Median Total Cost of Attendance Inquiry

[492618]

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I was reading this article:

http://www.boston.com/whitecoatnote...-physicians/ukdiUI3wa20DNEgWnpkFIP/story.html

And saw that it said the "Most young doctors who choose a career in primary care will be able to pay off medical school debt of about $160,000, the median among medical school graduates in 2011, within 10 years even as they raise a family in a high-cost urban area...After leveling off some in recent years, median debt among medical school graduates increased about 5 percent for the class of 2012, to $170,000, according to an AAMC analysis. Seventeen percent of graduates carry debt of $250,000 or more."

How is the median medical school debt only $160,000-$170,000? I've been spending this weekend crunching numbers and I'm getting at least $240,000+ in total cost of attendance. How is that only 17% of graduates carry debts of $250,000 or more? Do most people receive parental support or scholarships? I can't even imagine how I'd be able to reduce my future loans to lower than 200k unless I financially burden my parents.

 

[inycepoo]

I was reading this article:

http://www.boston.com/whitecoatnote...-physicians/ukdiUI3wa20DNEgWnpkFIP/story.html

And saw that it said the "Most young doctors who choose a career in primary care will be able to pay off medical school debt of about $160,000, the median among medical school graduates in 2011, within 10 years even as they raise a family in a high-cost urban area...After leveling off some in recent years, median debt among medical school graduates increased about 5 percent for the class of 2012, to $170,000, according to an AAMC analysis. Seventeen percent of graduates carry debt of $250,000 or more."

How is the median medical school debt only $160,000-$170,000? I've been spending this weekend crunching numbers and I'm getting at least $240,000+ in total cost of attendance. How is that only 17% of graduates carry debts of $250,000 or more? Do most people receive parental support or scholarships? I can't even imagine how I'd be able to reduce my future loans to lower than 200k unless I financially burden my parents.

If you're seriously that curious, track the article back to its primary source and get the data files for the study. Only then can you see if 1) they're right, or 2) you're right.

 

[492618]

If you're seriously that curious, track the article back to its primary source and get the data files for the study. Only then can you see if 1) they're right, or 2) you're right.

Well, it seems accurate:
https://www.aamc.org/download/152968/data

I don't really understand the scenarios given though.

How does the loan system math work? Let's say I take out a $200,000 Stafford loan with 5.41% interest (the 2013-2014 rate). How much of that is typically subsidized and unsubsidized? If let's say all of it is unsubsidized, and I want to pay it off in 5 years after a 3-year residency, that would mean my total cost of repayment would be: ((200,000*.0541)*(4 yrs of school + 3 yrs of residency + 5 yrs post-residency)) + (200,000) = $329,840. If I pay off only interest amounts during residency, I'd have $297380 to pay off in 5 years, or almost 60 grand a year. I know that's not feasible, but is the math correct?

 

[CarlosDanger]

Yeah, its because most parents chip in a little to help out. Its not that they're paying the whole bill, but a few thousand here and there really adds up. The kids who make it to medical school are usually from middle to upper-middle class families who can afford to help out and who invested a lot in their kid's education along the way. This is why many med schools try so hard to recruit kids who are underrepresented and traditionally disadvantaged - there just aren't as many of them that make it so far in the process.

 

[circulus vitios]

Yeah, its because most parents chip in a little to help out. Its not that they're paying the whole bill, but a few thousand here and there really adds up. The kids who make it to medical school are usually from middle to upper-middle class families who can afford to help out and who invested a lot in their kid's education along the way. This is why many med schools try so hard to recruit kids who are underrepresented and traditionally disadvantaged - there just aren't as many of them that make it so far in the process.

They might recruit them, but how often do they give them any grants or scholarships?

 

[492618]

Yeah, its because most parents chip in a little to help out. Its not that they're paying the whole bill, but a few thousand here and there really adds up. The kids who make it to medical school are usually from middle to upper-middle class families who can afford to help out and who invested a lot in their kid's education along the way. This is why many med schools try so hard to recruit kids who are underrepresented and traditionally disadvantaged - there just aren't as many of them that make it so far in the process.

If I really needed it, my parents would be the type of people who would pay for a good portion of it, but I can't bear them having to deal with that financial burden. I mean even if my parents chipped in a sizable chunk (like 40,000), if the the total cost of attendance is around 240 grand, the loan amount would still be like 200k.

It's definitely frustrating because I want to be able to support my parents after they retire, but with loans this exorbitant, most of my own salary would be spent for my own family and student loans.

Even though I don't really want to join the military, it's stuff like this that makes me consider stuff like HPSP.

 

[armybound]

there are a lot of schools out there that are cheap, and they have a lot of students.

 

[CarlosDanger]

They might recruit them, but how often do they give them any grants or scholarships?

I agree, those kids probably do have a higher debt burden. I was just making the point that most med students have decently well-off parents/grandparents/rich aunt or uncle who help with the cost. Maybe they're helping with the rent, or some other living expense - either way. I've noticed that a lot of premeds on SDN are not these people, but most med students are, in my opinion.

And yeah, there are a lot of state schools which lowers the COA some. But in my home state, the recommended COA for in-state is about $60k, and this is in one of the lowest cost of living towns in America.

Family definitely chips in - which is frustrating for those of us paying for 100%

 

[Perrotfish]

Well, it seems accurate:
https://www.aamc.org/download/152968/data

I don't really understand the scenarios given though.

How does the loan system math work? Let's say I take out a $200,000 Stafford loan with 5.41% interest (the 2013-2014 rate). How much of that is typically subsidized and unsubsidized? If let's say all of it is unsubsidized, and I want to pay it off in 5 years after a 3-year residency, that would mean my total cost of repayment would be: ((200,000*.0541)*(4 yrs of school + 3 yrs of residency + 5 yrs post-residency)) + (200,000) = $329,840. If I pay off only interest amounts during residency, I'd have $297380 to pay off in 5 years, or almost 60 grand a year. I know that's not feasible, but is the math correct?

The math is mostly correct. The only thing that's off is that not only are there no subsidized loans for medical school, all loans beyond a certain low number are grad plus loans with a slightly higher interest rate. The average interest rate on my loans is more than 7 %, for next years student the average will be a little over 6%. The median cost of attendance at public schools is now 210K, and at private schools is 280K. The 170K 'average debt' that medical students carry number is the mean of a bimodal distribution and basically a useless number.

 

[492618]

The math is mostly correct. The only thing that's off is that not only are there no subsidized loans for medical school, all loans beyond a certain low number are grad plus loans with a slightly higher interest rate. The average interest rate on my loans is more than 7 %, for next years student the average will be a little over 6%. The median cost of attendance at public schools is now 210K, and at private schools is 280K. The 170K 'average debt' that medical students carry number is the mean of a bimodal distribution and basically a useless number.

Damn. Do most people pay all of that debt within 10 years, or drag it to 15-20 years? If you go into primary care and are the head of a household of a family of 4 and come out of residency with 250k in debt, I can't imagine you would be taking more than 70-80k after taxes and loans?

 

[Perrotfish]

Damn. Do most people pay all of that debt within 10 years, or drag it to 15-20 years? If you go into primary care and are the head of a household of a family of 4 and come out of residency with 250k in debt, I can't imagine you would be taking more than 70-80k after taxes and loans?

No one has ever had debt like this before, so we don't really know. The loans went unsubsidized my fourth year of medical school, and I'm a second year resident. Then the rates changed (got a little lower, but more variable) just this year. Your calculations for income would only be right if you chose a true 10 year repayment plan. Taxes for a 160K salary with a mortgage deduction and a spouse in anything like a decent state is actually not that bad. You should be able to put 40K towards your loans at that income level and have enough left over to spend 70K on the family.

The other variable, of course, are the loan repayment programs: Public service loan forgiveness and income based repayment both only require you to put 10% of your income towards your loans. The scam is that 'public service', as currently defined, means working for ANY non-profit, meaning almost every medical professional qualifies, and residency counts. So theoretically an FP could pay 10% of his salary for three years as a resident and then for 7 years as an attending, working a normal job in a good location, and have his loans discharged before he even paid half the principle. The downside, of course, is that no one has yet had their loans paid off through this program, and if you pursued it your loans would actually increase during your 10 years of repayment, so if the government didn't come through and left you with your inflated debt you would basically be stuck with your debt until retirement.

I would guess that most people will drag the debt out 20-30 years, if only because that's what most people do with any kind of debt. People aren't good at saving or paying off loans.

 

[circulus vitios]

Damn. Do most people pay all of that debt within 10 years, or drag it to 15-20 years? If you go into primary care and are the head of a household of a family of 4 and come out of residency with 250k in debt, I can't imagine you would be taking more than 70-80k after taxes and loans?

I can't remember what Grad PLUS loan interest rates are, but let's assume $250k in student loans at 8%. A 10 year plan would be about $36k/yr in payments. $175k/yr primary care salary is about $110k/yr after taxes. Your take home income, post student loans, would then be about $74k/yr.

A 20 year payment plan would be about $25k/yr in student loan payments. Not that big of a difference.

Another option is to continue living like a resident (~$50k/yr pre-tax or about $40k/yr post-tax.) Doing this allow you to put about $70k/yr toward student loans, so your loans would be paid off in about 4 years.

You could also look for hospitals or physician groups that offer student loan repayment programs. The NHSC also has a federal primary care loan forgiveness program, but I have no idea how it works.

 

[492618]

No one has ever had debt like this before, so we don't really know. The loans went unsubsidized my fourth year of medical school, and I'm a second year resident. Then the rates changed (got a little lower, but more variable) just this year. Your calculations for income would only be right if you chose a true 10 year repayment plan. Taxes for a 160K salary with a mortgage deduction and a spouse in anything like a decent state is actually not that bad. You should be able to put 40K towards your loans at that income level and have enough left over to spend 70K on the family.

So does your interest rate change with each year, or do you keep the same rate when you first took out the loan?

See, that's what's annoying me. I know money isn't everything, but it does bother me that a quarter of your salary would be going towards student loans, and your leftover income would be the same as an engineer who just graduated with a four-year degree.

The other variable, of course, are the loan repayment programs: Public service loan forgiveness and income based repayment both only require you to put 10% of your income towards your loans. The scam is that 'public service', as currently defined, means working for ANY non-profit, meaning almost every medical professional qualifies, and residency counts. So theoretically an FP could pay 10% of his salary for three years as a resident and then for 7 years as an attending, working a normal job in a good location, and have his loans discharged before he even paid half the principle. The downside, of course, is that no one has yet had their loans paid off through this program, and if you pursued it your loans would actually increase during your 10 years of repayment, so if the government didn't come through and left you with your inflated debt you would basically be stuck with your debt until retirement.

So can you clarify this for me? So basically, under PSLF, if I complete 120 payments working full-time at a non-profit the rest of my loan is forgiven. But you're saying that because nobody has yet to complete this problem, if the government decided to suddenly bail on it at the end of 10 years, you'd be screwed over because you were paying less for loans than you should have been?

Not sure if I can trust the government to keep such a policy.

I would guess that most people will drag the debt out 20-30 years, if only because that's what most people do with any kind of debt. People aren't good at saving or paying off loans.

Well if you're the main provider of a family, and you have mortgages, car payments, saving for retirement, saving for kid's education, I can't imagine it's easy to pay off that easily. I mean, if you took a 250k loan with current interest rate and you made 160k as a primary care physician, it's going to take at least 10 years to pay off that debt if you want to live moderately.

 

[492618]

I can't remember what Grad PLUS loan interest rates are, but let's assume $250k in student loans at 8%. A 10 year plan would be about $36k/yr in payments. $175k/yr primary care salary is about $110k/yr after taxes. Your take home income, post student loans, would then be about $74k/yr.

A 20 year payment plan would be about $25k/yr in student loan payments. Not that big of a difference.

Another option is to continue living like a resident (~$50k/yr pre-tax or about $40k/yr post-tax.) Doing this allow you to put about $70k/yr toward student loans, so your loans would be paid off in about 4 years.

You could also look for hospitals or physician groups that offer student loan repayment programs. The NHSC also has a federal primary care loan forgiveness program, but I have no idea how it works.

I'm not getting the same numbers. If you took a 250k loan with 8%, wouldn't the total amount after 17 years (4 years medical school + 3 years residency + 10 years post-residency) be:

((250,000*.08)*17) + (250,000) = $590000?

I don't know how much you can pay off during residency, but if you made like $45,000 in residency, you could pay off maybe $15,000 after 3 years of residency.

So isn't that 589,985 or basically ~59,000/year???

 

[circulus vitios]

I'm not getting the same numbers. If you took a 250k loan with 8%, wouldn't the total amount after 17 years (4 years medical school + 3 years residency + 10 years post-residency) be:

((250,000*.08)*17) + (250,000) = $590000?

I don't know how much you can pay off during residency, but if you made like $45,000 in residency, you could pay off maybe $15,000 after 3 years of residency.

So isn't that 589,985 or basically ~59,000/year???

http://www.finaid.org/calculators/loanpayments.phtml

$250k @ 8% over 10 years = $3033.19/mo, total cumulative payments of $363k.

I ignored the residency part. I thought loans went into forbearance during residency? If not, then $250k at the end of med school turns into $315k at the end of residency, assuming it compounds once per year (probably several times that, but the difference will only be a couple thousand dollars.)

$315k in loans @ 8% over 10 years = $3800/mo, total cumulative payments of $458k.

edit: Apparently residents are eligible for deferment during residency, but this obviously doesn't stop the interest on unsubsidized loans i.e. the majority of medical student loans. For my hypothetical $250k / 8% situation, interest-only payments are about $1700/month.

 

[lovemango]

And yeah, there are a lot of state schools which lowers the COA some. But in my home state, the recommended COA for in-state is about $60k, and this is in one of the lowest cost of living towns in America.

Family definitely chips in - which is frustrating for those of us paying for 100%

Definitely glad I live in Texas. COA for our public med schools is about $40-45k a year and my school gives out institutional aid and scholarships.

 

[circulus vitios]

So does your interest rate change with each year, or do you keep the same rate when you first took out the loan?

See, that's what's annoying me. I know money isn't everything, but it does bother me that a quarter of your salary would be going towards student loans, and your leftover income would be the same as an engineer who just graduated with a four-year degree.



So can you clarify this for me? So basically, under PSLF, if I complete 120 payments working full-time at a non-profit the rest of my loan is forgiven. But you're saying that because nobody has yet to complete this problem, if the government decided to suddenly bail on it at the end of 10 years, you'd be screwed over because you were paying less for loans than you should have been?

Not sure if I can trust the government to keep such a policy.



Well if you're the main provider of a family, and you have mortgages, car payments, saving for retirement, saving for kid's education, I can't imagine it's easy to pay off that easily. I mean, if you took a 250k loan with current interest rate and you made 160k as a primary care physician, it's going to take at least 10 years to pay off that debt if you want to live moderately.

Stafford and Grad PLUS loans have fixed interest rates. Like undergrad Stafford loans, the loans might have different interest rates, but those rates remain fixed.

PLSF, IBR, and PYE programs sound great but as it stand, the amount forgiven will be treated as taxable income e.g. let's say you paid off $150k of a $250k loan balance. $100k would then be forgiven. For the year on which the debt is forgiven, your taxable income would be whatever your taxable income is plus $100k. If you haven't been saving up for this "tax bomb," things could get pretty ugly because the IRS doesn't **** around. I've heard of a few Congressmen/women working on a bill that would remove this tax bomb, but who knows how that will play it. If the program does vanish, I imagine that currently eligible and enrolled members will be grandfathered in.

If you're 100% dead set on primary care, go to the cheapest school you can get into. Maybe look at schools that offer 3 year primary care pathways, and definitely look into working at hospitals or with groups that offer student loan repayment incentives.

 

[492618]

Stafford and Grad PLUS loans have fixed interest rates. Like undergrad Stafford loans, the loans might have different interest rates, but those rates remain fixed.

PLSF, IBR, and PYE programs sound great but as it stand, the amount forgiven will be treated as taxable income e.g. let's say you paid off $150k of a $250k loan balance. $100k would then be forgiven. For the year on which the debt is forgiven, your taxable income would be whatever your taxable income is plus $100k. If you haven't been saving up for this "tax bomb," things could get pretty ugly because the IRS doesn't **** around. I've heard of a few Congressmen/women working on a bill that would remove this tax bomb, but who knows how that will play it. If the program does vanish, I imagine that currently eligible and enrolled members will be grandfathered in.

If you're 100% dead set on primary care, go to the cheapest school you can get into. Maybe look at schools that offer 3 year primary care pathways, and definitely look into working at hospitals or with groups that offer student loan repayment incentives.

My first goal is just to get accepted into medical school. But I can't imagine I would be happy if the only schools I get into are some private ones where I'm supposed to fork over 80 grand a year in total COA. I'd rather just do a HPSP at that point, even if everyone says don't do it for the money.

I'm not dead set on any specialty. But I don't want specialty options to be limited due to finance (which seems very possible). Especially in a field such as medicine, it seems awful.

 

[492618]

Definitely glad I live in Texas. COA for our public med schools is about $40-45k a year and my school gives out institutional aid and scholarships.

I would love to go to TCOM or any Texas medical school, but I'm from Michigan. In fact, if I had the chance, I'd even move and become a Texas resident if it bolstered the chance to get me into a school in state.

 

[yehhhboiii]

I'm not getting the same numbers. If you took a 250k loan with 8%, wouldn't the total amount after 17 years (4 years medical school + 3 years residency + 10 years post-residency) be:

((250,000*.08)*17) + (250,000) = $590000?

I don't know how much you can pay off during residency, but if you made like $45,000 in residency, you could pay off maybe $15,000 after 3 years of residency.

So isn't that 589,985 or basically ~59,000/year???

the maximum you can get from stafford unsubsidized is 40,500 and the interest rate last year was 6.8% on that. anything above that and you were looking at a 7.9% interest rate from the grad plus loan. if you can get a perkins loan, it's around 8k at most although you have to be really poor to get that much and the rate is 5%. this year, the unsubsidized stafford rate is 5.1 and the grad plus loan is 6.4%. it's tied to the 10 year treasury note rate so it's pretty much guaranteed to go up even though it's usurious already. the real kicker is that there's an origination fee of 1% for the stafford and 4.2% for the grad plus. so if you borrow 40k, they keep 400 dollars (not sure why) and you have to pay interest for money you don't get as well as interest on top of that interest. so if you're at a school like tufts med, you're screwed. looking at maybe 400-500k repayment whereas if you went to umass, you'd probably be paying back 200-250k over 10 years depending on rent, car payments, etc. the interest rate is fixed meaning that the rate you borrow at is how much it will increase by until you pay it off.

it used to be that interest didn't accrue during residency but now interest rates are much higher, they steal some of your money before you even see any of the cash and the interest accrues during med school as well as residency. you can try to pay it off during residency but if you want to go into academics, you'll probably be in a big city and good luck paying off loans when your rent is through the roof. also you'll probably be taking care of a family by then with the mortgage and all the expenses that come with raising children. then people wonder why the high paying specialties are the competitive ones and why med students don't want to go into primary care.

 

[mcloaf]

then people wonder why the high paying specialties are the competitive ones and why med students don't want to go into primary care.

No kidding. Thankfully they'll solve this pesky physician maldistribution problem by paying specialists less so nobody can afford medical school anymore.

 

[492618]

the maximum you can get from stafford unsubsidized is 40,500 and the interest rate last year was 6.8% on that. anything above that and you were looking at a 7.9% interest rate from the grad plus loan. if you can get a perkins loan, it's around 8k at most although you have to be really poor to get that much and the rate is 5%. this year, the unsubsidized stafford rate is 5.1 and the grad plus loan is 6.4%. it's tied to the 10 year treasury note rate so it's pretty much guaranteed to go up even though it's usurious already. the real kicker is that there's an origination fee of 1% for the stafford and 4.2% for the grad plus. so if you borrow 40k, they keep 400 dollars (not sure why) and you have to pay interest for money you don't get as well as interest on top of that interest. so if you're at a school like tufts med, you're screwed. looking at maybe 400-500k repayment whereas if you went to umass, you'd probably be paying back 200-250k over 10 years depending on rent, car payments, etc. the interest rate is fixed meaning that the rate you borrow at is how much it will increase by until you pay it off.

it used to be that interest didn't accrue during residency but now interest rates are much higher, they steal some of your money before you even see any of the cash and the interest accrues during med school as well as residency. you can try to pay it off during residency but if you want to go into academics, you'll probably be in a big city and good luck paying off loans when your rent is through the roof. also you'll probably be taking care of a family by then with the mortgage and all the expenses that come with raising children. then people wonder why the high paying specialties are the competitive ones and why med students don't want to go into primary care.

All this stuff is honestly giving me a headache. I don't understand how anybody can stomach this type of debt especially after sacrificing at least an additional 7 years before making actual salary. Honestly, I don't even care about money that much. It's not like I want or expect to buy a million dollar house, a yacht, and a BMW as a doctor. But I do care about family and being able to provide my family a comfortable life (upper middle class). I would be content with that. But it seems ridiculous that money dictates what specialty one wants to do.

Unless I miraculously get into some Texas school as a non-resident (and then try to establish in-state residency), I can't imagine I'd feel great anywhere knowing I'm going to be deep in my neck in loans.

 

[circulus vitios]

No kidding. Thankfully they'll solve this pesky physician maldistribution problem by paying specialists less so nobody can afford medical school anymore.

I think we need more new, private medical schools with primary care and patient-centric mission statements, that charge $50k/year in tuition. 👍

All this stuff is honestly giving me a headache. I don't understand how anybody can stomach this type of debt especially after sacrificing at least an additional 7 years before making actual salary. Honestly, I don't even care about money that much. It's not like I want or expect to buy a million dollar house, a yacht, and a BMW as a doctor. But I do care about family and being able to provide my family a comfortable life (upper middle class). I would be content with that. But it seems ridiculous that money dictates what specialty one wants to do.

Unless I miraculously get into some Texas school as a non-resident (and then try to establish in-state residency), I can't imagine I'd feel great anywhere knowing I'm going to be deep in my neck in loans.

Plan on living in the boondocks for 5 years for the sole purpose of making fat stacks and crushing your student loans, or targeting groups that offer loan repayment incentives.

 

[mvenus929]

How is the median medical school debt only $160,000-$170,000? I've been spending this weekend crunching numbers and I'm getting at least $240,000+ in total cost of attendance. How is that only 17% of graduates carry debts of $250,000 or more? Do most people receive parental support or scholarships? I can't even imagine how I'd be able to reduce my future loans to lower than 200k unless I financially burden my parents.

People go to cheap schools (the Texas schools), parents help out with some (I have several friends who had their parents buy a townhome that they rent out to pay for living expenses), others are military or MSTP (who are still eligible to take out loans, so maybe they take out loans for residency interview season). Lots of reasons people can come away with less debt.

So does your interest rate change with each year, or do you keep the same rate when you first took out the loan?

Currently, loans are fixed rate, but the rate changes each year. That was nice for people like me, who came in while there were still subsidized loans, and got a cut in the interest rate my final year. Not so nice for the people who haven't started yet who will end up with higher interest rates overall.

Well if you're the main provider of a family, and you have mortgages, car payments, saving for retirement, saving for kid's education, I can't imagine it's easy to pay off that easily. I mean, if you took a 250k loan with current interest rate and you made 160k as a primary care physician, it's going to take at least 10 years to pay off that debt if you want to live moderately.

Different people have different priorities. If you make it a priority to pay off your loans, after a few years, you'll suddenly have a large chunk of income that you didn't have before that you can put towards retirement, college funds, etc. Take a look at Dave Ramsey.

((250,000*.08)*17) + (250,000) = $590000?

If you're making payments, your principle is going to be going down each year (assuming you're paying enough to pay off interest + principle), so you're not going to be paying 8% on 250K all 17 years.

I thought loans went into forbearance during residency? If not, then $250k at the end of med school turns into $315k at the end of residency, assuming it compounds once per year (probably several times that, but the difference will only be a couple thousand dollars.)

edit: Apparently residents are eligible for deferment during residency, but this obviously doesn't stop the interest on unsubsidized loans i.e. the majority of medical student loans. For my hypothetical $250k / 8% situation, interest-only payments are about $1700/month.

I'm pretty sure most loans don't allow forbearance during residency. Most people do interest-only payments or IBR, I think.

But I do care about family and being able to provide my family a comfortable life (upper middle class). I would be content with that. But it seems ridiculous that money dictates what specialty one wants to do.

You'd be surprised how much you can make things stretch if you're willing to put in the effort. My mom is a single parent, owns three homes, and only makes something like $75K per year pretax (or she did before she retired, now she makes like half that). We lived pretty comfortably once she got some of her debt paid off. She's not as financially secure as I'd like her to be, but she's not slumming it. So if your income is such that you're still taking home $70K after taxes and loan payments, you're doing pretty good, IMO.

 

[492618]

Plan on living in the boondocks for 5 years for the sole purpose of making fat stacks and crushing your student loans, or targeting groups that offer loan repayment incentives.

So ridiculous, I swear...

 

[492618]

People go to cheap schools (the Texas schools), parents help out with some (I have several friends who had their parents buy a townhome that they rent out to pay for living expenses), others are military or MSTP (who are still eligible to take out loans, so maybe they take out loans for residency interview season). Lots of reasons people can come away with less debt.

I can only hope I have some of those options available.

Currently, loans are fixed rate, but the rate changes each year. That was nice for people like me, who came in while there were still subsidized loans, and got a cut in the interest rate my final year. Not so nice for the people who haven't started yet who will end up with higher interest rates overall.

Yup, it sucks now.

Different people have different priorities. If you make it a priority to pay off your loans, after a few years, you'll suddenly have a large chunk of income that you didn't have before that you can put towards retirement, college funds, etc. Take a look at Dave Ramsey.

It would just seem quite difficult putting in 70k/yr for loans if you have a family to provide for.

If you're making payments, your principle is going to be going down each year (assuming you're paying enough to pay off interest + principle), so you're not going to be paying 8% on 250K all 17 years.

Oh really? I guess that's a little bit better? 250,000*.08 = 20k in interest. 140k by the end of medical school. Paying 20k per interest for interest payments on a 45k resident salary seems difficult??

I'm pretty sure most loans don't allow forbearance during residency. Most people do interest-only payments or IBR, I think.

That makes sense. IBR seems the way to go.

You'd be surprised how much you can make things stretch if you're willing to put in the effort. My mom is a single parent, owns three homes, and only makes something like $75K per year pretax (or she did before she retired, now she makes like half that). We lived pretty comfortably once she got some of her debt paid off. She's not as financially secure as I'd like her to be, but she's not slumming it. So if your income is such that you're still taking home $70K after taxes and loan payments, you're doing pretty good, IMO.

I guess that's true.

-----------

Ignoring personal interest, and strictly looking at it from a purely monetary and financial perspective, is it worth going into medicine? Most people aren't going to end up making
$500,00 as a surgeon, and the reality is that many of us will be shouldering a massive debt for at least a decade and be getting a take home pay of less than $100,000 (and in the example used above...70k).
Is it worth investing those years and shouldering massive amounts of debt for a decade+ to be receiving that type of take-home salary? Or does the job security and net worth pay off in the end?

 

[Perrotfish]

Ignoring personal interest, and strictly looking at it from a purely monetary and financial perspective, is it worth going into medicine? Most people aren't going to end up making
$500,00 as a surgeon, and the reality is that many of us will be shouldering a massive debt for at least a decade and be getting a take home pay of less than $100,000 (and in the example used above...70k).
Is it worth investing those years and shouldering massive amounts of debt for a decade+ to be receiving that type of take-home salary? Or does the job security and net worth pay off in the end?

Well, the take home pay you're talking about (<100K) assumes a low end salary (<150K), and even then is only for the duration of an extremely short 10 year payment plan at which time you basically get a 40K after tax raise.

Is it worth it? The problem with that question is what you're comparing it to. If you compare the average lifetime earnings for a physician to the average 4 year earnings of a college graduate, even a STEM graduate, the answer is clearly yes. Its not as lucrative as it was before student loans exploded, but medical school is an investment that nets you several million over the course of the career vs not going. The problem, of course, is that that's an AVERAGE college graduate, and many physicians would argue that they're not average, and there really aren't good statistics that I know of that sort average lifetime income by college major and GPA.

I still think it was worth it, FWIW.

 

[circulus vitios]

Ignoring personal interest, and strictly looking at it from a purely monetary and financial perspective, is it worth going into medicine? Most people aren't going to end up making
$500,00 as a surgeon, and the reality is that many of us will be shouldering a massive debt for at least a decade and be getting a take home pay of less than $100,000 (and in the example used above...70k).
Is it worth investing those years and shouldering massive amounts of debt for a decade+ to be receiving that type of take-home salary? Or does the job security and net worth pay off in the end?

More than 50% of physicians are specialists.

If you want to do primary care, you can always supplement your income with stuff like non-invasive cosmetics, or getting the certifications to work in the emergency department. I know of a few second and third year family medicine residents who moonlighted and later took a job in the ED for $150/hour -- always an option if you live in rural areas that aren't sticklers about EM board certification.

 

[492618]

Well, the take home pay you're talking about (<100K) assumes a low end salary (<150K), and even then is only for the duration of an extremely short 10 year payment plan at which time you basically get a 40K after tax raise.

What's the retirement age nowadays? 65? So, 10 years out of a 35 year career (if you start earning at 30 after a 3-year residency)? It's about a quarter to a third of your working career, but I see what you mean.

Is it worth it? The problem with that question is what you're comparing it to. If you compare the average lifetime earnings for a physician to the average 4 year earnings of a college graduate, even a STEM graduate, the answer is clearly yes. Its not as lucrative as it was before student loans exploded, but medical school is an investment that nets you several million over the course of the career vs not going. The problem, of course, is that that's an AVERAGE college graduate, and many physicians would argue that they're not average, and there really aren't good statistics that I know of that sort average lifetime income by college major and GPA.

Well there are IT personnel making between 100-160k now (my cousin is a software analyst in Dallas making like 150k it's crazy). Obviously not everyone can be a Google employee, but there are some really well-paying jobs out there for STEM graduates now.

I guess you bring you up a good point. It's hard to say if whether I switched majors to engineering tomorrow and check my career earnings in 25 years versus if I go into medical school and become a physician, which one would be higher.

I still think it was worth it, FWIW.

I hope so, because when I see read stuff like this:

Despite the frustration over reporting requirements, malpractice risks, EHRs, and other new aspects of medical practice, more than half of physicians would choose to become doctors again. While that's just slightly down from 54% in 2012, it's still a huge decline from the 2011 report in which a whopping 69% said they'd choose medicine again.
The specialties most apt to choose their own specialty again are dermatology (74%), ophthalmology (61%), and urology (60%). Least likely to choose their own specialty again are internists (19%), family physicians (28%), and obstetricians/gynecologists (37%). The dissatisfaction with their specialty, among primary care physicians, is palpable.

It doesn't sound too great. And I wouldn't be surprised if that dissatisfaction has a lot to due with the difference in income.

http://www.medscape.com/features/slideshow/compensation/2013/public

 

[492618]

More than 50% of physicians are specialists.

If you want to do primary care, you can always supplement your income with stuff like non-invasive cosmetics, or getting the certifications to work in the emergency department. I know of a few second and third year family medicine residents who moonlighted and later took a job in the ED for $150/hour -- always an option if you live in rural areas that aren't sticklers about EM board certification.

I don't know what I want to go into yet (I think it's premature to I decide), but I think when looking into stuff like finances it's best to consider the 'lowest' (for lack of a better term) option. PCPs do make the lowest, so when I look into stuff like debt, I need to see how I would pay it off in those shoes.

I really want to go into some surgical specialty, but that might be difficult if I want to pick something that lets me have more time with family.

 

[mvenus929]

It would just seem quite difficult putting in 70k/yr for loans if you have a family to provide for.

Again, it's about priorities and how much sacrifice you're willing to make now for delayed gratification. I have no doubt that I can have a decent living continuing to live on a resident's salary for a few years after I become an attending. I'm also currently unmarried with no prospects in sight, so in 4 years, maybe things will change dramatically. But if you're making, say, 125K post-tax, and put half of that towards loans, you're still making more than a resident, and this is assuming that you're the single provider in your home.

Oh really? I guess that's a little bit better? 250,000*.08 = 20k in interest. 140k by the end of medical school. Paying 20k per interest for interest payments on a 45k resident salary seems difficult??

You're not going to be paying interest on 250K all four years of med school either, but now we're just getting into technicalities. You're not going to be able to make full payments during residency. No one does, unless they have a small enough loan burden to have low enough payments to do so. And yes, even interest-only payments are expensive at that high of a loan burden. This is why most people end up doing some version of IBR.

Ignoring personal interest, and strictly looking at it from a purely monetary and financial perspective, is it worth going into medicine? Most people aren't going to end up making $500,00 as a surgeon, and the reality is that many of us will be shouldering a massive debt for at least a decade and be getting a take home pay of less than $100,000 (and in the example used above...70k). Is it worth investing those years and shouldering massive amounts of debt for a decade+ to be receiving that type of take-home salary? Or does the job security and net worth pay off in the end?

The take home pay of 70K that I was demonstrating above was after both taxes and loan payments. That makes a significant difference.

But let's look at actual salaries. The median starting salary for a pediatrician, which is one of the lowest paying specialties is $162K (link). Rough income federal income tax for a single person is about $40K. That puts your take home salary at about $120K (slightly more, but let's make the numbers easy). If you're putting $60K towards loans, you have a disposable income of roughly $60K. You're still making more than most college graduates (link)--and these numbers are likely before taxes, while my example is after taxes.

So you have to account for the opportunity cost--you did put in an additional 7 years of training (to be a pediatrician). But you also essentially get a 60K raise after 5ish years. So 12 years out, are those college graduates making 120K post taxes? I'd wager that very few of them are. Of course, you do have to account for the fact that physicians tend to be in the upper half, at least, of college graduates, so maybe there's a difference. I'd say you'd at least break even for the higher paying post-college professions.

Plus, being a physician pretty much guarantees you a job. Assuming you graduate from a US med school. You can't really say that of many other professions. So yeah, I'd say that it's still worth it from a monetary perspective. But most of us aren't going into it for the money alone--we're going into it because it genuinely interests us and we can't see ourselves doing anything else.

I don't know what I want to go into yet (I think it's premature to I decide), but I think when looking into stuff like finances it's best to consider the 'lowest' (for lack of a better term) option. PCPs do make the lowest, so when I look into stuff like debt, I need to see how I would pay it off in those shoes.

The thing about going into a primary care specialty is that there are often loan repayment options available to them, which reduce their loan burden. It's hard to say what they are, because they vary so much from job to job, but you can cut a significant chunk of your loans with those as well.

 

[492618]

Again, it's about priorities and how much sacrifice you're willing to make now for delayed gratification. I have no doubt that I can have a decent living continuing to live on a resident's salary for a few years after I become an attending. I'm also currently unmarried with no prospects in sight, so in 4 years, maybe things will change dramatically. But if you're making, say, 125K post-tax, and put half of that towards loans, you're still making more than a resident, and this is assuming that you're the single provider in your home.

Guess it really depends on whether you have a spouse, kids, and how more lavish of a lifestyle you want post-residency.

You're not going to be paying interest on 250K all four years of med school either, but now we're just getting into technicalities. You're not going to be able to make full payments during residency. No one does, unless they have a small enough loan burden to have low enough payments to do so. And yes, even interest-only payments are expensive at that high of a loan burden. This is why most people end up doing some version of IBR.

Got it.

The take home pay of 70K that I was demonstrating above was after both taxes and loan payments. That makes a significant difference.

But let's look at actual salaries. The median starting salary for a pediatrician, which is one of the lowest paying specialties is $162K (link). Rough income federal income tax for a single person is about $40K. That puts your take home salary at about $120K (slightly more, but let's make the numbers easy). If you're putting $60K towards loans, you have a disposable income of roughly $60K. You're still making more than most college graduates (link)--and these numbers are likely before taxes, while my example is after taxes.

So you have to account for the opportunity cost--you did put in an additional 7 years of training (to be a pediatrician). But you also essentially get a 60K raise after 5ish years. So 12 years out, are those college graduates making 120K post taxes? I'd wager that very few of them are. Of course, you do have to account for the fact that physicians tend to be in the upper half, at least, of college graduates, so maybe there's a difference. I'd say you'd at least break even for the higher paying post-college professions.

Hmm, all right. I mean, it doesn't as sound that bad saying even if you're in one of the lowest paying specialties, you would still have 60k after taxes and after student loans. And you'd be able to pay off 300k in loans within 5 years (which may not be enough, but it'll eat away a lot of it and lower the interest amount), and be able to keep more after that time. And your final take home will be more than a lot of STEM graduates.

I guess as you said, it depends on sacrifice and your situation (single vs head of household; main provider vs having a spouse who earned decently as well). After that type of opportunity cost, do you really want to be taking home just 60k?

Plus, being a physician pretty much guarantees you a job. Assuming you graduate from a US med school. You can't really say that of many other professions. So yeah, I'd say that it's still worth it from a monetary perspective. But most of us aren't going into it for the money alone--we're going into it because it genuinely interests us and we can't see ourselves doing anything else.

Well, I am worried about the bottleneck of residency spots by the time I graduate near the end of the decade. If I go down the DO route, I sure as hope there's a residency waiting for me at the end of the road. But I think it's pointless to think about that now?

And right, I am strictly talking about it from a financial perspective. There will be STEM grads who will be earning well by the time they leave college and can start saving immediately for retirement and such (and many won't have any student loans). I don't know who'll come out ahead, but I guess that's hard to calculate. Like you mentioned, not every engineer is going to be taking home 120k after taxes.

The thing about going into a primary care specialty is that there are often loan repayment options available to them, which reduce their loan burden. It's hard to say what they are, because they vary so much from job to job, but you can cut a significant chunk of your loans with those as well.

Got it.