Medicine - Debt and Other Economic Issues

[DarkChild]

Forgive cuz I know very little about this, but how do most people finance their med school?
Worst case scenario and I have to borrow the $120K (4 years @30K) - when will I be able to even begin to start paying that off?
I've heard that residents get paid ~30K - can anyone confirm this? But my real question is how soon after I complete the MD will I be able to start significantly reducing the debt I have incurred.
I would love to hear from any current med students or even better, any recent grads.
Oh - one more quick question: how much (about) does a junior doctor in academic medicine (i.e. doing research at a teaching hospital) make a year - is it like 60K or is it more like 120K. Call me slow, but the reality of having to actually pay for a medical education is just now beginning to sink in.

---

Members don't see this ad.

 

[Trek]

Residents make different depending on what year they are, but it only increases like 1.5G/year. Most make around 35-38. Many people start paying off during residency cos you don't want it grow unchecked. They'll work with you obvously, since you have to eat, but my FAO said most lenders expect you to start repayment upon graduation. --Trek

 

[mpp]

If you borrow using the unsubsidized Federal Stafford Loans, you must begin repayment 6 months after school is complete. However, there is a deferment allowed for residency or at least for financial hardship of which you would qualify while being a resident. In this way, you really don't have to begin paying back the loan until after you complete residency (although they usually like you to make at least the interest payments while in residency). If the loans are unsubsidized however, they will be accruing interest all along.

First year resident's today make around $36,000 or so per year. This increases with each year of residency (3rd year residents, also known as PGY-3 makes around $40,000 per year). The scale also goes up each year so by the time you are finished with medical school, the first year residents should be making more than $36,000.

Typically the Stafford loan repayment period is 10 years. The loan rate is variable so it is difficult to determine exactly what your monthly payment will be, but the program offers various payback methods, such as a sliding payback in which your payments get higher and higher as the years go by and presumably you make more money and can afford the higher payments. There is also a maximum cap on the interest rate at 8.25 percent. The current rate is an unprecedented low of about 3.5 percent.

To get a feeling of what the payments would be like, if you borrowed $30K per year over the four years of medical school your total loan amount including interest (using 6.5 percent as an average) would be $138,750. If you go through a four-year residency without making the interest payments your loan amount would grow to $175,770. To pay that off over 10 years at 6.5 percent the payment would be $1,996 per month or just under $24,000 per year for 10 years.

That might seem incredibly scary at first. But figure what doctor's salaries are today. Assuming a nice lowball average of $150,000 today...perhaps $175,000 in eight years (an increase of about 2 percent per year), even if you lost 60 percent in taxes that would leave you with $105,000. After you pay off your loan you'd still have more than $75,000 to spend...and that's after taxes and after paying off the loan.

One last note. Your $30K/year in loans assumes a school that is about $15,000 in tuition. You'll still need living expense money (rent, transportation, books, food, etc.) while your are in medical school. If the school's tuition is $25,000, you may need to borrow as much as $40K per year. Look at state school's and less expensive private schools if this seems a bit scary to you.

 

[DarkChild]

mpp and Trek - I really appreciate the responses.
mpp - those numbers are definately scary; but I think you're right... after all people are still becoming doctors in spite of the mountainous debt, so there must be a way.

 

[Trek]

Go with what mpp says- he's got the financial stuff down PAT. But these numbers are scary- and i'm going to a state school! --Trek

 

[1st Rain Drop]

The numbers are definately scary. Especially to those of us who have undergrad and grad loans to pay off too.