Medical School Debt Experiment - Living Like a Resident

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One of the most common questions, and rightfully so, when applying to medical school and X v Y is “how much does it cost?” Also, you have crazy loans, you should live like a resident for X amount of time. Let’s try to get some basics out there. I will try to deal in simple scenarios and medians because there are a ton of moving parts.

*Disclaimers: I am an eyeball mechanic with online calculators and am not an accountant or lawyer. I only know the basics of the current loan market, which with the current environment may be as much as anybody. True data is pretty hard to find and I encourage you to reference Mark Twain when it comes to statistics.

So far as I can tell, the average medical school debt is somewhere approaching $250k, and the really expensive schools wind up with a cost of attendance around $440k. Current student loan rates sit about 9.08%.

I’ll do 2 scenarios: First, where you make enough in residency/have a conventionally working loan program where you can pay enough to keep interest from compounding while you’re not making much. Second, where you go into forbearance and the bank keeps on stacking against you for your 3 year residency in IM/FM/EM/peds since they’re fast and have a large market share of residents. That gives us 4 points of debt:

$250k
$328k
$440k
$578k

You take a $300k job which is about the MGMA median across those, in the state of Georgia which appears to have the median state income tax rate and cost of living for the US. You as a single person now have $195k after taxes to play with. The median household income in the US is $70k after taxes, and you’re dedicated and you’ll be living median to get rid of debt ASAP (while joyously still living on a little more than in residency), so you get $125k to throw at your loans per year. You’re done in:

$250k ~27 months
$328k ~36 months
$440k ~51 months
$578k ~72 months

This is, of course, a MASSIVE oversimplication, but hopefully it provides a very basic framework.

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[anon2]

Great post, but why end the calculation at debt repayment? People don't accept extraordinarily deferred gratification in high-paying careers just to breakeven at 0 NW.

Continue living "like a resident" aka top half of one of the wealthiest countries in the world, and according to the classic MMM, a 64% savings rate will get you to retirement outright in another 11 years.

I'd shade the investment+drawdown assumptions and call it ~13. My rules of thumb: from 0 NW, you can retire in 20 years on a 50% savings rate, 10 years on 70%. This is for bulletproof safety against never earning a cent again in employment; dropping to minimal part-time ("coast FIRE") can happen much earlier.

In other words, lifestyle inflation (aka spending addiction; pathopsych: hedonic treadmill) is the difference between manumission from capitalism by PGY-18 and dying chained to the job regardless of infinity income.

--- person who FIREd within 10 years total in tech/wall street, realized savings rate 67-79%