Payment of Loans: Timescale?

[yrodri15]

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Hey guys,

Well I posted this question here since the cost of a particular med. school might factor into our decisions..

Ok so I need someone to walk me through this.

WHEN do you start paying back your loans....
WHAT is the timescale (i.e. 10 years, 15 years, etc.)....
WHAT does the monthly payment, of, lets say, "100,000" really amount to?
DO loans affect your credit report when attempting to purchase a house, etc. later on?


Thanks, and if search were enabled, I wouldn't have posted this 😀

 

[Darth Asclepius]

loan repayment calculator

Careful, this doesn't account for interest being added to it. The monthly payments this gives you assumes you are paying the interest along the way, which you probably won't be doing since you'd be living off of loans in the first place

My loans allow you 20 years to pay them back. You might be able to wait until after residency to start paying the loans. That depends on the loan itself and sometimes your financial situation (if you qualify for forebearance).

 

[Law2Doc]

loan repayment calculator

Careful, this doesn't account for interest being added to it. The monthly payments this gives you assumes you are paying the interest along the way, which you probably won't be doing since you'd be living off of loans in the first place

My loans allow you 20 years to pay them back. You might be able to wait until after residency to start paying the loans. That depends on the loan itself and sometimes your financial situation (if you qualify for forebearance).

I agree that 20+ years is not unusual. Not sure about waiting until after residency, though, as you will have income at that point, so I would suspect not -- I'm sure someone on the other boards could answer this definitively. Even if they allow you to defer loans through residency you might want not to, as you should be earning enough to pay the interest, and perhaps don't really want it to accumulate for 3-5 more years before you start paying it down.

 

[Non-TradTulsa]

I agree that 20+ years is not unusual. Not sure about waiting until after residency, though, as you will have income at that point, so I would suspect not -- I'm sure someone on the other boards could answer this definitively. Even if they allow you to defer loans through residency you might want not to, as you should be earning enough to pay the interest, and perhaps don't really want it to accumulate for 3-5 more years before you start paying it down.

I don't get to be useful as a CPA pre-med very often, so I'll try here - although someone who is actually in residency or practice probably knows the ropes far better than I would.

Most residents do apply for deferment on their loan payments. It would be nice to get started paying the debt, but... let's say you have $150K in debt (which is going to be more typical than $100K). On a 15-year payment schedule, that's something like $1,100/month. If you do your residency in a large city and are making $38-$40K, after tax you are not going to have enough money to make that loan payment and still get a safe apartment and an occasional Happy Meal.

Yes, your loan balances do go on your credit report. If you live in a high-cost housing area of the country, it can be a real problem. If you want to pay $400K for a "starter" home in many areas of Southern California, many banks will look at your total debt - student loans and mortgage - and they will decide that you would be carrying too much debt - regardless of your income - and they'll deny you a mortgage. Some banks specialize in "physician" mortgages, however, since a physician's income stream is pretty reliable, they'll allow higher total debt ratios.

The difference between a 15-year loan payment and a 20-year loan payment is generally only going to be a few hundred dollars a month. For me, as a non-trad, if I went over 20 years, I'd be paying student loans out of my social security check, which would be very un-cool.

 

[Darth Asclepius]

The difference between a 15-year loan payment and a 20-year loan payment is generally only going to be a few hundred dollars a month.

That and potentially thousands (or tens of thousands) of dollars in total repayment amount due to interest. If I can afford it, I'll probably try to pay mine off sooner than later because of that, but the loan payments are going to be insane.

 

[majikbob]

That and potentially thousands (or tens of thousands) of dollars in total repayment amount due to interest. If I can afford it, I'll probably try to pay mine off sooner than later because of that, but the loan payments are going to be insane.

Loan repayment is going to be a big consideration for our generation of docs. It used to be 15 years ago you could pay of your loans in 5 years and be done with it, but talk to docs today and the way reimbursement is going down and insurance costs (especially in the specialities), most tell me they could never have payed them back on anything like that aggressive of a time scale today. Which, as others have stated, can dramatically affect for quality of life, job choice, and even deciding to reproduce. For me this large debt load is a huge loss of freedom, and makes loan repayment programs that swap years of service (both military and civilian) for years of debt more valuable as salaries decrease. Especially when once considers some will pay for 4 years of school now for years of service in 6-10 years. We could be into a form of socialized medicine by then, across the tipping point, and into god knows what standard for salaries and job freedom.

Just something to consider. Don't take loans with too caviler of an attitude.

Oh--and be serious our debt load for school, with living expenses, is going to be closer to 180-200K