I'm going to make HOW MUCH MONEY?!?!

[The JockDoc]

Basically this is a cross post from another forum, but I was shocked by how the numbers came out and thought it would be interesting to hear everyone's feedback on this topic. I calculated out how much I would be making after residency and this is what I found:

If I get all the loans I can and take out 56k/year for medical school (which is a common figure for many students, esp at my school), which maxes out the federal loans at 6.8% and adds on a private loan (assuming the PLUS loan) at 8.5%, I will owe 270k at graduation.

If I tack on 4 years of forbearance (usually its 3 i believe, but lets assume 4 for simplicity's sake), I will owe 360k by the time I see my first doctor paycheck. Since I will want to pay this off as quickly as possible becuase of how much higher the interest is compared to inflation, and the best performing safe stocks/mutual funds (returning 6-10% variably), it will cost $7k a month over 5 years (84k/year), or $4.2k(~50k/yr) over 10 years to pay this off.

There are plenty of docs that don't make 200k/year. But lets say I do. $200k base salary translates into 11k/month after taxes (salary.com). This means that take home salary is 4k/month ($48k/year, essentially resident's wages) if I pay it off in 5 years, or 6k/month in 10 (take home is 72k/year). These numbers don't include any payments to 401k, investments, mortgages, etc. And I'm not even eligible for a Roth IRA anymore becuase my salary is too high.

Is it true that I'm going to go through hell and back in medical school and residency to make $48-72k/year? I'm not saying that I'm becoming a doc for the money, but it would be nice to get paid well for as much training that we go through.

And I don't even have loans from undergrad. I wonder how people who do so will deal with this.

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[TMP-SMX]

You want to defer loans during interest not forbearance. As for 56k a year... Ouch. You need to figure out how to live very cheaply. How much is tuition?

Oh yeah... Marry rich.

 

[The JockDoc]

You want to defer loans during interest not forbearance. As for 56k a year... Ouch. You need to figure out how to live very cheaply. How much is tuition?

Oh yeah... Marry rich.

Tuition is 40k.

 

[bla_3x]

Man,I am going to be in the hole with the max staffords and a total of about 220K after I graduate in June. With consolidation I just plan on going the long route with th 30y and IF I have EXTRA $$$ after savings and living etc.then I will try to knock those puppies off.

Am I crazy? This seems to be what a lot of people I take to are doing.

Doing EM so the $$ is good but surely not the best.

 

[The JockDoc]

Man,I am going to be in the hole with the max staffords and a total of about 220K after I graduate in June. With consolidation I just plan on going the long route with th 30y and IF I have EXTRA $$$ after savings and living etc.then I will try to knock those puppies off.

Am I crazy? This seems to be what a lot of people I take to are doing.

Doing EM so the $$ is good but surely not the best.

That will lower monthly payments but ultimately cost more in the long run. It makes little sense to even invest your money in the stock market because it's difficult to find a guaranteed return higher than 2% (for inflation) + the interest on your 6.8%+ loan. I really think this is going to be a problem once we enter our practicing time, although the ones affected the most will be entering med school in the coming years.

If nothing changes and tuition continues to rise while physician salaries remain the same, there will be more doctors defaulting on their loans. This will cause the lenders to become more wary of lending to physicians, lowering the amounts that they are willing to risk on doctors. This will force med schools to also lower their tuition because people simply can't acquire the loan money needed to attend school. Unfortunately this sort of change is going to take a long time, and who knows what changes will be made to the medical system.

 

[mshheaddoc]

While it would be great to pay off all your debt (which is quite higher than the avg medical student) in 5-10 years, its really not going to happen. The goal of most physicians I know is usually 10-15 yr range and that is with about $200K in debt. I'd suggest you'd look in this time frame and lock your rate and think of yourself as an investment. There are other things that you will need to use your income for (family, practice, retirement, etc) and the way the fed funds rate is moving, right now your loans might end up being the cheapest loan that you have! I'd suggest you work on paying down your private loans first (and the quickest! - moonlighting during residency/fellowship often helps!) and then work on your federal loans. Don't worry about rushing it as you're loans will eventually get paid off. Its just like any other debt. Dreaming of paying it off in your first 5 years as a practicing phsyician will be impossible unless you a) marry rich b) win the lottery c) get a cush job that will pay part of your debt for you.

 

[The White Coat Investor]

Most schools won't require 56K/year in debt. I had the military pay for my school and actually ran the numbers once I was active duty. I figure I came out about $200K behind by joining the military. I think I could have come out of med school with something like 75K in loans.

 

[Faraaz23]

Yea, thats why I hear doctors saying live like a student for your first couple years out so you can either pay off your loans or put a lot into savings (this question depends on whether you can make a bigger return on your savings/investment than you pay extra interest on the loans).

 

[Doctor Bagel]

Most schools won't require 56K/year in debt. I had the military pay for my school and actually ran the numbers once I was active duty. I figure I came out about $200K behind by joining the military. I think I could have come out of med school with something like 75K in loans.

Actually lots of schools require more than that. State schools cost instate applicants about $40k/year, and private schools and oos students at state schools usually have to borrow $60k/year. If you're coming out only owing $75k, you either had money, help from parents or spouses, big scholarships or some other windfall.

I'm sort of puzzled as to why everyone is acting like $56k/year is a huge deal -- I'm assuming that's including living expenses, which puts it in the normal to slightly below normal yearly borrowing range.

Editing to say that I'm not saying $56k/year is not a huge deal financially, but it's not at all abnormal for med students.

 

[TMP-SMX]

Actually lots of schools require more than that. State schools cost instate applicants about $40k/year, and private schools and oos students at state schools usually have to borrow $60k/year. If you're coming out only owing $75k, you either had money, help from parents or spouses, big scholarships or some other windfall.

I'm sort of puzzled as to why everyone is acting like $56k/year is a huge deal -- I'm assuming that's including living expenses, which puts it in the normal to slightly below normal yearly borrowing range.

Editing to say that I'm not saying $56k/year is not a huge deal financially, but it's not at all abnormal for med students.

Well it is a huge deal and the problem is that a lot of med students are having to take out that much in loans. It is definitely not a good thing for the future, but unfortunately I do agree that it is becoming commonplace. Maybe it will force more students to reweigh their options and go for in-state medical education? I think if you come out with less than 100k of debt it's likely you had some money, lived very cheaply with parents or someone else, and went to a school with tuition that was very low.

 

[Doctor Bagel]

Well it is a huge deal and the problem is that a lot of med students are having to take out that much in loans. It is definitely not a good thing for the future, but unfortunately I do agree that it is becoming commonplace. Maybe it will force more students to reweigh their options and go for in-state medical education? I think if you come out with less than 100k of debt it's likely you had some money, lived very cheaply with parents or someone else, and went to a school with tuition that was very low.

Even instate options aren't great. At my school, if you don't have help and have instate tuition, you're still looking at borrowing around $160k total. Tuition's about $20k, and you need about $20k for living expenses. I guess what's been bugging me recently on SDN is that it seems like there's a lot of blame for the students regarding our debt levels, when it's not something that most of us have control over. You weren't doing that, but I feel like it's important to always get it out there that these debt levels are now common and not really something that we're bringing upon ourselves through poor school selection or through extravagant lifestyles.

 

[The JockDoc]

Even instate options aren't great. At my school, if you don't have help and have instate tuition, you're still looking at borrowing around $160k total. Tuition's about $20k, and you need about $20k for living expenses. I guess what's been bugging me recently on SDN is that it seems like there's a lot of blame for the students regarding our debt levels, when it's not something that most of us have control over. You weren't doing that, but I feel like it's important to always get it out there that these debt levels are now common and not really something that we're bringing upon ourselves through poor school selection or through extravagant lifestyles.

This is what I'm talking about. Tuition is increasing no matter where you go to school (not sure what the average increase is) AND interest rates have increased significantly. Yet docs aren't getting paid any more. Something's going to have to give.

It's kind of an ironic situation because the general public thinks docs are paid extremely well and shouldn't be reimbursed, yet getting paid a lot doesnt mean anything if you also owe a lot. Furthermore, because of the rich-physician public view, there is likely to be less impetus to increase salaries. Perhaps the supposedly coming physician shortage will place more demand on docs and therefore increase salary, but who knows what will happen in the end.

 

[QuantumMechanic]

Furthermore, because of the rich-physician public view, there is likely to be less impetus to increase salaries.

when was the last time a person in the general public directly paid for their physician bill? the "general public" has no influence on physician reimbursement...its the insurance companies and medicare that play the biggest roles.

go w/ the previously said advice, and pay your loans over a longer period of time (>10 yrs) while investing in your retirement via 401k or 403b and IRAs. living like a pauper (well...you know what I mean) just to pay off debt while you could also invest in higher yield routes is not the best idea.

you also mentioned that stock funds will only yield 6-10%...if you diversify well enough you will be at least on the higher end of that range in long term, if not closer to 12%.

you shouldn't go into medicine just for the money...hopefully you will find the rewards of the career worth these costs. however, I don't think things are as bad as you make it out to be. if you look at the debt as a burden it will be one, but if you look at it as an investment then it will be much more easy to swallow.

 

[The JockDoc]

when was the last time a person in the general public directly paid for their physician bill? the "general public" has no influence on physician reimbursement...its the insurance companies and medicare that play the biggest roles.

Right, the general public doesn't pay for their physician bills. But the goverment pays a lot of them (and moreso every year now) via medicare. The public really doesn't care about medicare reimbursements to physicians, and therefore there's minimal pressure for any political party to increase reimbursements.

And i'm confident that i will be able to figure things out financially, although its not as straight forward as most naive premeds might think. I'm more worried about this trend continuing so that future medical students will have to pay even higher tuition bills/loans (both medical and undergrad) than we already do.

 

[TMP-SMX]

Even instate options aren't great. At my school, if you don't have help and have instate tuition, you're still looking at borrowing around $160k total. Tuition's about $20k, and you need about $20k for living expenses. I guess what's been bugging me recently on SDN is that it seems like there's a lot of blame for the students regarding our debt levels, when it's not something that most of us have control over. You weren't doing that, but I feel like it's important to always get it out there that these debt levels are now common and not really something that we're bringing upon ourselves through poor school selection or through extravagant lifestyles.

I'm in agreement. While tuition is on the rise it is the living expenses that can be controlled to an extent. Of course it is not an option for everyone unless you live with someone else for a low rent/with parents. It also depends on the location and price of the area. In any case, you can reduce your non-living expenses by not spending much on things other than the necessities and transportation, which of course is a whole different problem with gas prices and not living near campus. As for school selection, most of us have no real choice and will go anywhere for the degree.

 

[EM_Rebuilder]

Tuition is 40k.

Ouch, shoulda come to Texas!

My whole education didnt hit 40K!