Yes, folks often take out 30 year loans for $400K and more mortgage debt (especially in "hot" real estate markets). That's a heck of a lot of debt, and plenty of ordinary folks routinely engage such debts. That includes folks who have jobs that pay around $100K/year. As an MD, your earning potential should be at least that much.
Purchasing real estate on loan is a bit different from financing your education. For one thing, a mortgage loan is a "secured" loan, and the security is provided by the real property your are financing. If you "default" on loan repayment, the lending institution can take your real estate as "collateral." Educational loans are not "secured" in this way. If you default on an educational loan the lending institutions can't take away your "property" because there really isn't any that was offered as collateral, though they could go after the property of anyone who "co-signed" your loan or they could place a lien against you for repayment.
The cost of higher education in the US has become a major issue. I attended college and graduate school (including medical school) in the late 1970's and mid-1980's. I wound up with less than $25K educational debt for all of my UG, graduate, and MS loan debt. I've discharged all of this debt...
I don't disagree with you. Moving into your point about educational loans from lending institutions and putting a lien against a co-signer's property, well, couldn't this happen with a student that owns real estate property? The bank sues and gets judgment and a lien is placed. So then the student couldn't sell or refinance the property until the lien is paid. The only way to avoid that is to not have the student's name on the title.
Although they will use the property as collateral, and your point is quite right, still, the banks don't want to be relators. They don't really want the real estate necessarily--or the fun of a short sale. To be honest, many people I know will pay their mortgages before they even think about buying food to eat. It is b/c they want to protect their investment. Naturally it is also b/c they want to have a place to live--and rent isn't necessarily cheaper--short of maybe the ghetto or something not too far from it. And most people aren't going to leave their jobs to move to an area with a cheaper COL if their homes fall into foreclosure--unless they are lucky enough to find a job in such an area with a higher salary. You go into foreclosure, well, there goes your credit AND home. Then again, if a student has a lien placed against his/her property, he /she is digging in way deep. Considering the many nontrads with families, it truly IS something to seriously think long and hard about.
At any rate, most folks I know take paying their mortgages seriously--just as seriously as paying back student loans. But again, to your point, it may end up such that a lot of medical school graduates will have to delay buying a home for more years nowadays. This may mean that they defer having families as well. The non-trads OTOH may have already started a family. Yes, it's true. No matter how you slice it, it sucks to be chained to such an incredible amount of money. For those without homes, as I said. They will probably be taking longer to buy homes. The economy is in a mess, and the value of the dollar will continue to drop, and really, who in the world will be able to afford higher education at some point?
But people are also supposed to look at taking out student loans as an investment in their future. Is this indeed a bad investment? It may be risky; but I see where you are going. It may lead to indentured servitude with increasingly greater amounts of time in servitude. But how far can any one individual take that? Isn't this an individual question? OTOH, isn't it a very necessary, pragmatic question? How far is higher education going with expanding this burden of servitude?
I firmly agree with you re: the cost of higher education in the US being a major issue. It's insane. I went to a private university, and although I value the experience, I definitely feel the pain of it. I have complained for years about how schools never give tuition increases a rest--endless, yearly increases in tuition. Education in the US is big business.
But remember, the OP was asking if it is worth it--or really, 'Will it be worth it?' So, even if the person loves being a physician, what I hear you suggesting is 'No. It still may not be worth it.' And that leads me to second Ibn's question above. To which I add, what is the equivalent of $400,000 (or the adjusted buying power) three decades ago--not even counting interest? One inflation calculator says it would have been as follows: "
$400,000 of
2014 dollars would be worth
$175,600.00 in
1984" (Inflation Calculator, 2014).
Now, based on your career in your particular specialty, would you say that the financial burden of the adjusted amount noted above would not have been worth it? I ask this b/c, if you feel this way; what might the family practice or other primary care physicians from that period feel, given that adjusted amount? All things considered, it may further make the case for people opting not to go into primary care. That makes me very sad.
