Ok, two pages of responses later, I had to comment just to clear up a few inaccuracies:
1. Medical school debt is manageable.
2. You won't really end up paying it all back under the current scheme.
3. Public Service Loan Forgiveness (PSLF) applies to ANYONE working at a non-profit with eligible federal loans (pretty much any loans you'll take during medical school that are non-private).
Let's take a scenario:
Let's say you owe $200,000 when you leave medical school and you have no additional student loan debt. You are immediately put into a 6 month grace period. You must take that. You are welcome to make interest-only payments at this point, but why bother?
After 6 months on your 45-55k resident salary you enter re-payment on the income-based repayment play (see:
http://www.ibrinfo.org for more details). Let's assume you are single, have no kids, and make 50,000 per year. You would repay $420/month. As a side-note, while you are on the IBR plan the subsidized portion of your loan (probably about 45-50k) will continue to be subsidized for the first 3 years = no interest accrues. The remainder of your loan will be accuring interest at the standard 6.8% for most people.
The way that IBR works is they take your salary, subtract 150% of the poverty line (for a single person this is $16,755), and then charge you no more than 15% of the remaining value. For most it is is more like 10%.
Given that you are most likely training at a major university or some other medical center, you most likely work at a non-profit and you are considered an employee. There is a form you fill out that will certify your place of employment is a non-profit. You send this into Uncle Sam.
Now you start making monthly payments. Let's say you do a 3 year residency + 2 year fellowship, or 5 years at a PGY-x salary. You'll probably max out at around 70k. By year 5 you are only paying $670/month. This assumes you are still single and childless.
So, now you've finished fellowship, and you making those fat attending dollars at the local university/non-profit hospital. Don't forget to send in that non-profit certification sheet. Let's say you're making $200,000/year. Now you owe $2,290/month. Except not yet, since it is based on your tax return. One more year of cheap payments!
So now, you have 5.5 years of payments on the cheap and you will only owe 4.5 years of actual payments. As your salary increases above $200,000 you will most likely no longer qualify for IBR and will be paying the "standard" 10 year. Now, make your remaining payments to get to 120 monthly payments.
Once you have done this the balance of your loans will be forgiven, and you will have barely paid the principal. This is a new program that applies to loan payments made after 10/1/2007 and will start in 2017 (the first batch of 10 years).
If this program goes away then things will be much scarier, but for now it seems reasonable to me. This is especially true for people in long residencies (neurosurg). They could be on IBR for almost 9 years and only have to pay 1 year of full payments. IBR does not even cover the interest only payments, so someone before this plan would have had huge interest just for completing residency.
Hopefully this clarifies things a bit.
"Wovon man nicht sprechen kann, darüber muß man schweigen."
What we cannot speak of we must pass over in silence.
