Military Pay

[erkin777]

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I am considering the health professions scholarship program with one of the military services. Does anyone know how much a military physician makes after completing residency, but while completing the 4 year payback? I heard they make about $110K to $120K right out of residency while fulfilling the payback.

 

[edmadison]

You total compensation will depend on your specialty. Your base pay will depend on your rank. After a four year military residency you would be an 0-3 (captain in army/Air force, lieutenant in navy) with 4 years time, that gets you $3,700 per month or $44,000 year. Now you also get a housing allowance $762 per month (if married or kids -- less otherwise), but this is tax free so its really like earning an additional 950 or 11,500 per year. So now we are up to 55,500. These numbers kick up quite a bit when you get promoted to 0-4 which would happend 5 or 6 years after you started.

In addition to these figures, there are a number of special pays that physicians will receive. Depending on your specialty, the total of these will range from 20,000-45,000 dollars per year.

Don't forget in your calculation that you will make significantly more in residency in the military than in the civilian world. As an intern you would make about $45,000 per year. Not bad considering most military hospitals are in relatively low cost of living areas.

Now here's the low down. You will do fairly well compared to your civilian counterparts if you are going to specialize in a low paying area, e.g. family practice or pediatrics. However, the military doesn't come close to what the high paying specialist will make. That being said, do not forget about the cost of debt. If you are attending a private medical school, the cost of your debt will be huge. I have shown the figures before in another forum, but here goes again. If you take your debt principal and accrued interest, amortize it for payback over fifteen years or so and then factor in that you have to pay it back with income AFTER taxes, you will be looking at having to earn about 700,000 to pay back your loans! If you do the scholarship, you'd be debt free after four years.

Now that's just the money aspects. There are many pros and cons to signing up. Search this site for HPSP and see. Many of us are happy to answer any further questions.

Ed

 

[A. Caveman]

is that a fact ed? 700,000!? what forum did you describe this on?

 

[sandflea]

Originally posted by edmadison:
•That being said, do not forget about the cost of debt. If you are attending a private medical school, the cost of your debt will be huge. I have shown the figures before in another forum, but here goes again. If you take your debt principal and accrued interest, amortize it for payback over fifteen years or so and then factor in that you have to pay it back with income AFTER taxes, you will be looking at having to earn about 700,000 to pay back your loans! If you do the scholarship, you'd be debt free after four years.

Ed•••

i thought that the HPSP covered tuition, so why would you accrue any debt if no loans were taken out in the first place? i was under the impression that the only 'debt' that resulted from this program was the service to the military you were obligated to take part in after residency.

 

[HPSP]

Sandflea,
Ed is talking about the debt accrued is one does not take the scholarship.

 

[edmadison]

I run the calculations for you here, because I think they are interesting:

Private medical school $40,000 per year times 4 years. At the end of four years you will owe about 185,000 with the accrued interest, assuming a 6% rate. Now the interest continues to accrue during your residency, lets assume a four year OB/GYN residency. This now puts you at $234,000 This is the amount of money you have to pay back.

Lets assume you take a high paying job and can afford a ten year repayment schedule at a conservative 6 percent. Amortizing, this equates to a monthy payment of $2840. Multiply that time 120 months and you get: $341,000, Thus, it take $341,000 to pay back $160,000.

Now here's the good part. You pay your loans back in after-tax dollars. Since you are a physician and have a "high" income, you do not qualify for the interest deduction on your student loans. Also, since you have a "high" income, you will pay an effective tax rate of 40-50% factoring in federal, state, local, FICA and Medicare taxes. In other words, you have to earn $1.60 - $2.00 to pay off each $1.00. In total, then, you have to earn between 545,00 - 680,000 to pay off your loans.

Two other things to note. First, this calculation assumed a fairly low interest rate of 6%, that is very unlikely to hold for long. Second, if you really want to assess the financial impact of the two different routes, you should add in the stipend you get in the program and the differential in residency pay. The stipend probably adds up to $50,000 while the residency differential is about $10,000 - $15,000 per year. This adds up to approximately another 100,000 in benifit to the scholarship.

We my colleges act incredulous that I "sold my soul" to the army, I respond that they sold theirs to debt and I have my soul back 4 years after residency, not 10 or 15 like them.

Hope this helps,

Ed

 

[tec]

Plus, add into those amounts any undergrad loans that are still outstanding (unless you are one of the lucky ones who had someone else foot the bill 🙂

 

[ducam]

What about ROTC? Does anyone know how NROTC works in how to go to medical school and have them pay for that along with your undergrad. school. And if you are in ROTC how would the rank you have differ from that of someone who did HPSP?

Thanks.
Ducam-

 

[sandflea]

Originally posted by HPSP:
•Sandflea,
Ed is talking about the debt accrued is one does not take the scholarship.•••

oops, sorry! if i had carefully read the section i quoted, it would have answered my own question. 😀

 

[HPSP]

Ducam,
ROTC is specifically for undergrad and does not pay for any post grad study. You would incur an obligation for the ROTC and apply for the HPSP seperately, and thus incur an additional obligation.