ROI for school Non Trads

[libertyyne]

Does anyone have an ROI calculator or spreadsheet. I am a non trad in my 30's and received my first acceptance. I wanted to make sure I was not committing financial suicide by taking on 250 K worth of debt at this time and forgoing 300K in income during my schooling. Has anyone created a spreadsheet for this purpose? Thanks.

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[tartesos]

Congrats on acceptance.
I don't have the data, but I can bet you $ you will be alright( if you are going to a us school that is).


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[libertyyne]

Congrats on acceptance.
I don't have the data, but I can bet you $ you will be alright( if you are going to a us school that is).


Sent from my iPhone using SDN mobile app

Thank you. US Osteopathic school acceptance at this point. I have a few interviews from MD schools, looking to opt for that sweet IS school tuition if they will have me. It feels like I will be fine, but I wanted to run some scenarios to be sure.

 

[tartesos]

Thank you. US Osteopathic school acceptance at this point I have a few interviews from MD schools, looking to opt for IS schools if they will have me. It feels like I will be fine, but I wanted to run some scenarios to be sure.

That's smart to prepare and ask questions, I'm sure some people here have gone through the same.

Good luck!


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[QofQuimica]

Does anyone have an ROI calculator or spreadsheet. I am a non trad in my 30's and received my first acceptance. I wanted to make sure I was not committing financial suicide by taking on 250 K worth of debt at this time and forgoing 300K in income during my schooling. Has anyone created a spreadsheet for this purpose? Thanks.

Calling it "financial suicide" is probably a bit strong, but yes, you are definitely going to take a major hit to your net worth for many years (likely a couple of decades) by going to medical school as a nontrad. Factors such as which specialty you go into and how much debt you take on (along with how much your current job pays, what your loan interest rate is, and how frugally you live during and after your training) will affect how many years of working FT as an attending physician it will take until you "break even." Major life events like a divorce (very bad for the bottom line) or other massive unexpected expenses (disability, serious health condition, being sued, etc.) may also be an issue for some people. The good news is that several of these risks can be mitigated with insurance.

If you're interested, there are some threads in the nontrad forum where people took a stab at doing a rough calculation of their break even points. Or you can make your own spreadsheet using Excel and do some sensitivity testing to see how the various factors I mentioned above affect the number of years to your break even point. But in general, it seemed like most people who started med school under age 40 were probably going to ultimately come out ahead if they worked FT until a traditional retirement age of 67 after completing their training. Older nontrads often did not ever break even, both because they were earning more money beforehand since they were already mid-career, and because they didn't have as long of a work life expectancy as a physician compared to younger nontrads and trads. Then again, someone who chooses to go back to med school in their 40s or 50s likely isn't doing it because they're looking to maximize their lifetime income.

Getting back to what I alluded to in the first paragraph, I'd also caution you that if you're not already financially independent (which I'm guessing you're not since you're talking about taking out loans), it is absolutely essential that you purchase a good disability insurance policy as soon as you are able (most likely as an intern, since you won't have any income to protect while in med school). I can tell you from experience that paying for DI in your 40s is painfully expensive (especially if you are female). However, losing your livelihood and being financially ruined would be much worse. And unfortunately, time would not be on your side as a 40-something-year-old new attending who has half a million dollars in debt and an upcoming retirement to fund, if you were unlucky enough to have some kind of catastrophic event and not be able to work long enough as an attending to meet all of your financial obligations.

 

[sazerac]

Q, as usual, is spot-on for non trad financial advice.

OP, forget the ROI calculators and spreadsheets. There are a dozen in the non-trad forum, and they all say the same thing. I can save you a ton of work and just give you the answer here.

If you matriculate medical school at age 40, you will die with just as much money as if you didn't go to medical school. If you enter med school before age 40, you come out ahead. If you enter after age 40, you are at a financial loss (but at age 40 you realize there are more important things in life than just dying with the most money). It never seems to matter how you set these calculations up, they always spit out the same answer. Start med school after age 40 like I did and it's a labor of love.



Also, please note that federal student loans are forgiven if you become disabled. But it is a taxable forgiveness so you will suddenly owe taxes on hundreds of thousands of dollars of phantom income. When you are disabled!!! This isn't theory, it's a big problem and it has been happening for years now. Plan ahead!

http://mobile.nytimes.com/2014/03/2...de-loan-debt-for-a-tax-bill-from-the-irs.html

 

[Plastikos]

In addition to the above, make a very concerted effort to look at shorter residencies, and if you consider fellowship make sure it actually pays something or allows you to do something for sure you cannot without it. An extra year or three can really put further damage to your finances. In that same vein you can consider specialties that give ample time and ability to moon light and make decent money in residency.

 

[Merely]

Lol it seems like all of your comments are just random conjecture. We have absolutely no idea if he's going to come out ahead or not because we don't know what he's going to specialize in and more importantly how much he's going to make. Where are you guys getting this seemingly arbitrary number of 40 from? We don't even know how much he's making before he's going to school lol so without a LOT more information the only thing we can see is we have no clue.

 

[libertyyne]

Q, as usual, is spot-on for non trad financial advice.

OP, forget the ROI calculators and spreadsheets. There are a dozen in the non-trad forum, and they all say the same thing. I can save you a ton of work and just give you the answer here.

If you matriculate medical school at age 40, you will die with just as much money as if you didn't go to medical school. If you enter med school before age 40, you come out ahead. If you enter after age 40, you are at a financial loss (but at age 40 you realize there are more important things in life than just dying with the most money). It never seems to matter how you set these calculations up, they always spit out the same answer. Start med school after age 40 like I did and it's a labor of love.



Also, please note that federal student loans are forgiven if you become disabled. But it is a taxable forgiveness so you will suddenly owe taxes on hundreds of thousands of dollars of phantom income. When you are disabled!!! This isn't theory, it's a big problem and it has been happening for years now. Plan ahead!

http://mobile.nytimes.com/2014/03/2...de-loan-debt-for-a-tax-bill-from-the-irs.html

I suppose if you are disabled and get a tax bill, is that dischargable in bankruptcy?

 

[libertyyne]

Lol it seems like all of your comments are just random conjecture. We have absolutely no idea if he's going to come out ahead or not because we don't know what he's going to specialize in and more importantly how much he's going to make. Where are you guys getting this seemingly arbitrary number of 40 from? We don't even know how much he's making before he's going to school lol so without a LOT more information the only thing we can see is we have no clue.

This is very valid point. The problem I am encountering is the variation in specialty salaries and incorporating changes in Tax rates and varied training durations. I have been looking on the non trad forms but I cant seem to find anything that provides IRR or NPV based assesment. I suppose Building my own is a fun excercise, all of it is almost useless because the farther you project out the higher degree of uncertainity regarding returns and future salaries.

 

[libertyyne]

In addition to the above, make a very concerted effort to look at shorter residencies, and if you consider fellowship make sure it actually pays something or allows you to do something for sure you cannot without it. An extra year or three can really put further damage to your finances. In that same vein you can consider specialties that give ample time and ability to moon light and make decent money in residency.

I did not even know moonlighting during residency was a possibility. Is that even doable with the 80 hour limits ?

 

[sazerac]

Lol it seems like all of your comments are just random conjecture. We have absolutely no idea if he's going to come out ahead or not because we don't know what he's going to specialize in and more importantly how much he's going to make. Where are you guys getting this seemingly arbitrary number of 40 from? We don't even know how much he's making before he's going to school lol so without a LOT more information the only thing we can see is we have no clue.

I am getting these numbers from hanging out in the non-trad forum, and seeing this question asked and answered a zillion times.

Yes there are a lot of unknowns. How much did you make before? How much will you make? Where will you live? With whom do you live? How long will you work? Etc.

But the funny thing is, in the Kallman-esque Filter of years of analysis of multiple scenarios in the non trad forum, the answer signal that emerges from the SDN noise is always matriculation at 40.

We can make spreadsheets and ROI estimates until the icon turns blue, but the underlying question from the OP is "am I committing financial suicide". He's in his 30s and already has an acceptance. That alone is enough data. The answer in his case is no.