In-Depth Financial Analysis of HPSP

[The White Coat Investor]

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[deuist]

Desperado, you bring up an excellent point: the financial benefit of HPSP is largely based upon specialty. As others have noted, HPSP only makes sense for primary care docs. For all other specialties, you've got to have a real sense of duty to the country to take the scholarship. Now if the government would allocate the $30,000 a year that's been appropriated for students, then the numbers might be more in favor of HPSP.

 

[NavyFP]

There is a frequent debate on this forum regarding just how much financial benefit the average medical student would get from going to school on the military's penny. The important principles to remember are that the scholarship becomes a better deal (financially speaking only, of course) as interest rates go up, as expected attending level pay goes down, and as cost of medical school goes up.

Many pre-meds are not very good at evaluating this decision (I certainly wasn't) because of the complexities of different loan rates, inflation, resident pay levels, and attending pay levels both inside and outside the military. I wanted to post something I put together which demonstrates just why the scholarship is often not a good deal. I tried to use generic, but realistic assumptions (I used my specialty, the biggest program in my branch of service in my specialty, my actual civilian hospital residency salaries, and the average medical school tuition ($25,000/year.) I used 2006 pay info and adjusted ALL numbers for inflation. I also used 2006 loan rates, which of course, are subject to change. I ignored tax benefits of shopping at AAFES (which I feel are pretty minimal anyway) and the benefit of student loan interest deductions on taxes. These likely offset each other somewhat anyway.

Tuition and Fees: $25,000 x 4 years= $100,000
Living Expenses $2000/month
Loan Rate for Stafford Loans 6.8%-3% inflation adjustment=3.8%
Maximum Subsidized Loan $8500/year=$34,000 total
Maximum Unsubsidized Stafford Loan $10,000/year=$40,000 total
Private Loan Rate 9.55%-3% inflation adjustment=6.55%
All loans capitalized during med school and residency
Married, no kids, $20,000 worth of deductions as attending, standard deduction as resident, no moonlighting, no additional income
Pay Assumptions (Civilian Residency (U of Arizona)+ Civilian Salary vs Military (Wilford Hall EM) Residency + Military Salary), assumes Emergency medicine as specialty

Military Resident Salary $56,015, $59815, $64,981 (After tax $52394, $55624, $60,015)
Military Attending Salary $115,000 (after tax $103,202)
Civilian Residency Salary $40,700, $43,000, $45,600 (After tax $36,953, $38908, $41118)
Civilian Attending Salary $215,431 (after tax $171,718)

Total After-Tax Salary Paid to Military Doctor after 4 year commitment $580,841
Total After-Tax Salary Paid to Civilian Doctor after 4 year commitment $803851
Indebtedness of Military Doctor after Residency $46,159.27
Indebtedness of Civilian Doctor after Residency $202976.69
Cost of Medical School if paid off within 4 years for Military Doctor $53957.36
Cost of Medical School if paid off within 4 years for Civilian Doctor 230979.35
Advantage of taking loans over joining military after 4 year commitment: $45,988.01

It should be noted that if interest rates change significantly, or if you choose a different specialty, or if you go to a medical school which is much more or much less costly than average, these numbers can change for you. (They are certainly much worse for me personally, because I got not only low civilian residency pay but low military attending pay and interest rates were at all time lows (-1% real rate) when I got out of medical school.)

Nevertheless, the point remains that the military is unlikely to be a good financial deal, without factoring in the real negatives of the scholarship (loss of options in residency training, deployments, and loss of autonomy as an attending)

If anyone is interested, I figure I came out $188,158 behind by taking the HPSP scholarship. Easily the worst financial decision I have ever made. It should be noted that if I had stuck with my original plan of Family Practice (and thus done a military residency) and if interest rates had been what they were when I started medical school, I would have come out $30K ahead by taking the HPSP scholarship. Certainly not enough money to make up for the military match, deployments, and not being able to walk away from a job you dislike and living in a location you dislike.

After stipulating the basic numbers, I am not clear on a couple of things.

1) How did you get 46K in debt for the military side? Assuming they borrow the additional 700/month (8400/yr) and they took that as a subsidized Stafford which would not accrue interest until 5 years after graduation (2year residency deferral/ 3 year military deferral), that person would have only 34K in debt.(rounded)

2) Assuming 25K for tuition/fees and 24K for living, after 4 years that would be 196K in priciple. Is there only going to be 7K of interest. I didn't do the math, but it seems low.

3) I also don't see all the pesky books/equip and such that are reimbursed.

Not disputing your numbers, just wanted some clarification.

 

[IgD]

What medical school offers tuition for $25k? The school I graduated from in 2000 was $35k for tuition.

Another item worth mentioning is the VA Home Loan. You can use this to make money off of real estate. You can also use the GI bill to fund a fellowship when you get out.

 

[deuist]

Now that I look closer, I also don't see malpractice insurance and health insurance added to the total compensation package.

 

[orbitsurgMD]

Now that I look closer, I also don't see malpractice insurance and health insurance added to the total compensation package.

Those are reasonably counted as business or practice expenses.

 

[The White Coat Investor]

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[delicatefade]

When you say you can fund a fellowship with the GI bill what exactly does that mean???

 

[R-Me-Doc]

When you say you can fund a fellowship with the GI bill what exactly does that mean???

You can collect GI bill benefits (approx $1100/month) while doing a civilian fellowship after you are out of the military. This is because the GI bill will fund "job training" programs, and fellowships and residencies fall into this category.

In order to do this you need to be enrolled in the GI Bill program while on active duty, since you have to pay in a minimal amount via payroll deductions while active. I think there are a couple of specific threads here on this issue, if you search the archives.

Note that people who have graduated from the service academies (West Point, AF, Annapolis) and ROTC programs are NOT eligible for GI bill benefits. But USUHS and HPSP grads are. Go figure. Can you say "LOOPHOLE"?????

X-RMD happily collecting my $1100/month

 

[delicatefade]

Sweet. I'm definitely going to take advantage of this after my commitment (there's no way I'm doing a fellowship during my commitment and extending my obligation). Good to know that you have to opt in during active duty.

 

[changhe]

But USUHS and HPSP grads are. Go figure. Can you say "LOOPHOLE"?????

Actually, USUHS grads are not eligible for the GI bill.

Interesting thread though. I'm curious (but not curious enough to spend any of my vacation time actually doing the math) what a similar analysis of the numbers would say for a USU grad.

 

[The White Coat Investor]

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[Bubblehead-to-MD]

Actually, USUHS grads are not eligible for the GI bill.

When did that change? My wife is a USU grad, and I recall her classmates being eligible for the GI bill - most enrolled in the program during their officer indoctrination period.

 

[Bubblehead-to-MD]

I must be way off, because I always thought that the GI bill was to go back to college after you get out of the military? What did the USU students do with it?

You can use the GI Bill for a variety of educational programs. Enlisted personnel will typically use it when pursuing an undergraduate degree (this is what the GI Bill is typically associated with). However, anyone that is eligible to receive GI Bill benefits can also apply them towards graduate education and professional training programs (flight training, fellowship, etc.)

Check out this link:

http://www.gibill.va.gov/

 

[runningmom]

When did that change? My wife is a USU grad, and I recall her classmates being eligible for the GI bill - most enrolled in the program during their officer indoctrination period.

I must be way off, because I always thought that the GI bill was to go back to college after you get out of the military? What did the USU students do with it?

FWIW - we were all offered the GI Bill at OCS in Pensacola back in 1996. That's how I got it. Everyone there was post college - and most signed up for it. Not sure what changes between OCS and OIS though.

It actually cheers me up considerably to see that it might be used for a fellowship since I'd hate to lose it.

 

[deegs]

Interesting thread though. I'm curious (but not curious enough to spend any of my vacation time actually doing the math) what a similar analysis of the numbers would say for a USU grad.

I ran the numbers before I signed on the dotted line. With my prior service, I came out ahead with the military, but I'm not sure if it would be the same for a raw recruit. The basic principle here is a dollar today is worth two tomorrow. Rather than racking up massive debt, I make $61K a year as a med student. If I was graduating this spring, I would make $85K as an intern! I will make 0-4 my second year of residency. Granted, I will make significantly less the seven years I am board certified, but the money that the military gave me 10 years previous can offset that. And when I retire at the end of my obligation, I keep that for the rest of my life.

I'm not sure it works out this way for most people, but it did for me.

dreamin' of that happy day in 15.5 years...
-deegs

 

[changhe]

Wow, that is impressive. 85K as an intern? Is that if you stay in the DC area? Because I'm almost positive I won't be making that in Texas, and I don't think the difference is solely prior service.

 

[Bubblehead-to-MD]

I ran the numbers before I signed on the dotted line. With my prior service, I came out ahead with the military, but I'm not sure if it would be the same for a raw recruit. The basic principle here is a dollar today is worth two tomorrow. Rather than racking up massive debt, I make $61K a year as a med student. If I was graduating this spring, I would make $85K as an intern! I will make 0-4 my second year of residency. Granted, I will make significantly less the seven years I am board certified, but the money that the military gave me 10 years previous can offset that. And when I retire at the end of my obligation, I keep that for the rest of my life.

I'm not sure it works out this way for most people, but it did for me.

dreamin' of that happy day in 15.5 years...
-deegs

I did a similar (albeit crude) analysis of my situation, and with my ten years of prior service, attending USUHS would put me roughly $400k ahead at age 65. This was assuming a civilian attending physician salary of $300k (not accounting for malpractice). Now, as that figure goes down, the military benefit becomes more significant; as that figure goes up, the opposite occurs. I did not account for variation in student loan interest or inflation.

So, to repeat what has already been stated: If I were to choose a primary care specialty, I would come out way ahead in the military. If I were to choose something like Anesthesiology, Radiology, or Ortho (my current interests), I could potentially miss out on some $$$, depending on what kind of salary I could make in the civilian sector.

Please bear in mind that this scenario only works out this way because of the fact that I have 10 years of active service, which will boost my med school and residency pay quite a bit. Another factor for me to consider is that by the time I complete my residency and 7 year commitment, I will have 21 years of active duty service towards retirement. With the 4 years of USUHS added, I will have 25 years of credited service towards retirement pay, and therefore will receive 62.5% of my base pay.

 

[NavyFP]

Then obviously this would work out better for you, financially at least, because your tuition was more expensive than the AVERAGE figure which is what I used in this exercise. The VA Home Loan ain't all that, and I wouldn't expect to be making much in real estate these days. I had the VA home loan available to me and chose to get a conventional because it was a much better deal for anyone making any kind of a down payment. The GI Bill is a nice benefit for anyone going back to get a fellowship. What you must keep in mind though is the loss of income that occured because your fellowship had to be delayed in the first place. This number is likely to be much larger than the GI Bill benefits. (I'm not actually even positive if you can use the GI bill for a fellowship or not.)

Deuist...malpractice and health insurance are included. The figures used for military and civilian resident and attending salaries all include health insurance and malpractice insurance.

NavyFP...I corrected for the errors noted in your #s 1-2 (you pointed them out about the time I realized them while explaining my results to my wife) Error three I have chosen to ignore as in my experience, my civilian classmates in med school didn't spend anywhere near what I spent on behalf of the military for ophthalmoscopes and brand new books. Plus, many of the books I actually used the military didn't reimburse. At any rate, add a couple of grand for books and supplies if you want, it doesn't change the analysis signficantly.

Fair enough.

 

[texdrake]

Tuition and Fees: $25,000 x 4 years= $100,000
Living Expenses $2000/month
Loan Rate for Stafford Loans 6.8%-3% inflation adjustment=3.8%
Maximum Subsidized Loan $8500/year=$34,000 total
Maximum Unsubsidized Stafford Loan $10,000/year=$40,000 total
Private Loan Rate 9.55%-3% inflation adjustment=6.55%
All loans capitalized during med school and residency
Married, no kids, $20,000 worth of deductions as attending, standard deduction as resident, no moonlighting, no additional income
Pay Assumptions (Civilian Residency (U of Arizona)+ Civilian Salary vs Military (Wilford Hall EM) Residency + Military Salary), assumes Emergency medicine as specialty

Military Resident Salary $56,015, $59815, $64,981 (After tax $52394, $55624, $60,015)
Military Attending Salary $115,000 (after tax $103,202)
Civilian Residency Salary $40,700, $43,000, $45,600 (After tax $36,953, $38908, $41118)
Civilian Attending Salary $215,431 (after tax $171,718)

Total After-Tax Salary Paid to Military Doctor after 4 year commitment $580,841
Total After-Tax Salary Paid to Civilian Doctor after 4 year commitment $803851
Cost of Medical School if paid off within 4 years for Military Doctor $38080
Cost of Medical School if paid off within 4 years for Civilian Doctor $252,210
Advantage of taking loans over joining military after 4 year commitment: $8,880
It should be noted that if interest rates change significantly, or if you choose a different specialty, or if you go to a medical school which is much more or much less costly than average, these numbers can change for you.

(They are certainly much worse for me personally, because I got not only low civilian residency pay but low military attending pay and interest rates were at all time lows (-1% real rate) when I got out of medical school.)

A few problems in your math.

1. Tuition and fees: Most non-state schools are well over 25k. My school cost closer to 30K, some of my friends 35K.

2. Maximum Unsubsidized Stafford Loan is actually 30,000 for med school not 10,000. The maximum government aid you can receive is 38,500

3. Your civilian residency pay numbers are actually on the high side (larger market side). You military numbers are clearly a lower market (like Texas or Georgia) whereas D/C, Seattle, California, and Hawaii are much better paying.

4. The average starting salary in civilian side is probably a little high. I am assuming you are using Internal Medicine or Family Medicine as your gauge based on the military salary rate. Starting Family and Internists in private sector make closer to 150k and work up from there.

 

[The White Coat Investor]

[

 

[deuist]

It would be fun to make a calculator where one could put in his specific circumstances and find out how he did. If anyone knows how to do that I can provide the calculations and data.

I found an extensive pay calculator from the Navy. I can't help you on the civilian comparison.

 

[USAFdoc]

all I can say is as a civilian I am making 50% more money and working 50% less hours and have 50% more job satisfaction, and 50% less admin hassles and 100% less headaches from my own admin.

I am not an econ major but whatever those numbers add up to, thank God I am no longer in a USAF primary care clinic.

 

[Galo]

all I can say is as a civilian I am making 50% more money and working 50% less hours and have 50% more job satisfaction, and 50% less admin hassles and 100% less headaches from my own admin.

I am not an econ major but whatever those numbers add up to, thank God I am no longer in a USAF primary care clinic.

Certainly it has been said numerous times here that doing it for the money only is absolutely the worst decision you can make.

No matter how you add it up, whether you come up ahead a few thousand dollars as a ped/fp, you will NEVER be able to recover the potential loss of a quality education, and the ability to provide quality care to your patients. Even on the list of complaints that came out from the lecture I have posted on this board from the surgeons, (a group who gets totally raped money wise), money was way down the list of reasons we are getting out. I don't think it can be emphasized enough how crappy a system you are going into, risking your education, and giving up certain rights, if you are trying to squeeze out a few thousand dollars of comfort now. Believe me, you will pay it in grief you cannot imagine a thousand times more. It is just not worth it!!

 

[Mirror Form]

I agree that money is not a good reason to do the hpsp scholarship. But when doing a finacial anaylysis, keep in mind that there is something to be said for the time when you receive the money. For a simplistic example, would you rather make 50k per year for 4 years, or make 10k for four years and then get 160k at the end?

I'm rolling in cash right now as a military resident (it helps starting out with four years toward my pay scale, avoiding state tax, getting a high bah, etc). Yeah, I'll definitley come out behind overall. But having the money spread out a little more is nice. It lets me enjoy the small amount of free time I have left in my twenties.

 

[FliteSurgn]

I'm embarassed to say that I took the scholarship when I started med school in 1993. The reason I'm embarassed...the tuition at my med school was $8000/yr. I was an idiot! I had worked full-time during my 4 years in undergrad and came through with less than $2000 in student loans. I figured there was no way I could work like that to fund med school so I came to the conclusion that HPSP would satisfy my aversion to debt. Little did I know, that HPSP scholarship brought me a whole new kind of debt!

 

[deegs]

Wow, that is impressive. 85K as an intern? Is that if you stay in the DC area? Because I'm almost positive I won't be making that in Texas, and I don't think the difference is solely prior service.

Yes, it was crudely done based on DC area. Its so far in the future that I didn't bother to look up the zip codes for any of the other places.

Difference in BAH (w/ depds) btw San Antonio and DC: $979/mo ($11748/yr)

Difference in Base Pay btw 0 years and 6+ years: $1310/mo ($15720/yr)

 

[The White Coat Investor]

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[met19]

You might be embarrassed, but you're not alone!

i think i'll join the embarrassed club...currently MSIV who is deferred for 4 years of EM training, but probably should not have taken the scholarship. The only reason I decided to was that I had a ton of loans from undergrad and grad school and was thinking IM or Peds. Boy how things have changed. Still gotta live with the decision, but I advise pre-meds to really think prior to signing on the dotted line....

Desperado- you plan on the 4 year payback than seperating? Any idea how hard it would be coming from the military to look for a EM job vs the new grads?

 

[The White Coat Investor]

[

 

[met19]

Of course, me and 19/20 of the people like me will separate. I don't anticipate any difficulty in the job hunt because I'll be moonlighting in the private world throughout my military time. Without that, I think it'll be a bit harder. I anticipate being hired preferentially over new grads, but maybe not over someone who has been working in a civilian ED for 4 years.

Thanks for the insight. I will hopefully will be back in NYC after my time in service.

 

[p9142]

I did a similar (albeit crude) analysis of my situation, and with my ten years of prior service, attending USUHS would put me roughly $400k ahead at age 65. This was assuming a civilian attending physician salary of $300k (not accounting for malpractice). Now, as that figure goes down, the military benefit becomes more significant; as that figure goes up, the opposite occurs. I did not account for variation in student loan interest or inflation.

So, to repeat what has already been stated: If I were to choose a primary care specialty, I would come out way ahead in the military. If I were to choose something like Anesthesiology, Radiology, or Ortho (my current interests), I could potentially miss out on some $$$, depending on what kind of salary I could make in the civilian sector.

Please bear in mind that this scenario only works out this way because of the fact that I have 10 years of active service, which will boost my med school and residency pay quite a bit. Another factor for me to consider is that by the time I complete my residency and 7 year commitment, I will have 21 years of active duty service towards retirement. With the 4 years of USUHS added, I will have 25 years of credited service towards retirement pay, and therefore will receive 62.5% of my base pay.

Your mdapps says you are going to Feinberg. Did you recently change your mind?

 

[Bubblehead-to-MD]

Your mdapps says you are going to Feinberg. Did you recently change your mind?

I just updated that. While I did fall in love with Northwestern during my interview day, I still have to consider where the Navy ends up sending my wife after she finishes her residency in June. With that in mind, this whole thing is still up in the air until the February-March timeframe!

 

[georgia_md]

When did that change? My wife is a USU grad, and I recall her classmates being eligible for the GI bill - most enrolled in the program during their officer indoctrination period.

Did she serve prior to USU? Because I remember reading somewhere that participants in Officer producing programs (i.e. west point, ROTC) were not eligible for the GI Bill. And since USU produces officers ... I could be wrong

 

[MrLebowski]

Another thing to take into account, with the current bearness of the market, is that putting HPSP's $20,000 sign-on bonus into a low-mid risk mutual fund at age 21-25 and letting it sit there for 35 years will almost certainly put you well ahead of the guys who go the civilian route and have to pay down $300,000 of debt (plus interest accrued) before they will have enough room in their budget to start investing (I would wager to guess about 7-ish years into practice). In addition, if you can manage to invest some of the monthy stipend during the four years, this will also balloon itself over the years.

The market has always shown growth over 30 year periods, and substantial growth at that. Having your money in a managed fund can only make it better.

Money today is better than money tomorrow, so long as you don't go buy something stupid like a car with it.

 

[The White Coat Investor]

The market has always shown growth over 30 year periods, and substantial growth at that. Having your money in a managed fund can only make it better.

I just wanted to join you in welcoming this thread back from the dead.

Also to point out that managed funds don't outperform index funds most of the time.

And to point out that only a fool waits 7 years after residency to start investing. I started as an intern.

 

[Perrotfish]

I think it is at lesat a resonable point that most analyses of how bad a financial deal military medicine is assume payback over a 4 year period post residency, which is only really possible if you're either a highly paid specialty or don't have a family. If you assume you're going to be paying down your 300-500K in loans over a much longer period of time, for example over 20-30 years, HPSP become a MUCH better deal by comparison.

 

[notdeadyet]

I think it is at lesat a resonable point that most analyses of how bad a financial deal military medicine is assume payback over a 4 year period post residency, which is only really possible if you're either a highly paid specialty or don't have a family. If you assume you're going to be paying down your 300-500K in loans over a much longer period of time, for example over 20-30 years, HPSP become a MUCH better deal by comparison.

Good point. This is why everyone needs to do their own spreadsheet and figure out their goals.

Paying back $300K in loans over four years comes out to over $75K/year four four years. If you're in family practice, this would be a hardship bordering on unrealistic. HPSP is a much better deal. If you're in anesthesia, you'd be able to pay back in 4 years and still end up having a better take-home paycheck than a military anesthesiologist.

Paying back $300K in loans over 30 years, and the interest associated with that makes HPSP a better deal unless you're in one of the higher paying specialties. Hands down.

Endgame? HPSP pays for itself if you take out huge loans and go into a low paying field. HPSP pays for itself if you have moderate loans and go into a low-mid paying field and take 30 years to pay. HPSP almost never pays for itself if you go the four year GMO route.

To each their own spreadsheets. Folks who visualize paying off their loans in four years may have a wakeup call. But anyone who takes 30 years is doing so by choice. And probably a bad one.

 

[crazybrancato]

To each their own spreadsheets. Folks who visualize paying off their loans in four years may have a wakeup call. But anyone who takes 30 years is doing so by choice. And probably a bad one.

Ok, your numbers make good sense . . .you're doing a good job of proving that people shouldn't be doing it for the the money (not necessarily at least). you should be doing it for the desire the serve (at least in part).

are you still a med student, as your 'Status' indicates? I assume you're an HPSPer? it strikes me as really odd that you did all this math now, and not 3 years ago??? what gives???

 

[notdeadyet]

Ok, your numbers make good sense . . .you're doing a good job of proving that people shouldn't be doing it for the the money (not necessarily at least).

HPSP is a financially solid move for some people. But not for nearly as many as folks seem to think. A lot of debt-adverse med students hear "free tuition" and sign up before realy doing the math.

Bottom line is that everyone needs to run their own numbers. Many people will be suprised to find that for a lot of medical careers, HPSP doesn't pay for itself.

you should be doing it for the desire the serve (at least in part).

Absolutely. For HPSP, NHSC, or any other service scholarship, you better be on board with the mission or else the sacrifices you have to make will make the obligation a bad life move, regardless of finances.

are you still a med student, as your 'Status' indicates? I assume you're an HPSPer? it strikes me as really odd that you did all this math now, and not 3 years ago??? what gives???

I'm still a med student. I came close to signing up for HPSP, but opted not after looking at residency training possibilities and running my own numbers. For my personal circumstances (moderate priced med school, not going into family practice), HPSP was a really bad deal financially. I'm currenlty in the application process for a National Guard scholarship which would allow me to serve but also give me a lot more flexibility and control over my training.

 

[crazybrancato]

I'm still a med student. I came close to signing up for HPSP, but opted not after looking at residency training possibilities and running my own numbers. For my personal circumstances (moderate priced med school, not going into family practice), HPSP was a really bad deal financially. I'm currenlty in the application process for a National Guard scholarship which would allow me to serve but also give me a lot more flexibility and control over my training.

ok, well good on you for doing your homework before signing up, and for finding a different way to serve.

 

[The White Coat Investor]

I think it is at lesat a resonable point that most analyses of how bad a financial deal military medicine is assume payback over a 4 year period post residency, which is only really possible if you're either a highly paid specialty or don't have a family. If you assume you're going to be paying down your 300-500K in loans over a much longer period of time, for example over 20-30 years, HPSP become a MUCH better deal by comparison.

WTH? I don't know anyone with $300K in loans, much less $500K. Where are you getting these numbers from? I could have gotten out of medical school with $70K (and yes, paid this back in my first year out of residency.) Granted, I went to a fairly cheap school, but even quadruple what my loans could have been and you're under $250K. How in the world does someone get to $500K? If you need $500K to get through med school I can assure you you won't be content living on what the military pays its doctors.

 

[TheGoose]

interest?

 

[The White Coat Investor]

interest?

Only some loans cost interest during the first few years. Some of interest is simply offsetting inflation. When I graduated in 2003 all my classmates refinanced at 1.9%.

But even if you apply 8% interest to say $150K in loans at graduation, if you have your loans paid off within 10 years of graduation, you're only looking at a total of $68K in interest for a grand total of $218K. That's awfully different from $500K. Also consider that a surgeon or emergency doc probably makes upward of $250K/year in the civilian world, but only half that in the military. You can pay off an awful lot of loans with an extra $125K/year, even after taxes.

 

[Perrotfish]

WTH? I don't know anyone with $300K in loans, much less $500K. Where are you getting these numbers from? I could have gotten out of medical school with $70K (and yes, paid this back in my first year out of residency.) Granted, I went to a fairly cheap school, but even quadruple what my loans could have been and you're under $250K. How in the world does someone get to $500K? If you need $500K to get through med school I can assure you you won't be content living on what the military pays its doctors.

Alright, first, if you could have gotten out with 70K you screwed yourself. The average medical school debt these days is a little over 130K, but that's a meaningless number, since it averages the public school people (0-100K, these people should never take the HPSP scholarship) and the private school people (180-300K debt). There are also a few people who go to out of state public schools that are actually charged 100K a year for tuition and should DEFINITELY take the scholarship. For my school, depending on how you want to live, the debt adds up to between 225 - 300K. 225K means living in a double room in the medical fraternity and eating nothing but Ramen noodles.

So how do you get from there to 500K? It's based on the difference between pay for a military resident and a civlian resident, and realy that only gets you to 420K anyway unless you do a fairly long residency. Now you wouldn't actually take out a loan to make up that difference, they'd just live on the lower income... unless they had a family, which many Interns do. However whether it's a loan or income you're looking at something that can accrue interest over time, so again you're looking at a significant financial advantage to being in the military.



Finally, once again, we have the short payback periods for loans. 10 years is saner than the 4 year scenario (I do at least know lots of docs who had it all paid back in 10 years), but again, docs with higher debts in primary care could be looking at even longer payback periods. Also there's some overestimation of what civilian doctor's make. Keep in mind you're talking about someone fresh out of residency. Civilian EMs average about 210 K/year, and the younger ones make less. Of course you can always beat the average, I suppose, which is an advantage compared to the military, but then again you can also be under the average. Also EM is one of the higher paid specialties, one of the ones where I have myself coming out financially neutral for my decision to go military.

 

[spicedmanna]

Alright, first, if you could have gotten out with 70K you screwed yourself. The average medical school debt these days is a little over 130K, but that's a meaningless number, since it averages the public school people (0-100K, these people should never take the HPSP scholarship) and the private school people (180-300K debt). There are also a few people who go to out of state public schools that are actually charged 100K a year for tuition and should DEFINITELY take the scholarship. For my school, depending on how you want to live, the debt adds up to between 225 - 300K. 225K means living in a double room in the medical fraternity and eating nothing but Ramen noodles.

Exactly. It runs roughly about that much for me to attend school for 4 years, too. I'm planning on going into primary care, so HPSP is a good deal for me.

 

[The White Coat Investor]

Civilian EMs average about 210 K/year, and the younger ones make less. Of course you can always beat the average, I suppose, which is an advantage compared to the military, but then again you can also be under the average. Also EM is one of the higher paid specialties, one of the ones where I have myself coming out financially neutral for my decision to go military.

I don't know where you get your numbers. Average EM doc last year made $278K according to the most prestigious poll out there.

Yes, I got "screwed" financially for going to a state school. HPSP was a bad financial deal. What can I say but don't make the same mistake I did?

Nevertheless, now that I'm staring my last 18 months of commitment in the face, it wasn't a horrible way to start out my career, but only because I made it through the match unscathed.

 

[notdeadyet]

The average medical school debt these days is a little over 130K, but that's a meaningless number, since it averages the public school people (0-100K, these people should never take the HPSP scholarship) and the private school people (180-300K debt).

Actually, if that was all it averaged, you'd find a much higher average indebtedness than the $130K folks keep tossing around.

A big majority of medical students come from middle upper class and higher backgrounds. A very sizable number of these qualify as what I would consider "rich" (granted, my financial background is humble). A fair number of medical students still recieve parental support from mom and dad. Nothing wrong with this, but it skews the numbers.

I go to a UC medical school and pretty much anyone taking out loans without outside support is looking at $180K. And that's public. I'd be very curious what the average indebtedness was for a med school graduate with 0 outside support from family, military, etc. I think it would be shockingly high.

For my school, depending on how you want to live, the debt adds up to between 225 - 300K. 225K means living in a double room in the medical fraternity and eating nothing but Ramen noodles.

Are you going to an osteopathic school? The average tuition for private allopathic usually run $40-45K/year. There are only a small handful of schools that run over that. And most cost-of-living allowances are around $20K/year at most, so I can't imagine how you'd get above $250K or so even at the most expensive schools.

But again, it might be very different for osteopathic schools. I've heard that some of those can be incredibly expensive.

 

[notdeadyet]

Civilian EMs average about 210 K/year, and the younger ones make less.

$210K/year is way low for an average civilian private EM wage. That's about aveage for starting from most recent graduates I've talked to.

And also, as a civilian graduate, you have the opportunity to go for four years to parts of the country that has trouble attracting talent and earn in the high $200's. Is it great living there? Probably not. But there are a lot of military bases I wouldn't go to by choice either and your hours are a heck of a lot less.

It's all give and take.

Also EM is one of the higher paid specialties, one of the ones where I have myself coming out financially neutral for my decision to go military.

that's why I plead with folks to run their own numbers. I ran mine going into exactly the same field with loans as high as $260K and could not make HPSP pay for itself.

So everyone please read SDN and form some ideas, but spend an hour with excel and carefully look at the numbers.

 

[notdeadyet]

Exactly. It runs roughly about that much for me to attend school for 4 years, too. I'm planning on going into primary care, so HPSP is a good deal for me.

Excellent stuff, spicedmanna, and I wish you the best.

But what troubles me about HPSP is that for every 10 people that enter medical school with the intent of doing primary care, how many do you know that still feel that way by the time they are applying for the match?

If you are supremely confident that you just would couldn't practice medicine unless it was primary care, that's great. But for most folks, they'd be wise to run numbers with any specialty that interests them and judge based on the highest paying one.

The main concern I have with HPSP is that it requires the recipient to sign away 7-12 years of their life in something that could potentially be financially disasterous based on their medical career aspirations when they haven't spent any significant time getting their medical eduation. It's like picking baby names with someone on your first date.

Statistically, most folks do not end up in the specialty they envisioned when they entered medical school. I know lots of folks who came in with visions of family practice that are now looking hard at anesthesiology; I don't know any budding surgeons who entered medical school and are now seriously considering primary care.

Take HPSP because you want to be a military officer and serve your country. It will possibly be a financial boon and possibly a financial bust. If you're not content with the possibility of the latter, you'd be wise to wait for FAP or other programs.