med school loans

[bddkyg4374]

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i did some calculations; lets assume i owe 350k after four years of med school, lets assume i want to be single until early 40's, lets assume i make 200k as attending physician, and after taxes/car/house/personal expenses i am left with about 60-70k per year. if i do a 30 yr repayment plan, then i would have to pay a minimum about 2500 per month or about 30k a year based off interest and online loan calculators i used. that leaves me with about 30-40k of savings every year, so if i can end up having 30-40k left over every year even after loans, i can afford to pay for loans essentially as long as it takes without it impacting my life pretty much at all. so my question is, is this common for doctors to pay just the minimum every year, or do most people complain about loans because of greater expenses due to families and more people to support? i feel like my desire to remain single for a while makes loans inconsequential and not a problem at all, or am i off in calculating how much loans will really impact my life?

 

[Barcu]

i did some calculations; lets assume i owe 350k after four years of med school, lets assume i want to be single until early 40's, lets assume i make 200k as attending physician, and after taxes/car/house/personal expenses i am left with about 60-70k per year. if i do a 30 yr repayment plan, then i would have to pay a minimum about 2500 per month or about 30k a year based off interest and online loan calculators i used. that leaves me with about 30-40k of savings every year, so if i can end up having 30-40k left over every year even after loans, i can afford to pay for loans essentially as long as it takes without it impacting my life pretty much at all. so my question is, is this common for doctors to pay just the minimum every year, or do most people complain about loans because of greater expenses due to families and more people to support? i feel like my desire to remain single for a while makes loans inconsequential and not a problem at all, or am i off in calculating how much loans will really impact my life?

Probably a little of both.

First off, things change. You may think you will remain single but maybe you won't. You might also knock someone up. You never know.

I think loans will impact your life, probably more than you think. However, there aren't really many doctors who can't handle loans (most of the time it's terrible money skills). That may change as debt levels increase.

If you really want to be a physician, the prospect of loans should not scare you off. Just try to take on as little debt as possible and be responsible with your money. You should be alright.

 

[DrBowtie]

6.8% aint no joke.

 

[alexandertg6]

I think this brings up a good point. Do most physicians try to pay off their loans quickly in order to pay less in the long run or do they tend to make minimum payments practically indefinitely? Any attendings/residents out there want to comment on this?

 

[alexandertg6]

6.8% aint no joke.

its 7.9% now. minimum I think

 

[kduck]

Last I heard, it was 6.8% for Stafford, 7.9% for the PLUS loans.

 

[blizzah]

its 7.9% now. minimum I think

Oh snap. As a Canadian, if I wanted a loan my bank would only charge me prime which is 3%.

 

[alexandertg6]

Last I heard, it was 6.8% for Stafford, 7.9% for the PLUS loans.

Are they discontinuing that or do they have a cap on that? I remember vaguely some contraindication for Stafford loans

 

[kduck]

Haha, private loans? Yes, they tempt you with low interest rates now, but they are almost always variable interest rates these days. Good luck keeping that at 3% for 20 years...

 

[kduck]

Are they discontinuing that or do they have a cap on that? I remember vaguely some contraindication for Stafford loans

There's a cap on Stafford, around 42k per year or something like that?

 

[blizzah]

Haha, private loans? Yes, they tempt you with low interest rates now, but they are almost always variable interest rates these days. Good luck keeping that at 3% for 20 years...

Hasn't gone above 6% in 10 years. 🙄

 

[kduck]

Oh, you mean since the economy started first having difficulties in 2001? 🙄

Well, everyone feels comfortable with different financial decisions. It also depends on how quickly you anticipate being able to pay off the loans, origination fees, capitalization policies, etc.

 

[alexandertg6]

There's a cap on Stafford, around 42k per year or something like that?

that could be, my first financial talk was at FIU where cost of attendance for an OOS student like me is 100k/year ... could explain why I didnt heavily consider those

 

[kduck]

that could be, my first financial talk was at FIU where cost of attendance for an OOS student like me is 100k/year ... could explain why I didnt heavily consider those

Yeah, if you need 100k in loans/year, you won't be able to cover it with federal loans. Once you max out Stafford loans, PLUS is only an additional 2500 or so, and you'll be forced to dip into private funding unless your med school offers something on its own. I'm trying to avoid considering any schools that have estimated total cost of attendance over 70k or so...

 

[MT Headed]

if i do a 30 yr repayment plan, ...

so my question is, is this common for doctors to pay just the minimum every year

The maximum repayment plan is usually 25 years, not 30.

Judging from the discussions in the financial aid forum, it seems like most residents go with Income Based Repayment (IBR) which has low payments until you are finished with residency, at which point it converts to a standard 10 year repayment plan because your income is so high.

Of course, those who lurk in the financial aid forum might not be representative of the majority of doctors.

 

[Local Native]

The maximum repayment plan is usually 25 years, not 30.

Judging from the discussions in the financial aid forum, it seems like most residents go with Income Based Repayment (IBR) which has low payments until you are finished with residency, at which point it converts to a standard 10 year repayment plan because your income is so high.

Of course, those who lurk in the financial aid forum might not be representative of the majority of doctors.

I don't think IBR applies anymore because subsidized loans will no longer exist starting in 2012.

 

[MT Headed]

I don't think IBR applies anymore because subsidized loans will no longer exist starting in 2012.

These topics are unrelated.

In fact, the act that eliminated the subsidized stafford loans simultaneously expanded the IBR program.