off that someone would claim you can somehow "manage" your debt during medical school. From day 1 the only thing that can happen is you ADD debt each year, you cannot really do anything else... What is it that you did?

I'll give anyone a shot so I'm interested to hear what you have to say.

 

[Red Lobster Actual]

I have a young child as med student, and worked 2 jobs (not extremely high paying either)

Interesting. To be clear, during medical school you were raising a kid, held 2 jobs, and lived in the Bay Area. You matched into residency so that means you did well enough during your didactic and clinical years. Very interesting.

How did you manage to work your 2 jobs during MS3-4? Or even MS1-2 even?
How much wealth have you accumulated prior to attending medical school?
What about your significant other (SO)? You say family members didn't pay for your tuition but did your SO contribute to living expenses and helped raise your daughter?

Half of all American households make under 50k a year and you're telling me you were able to do that with 2 "not extremely high paying" jobs during medical school and that you pulled this off by "staying on top/actively managing your debt"?

Please, do tell.

 

[Red Lobster Actual]

Dang it @pathologyDO! You beat me to the punch! Hahaha

 

[pathologyDO]

Dang it @pathologyDO! You beat me to the punch! Hahaha

This has to be a joke... I find it hard to believe an SDN mod asked somebody to post something like this... Sounds like an infomercial

 

[jeffk805dent]

this thread reminds me of another person, you might have heard of him.

 

[Red Lobster Actual]

This has to be a joke... I find it hard to believe an SDN mod asked somebody to post something like this... Sounds like an infomercial

It might be, it might not be. I'm willing to give him the benefit of the doubt for now. However, the fact that the OP starts off the thread so incredibly vague is a big strike. We shall see...

 

[deleted480308]

Scapula is a woman. You were spamming the forum in multiple threads. My belief is she politely told you that you were welcome to post as a member here if you felt compelled to share your story but you had to start following our TOS

 

[pathologyDO]

It might be, it might not be. I'm willing to give him the benefit of the doubt for now. However, the fact that the OP starts off the thread so incredibly vague is a big strike. We shall see...

No, it is

 

[Debt Free Doctor]

I am an intern, on NF right now, about to pass out.

But the gist goes like this, I saved up 20k prior to med school.
lived frugally. drove my paid off car.
my Sig Other was partly absent in med school but became more involved stay at home parent with some non-substantial income in MS3-4.

most importantly i had 2 work study jobs, and had some scholarship.
i also used credit card to my advantage by delaying student loan interest, getting cash back bonuses, and riding zero interests for as long as i can before ever taking out student loans...
ie. i requested NO student loans until i absolutely have to, until I exhuasted all 0% interest credit card promotional offers (which I have alot) beause i keep shifting money around to avoid interest and make some extra cash from the bonuses.

If you do the math, you can save quite a couple 10's of 1000's from charging 45k of student loan onto credit cards and delaying the onset of 7-9% or even higher interest rate till 1.5 years later... or even later if you shift & or pay down the balance somewhat.

I was pretty excited to share my experience because my co-workers at the university encouraged me to.

i wrote many articles detailing what i did on my website but i'm NOT supposed to post my website at SDN

So sorry if I'm not giving you more details right now.
As i'm both quite tired and a little taken aback by the cynisism I've been receiving.

Best wishes to all, maybe I will copy and paste what I wrote on my website over here so that I don't have to re-write everything.

But I also heard from my mentor WCI that google will penalize me if I have similar contents at two sites...

I'll try to figure it out.
but meanwhile, please be patient and try to be open.

It's hard for me to keep being cheerful and wanting to share what I learned when I feel like I'm getting bashed.

 

[Debt Free Doctor]

This is what winged scapula wrote to my inbox

You're welcome.
I encourage you to post when and where you can as debt resolution is a exceedingly important topic for our members. .... personal details about the writer I should leave out....
Not everyone has that option and I cringe when my students, sometimes married to other medical students, tell me they are $300K or more in debt.

 

[Debt Free Doctor]

You can ask her/him to confirm. I didn't check out the gender of winged scapula.
But I don't think I need to defend myself for trying to share something positive...
Yes I was the same person who tried to post my website earlier today, because I thought that was the best use of my time, that way I don't have to re-write everything.
But Wingedscapula told me not to use my site, so I abide...

I am uncertain as to why there seems to be so much animosity when I am totally open to learn and cooperate...

Btw, English also wasn't my first language. So sorry if my syntax isn't perfect all the time.

 

[pathologyDO]

Thanks for sharing and I hope to use any useful advice you have, but the problem is that this is really something nobody has done or talked about on SDN before that I know of ... If there was a way to cut $200k of your medical school loans (besides working for several years before medical school and saving $200k), then everyone would be doing it. Nothing says gimmick like this situation right here and it's nothing against you and your altruistic intentions, it's just hard to believe.

 

[Red Lobster Actual]

But the gist goes like this, I saved up 20k prior to med school.
lived frugally. drove my paid off car.
my Sig Other was partly absent in med school but became more involved stay at home parent with some non-substantial income in MS3-4.

most importantly i had 2 work study jobs, and had a couple 1000's of scholarship.
i also used credit card to my advantage by delaying student loan interest, getting cash back bonuses, and riding zero interests for as long as i can before ever taking out student loans...
ie. i requested NO student loans until i absolutely have to, until I exhuasted all 0% interest credit card promotional offers (which I have alot) beause i keep shifting money around to avoid interest and make some extra cash from the bonuses.
If you do the math, you can save quite a couple 10's of 1000's from charging 45k of student loan onto credit cards and delaying the onset of 7-9% or even higher interest rate till 1.5 years later... or even later if you shift & or pay down the balance somewhat.

Interesting indeed...I will apologize for sounding like I am bashing you but I grew up very poor and when a stranger tells me they can get a million dollar deal (ie, medical education) without paying their pound of flesh in one form or another I get very skeptical, very cynical, very fast.

While you sleep I'm going to see if I can approximate what you did:

The tuition cost: $48,510 x 4 years = $194,040

$20k saved before medical school
$45k charged onto credit cards and used promotional offers to keep APR to 0% (but these promotions only lasts 1-2 years...)
$10k - $20k from credit card bonuses???
$5k scholarship
$64k from work study (The work study program at OP's school lists $15/hr with 20 hours per week. I was generous and calculated it at $20/hr with 20 hours/week worked for 10 months per year for 4 years)

Still leaves ~$40k unaccounted for. That's fine...Ok I can reasonably see how you pulled this off with tuition...

Which leads me to my other big question...how did you raise your family? Where did that money come from? With frugal living a family of 3 will still cost another $80k over the course of your medical school (poverty guidelines with a household of 3 is $20k/year).

Dr. Debt Free Doctor, I am really impressed you managed to graduate medical school with relatively little debt but let me give you a heads up that you must brace yourself for what's to come. Get ready to dig in and defend this day and night because the SDN Hive Mind is a cruel creature (as you already experienced tonight). The Hungarian German physician Dr. Semmelweiss once proposed to the medical community around the mid 19th century that doctors and medical students should bleach there hands prior to delivering babies. And for that proposal they threw him into a mental asylum.

 

[RangerBob]

I don't know the OP well, but I do know her through facebook and 1) believe she's being honest here and 2) think she's just trying to help.

The more physicians that graduate with little to no debt, the better.

 

[sazerac]

You avoided "student loans" by paying for tuition with credit cards?

 

[Debt Free Doctor]

I don't know the OP well, but I do know her through facebook and 1) believe she's being honest here and 2) think she's just trying to help.

The more physicians that graduate with little to no debt, the better.

Thank you so much for pointing this out. I was about the cancel the thread and just not return to SDN anymore because I was so discouraged.
I also emailed my mentor White Coat Investor, he advised me "Gotta have a thick skin if you want to be on the internet."

That's exactly what I don't have... thick skin... So I thank both the red lobster and the Pathology DO for taking a little easier on me.

I just barely finished my NF. Once I get little rest, I will try my best to anwer your questions.
But Red lobster your calcaluations are pretty close...

Thanks!

 

[Debt Free Doctor]

"but I grew up very poor and when a stranger tells me they can get a million dollar deal (ie, medical education) without paying their pound of flesh in one form or another I get very skeptical, very cynical, very fast." comment from a poster above.

By the way. I grew up really poor too.

With debt collectors at our door when I was still in Asia.
My parents who are asian totally didn't possess the most important asian virtue of $ management. So they've got is debt, no asset. That's why i'm so debt-adverse and will do anything LEGAL to avoid and minimize debt.

Growing up poor and having my parents being fincnially insolvant also pushed me to worked 7 jobs in college to send home money to home for paying bastard credit card companies who are charging my dad 30% interest rate for not reading or understanding the fine print.

Credit card companies are nothing short of my arch enemies.

So, I did all my home work to take advantage of the credit card companies to HELP ME reduce my debt and make extra side money (cash back bonuses).

I hope we can all crack the credit card companies since they have mooched off of the backs of honest working people.

And the main thing that help me manage my debt other than working through med school and being frugal was debt prevention in the first place.

I played the "cathc me if you can" chase with credit card companies by shifting my student loan balance around from one card to another, therefore nearly always avoiding the student loan interest, and never paying more than 2% and mostly riding 0% interest throughout medical school and even now.

I currently carry 30k on credit card at 0% interest. Credit card companies rewarded me HEAVILY for leaving my blaance on their cards because they hope that I would stay after the interest jumps to 20%. But guess what, they will never get to charge me interest as they had hoped, I have too many eager credit card companies who will happily take my 30k balance in a heart beat when my 0% interest is up with these current ones 🙂

I did not have lots of income, my current income is not much more than 50k of internship, with a little supplemental income from tutoring MCAT/USMLE.
But I make my income flow in circle so that I build wealth from "cash flow" rather than "cash" alone.

 

[Debt Free Doctor]

by the way, white coat investor will have one of my article as his guest post on June 17th 2015.
I can't repost this content anywhere since it technically belongs to him as soon as I submitted to him.
But that post gives a pretty detailed view of how I min debt using credit cards 🙂

 

[Mass Effect]

I was the one who called the OP out yesterday because she got the name of her degree wrong (called it doctor of osteopathy), which sent off an immediate red flag to me as anyone in DO school, let alone a recent graduate, would know it's doctor of osteopathic medicine. However, I'm willing to suggest this could have been a brain fog from nightfloat and that she usually wouldn't make such an error. Don't know if she's legit, but individual posters can decide for themselves if what she says holds merit.

 

[Jabbed]

The Hungarian German physician Dr. Semmelweiss once proposed to the medical community around the mid 19th century that doctors and medical students should bleach there hands prior to delivering babies. And for that proposal they threw him into a mental asylum.

To be fair, he was kind of a raging dick.

 

[Apoplexy__]

The 0% offer thing that OP did is legit. I'm juggling $20k right now on 0% APR cards. A couple weeks ago, an 18-month 0% APR offer expired, and I subsequently paid it off using a balance transfer to a 21-month 0% APR card. I paid a 3% fee for that transfer, but it's far better than 7.8% annually.

Unlike OP, I went ahead and took out loans anyway, even though I was charging my living expenses to the 0% APR cards to rack up the $20k debt. The loans I didn't have to use for living expenses were instead socked into a mutual fund. It has earned me ~11% annually for the past 30 months.

...It doesn't even come close to making a dent in my total debt, but I still think it's a strategic move.

 

[Winged Scapula]

This is what winged scapula wrote to my inbox

You're welcome.
I encourage you to post when and where you can as debt resolution is a exceedingly important topic for our members. .... personal details about the writer I should leave out....
Not everyone has that option and I cringe when my students, sometimes married to other medical students, tell me they are $300K or more in debt.

BTW, posting the contents of PMs is a violation of the TOS as well ((even if some info is redacted). 😉

 

[ortnakas]

I can see where this COULD work. However, if you ever slip up, or don't manage to get another 0% offer, that 19%+ APR they can hit you with will hurt.

I also wonder what it's doing to your credit rating; even $28K outstanding on credit cards is quite substantial.

I don't think you're lying, but I'm not sold this is a solid plan, or a realistic one for most people.

 

[Debt Free Doctor]

BTW, posting the contents of PMs is a violation of the TOS as well ((even if some info is redacted). 😉

Dear Winged scapula,

Thank you for letting me know. I will not do that again 🙂
I appreciate your gentle kind reminders... I will find a chance to read over all the TOS rules so I don't make mistakes again.

 

[Debt Free Doctor]

The 0% offer thing that OP did is legit. I'm juggling $20k right now on 0% APR cards. A couple weeks ago, an 18-month 0% APR offer expired, and I subsequently paid it off using a balance transfer to a 21-month 0% APR card. I paid a 3% fee for that transfer, but it's far better than 7.8% annually.

Unlike OP, I went ahead and took out loans anyway, even though I was charging my living expenses to the 0% APR cards to rack up the $20k debt. The loans I didn't have to use for living expenses were instead socked into a mutual fund. It has earned me ~11% annually for the past 30 months.

...It doesn't even come close to making a dent in my total debt, but I still think it's a strategic move.

Awesome job!!!
I wish I had done that.

I have no investment what so ever.
In hindsight I would have max out my ROTH IRA every year since the age of 14 since I worked every single year since then. Wow, I could have 16 year of ROTH IRA... that would have been incredible!

I would have used credit cards like you did to fund my retirement. What better strategy than to earn 11% pretax return on the backs of money sucking credit card companies while getting 100's and 1000's in cash back bonus doing it!

I'm so glad someone else finds the cash flow/shifting money between credit cards a great strategy.

Congrats, I'm so happy that you already got investment going.
I wish I had. this will be my first year of doing ROTH IRA as a pgy1. seems late but never too late 🙂

I hope those who read your post will be smart and start investment sooner than later. If I had read your post in earlier in my life, I would love totally invested!!!!

 

[Debt Free Doctor]

I can see where this COULD work. However, if you ever slip up, or don't manage to get another 0% offer, that 19%+ APR they can hit you with will hurt.

I also wonder what it's doing to your credit rating; even $28K outstanding on credit cards is quite substantial.

I don't think you're lying, but I'm not sold this is a solid plan, or a realistic one for most people.

Great questions.

thank you for bringing that up

my current credit is 750, total credit limit near 1/4 million

 

[Psai]

.

 

[Debt Free Doctor]

I was the one who called the OP out yesterday because she got the name of her degree wrong (called it doctor of osteopathy), which sent off an immediate red flag to me as anyone in DO school, let alone a recent graduate, would know it's doctor of osteopathic medicine. However, I'm willing to suggest this could have been a brain fog from nightfloat and that she usually wouldn't make such an error. Don't know if she's legit, but individual posters can decide for themselves if what she says holds merit.

thank you for cutting me some slack...
I have been on sleep deficit since teenage years and recently found out why I am always tired is because I have boarder line narcoplexy with 2 constriction site in my airway for OSA.
I also am not the most particular with spelling, semantics. That post was actually the front page of my website, that was written by my sister who's an editor. I asked her to write it for me because I tend to stuff too much information and sound like I'm rambling (often because I'm too enthusiastic).

I ask for continued understanding in little slips up as such. Let the numbers speak for themselves 🙂

 

[Debt Free Doctor]

By the way, thank you all for voting. Congratulations to those who voted zero debt, all income. That must be an incredibly liberating feeling to be debt free 🙂

Any sage advice to share? Are you guys med students, pgy's or attendings?

 

[pathologyDO]

I still just don't understand how you can get a credit limit adding up to a quarter million? I have 758 credit score and my discover card will only give me $1,000 credit limit. Hell, my USAA mastercard wont budge above $500.

With your strategy I would have to open 10's of cards at a time and transfer to 10's of new cards. That would be a nightmare

Also, aren't you usually required to fill out a FAFSA to determine if you need financial help in order to qualify work study?

Getting scholarships are mostly feasible only if you satisfy one of the following: have really good GPA or MCAT, are at an economic disadvantage, or your ethnicity is considered disadvantaged... Basically meaning that if you're a Caucasian, average scoring medical student, and come from a middle class family then you pretty much don't qualify for any help.

 

[Debt Free Doctor]

Again great question, let me go get my article on my website
WCI told me I get copy "excerpt" of my own article without getting penalized by Google...
I'm new to online scene and want to play by the rule.

 

[Debt Free Doctor]

Credit: If you don’t stretch, it ain’t gonna grow.

Use it or lose it; my personal take on this idiom:
stretch it and grow it.
First of all, divide your credit history into “need it” vs. “don’t need it” phases.
When you “need your credit,”
you want your absolute highest credit score, lowest revolving balance (IE credit card debt) to credit limit RATIO (total combined credit limit of all your consumer cards/accounts), and the fewest hard inquiries, and NO negative information.
In other words, you polish your credit 3-6 months PRIOR to major financial moves

 

[Debt Free Doctor]

When you “don’t need your credit,”
you get to experiment a bit… This is where each individual develops their own comfort level with “stretching” their credit.
I began with gentle credit exercise in 2007, when I also started to actively manage my debt. (Remember that high interest car loan I rushed to pay off 5 years in advance?) Progressively, I have gotten bolder and enjoyed great success. Fortune favors the brave. IE I have built a very large combined credit limit, the largest of people I know, even including those with 5x-20x more income than mine.
When I say “stretch” my credit, this doesn’t mean I keep adding to my total credit card debt. I dodge interest and shun debt. Instead of stretching my credit cards across the board (parallel stretching), I stretch my cards SERIALLY. I max out 1-2 cards, pay them off entirely when the 0% interest runs out, then I stretch the next lucky card(s) that literally “fall into my lap” from the endless credit offers I receive on weekly basis.

 

[Debt Free Doctor]

Sorry, I can only supply excerpt of the article I wrote, so I don't get dinged by google.

But the general idea is that

1. stretch and flex ur credit by maxing it
2. paying it off
3. credit card company think you are super user, so they either automatically increase your limit or happily do so when you give them a call
4. it's baby steps, and may seem slow initially to increase your total credit limit, it does pick up momentum when credit card companies start to COMPETE for your "debt."
5. once you build up a critical momentum, it just snows ball like crazy from there. I got my most recent increase of 50k within the last 1 month or so.

If I can do it, you can do it too. It takes patience and diligence but I know you've got that because you are doctor!

 

[Debt Free Doctor]

so as you can tell, with this stretch credit and rest credit cycle,
your credit score will fluctuate.
mine has gone from as high as 790 down to as low as 746 (most recent).

keep the questions coming. it will help perfect the strategy further so more people can benefit from it.

 

[Debt Free Doctor]

oops, duplicate.

 

[pathologyDO]

Sorry, I can only supply excerpt of the article I wrote, so I don't get dinged by google.

But the general idea is that

1. stretch and flex ur credit by maxing it
2. paying it off
3. credit card company think you are super user, so they either automatically increase your limit or happily do so when you give them a call
4. it's baby steps, and may seem slow initially to increase your total credit limit, it does pick up momentum when credit card companies start to COMPETE for your "debt."
5. once you build up a critical momentum, it just snows ball like crazy from there. I got my most recent increase of 50k within the last 1 month or so.

If I can do it, you can do it too. It takes patience and diligence but I know you've got that because you are doctor!

In regards to #3, how is it that after numerous attempts to raise my mastercard and discover card credit limits beyond $500 and $1,000 respectively, that I always get denied an increase, despite maxing them out often?

It's because they base your credit limit off of income, not by how often you max out your card!

According to US News your credit limits are determined by:

1. Credit Score
2. Personal Income

My credit score is 758, and yet, my credit limits are still really low because of low personal income.

 

[pathologyDO]

Also, how can you get away with not making any payments and having a maxed out credit card balance for a year, with no hit to your credit score? Im baffled, truly

 

[Debt Free Doctor]

I see that this response has caused a lot of confusion.
I apologized for that.

I definitely AM NOT telling you to make up number on your credit card application.

In my experience, there are times when they ask how much I think I will make in this year... I add up my work study job at the library, my work study job at the clinic, and my scholarship, and my tutoring income (projected) and that's the number I give them.

There are up and downs in private tutoring, I can never accurately predict how much I will make in an entire year. So I try to be optimistic without outright making up numbers from thin air.

Does this make sense?

Another note is, I think it is a fed law because there are people who really lie about their income, rack up credit card debts, then file for bankruptcy.

I pay off all my debts, and keep an immaculate credit history, and use that to my advantage to lower my over all loan burden (minimize interest, maximize cash flow, and get some bonus cash back). I don't see anything wrong with what I'm doing since each time I swiped my BOA visa card or Chase Freedom with 15k of tuition. Visa is happy to get a % of the transaction, my school is happy to let me continue my education, and I'm happy to delay the 7-9% interest and loan origination fee for another 1.5 years...

Thank you all for pointing the confusion out. I hope this clears it up 🙂

 

[Debt Free Doctor]

Also, how can you get away with not making any payments and having a maxed out credit card balance for a year, with no hit to your credit score? Im baffled, truly

maxed out credit card balance for a year definitely lowers my score... that's why my score fluctuate and it is NOT ALWAYS at 790
but that's a price I'm willing to pay to save 1000's in student loan interest and to build a more robust credit history for the long run...

 

[pathologyDO]

Good point.
What do you tell them when they ask you for your income?

In my experience, they never check my actual income and just go off what I tell them. especially they see that I'm able to charge 15k AND pay off 15k... then they don't really care about my income and asking me for this number is just a formality... at least that's how I feel

Sometimes they ask extensive questions... But I have good answers in terms of my seasonal work as a MCAT tutor.
Because my hourly rate is very high, but I don't get that many hours...
So even though my total income isn't actually ever high (always less than 30k in med school, with this year being an intern around 50k)... credit card companies like to believe that I have lots of income...

I tell them what they want to hear, does that make sense?
Just like when they sent out predatory lending offers, they tell me what I want to hear...

hope this helps without outright calling myself a lier.

I'm just gunna pretend I didn't read that

 

[Debt Free Doctor]

maxed out credit card balance for a year definitely lowers my score... that's why my score fluctuate and it is never ALWAYS at 790
but that's a price I'm willing to pay to save 1000's in student loan interest and to build a more robust credit history for the long run...

Also, the credit card payment is often 1% of the total balance...
so 150 for 15k balance. if you make your "limited" cash flow... IE charge expenses on another 0% APR card, then you'll be able to make payments no problem even if your cc balance is 45k for the year...
hope this makes sense.

idea is since we are dirt poor as medical student and pretty much so as residents, we need to use "cash flow" and not actual "cash" to grow net worth, at least away from the negative direction.

 

[Debt Free Doctor]

I'm just gunna pretend I didn't read that

I hope I didn't offend you.

 

[pathologyDO]

It makes sense but.... I feel as though lying about your income is credit fraud? Maybe I'm wrong?

 

[Ophthoseidon]

wtf is even happening in this thread? lol

 

[Winged Scapula]

It makes sense but.... I feel as though lying about your income is credit fraud? Maybe I'm wrong?

Yes it is.

Lying on a credit card application is FRAUD. If the card is from a federally insured bank, it becomes a federal crime which is punishable by hefty fines and/or imprisonment. If the OP is really doing this and recommending it, this is extremely bad advice.

I'd advise her to delete that information before a credit card company traces this back to her. Admitting fraud on-line is unwise. Your anonymity is not assured.

 

[Jabbed]

Paying off med school debt with credit cards? Taking out federal loans to finance investments?

What could ever go wrong..

 

[jeffk805dent]

this thread is full of win. Man if you posters represented all U.S. doctors, maybe the public wouldnt hate doctors so much (well except for DFD).

 

[Stagg737]

To be blunt, this doesn't sound like a plan that is viable for anyone that is already in medical school or for most people going straight from undergrad to med school. OP said you have to take baby steps to build up your line of credit. How many years would it take to get that line to a point that you could legitimately put tuition on it? I've had my cards for about 8 years now and my total line is still under 10k. That covers about half a semester's tuition for me.

You have to be financially knowledgable to pull this off. Not only do you have to understand credit cards, payments, APRs, cashback reward systems, and application processes, you have to have a strong knowledge of credit ratings and how to cancel/apply without destroying your rating, as your rating takes a hit every time you apply for a new card (and a bigger hit if you get rejected). The other thing to remember is that credit card companies are all about making money. I guarantee that no company that debt free doc has used will ever give her a card again after pulling this kind of maneuver. Additionally, I wouldn't be surprised at all to hear that other companies would reject her for a card if they saw she had a history of this. While OP may be building up good long-term credit once everything gets paid off, she is also destroying her ability to get a card from these companies and their associates.

You also have to be financially responsible to manage this. Like @ortnakas said, if you miss transferring that debt by 1 month, then you could potentially be charged 20% interest on your 100k+ student debt. That's an extra 20k for that one month because you made a mistake with timing. Also, what happens if you can't get approved for another card before that time expires? Then you're just flat out screwed.

I'm not saying this method isn't possible, as I know some people who only needed to pay for about a year that did this and several people who do something similar to this (not for payments as large as tuition though) to gain the bonus rewards. However, the risk vs. reward of this method just isn't worth it to me. There's just too many places where something disastrous can go wrong, plus the added stress of this would interfere with my studies and personal life too much for it to be personally viable. I do have to say that I am jealous of @kirbymiester for already having money invested. That would be a pretty amazing start to the future nest egg...