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What if a person has 500K+ of debt?
Don't do Peds. Or at least think carefully about it.
One of the reasons I felt fine with going into Peds knowing the salaries I could expect to make was that I did a PhD and had no med school debt. It's unaffordable with $500k of debt and I wouldn't bank on PSLF. IBR makes things somewhat easier but I'd still be skeptical that the loan forgiveness after 20 years (through IBR) or 10 years (through PSLF) will be there forever, especially for physicians. As far as I understand you still owe taxes on the balance paid off with IBR, which is a huge financial burden:
Think about it this way, paying off $500k in 20 years at 6.8% would mean paying almost $4000 per month, or about $46k per year (you will have paid over 900k for your original 500k debt). As a general pediatrician making $140k per year, that would be about half your after-tax income, or more depending on where you live. You still have to pay for housing, retirement, food, (maybe kids), etc.
If you do it through IBR you're paying 10% of your AGI, or about $1k per month, which doesn't even cover half of the interest on the loan. Now, if PSLF still exists then the rest of the loan (750k after 10 years) if forgiven tax free. If that tax-free forgiveness goes away, though (no guarantees PSLF is still around for physicians 10 years from now), then you're really in trouble since you now have a 750k loan which will only continue to grow. After 20 years for IBR you have to pay taxes on $1.3 million forgiven (at least 500k lump sum). Also, student loans are non-dischargeable in bankruptcy, so if the loan forgiveness goes away there is no other way to get rid of the debt other than paying it off.
I'm not saying don't do Peds, I'm saying know what kind of financial hole you may be getting into. That hole may severely limit life choices in the future. Is doing Peds worth decades of paying off a student loan or perpetually living like a resident when you could do something like medicine and more easily be able to afford your debt?
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