Paying for med school/loans

[bigbad]

I know the majority of students have huge amounts of debt and pay for med school almost entirely with loans.

I don't have any debt coming out of college thanks to my parents. Although they may have enough to pay for med school, I have no intention of depleting their life savings and don't expect them to pay for me past college.

If they have high income/net worth, is that going to make it very difficult for me to get loans? I know that they were paying the full price for my college education because of this. Does the FAFSA calculate an expected family contribution for graduate school as well?

I've tried to do research, but there doesn't seem to be any info on my specific situation.

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[Twinnering]

I know the majority of students have huge amounts of debt and pay for med school almost entirely with loans.

I don't have any debt coming out of college thanks to my parents. Although they may have enough to pay for med school, I have no intention of depleting their life savings and don't expect them to pay for me past college.

If they have high income/net worth, is that going to make it very difficult for me to get loans? I know that they were paying the full price for my college education because of this. Does the FAFSA calculate an expected family contribution for graduate school as well?

I've tried to do research, but there doesn't seem to be any info on my specific situation.

Depends on what kind of loans you're talking about. The federal loans you shouldn't have a problem getting, I believe they give them to everyone up to the cost of attendance. Some schools have needs-based loans/institutional loans that are given to the "neediest" students (and one of the determining factors for getting these types of loans is parental income). There are also merit/needs-based scholarships and grants offered through several institutions.

 

[Twinnering]

Also (sorry forgot to answer the FAFSA EFC bit), the FAFSA will calculate your "expected family contribution." However, since you are going to be a graduate student you apply as independent on the FAFSA and unless your (personal, not parental) income is a significant amount, you should technically have an EFC of 0. Some schools, regardless of this fact will ask for your parents income to determine what types of aid to give you.

 

[pre med 2014]

You don't have to disclose parents info on the FAFSA at least I didn't.

Let your parents pay or at least let them pay half so you stay under 100K in debt

 

[bigbad]

I'm in the same situation as you bigbad. My parents have assured me numerous times that they are completely fine with paying and that it will not impact their standard of living in any way. I would let them pay; don't get yourself in formal debt that you will have to pay interest on. Why not just repay your parents back later?

I just don't feel like that should be any of their responsibility at this point. In addition, I have a sibling starting college soon, so that's going to be an extra drain on their resources.

 

[Doctor Strange]

I just don't feel like that should be any of their responsibility at this point. In addition, I have a sibling starting college soon, so that's going to be an extra drain on their resources.

If you don't want their money, I would gladly take it. Just think about it this way... If you had the opportunity to pay for YOUR child's education, wouldn't you want to do it?

 

[MVP]

i thought that for med school specifically you don't completely count as an independent?

 

[Perrotfish]

If your parents have the resources and you're not comfortable taking the money as a gift, take it as a loan. I know it sucks to have your parents involved with your finances into your 30s, but you'll be in a better position to actually be independent and helpful when your parents are retired and need your help if you don't sign up to give all of your future income to the federal government now. Federal loans accumulate interest at a rate of almost 8% a year and compound continuously through school and residency when you can't pay it back, which more than doubles the amount you need to pay for your already unreasonable tuition. For example if you take out a pretty typical 200K for medical school you will end up owing over 300K by the end of a 4 year residency and and then need to pay back more than 450K over an (optimistic) 10 year repayment plan. If you really want to make sure your parents lose nothing in the deal you can even pay them back at 2.5% year, but don't sign on to the government's interest rate if you have an option.

Grad loans are a tax, they transfer the money you earn through their hard work to the federal government. The goal here isn't to rob your parents, its to keep your money in your family's hands and away from the government. Even if you agree to pay your parents the entire 500K that you would have paid in exchange for the 200K loan its better than giving the same money to the government.

 

[Doctor Strange]

If your parents have the resources and you're not comfortable taking the money as a gift, take it as a loan. I know it sucks, but you'll be in a better position to actually be independent when your parents are retired and need your help if you don't sign up to give all of your future income to the federal government now. Federal loans accumulate interest at a rate of almost 8% a year and compounds continuously through school and residency when you can't pay it back, which effectively doubles the amount you need to pay for the same tuition. For example if you take out a very reasonable 200K for medical school you will end up owing over 300K by the end of a 4 year residency and and then need to pay back more than450K over an (optimistic) 10 year repayment plan. If you really want to make sure your parents lose nothing in the deal you can even pay them back at 2.5% year, but don't sign on to this interest rate if you have an option.

Interest accrues but does not capitalize while in school.. At least on federal loans.

 

[yehhhboiii]

.

 

[Perrotfish]

Interest accrues but does not capitalize while in school.. At least on federal loans.

That's true. The point remains, though: you can still pay more than twice as much for the same tuition through federal loans as if you get the loan from your family.

 

[zeppelinpage4]

If your parents have the resources and you're not comfortable taking the money as a gift, take it as a loan. I know it sucks to have your parents involved with your finances into your 30s, but you'll be in a better position to actually be independent when your parents are retired and need your help if you don't sign up to give all of your future income to the federal government now. Federal loans accumulate interest at a rate of almost 8% a year and compounds continuously through school and residency when you can't pay it back, which effectively doubles the amount you need to pay for the same tuition. For example if you take out a very reasonable 200K for medical school you will end up owing over 300K by the end of a 4 year residency and and then need to pay back more than450K over an (optimistic) 10 year repayment plan. If you really want to make sure your parents lose nothing in the deal you can even pay them back at 2.5% year, but don't sign on to this interest rate if you have an option.

Grad loans are a tax, they transfer their money you earn through their hard work to the federal government. The goal here isn't to rob your parents, its to keep your money in your family's hands and away from the government. Even if you agree to pay your parents the entire 500K that you would have paid in exchange for the 200K loan its better than giving the same money to the government to piss away.

I agree. If your parents can pay for your med school without it causing them any noticeable burdens I'd take it.

With compound interest, you'll be paying back so much more because of these federal loans. Whereas you can just pay your parents back much more easily without the interest.

Interest accrues but does not capitalize while in school.. At least on federal loans.

I could be wrong, but when I did my entrance counseling, it said that graduate students could only get the unsubsidized federal loans, and that those accrue interest while we're in school. So if that's true, the original post will likely have the interest accrue while they are in med school. I believe it is the subsidized federal loans that don't accrue interest while we're in school, but I don't think medical students get that anymore.

 

[pre med 2014]

If your parents have the resources and you're not comfortable taking the money as a gift, take it as a loan. I know it sucks to have your parents involved with your finances into your 30s, but you'll be in a better position to actually be independent and helpful when your parents are retired and need your help if you don't sign up to give all of your future income to the federal government now. Federal loans accumulate interest at a rate of almost 8% a year and compounds continuously through school and residency when you can't pay it back, which more than doubles the amount you need to pay for your already unreasonable tuition. For example if you take out a pretty typical 200K for medical school you will end up owing over 300K by the end of a 4 year residency and and then need to pay back more than 450K over an (optimistic) 10 year repayment plan. If you really want to make sure your parents lose nothing in the deal you can even pay them back at 2.5% year, but don't sign on to the government's interest rate if you have an option.

Grad loans are a tax, they transfer the money you earn through their hard work to the federal government. The goal here isn't to rob your parents, its to keep your money in your family's hands and away from the government. Even if you agree to pay your parents the entire 500K that you would have paid in exchange for the 200K loan its better than giving the same money to the government.

+1 Keep the money in the family and don't give it to government.

So If you take out 200K at 8% it will be 328K at the end of a 4 year residency.

Assume a 200K physician salary, 140K after taxes. 40K to live on and pay 100K per year and in 4 years it will be paid off. That's if you can live like a first year resident for 4 years.

 

[ericksonj15]

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[SN12357]

It's hilarious the way people here seem to assume because someone's parents paid for their college education that means they can or should pay for their medical school education. As though after saving carefully for years to pay for undergrad they can just toss off another 200k check.

My parents paid for my college education outright, but I have younger siblings and although my parents are well off they flat-out cannot pay for medical school. And I would much, much rather they have a strong retirement savings to lean on later.

OP, we're in the same boat. You'll be able to get loans. I'm a nontrad and it's absurd that my parents income will have a negative impact on my ability to get financial aid, but that's just the way the game is set up. Nothing to do about it but cope.

 

[littlelight]

Wow. I'm in a completely different boat. My mom is below the poverty line and I get food stamps cuz I barely make enough money for rent and utilities. All I know is that I want to be a doctor and once I'm in I'll do whatever it takes to pay for it, loan, work, whatever.
Even if my mom could pay for my school I would never let her compromise her way of life for my dreams. I don't need to be a doctor but I want to more than anything.

 

[Perrotfish]

I could be wrong, but when I did my entrance counseling, it said that graduate students could only get the unsubsidized federal loans, and that those accrue interest while we're in school. So if that's true, the original post will likely have the interest accrue while they are in med school. I believe it is the subsidized federal loans that don't accrue interest while we're in school, but I don't think medical students get that anymore.

What he was saying was that during school (and the first three years of residency, if you're in IBR) interest accrues but doesn't compound. So in your first year you take out 50K of loans and pay 8% interest (4K). The second year you take out another 50K of loans and now you pay 8% interest on every loan you've taken out (8K of interest) but you DON'T pay interest on the interest your loan has already accrued (you don't pay 8% on that 4K of interest you've already added on to your debt). Until you're out of school you never pay interest on interest that has already accrued.

 

[Perrotfish]

Wow. I'm in a completely different boat. My mom is below the poverty line and I get food stamps cuz I barely make enough money for rent and utilities. All I know is that I want to be a doctor and once I'm in I'll do whatever it takes to pay for it, loan, work, whatever.
Even if my mom could pay for my school I would never let her compromise her way of life for my dreams. I don't need to be a doctor but I want to more than anything.

This is the boat most people are in. You try to get into the cheapest school you can and then either take out loans or join the military

 

[littlelight]

This is the boat most people are in. You try to get into the cheapest school you can and then either take out loans or join the military

Neither of those sound appealing but I'll do what I have to. =)

 

[pre med 2014]

Does anyone know people who pay back 100K per year in loans as attendings?

 

[Perrotfish]

Does anyone know people who pay back 100K per year in loans as attendings?

Yes but not many. As you pointed out above to even have 40K left to live on you need to be making nearly 200K a year, which most newly minted physicians won't (FM, Peds, PM&R, Psych, etc will still take the lions share of medical school grads). Even if you do have the 140K of after tax income, you need to have the expenses of a resident to live on 40K and keep up with the car/smart phone/internet/CME expenses which the profession forces on you, which basically means not having kids. There are good biological reasons why you don't want to put off having a family until your early 40s. Finally most people just aren't willing to live like that for that long. By the time you finish residency you've already spent a decade watching your college friends live a middle class life while you're stuck in academic purgatory. It takes a very strong willed person to keep living like a mill worker when they have deferred their life for a decade and now have 100K or more of after tax income is rolling in.

 

[pre med 2014]

...

 

[pre med 2014]

Yes but not many. As you pointed out above to even have 40K left to live on you need to be making nearly 200K a year, which most newly minted physicians won't (FM, Peds, PM&R, Psych, etc will still take the lions share of medical school grads). Even if you do have the 140K of after tax income, you need to have the expenses of a resident to live on 40K and keep up with the car/smart phone/internet/CME expenses which the profession forces on you, which basically means not having kids. There are good biological reasons why you don't want to put off having a family until your early 40s. Finally most people just aren't willing to live like that for that long. By the time you finish residency you've already spent a decade watching your college friends live a middle class life while you're stuck in academic purgatory. It takes a very strong willed person to keep living like a mill worker when they have deferred their life for a decade and now have 100K or more of after tax income is rolling in.

It is so depressing to think about planning out your entire life out to a tee.

Have family by 35. Pay off loans by 40. Save for retirement and die.

 

[Doctor Strange]

It is so depressing to think about planning out your entire life out to a tee.

Have family by 35. Pay off loans by 40. Save for retirement and die.

Not having kids. Problem solved!

 

[Perrotfish]

It is so depressing to think about planning out your entire life out to a tee.

Have family by 35. Pay off loans by 40. Save for retirement and die.

Try and remember that you're not planning your life, just your finances. In your mid 30s you could be living in a mansion in Mississippi, working Locums as you explore the US, planning a medical mission in Guatemala, running an aid station for Marines in Kandahar, or just quietly Surfing through 3 day weekends in San Diego. All that you're planning is to make sure you have enough money to live the life you want to live rather than the life you have to live.

 

[zeppelinpage4]

What he was saying was that during school (and the first three years of residency, if you're in IBR) interest accrues but doesn't compound. So in your first year you take out 50K of loans and pay 8% interest (4K). The second year you take out another 50K of loans and now you pay 8% interest on every loan you've taken out (8K of interest) but you DON'T pay interest on the interest your loan has already accrued (you don't pay 8% on that 4K of interest you've already added on to your debt). Until you're out of school you never pay interest on interest that has already accrued.

Oh okay, that makes a lot of sense. Thanks for clarifying! I assumed it would be compound interest while we're in school, so that's a good thing it's not.

I'm just starting to learn about this whole loan thing.

 

[RedICEE]

Try and remember that you're not planning your life, just your finances. In your mid 30s you could be living in a mansion in Mississippi, working Locums as you explore the US, planning a medical mission in Guatemala, running an aid station for Marines in Kandahar, or just quietly Surfing through 3 day weekends in San Diego. All that you're planning is to make sure you have enough money to live the life you want to live rather than the life you have to live.

Great contribution to the thread. It's easy to feel like we're signing our life away to live in some dungeon reading posts sometimes.

 

[mvenus929]

It is so depressing to think about planning out your entire life out to a tee.

I highly recommend everyone read up on Dave Ramsey's philosophy. Total Money Makeover is a good starting point.

 

[pre med 2014]

Can you take out FAFSA loans to put down deposits?

Like if you only need a few thousand early can you take out little before taking out 50K for first year tuition?

 

[bigbad]

OP, we're in the same boat. You'll be able to get loans. I'm a nontrad and it's absurd that my parents income will have a negative impact on my ability to get financial aid, but that's just the way the game is set up. Nothing to do about it but cope.

I hear people brag about how they worked their way through college and did everything by themselves. Their "working" usually consisted of part-time work and a 95% federal contribution for having poor parents.

Meanwhile, I'm stuck looking like a loser for taking money from my parents because I had no other choice (whereas they took money from the government). I wouldn't even have been able to get decent loans 4 years ago because I happen to have responsible parents that saved every penny.

What pisses me off is that this doesn't stop into my mid-twenties... I'll be 30 years old and my parent's income will still be having negative consequences for me. Ridiculous isn't even the word.

 

[Doctor Strange]

I hear people brag about how they worked their way through college and did everything by themselves. Their "working" usually consisted of part-time work and a 95% federal contribution for having poor parents.

Meanwhile, I'm stuck looking like a loser for taking money from my parents because I had no other choice (whereas they took money from the government). I wouldn't even have been able to get decent loans 4 years ago because I happen to have responsible parents that saved every penny.

What pisses me off is that this doesn't stop into my mid-twenties... I'll be 30 years old and my parent's income will still be having negative consequences for me. Ridiculous isn't even the word.

FWIW, you're a winner in my book.

 

[jw3600]

Interest free loan from parents is the way to go. Yeah, you rob them of a couple thousands bucks probably with the time value of money, but if they can afford it I'm sure they would be delighted to. Plus, if your parents are pretty well off anyway, they are already getting pillaged by the government plenty. No need to increase the plundering with ridiculous 8% loans paying for the racket that is higher education.