I knew med school wouldn't be cheap but...

[Lshapley]

If you want to do primary care, there are plenty of slots open in programs that pay off your debt for you. You may have to suck it up in the middle of nowhere for a few years, but you'll get your specialty of choice and be debt free - not that bad considering that people specializing will still be accruing interest and making $50k/year.

Not necessarily true. Check out the forum for this main program on SDN. You'll see that the program is likely on hold this year. Some of the presidential candidates (most notably, the husband of one candidate) is discussing the expansion of the program, which would help. However, this is far from a sure thing.

There are some state programs, at least I noticed there is one in Oregon. IMO, there are two main problems. Average debt is soaring for ALL college graduates (not just professional school graduates) at a rate that is not equivalent to the increases in wages. Add to this, a perverse reimbursement system for healthcare in this country and you have problems for everybody.

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[frikarika]

so I just accepted my financial aide package yesterday, I accepted 45k per year. Much less than 70k, but I still feel really uneasy. So for these primary care programs, do you have to decide before your first year...or can you do it after you've really decided what you are going to do (say after 3rd year) ?

 

[SageFrancis]

I presented this to my daughter who had acceptances from a private school and our state school. I told her I would buy a small house and give her a car in her junior year if she went to the state school.

Would you like a son?

I guess the first thing to do is figure out how to get off the waitlist at my state school.

I've found some info on NHSC on SDN, but the deadline has passed for this year. Are there other federal programs like that?

Ironically, I am most interested in primary care. I'm not in medicine for the money, I'd just like to minimize the huge load of debt that I'll be carrying around for years.

 

[parto123]

You think 20k per year, huh? IDK, but considering that paying off quickly saves money, 15 years would be 3/2 the amount of time necessary to pay off 300k. If you have debt and 150+k income, I would think 15 years is crazy high. More like 10y max, IMO, & after res., even w/ a small family. r/nr?

While fear mongering is wrong, what youre doing is just as bad. You are frighteningly unaware of how loans works. You pay something called “interest” on these loans, so 300k becomes far more than that in no time. It would be very difficult for anyone pay off 300k of loans in 10 years on under.

 

[Alfalfa Bill]

I've found some info on NHSC on SDN, but the deadline has passed for this year. Are there other federal programs like that?

The deadline for this year has not passed yet, they haven't even released the application for the upcoming academic year. This has led many to speculate they don't have funding.

 

[SageFrancis]

The deadline for this year has not passed yet, they haven't even released the application for the upcoming academic year. This has led many to speculate they don't have funding.

Oh that was for last year?
Hmm, bad news either way.

 

[yadayadadude]

Just a friendly reminder: you can't simply multiply your MS1 loans by four to arrive at your total debt. Medical school tuition increases every year, as do living expenses. Worse, interest begins accruing on the majority of your loans as soon as they are disbursed. So you accrue interest all through medical school. And, of course, it's essentially impossible to make payments on $200K+ as a resident, so your only option will be to defer (if this pathway is reinstated) or forbear ... making another 3-7+ years of interst accruing. If you borrow $70K as a MS1 and complete a 4 year residency, you may owe more than $400K at capitalization, not $280K.

 

[DulyNoted]

You think 20k per year, huh? IDK, but considering that paying off quickly saves money, 15 years would be 3/2 the amount of time necessary to pay off 300k. If you have debt and 150+k income, I would think 15 years is crazy high. More like 10y max, IMO, & after res., even w/ a small family. r/nr?

Large oversimplification here. Paying off high-interest (credit card) debt quickly saves money. Making extra payments on 2-5% consolidated educational debts would go against the advice of most financial planners. Great for peace of mind, but a terrible, terrible investment strategy. The stock market has a historical ROI of about 11%. You'd be better off investing in a no-load index mutual (even better if done within a tax-sheltering IRA). Heck, any tax-sheltered use of your income will prove a much, much better investment than paying down educational debt. Why would you pay extra when you can, with very conservative investments, compound the interest for yourself?

 

[foster033]

Large oversimplification here. Paying off high-interest (credit card) debt quickly saves money. Making extra payments on 2-5% consolidated educational debts would go against the advice of most financial planners. Great for peace of mind, but a terrible, terrible investment strategy. The stock market has a historical ROI of about 11%. You'd be better off investing in a no-load index mutual (even better if done within a tax-sheltering IRA). Heck, any tax-sheltered use of your income will prove a much, much better investment than paying down educational debt. Why would you pay extra when you can, with very conservative investments, compound the interest for yourself?

Most informed post on here. Taking the max amount of time to pay off loans will be better in the end. Just invest your money and you can make a lot more. Interest rates can usually be lowered significantly if your loans are consolidated as well. Plus, my boyfriend always says that taking the max amount of time is sort of like having extra life insurance since you don't have to pay back the loans upon death or permanent disability. Makes sense if you think about it.

 

[Jolie South]

Large oversimplification here. Paying off high-interest (credit card) debt quickly saves money. Making extra payments on 2-5% consolidated educational debts would go against the advice of most financial planners. Great for peace of mind, but a terrible, terrible investment strategy. The stock market has a historical ROI of about 11%. You'd be better off investing in a no-load index mutual (even better if done within a tax-sheltering IRA). Heck, any tax-sheltered use of your income will prove a much, much better investment than paying down educational debt. Why would you pay extra when you can, with very conservative investments, compound the interest for yourself?

Aren't the days of low interest consolidation over? I tried to consolidate my undergrad loans recently and the best I could get was an average of the current rates.

 

[FSAP]

That's why I want to get into MD/PhD program so badly.

 

[yadayadadude]

Large oversimplification here. Paying off high-interest (credit card) debt quickly saves money. Making extra payments on 2-5% consolidated educational debts would go against the advice of most financial planners. Great for peace of mind, but a terrible, terrible investment strategy. The stock market has a historical ROI of about 11%. You'd be better off investing in a no-load index mutual (even better if done within a tax-sheltering IRA). Heck, any tax-sheltered use of your income will prove a much, much better investment than paying down educational debt. Why would you pay extra when you can, with very conservative investments, compound the interest for yourself?

Uh, no. Federal student loans now have fixed interest rates: 6.8% for Staffords and 8.5% for GradPlus. There's no more consolidating at 2-5%. That's over. So the average medical student with a typical mix of Staffords and GradPlus loans is looking at a weighted interest rate of roughly 7.5%. While it's true that the stock market does have a historic return of 10% or so, that figure doesn't include fees that most investors pay (which can be 1-2%); neither does it include taxes, which will eat up another 2-3% (unless your investments are exclusively in tax advantaged vehicles -- which are subject to low annual maximum savings). You can see that achieving a return that will beat the interest rate on your federal student loans is a non-trivial task.

Nonetheless, this advice finds its way into every single SDN discussion of debt repayment ...

 

[bodonid]

While fear mongering is wrong, what youre doing is just as bad. You are frighteningly unaware of how loans works. You pay something called “interest” on these loans, so 300k becomes far more than that in no time. It would be very difficult for anyone pay off 300k of loans in 10 years on under.

but we make alot of money

we are poor from birth until after res, and if we keep that up after without buying a new mercedes the debt will be gone in less than 10yrs.

I know plenty of med students who as a basic instinct try to fend off the idea that we make money. But we are all med students here, no reason to lie.

i hate to generalize, but there is a hell of a lot of fearmongering on SDN. Teachers make enough to live, and most practicing docs I know aren't still paying off debt.

 

[Live4Life]

Uh, no. Federal student loans now have fixed interest rates: 6.8% for Staffords and 8.5% for GradPlus. There's no more consolidating at 2-5%. That's over. So the average medical student with a typical mix of Staffords and GradPlus loans is looking at a weighted interest rate of roughly 7.5%. While it's true that the stock market does have a historic return of 10% or so, that figure doesn't include fees that most investors pay (which can be 1-2%); neither does it include taxes, which will eat up another 2-3% (unless your investments are exclusively in tax advantaged vehicles -- which are subject to low annual maximum savings). You can see that achieving a return that will beat the interest rate on your federal student loans is a non-trivial task.

This is quite an easy task if your switching to medicine from finance. Anyone who has spent even one year working in finance as an analyst can easily earn 10% annualized returns over five years. Those that have the knowledge can easily avoid using funds with 1-2% expense ratios by buying individual stocks or low cost/low expense ratio ETFs or index funds (For those that don't have investing expertise, check out Vanguard, they are the founder of the low cost index fund). Taxes can be minimized by maxing out a 401k ($15,500 per year + $5,000 if you are 50+) and a traditional IRA ($5,000 per year + $1,000 if you are 50+) (I'm not including a Roth IRA because most physicians, except residents, will make too much to contribute to a Roth IRA - Plus you can only contribute a max of the aforementioned amount to an IRA per year which means you can contribute to both types but no more than the limit) and through hedging by selling specific stocks which have declined in value in order to realize short-term loses in specific years where you have had significant gains. Also, by holding stocks or funds for longer than a year you can be taxed at long-term capital gains tax rate which is significantly less than if taxed at your normal tax rate. So even if loan rates are 6.8%, if you have as much principle in your savings as you have in loans and are able to earn 10% on your investable accounts, you are still gaining 3.2% gains. However, this doesn't hold true if say you have $400k in debt and $30k in savings because even if you earn 10% annualized returns on your investments, it will not offset the amount of interest earned on your debt.

 

[yadayadadude]

This is quite an easy task if your switching to medicine from finance. Anyone who has spent even one year working in finance as an analyst can easily earn 10% annualized returns over five years. Those that have the knowledge can easily avoid using funds with 1-2% expense ratios by buying individual stocks or low cost/low expense ratio ETFs or index funds (For those that don't have investing expertise, check out Vanguard, they are the founder of the low cost index fund). Taxes can be minimized by maxing out a 401k ($15,500 per year + $5,000 if you are 50+) and a traditional IRA ($5,000 per year + $1,000 if you are 50+) (I'm not including a Roth IRA because most physicians, except residents, will make too much to contribute to a Roth IRA - Plus you can only contribute a max of the aforementioned amount to an IRA per year which means you can contribute to both types but no more than the limit) and through hedging by selling specific stocks which have declined in value in order to realize short-term loses in specific years where you have had significant gains. Also, by holding stocks or funds for longer than a year you can be taxed at long-term capital gains tax rate which is significantly less than if taxed at your normal tax rate. So even if loan rates are 6.8%, if you have as much principle in your savings as you have in loans and are able to earn 10% on your investable accounts, you are still gaining 3.2% gains. However, this doesn't hold true if say you have $400k in debt and $30k in savings because even if you earn 10% annualized returns on your investments, it will not offset the amount of interest earned on your debt.

Well, sure. You don't have to have worked in finance to figure out that you should a) invest via your 401(k) and IRA b) take advantage of low cost funds like index funds. My point was simply that, even using these strategies, you can't expect to make more than a 2-3 point spread on your student loans. This is hardly going to make you rich ... given the risk inherent in student loans (they're not dischargable in bankruptcy, for example), I think it's smart to pay them off quickly.

 

[Live4Life]

Well, sure. You don't have to have worked in finance to figure out that you should a) invest via your 401(k) and IRA b) take advantage of low cost funds like index funds. My point was simply that, even using these strategies, you can't expect to make more than a 2-3 point spread on your student loans. This is hardly going to make you rich ... given the risk inherent in student loans (they're not dischargable in bankruptcy, for example), I think it's smart to pay them off quickly.

What's the inherent risk with student loans? If you die, they are forgiven. Whatever you do, don't have your significant other co-sign a consolidation loan so they don't end up being stuck paying for your loan if something were to happen to you. It's one of the few types of loans that financial planners recommended that couples keep separate.

A 2-3% can make a HUGE difference once you take compounding into account over a 30 year period, especially once you break the million dollar mark. Just think, once you reach $1 million, a 1% is $10k, so that 2-3 point spread equates to $20-30k per year. Even if you have a net worth of $1 million, an extra $20-30k a year is not something to sneeze at. Trying tell a veteran fund manager that a 2-3% difference won't make you rich and see what they say.

For example, if you start with $1,000,000 and earn 6.8% interest on it, after 30 years you will have $7,196,769. If you start with that same $1,000,000 and earn 10% interest on it, after 30 years you will have $17,449,402. Now try telling me that a 2-3% difference is not going to make you rich. Is your $17,449,402 going to pay of your $7,196,769 loan? You bet! Is it going to leave you with some spending money? Enough to let you live pretty confortably to say the least.

 

[87138]

i hate to generalize, but there is a hell of a lot of fearmongering on SDN. Teachers make enough to live, and most practicing docs I know aren't still paying off debt.

Most docs payed a LOT less when they were in school. I know two docs in their very early 40s who paid in the range of $13,000 for OUT OF STATE schools. It's a little different paying that back in loans vs. $72,000 a year.

 

[Lshapley]

Teachers make enough to live, and most practicing docs I know aren't still paying off debt.

That is the thing, the paradigm has shifted. Tuition has increased exponentially since those practicing docs you know went to medical school. We will be facing a debt load that makes their debt load look like a walk in a park. Don't forget, most of us we be bringing loan debt from undergrad (or postbac in my case) to the table as well. When I went to undergrad from 1992-96, my student loan debt upon graduation was around 25k. Ten years in the future, with increases in tuition that all colleges have experienced, that debt would have been closer to 50k at least. Same is true for medical school. Docs a decade ago had about 125k in debt. We are looking at 250k. The totals are 150k then (med + undergrad) versus 300k now. Income has not increased two fold over a decade. When we graduate we will be paying off twice the amount of debt as the doctors from a decade ago. That is no easy task.

 

[Lshapley]

Well, sure. You don't have to have worked in finance to figure out that you should a) invest via your 401(k) and IRA b) take advantage of low cost funds like index funds. My point was simply that, even using these strategies, you can't expect to make more than a 2-3 point spread on your student loans. This is hardly going to make you rich ... given the risk inherent in student loans (they're not dischargable in bankruptcy, for example), I think it's smart to pay them off quickly.

I have invested some money last year in an index fund for my father-in-law. It is the only fund I invested for him that lost money (I diversified, of course). There is no sure thing with investing. The market has good years and it has bad years. It is misleading to look at the markets annual return over a 20-year period because the methods of trading have changed drastically. In the 80's, there were no day traders and there were exorbitant fees associated with making a simple trade. Today, your grandma can get on the computer and buy some stock. Past performance is not a guarantee of future returns. I have no problem with investing, but assuming that this will be your bread and butter is a risky proposition.

 

[flip26]

Well, sure. You don't have to have worked in finance to figure out that you should a) invest via your 401(k) and IRA b) take advantage of low cost funds like index funds. My point was simply that, even using these strategies, you can't expect to make more than a 2-3 point spread on your student loans. This is hardly going to make you rich ... given the risk inherent in student loans (they're not dischargable in bankruptcy, for example), I think it's smart to pay them off quickly.

I think the "smart" thing to do is to minimize student loan debt in the first place by choosing the lowest cost medical school, assuming one has the option. So many of these discussions deal with students attempting to justify the added burden of $100k to $200k of debt to attend their "dream" school over an in-state public option.

I have shadowed docs in their 40s and 50s who told me they left med school and residency with no or very little debt (say $15k). They are dumbfounded by the debt that med students today are taking on in an era of falling physician salaries and rising tuitions and student loan interest rates.

 

[midn]

Gas wasn't freakin $3.50 5 years ago....

You don't even have a car...

 

[45408]

but we make alot of money

we are poor from birth until after res, and if we keep that up after without buying a new mercedes the debt will be gone in less than 10yrs.

Teachers make enough to live, and most practicing docs I know aren't still paying off debt.

You say this now....let's see how you feel after residency.


Teachers aren't as poorly paid as many people make them out to be.

 

[flip26]

You say this now....let's see how you feel after residency.


Teachers aren't as poorly paid as many people make them out to be.

Not too many teachers with $300k in student debt, either...

 

[sosarah]

Crunch your personal numbers. $70k is probably the max allowed COA, but if you are a conservative spender, you can probably cut off a few thousand a year, and over four years, and including interests, those few thousands really add up. You don't have to take the full 70k. Also, to the person who said 15+ years to pay back, I'm pretty sure federal loans only allow 10 years.

 

[bodonid]

Most docs payed a LOT less when they were in school. I know two docs in their very early 40s who paid in the range of $13,000 for OUT OF STATE schools. It's a little different paying that back in loans vs. $72,000 a year.

touche