Seriously worried about debt

[friendly_premed]

my parents make a solid amount of money so I don’t think I will get any need based aid. That said, I will be paying for my own school so will likely need to pay the full COA with loans. I’m worried that $400K in debt + my undergrad debt (80K) will be too much to pay off .. especially with other costs of starting a family. Does anytime have any advice/experience having to take out the full cost via loans??

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[allantois]

What school costs 400k?

 

[907914]

What school costs 400k?

If you borrow at full COA, $60,000 tuition plus $25,000 living expenses x 4 years will be $340,000. That is quite a few schools. Some schools have OOS tuition of $70,000 plus. $400,000 is totally possible.

Average school debt is skewed due to need based aid, merit scholarships, and the 25% of students whose parents cover all of it. For those who actually have to pay with all loans, it is unlikely to get through MED school with less than $300,000...even those who get need based aid easily exceed $200,000.

 

[907914]

my parents make a solid amount of money so I don’t think I will get any need based aid. That said, I will be paying for my own school so will likely need to pay the full COA with loans. I’m worried that $400K in debt + my undergrad debt (80K) will be too much to pay off .. especially with other costs of starting a family. Does anytime have any advice/experience having to take out the full cost via loans??

To OP, $500,000 sounds like alot, but if you get out of residency and make $200,000, you should be able to comfortably live off of $80,000 for 5 years and have it all paid off. Or live off of $120,000 for 10 years. Or make minimum payments for 30 years. Debt should not be a major concerning factor. If you are that worried, do the HPSP or find a job (such as working for the state) that will pay off all loans after 10 years. Easy peasy.

 

[Tenk]

To OP, $500,000 sounds like alot, but if you get out of residency and make $200,000, you should be able to comfortably live off of $80,000 for 5 years and have it all paid off. Or live off of $120,000 for 10 years. Or make minimum payments for 30 years. Debt should not be a major concerning factor. If you are that worried, do the HPSP or find a job (such as working for the state) that will pay off all loans after 10 years. Easy peasy.

Taxes.

I do agree though that so long as you aren’t an idiot with money the debt is nothing compared to what a financially savvy doctor can generate.

 

[907914]

Taxes.

I do agree though that so long as you aren’t an idiot with money the debt is nothing compared to what a financially savvy doctor can generate.

I guess I was accounting for post-tax income, however I forgot about the higher tax bracket.

But yes, general rule of be good to the money and it will be good to you applies.

 

[acslater99]

Like others have mentioned, I wouldn’t be to worried about being in debt because if you’re smart with your money, you’ll pay off those loans quickly.

Now, don’t go buying a big house and a BMW or Mercedes right out of medical school. That’s just plain stupid. Now you’ve just created a deeper hole for yourself.

Be smart with your money, and live below your means and you’ll be fine.

 

[wontonsoup]

To OP, $500,000 sounds like alot, but if you get out of residency and make $200,000, you should be able to comfortably live off of $80,000 for 5 years and have it all paid off. Or live off of $120,000 for 10 years. Or make minimum payments for 30 years. Debt should not be a major concerning factor. If you are that worried, do the HPSP or find a job (such as working for the state) that will pay off all loans after 10 years. Easy peasy.

Let's say your pre-tax income is the median physician income (as of 2015) at 187k. That is a take home of about 140k in Tennessee, which has no state income tax. Using OP's numbers, you have 500k in debt at the end of residency. For simplicity, let's stick to 5% interest, though usually it is higher than that, which means that 0.05*500k = 25k per year in interest alone. If you want to knock out this debt in 10 years, that's 50k per year on principle + 25k for interest. 140k - 75k = 65k/year net income. This is more than the median income in the country and plenty to live on comfortably raising a family. But is it worth it to go through med school and residency and work a high-stress, high-responsibility job to make 65k year for 10 years? Assuming you finish med school around 26, you will be making 65k through residency and 10 years into your attending life. Medicine is obviously more than just a paycheck, but living like residents until you are 40 is not a reasonable life plan for the vast majority of high-achieving students going into medicine. The looming possibility of single-payer healthcare in the next decade or two will likely also depress wages for physicians.

I don't think OP is wrong to be worried about finances and frankly I am often shocked at how blithely SDN dismisses financial concerns. I don't know if this is enough to dissuade someone from going into the field, but everyone should be making informed decisions, aware of the mathematical reality of such high debt loads. It's not "easy peasy."

 

[Disciple of Sattar]

Let's say your pre-tax income is the median physician income (as of 2015) at 187k. That is a take home of about 140k in Tennessee, which has no state income tax. Using OP's numbers, you have 500k in debt at the end of residency. For simplicity, let's stick to 5% interest, though usually it is higher than that, which means that 0.05*500k = 25k per year in interest alone. If you want to knock out this debt in 10 years, that's 50k per year on principle + 25k for interest. 140k - 75k = 65k/year net income. This is more than the median income in the country and plenty to live on comfortably raising a family. But is it worth it to go through med school and residency and work a high-stress, high-responsibility job to make 65k year for 10 years? Assuming you finish med school around 26, you will be making 65k through residency and 10 years into your attending life. Medicine is obviously more than just a paycheck, but living like residents until you are 40 is not a reasonable life plan for the vast majority of high-achieving students going into medicine. The looming possibility of single-payer healthcare in the next decade or two will likely also depress wages for physicians.

I don't think OP is wrong to be worried about finances and frankly I am often shocked at how blithely SDN dismisses financial concerns. I don't know if this is enough to dissuade someone from going into the field, but everyone should be making informed decisions, aware of the mathematical reality of such high debt loads. It's not "easy peasy."

But how am I going to assert my prestige over my patients if I don't choose the expensive school so I can match a top 5 nuclear dermatology residency?

 

[907914]

my parents make a solid amount of money so I don’t think I will get any need based aid. That said, I will be paying for my own school so will likely need to pay the full COA with loans. I’m worried that $400K in debt + my undergrad debt (80K) will be too much to pay off .. especially with other costs of starting a family. Does anytime have any advice/experience having to take out the full cost via loans??

In general, what is considered too much money on the parent’s side of things for need based aid? Like, say your parents make $100,000 > x < $150,000 - what is the EFC? At that, will the EFC change depending on whether you are married/have kids?

 

[DrStephenStrange]

Let's say your pre-tax income is the median physician income (as of 2015) at 187k. That is a take home of about 140k in Tennessee, which has no state income tax. Using OP's numbers, you have 500k in debt at the end of residency. For simplicity, let's stick to 5% interest, though usually it is higher than that, which means that 0.05*500k = 25k per year in interest alone. If you want to knock out this debt in 10 years, that's 50k per year on principle + 25k for interest. 140k - 75k = 65k/year net income. This is more than the median income in the country and plenty to live on comfortably raising a family. But is it worth it to go through med school and residency and work a high-stress, high-responsibility job to make 65k year for 10 years? Assuming you finish med school around 26, you will be making 65k through residency and 10 years into your attending life. Medicine is obviously more than just a paycheck, but living like residents until you are 40 is not a reasonable life plan for the vast majority of high-achieving students going into medicine. The looming possibility of single-payer healthcare in the next decade or two will likely also depress wages for physicians.

I don't think OP is wrong to be worried about finances and frankly I am often shocked at how blithely SDN dismisses financial concerns. I don't know if this is enough to dissuade someone from going into the field, but everyone should be making informed decisions, aware of the mathematical reality of such high debt loads. It's not "easy peasy."

Well, it all depends on what specialty OP end up doing (see the medscape physician compensation report). Also, there are some loan repayments programs out there that have some good incentives that might be worth considering as well.

Sent from my SM-G950U using SDN mobile

 

[676188]

In general, what is considered too much money on the parent’s side of things for need based aid? Like, say your parents make $100,000 > x < $150,000 - what is the EFC? At that, will the EFC change depending on whether you are married/have kids?

If you're married with kids you're independent and your parents' incomes no longer matter for financial aid. Also, EFC doesn't matter for loans, and medical school students can't get grants.

 

[907914]

If you're married with kids you're independent and your parents' incomes no longer matter for financial aid. Also, EFC doesn't matter for loans, and medical school students can't get grants.

For undergrad independent status matters, but I have been told time and again that regardless of independent status for medical schools parental information matters for need based aid. Is that just FAP or is it school specific?

 

[676188]

For undergrad independent status matters, but I have been told time and again that regardless of independent status for medical schools parental information matters for need based aid. Is that just FAP or is it school specific?

I honestly have no idea. My experience is strictly with taking out loans for graduate school as a married student with children. Sorry I couldn't be more helpful.

And what about nontraditional students? A 30+ year old student with a family is going to have to report his/her parents' incomes for need based aid?

 

[ciestar]

For undergrad independent status matters, but I have been told time and again that regardless of independent status for medical schools parental information matters for need based aid. Is that just FAP or is it school specific?

I honestly have no idea. My experience is strictly with taking out loans for graduate school as a married student with children. Sorry I couldn't be more helpful.

And what about nontraditional students? A 30+ year old student with a family is going to have to report his/her parents' incomes for need based aid?

Most schools will ask for parental infortmation for need based aid.

 

[907914]

Yes, they will for institutional aid. The federal loans are considered independent, but (what I gather from AMCAS and school websites) need based aid is determined by schools. If you want need based aid, regardless of age or marital status, many schools require parental information.

I personally think it is idiotic for people who are married/have kids/28 y/o + and has obviously not been attached to their parent’s wallet...however, it makes sense to require it from your traditional student where around 25% of them have parents/family fully cover medical school and another 25% have parents/family covering a good chunk of that portion. Those students who come from low/middle SES are the ones that get the most need based aid, but also still have to take out the most loans.

 

[LizzyM]

Yes, they will for institutional aid. The federal loans are considered independent, but (what I gather from AMCAS and school websites) need based aid is determined by schools. If you want need based aid, regardless of age or marital status, many schools require parental information.

I personally think it is idiotic for people who are married/have kids/28 y/o + and has obviously not been attached to their parent’s wallet...however, it makes sense to require it from your traditional student where around 25% of them have parents/family fully cover medical school and another 25% have parents/family covering a good chunk of that portion. Those students who come from low/middle SES are the ones that get the most need based aid, but also still have to take out the most loans.

It is idiotic for a medical school to beg donors for scholarship funds and then turn around and give those scholarship funds to a 28 year old married student with kids whose parents have a net worth of $16 million or more.

 

[907914]

It is idiotic for a medical school to beg donors for scholarship funds and then turn around and give those scholarship funds to a 28 year old married student with kids whose parents have a net worth of $16 million or more.

@LizzyM i can definitely see the perspective of “the parents have money, they can help this student.” But how do schools/do schools even take it to account that parents can help but don’t?

For instance, compare a millionaire parent who has the perspective of “I made it on my own so you can too,” with a single working mom who saves half of every paycheck so her child doesn’t have to worry about money in school...Is the first situation just so rare it doesn’t even matter?

This may just be my perspective because of how I was raised... my parents are by no means rich, but still >$100,000 income. They could afford to help, but their perspective is “if you want college, pay for it yourself.”

 

[whorobbedthewoods]

i can definitely see the perspective of “the parents have money, they can help this student.” But how do schools/do schools even take it to account that parents can help but don’t?

I've filled out a financial aid forms for a couple of schools so far, and they've had a place for you to indicate "expected family contribution" or something like that. Presumably if they're asking for this information, they're taking it into account? I don't know.

I am that 28-year-old financially independent applicant with a family. My parents make around $150K, which is about twice what they were making when I became financially independent from them 10+ years ago (they graduated 5 kids, progressed at work, collected retirement benefits, etc). So it's a bit frustrating because not only do I not currently benefit from their financial situation, but I never benefited from their financial situation. Tough luck, basically! I understand there are others who are worse off than I am who could really use the aid. I've done what I can in the intervening years (served in the military, paid off undergrad debt, earned my GI Bill, scrounged some savings) to put myself and my family in an okay place, and I guess there's nothing stopping others from doing the same if they're truly worried about debt.

That said, the $16 million example strikes me as really, really extreme. Are applicants from families like these really a common thing that adcoms see? That describes the top 1% of the top 1% of earners in this country. If we're drawing physicians from that demographic often enough that a scenario involving them comes up more than a handful of times, like, ever, then it seems to me we have much bigger equality issues beyond who gets financial aid and who doesn't.

 

[riverrunner]

Figure 30. Parents’ combined gross income by race and ethnicity of 2015 matriculants to U.S. medical schools.
Figure 30 displays parents combined gross income by race and ethnic subgroups. In 2015, medical school matriculants often come from middle and upper income families across racial and ethnic groups. More than 70% of White, 60% of Asian, and 50% American Indian or Alaska Native and Native Hawaiian or Other Pacific Islander matriculants have a parents whose combined gross income over $100,000. Hispanic or Latino and Black or African American matriculants, at more than 40%, report a parental combined gross income over $100,000. Compared with their peers, Black or African American (31%), Hispanic or Latino (29%), and Asian (16%) matriculants are more likely to have parents with a combined gross income under $50,000.

Almost 40% of white matriculants parents' make more than $200,000 per year. Go to the last figure in this report:
AAMC FACTS & FIGURES 2016 | Current Trends in Medical Education |

 

[catlady87]

I would wait and see what your options are as far as scholarships before you panic. It seems like you’ve gotten multiple acceptances and interviewed at competitive schools - many of those schools have good scholarship funds and provide their students with generous aid packages. You may also be able to get a cheaper education at a state school. Finally, Dartmouth keeps a long list of outside scholarships available to medical students, and it’s worth seeing if you are eligible for any of them.

You may be surprised by what funds become available to you. I expected to have to take out loans to cover my entire education and ended up being offered full-tuition scholarships at two schools - and I was not one of those perfect applicants either. Many students at my school got more money than they expected.

 

[DMPP123]

I've filled out a financial aid forms for a couple of schools so far, and they've had a place for you to indicate "expected family contribution" or something like that. Presumably if they're asking for this information, they're taking it into account? I don't know.

I filled out my FAFSA already and my EFC was high due to my spouse's employment. I spoke with the financial aid office at the medical school where I've been accepted and they said none of the federal loans for medical school are dependent on the EFC number. The only thing they use EFC for is need-based scholarships from the school, which range from $2,000-$10,000 per year. So I would suspect that your school(s) would do something similar and use the EFC for determining scholarship need.

 

[friendly_premed]

What is EFC? Is it the amount they pay per semester?

 

[907914]

What is EFC? Is it the amount they pay per semester?

Estimated familial contribution

How much they think your parents/spouse will be contributing.

 

[friendly_premed]

Estimated familial contribution

How much they think your parents/spouse will be contributing.

But in total? Or is it per semester?

 

[DMPP123]

But in total? Or is it per semester?

Per year. You have to fill out the FAFSA every year.

 

[907914]

But in total? Or is it per semester?

¿Both, I guess? It is just how much they think your family will contribute in a given year. Your FA award will be split evenly among terms.

 

[LizzyM]

@LizzyM i can definitely see the perspective of “the parents have money, they can help this student.” But how do schools/do schools even take it to account that parents can help but don’t?

This was a major plot point in the novel Love Story by Erich Segal (1970). Harvard boy from super-wealthy family falls in love and marries a beautiful and talented music student from a working class background. Guy's dad disowns him, Harvard Law School financial aid office laughs in his face, and the two work like crazy to afford his tuition.

I'll go back again to the ultra-rich. If a family has an annual income of over $1 million, should someone in the development office be busting their butt to get the offspring of that family some "need based" aid? I'm not talking about the offspring of families with annual incomes of $100,000 but families with annual incomes of $1 million or more.

 

[907914]

This was a major plot point in the novel Love Story by Erich Segal (1970). Harvard boy from super-wealthy family falls in love and marries a beautiful and talented music student from a working class background. Guy's dad disowns him, Harvard Law School financial aid office laughs in his face, and the two work like crazy to afford his tuition.

I'll go back again to the ultra-rich. If a family has an annual income of over $1 million, should someone in the development office be busting their butt to get the offspring of that family some "need based" aid? I'm not talking about the offspring of families with annual incomes of $100,000 but families with annual incomes of $1 million or more.

Thank you for your feedback, that is much appreciated. It must just be representative heuristic for us lower-upper-middle class types that grew up as the 'wealthy' family in an otherwise poor neighborhood. However, seeing the numbers ^^ up there, I now understand what you mean and did not realize there was THAT much wealthy background flowing in to medial schools.

 

[doc05]

my parents make a solid amount of money so I don’t think I will get any need based aid. That said, I will be paying for my own school so will likely need to pay the full COA with loans. I’m worried that $400K in debt + my undergrad debt (80K) will be too much to pay off .. especially with other costs of starting a family. Does anytime have any advice/experience having to take out the full cost via loans??

Frankly, I would recommend against a career in medicine if this is what you're facing. Go to your state school (is it any cheaper??) or get into NYU. Because getting out from under that kind of debt will be a problem, even if you're bringing in 400-500k per year (or whatever salaries will be when you become an attending).

 

[doc05]

To OP, $500,000 sounds like alot, but if you get out of residency and make $200,000, you should be able to comfortably live off of $80,000 for 5 years and have it all paid off. Or live off of $120,000 for 10 years. Or make minimum payments for 30 years. Debt should not be a major concerning factor. If you are that worried, do the HPSP or find a job (such as working for the state) that will pay off all loans after 10 years. Easy peasy.

200k isn't much when you're paying taxes, supporting a family, paying off a mortgage. Don't make light of this. Financially, doesn't make sense to borrow that much.

 

[doc05]

Let's say your pre-tax income is the median physician income (as of 2015) at 187k. That is a take home of about 140k in Tennessee, which has no state income tax. Using OP's numbers, you have 500k in debt at the end of residency. For simplicity, let's stick to 5% interest, though usually it is higher than that, which means that 0.05*500k = 25k per year in interest alone. If you want to knock out this debt in 10 years, that's 50k per year on principle + 25k for interest. 140k - 75k = 65k/year net income. This is more than the median income in the country and plenty to live on comfortably raising a family. But is it worth it to go through med school and residency and work a high-stress, high-responsibility job to make 65k year for 10 years? Assuming you finish med school around 26, you will be making 65k through residency and 10 years into your attending life. Medicine is obviously more than just a paycheck, but living like residents until you are 40 is not a reasonable life plan for the vast majority of high-achieving students going into medicine. The looming possibility of single-payer healthcare in the next decade or two will likely also depress wages for physicians.

I don't think OP is wrong to be worried about finances and frankly I am often shocked at how blithely SDN dismisses financial concerns. I don't know if this is enough to dissuade someone from going into the field, but everyone should be making informed decisions, aware of the mathematical reality of such high debt loads. It's not "easy peasy."

Your numbers underestimate interest accrual during residency. Also keep in mind that living on 65k per year is not easy for a family of 3-4-5. It's possible, but this also guarantees that you won't have enough to save/invest for retirement!! Good luck practicing into your 80s!

 

[IlDestriero]

It’s smart to be worried about loans and large debt. 350-400k quickly turn to 500 by the end of residency, and that’s a deep hole. You’re not paying that off in 10 years unless you’re a highly paid specialist.

 

[ciestar]

Thank you for your feedback, that is much appreciated. It must just be representative heuristic for us lower-upper-middle class types that grew up as the 'wealthy' family in an otherwise poor neighborhood. However, seeing the numbers ^^ up there, I now understand what you mean and did not realize there was THAT much wealthy background flowing in to medial schools.

Yeah, it is stunning actually. Im near the bottom when it comes to that. My parents make a combined 20k. Reality check lol

 

[ciestar]

200k isn't much when you're paying taxes, supporting a family, paying off a mortgage. Don't make light of this. Financially, doesn't make sense to borrow that much.

200k isnt much? What?
Maybe it is the poor person in me, but i know a lot of people who did all of this things, plus put away for retirement, making significantly less.

 

[wontonsoup]

Yeah, it is stunning actually. Im near the bottom when it comes to that. My parents make a combined 20k. Reality check lol

Same, man. Even though I haven't matriculated yet, it sometimes strikes me the number of resources my peers have in the application process that were always out of reach. Personal MCAT tutors, expensive prep courses, spending entire summers volunteering or studying without any work obligations, relatives with more than a high school diploma to ask for application advice... it adds up. Despite aggressive recruiting, many of the soft requirements (hundreds of volunteer hours, ever-higher MCATs) for medical school admission de facto exclude the lower class.

Education, while a tremendous opportunity for social mobility, more often is appropriated for reproducing wealth. This is not a problem unique to medicine by any means and I am not offering any easy solutions, but I think it certainly makes the case for reserving the small amount of medical school scholarship funds that are available for those who come from working class backgrounds. As for us, we should return to our communities and hold open the door for those who would follow us.

 

[JPmoleymole]

200k isnt much? What?
Maybe it is the poor person in me, but i know a lot of people who did all of this things, plus put away for retirement, making significantly less.

Seriously, what an absurd comment lol. That more than like 95% of American households

Honestly OP, I was very surprised to see the amount of need based aid I got. My family was well-off growing up with a household income of just under 100k, and this actually put me in the lower end of my class, since so many students have physician parents

 

[JeSuisUnDoc]

Yeah, it is stunning actually. Im near the bottom when it comes to that. My parents make a combined 20k. Reality check lol

Mine are in my home country and they make around 7k/year lol. I guess I won’t have a problem getting financial aid.


Sent from my iPhone using SDN

 

[DrStephenStrange]

Frankly, I would recommend against a career in medicine if this is what you're facing. Go to your state school (is it any cheaper??) or get into NYU. Because getting out from under that kind of debt will be a problem, even if you're bringing in 400-500k per year (or whatever salaries will be when you become an attending).

Yet, people have been graduating with that kind of debt for a while, and they seem to be doing fine. Most doctors I know tell me they pay off their debts within 5 to 10 years while still living a comfortable life. I don't think telling OP to abandon ship or to try to get in a state school or NYU is the most sound advice. There is no guarantee when applying to med school, and more often than not, you just have to run with the hand your are dealt at the end of the cycle.

Sent from my SM-G950U using SDN mobile

 

[themightyquinn]

It’s smart to be worried about loans and large debt. 350-400k quickly turn to 500 by the end of residency, and that’s a deep hole. You’re not paying that off in 10 years unless you’re a highly paid specialist.

Except you should be paying on your damn loans when you're a resident so you don't end up with 500K in debt by the end of residency, and maybe even get your principle paid down a little bit. I say this time and again, but for all the whinging docs do about their debt, physicians are in a much better place making $200K with $300K in debt than your average college grad with an average starting salary of $50K and a student loan debt of $37K. Yes, it's a very large number, but docs make a proportionally larger income while the basic cost remains fixed so they're disproportionately better able to pay it down. The rest of America lives comfortably on an average household income of ~$70K a year, a doctor can pull that off for a few years while throwing huge chunks at their debt and that's assuming all household income and expenses come from their salary and they don't have a spouse pulling in a even a moderate wage for a few years to increase household income and help share expenses.

LFor simplicity, let's stick to 5% interest, though usually it is higher than that, which means that 0.05*500k = 25k per year in interest alone. If you want to knock out this debt in 10 years, that's 50k per year on principle + 25k for interest. 140k - 75k = 65k/year net income. This is more than the median income in the country and plenty to live on comfortably raising a family.

While I think your starting numbers are a little low for salary, we're doing back of the napkin math so I won't get too picky. It's worth pointing out that the $65K a year is, as you say, net income while I'm pretty sure median income is given in pre-tax. Also as I mention above it neglects the fact that it's household income which means it's often the work product of two people sometimes with kids. A single doc can still likely live comfortably on even less, and a married one might even have another physician salary to share expenses but at either rate absent a stay at home spouse will likely be doing better than just their salary. Additionally, if you're paying interest and paying down the principle you'll be paying 10% less interest ever year which you can either pocket or put towards the principle paying off your debt faster. Even more additionally, you can refinance your loans dropping the interest rate to 2-3%.

 

[IlDestriero]

It’s hard to pay down your loans at all when interest alone might be ~25,000 a year and you’re only making $50k or so.
You can always ask your Uncle Sam for some help. He gets his money back in other ways though.

 

[907914]

Your numbers underestimate interest accrual during residency. Also keep in mind that living on 65k per year is not easy for a family of 3-4-5. It's possible, but this also guarantees that you won't have enough to save/invest for retirement!! Good luck practicing into your 80s!

The numbers change for everyone, obviously, but even with say $140,000 post taxes, if you live comfortably (for your family size - even with 4 kids, comfortable is doable at $100,000 between your and spouses income). Then throw all of that at the student loan

It’s hard to pay down your loans at all when interest alone might be ~25,000 a year and you’re only making $50k or so.
You can always ask your Uncle Sam for some help. He gets his money back in other ways though.

joining the reserves is a good Uncle Sam route. 4 years at 50,000 of student loan repayment a year and only 1 90 day deployment every 2 years. Not a bad gig.

 

[themightyquinn]

It’s hard to pay down your loans at all when interest alone might be ~25,000 a year and you’re only making $50k or so.
You can always ask your Uncle Sam for some help. He gets his money back in other ways though.

RePAYE:

Eligible loans: Direct Unsubsidized Loans, Direct GradPLUS loans, Direct Consolidation loans that don’t include a Parent Plus Loan.

Payment Schedule: On the RePAYE plan, your monthly payment is 10% of your income over 150% of the poverty line. That means if you earn less than 150% of the poverty line, your payment is zero dollars.


If your monthly student loan payment doesn’t cover all the interest that accrues on your loan, the student loan interest subsidy kicks in. The government will pay for 100% of accruing interest on subsidized loans for the first three years. After three years, they will pay for half of the accruing interest.

If you have unsubsidized loans, the federal government will pay 50% of the interest due

I've yet to see a residency pay much more than $70K, so that would be at most under $500/mo., $265.92 a month if you're making $50K under RePaye. A hypothetical 400K at 5% (the reality is we'll probably be paying more like 6-7%) would be $20K a year in interest, however with RePaye's interest subsidy halving that you're now looking at (20,000-3180)/2=$8410 in interest per year given a $50K residency salary (12*265.92). Not that I'd necessarily recommend eating nothing but beans and rice and eschewing any fun during a time as hellish as residency, but even if you don't set aside the full amount of interest anything you can do to defray its accumulation and compounding is a huge win.

 

[ciestar]

Mine are in my home country and they make around 7k/year lol. I guess I won’t have a problem getting financial aid.


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Unfortunately some schools are really stingy. Everyone gets loans, though

 

[ciestar]

RePAYE:



I've yet to see a residency pay much more than $70K, so that would be at most under $500/mo., $265.92 a month if you're making $50K under RePaye. A hypothetical 400K at 5% (the reality is we'll probably be paying more like 6-7%) would be $20K a year in interest, however with RePaye's interest subsidy halving that you're now looking at (20,000-3180)/2=$8410 in interest per year given a $50K residency salary (12*265.92). Not that I'd necessarily recommend eating nothing but beans and rice and eschewing any fun during a time as hellish as residency, but even if you don't set aside the full amount of interest anything you can do to defray its accumulation and compounding is a huge win.

My financial planner has me going the REPAYE or PAYE route (as should basically everyone..). Im gonna be knocking on 400k, unfortunately.

 

[Med Ed]

200k isnt much? What?
Maybe it is the poor person in me, but i know a lot of people who did all of this things, plus put away for retirement, making significantly less.

You may change your tune someday. It's not that $200,000 isn't a hefty amount of money, it's that new attending physicians often find themselves jammed between a peculiar set of circumstances: (1) delay, (2) debt, and (3) expectations.

Delay references the fact that you have suffered and sacrificed for many years and feel that you deserve to live in a decent house, with decent furniture, in a decent neighborhood, send your kids to decent schools, and drive a decent car, often with zero down. You also need to jumpstart saving for retirement (for which you're way behind) and funding 529 plans. Oh, and your spouse wants to stay at home and raise the kids. This will soak up a large amount of your cash flow.

Debt is self explanatory.

Expectations references the insidious habit of people to compare their lifestyles to those of their peers. This is in part what makes delaying gratification so tough. When you feel that all the physicians you interact with are effortlessly buying things, taking vacations, and sending their kids to private school, it get's really tough to stay in the one bedroom apartment above the bowling alley.

Put it all together and you can start to get an idea of how a disturbing number of docs end up scraping by on a quarter million a year.

 

[907914]

You may change your tune someday. It's not that $200,000 isn't a hefty amount of money, it's that new attending physicians often find themselves jammed between a peculiar set of circumstances: (1) delay, (2) debt, and (3) expectations.

Delay references the fact that you have suffered and sacrificed for many years and feel that you deserve to live in a decent house, with decent furniture, in a decent neighborhood, send your kids to decent schools, and drive a decent car, often with zero down. You also need to jumpstart saving for retirement (for which you're way behind) and funding 529 plans. Oh, and your spouse wants to stay at home and raise the kids. This will soak up a large amount of your cash flow.

Debt is self explanatory.

Expectations references the insidious habit of people to compare their lifestyles to those of their peers. This is in part what makes delaying gratification so tough. When you feel that all the physicians you interact with are effortlessly buying things, taking vacations, and sending their kids to private school, it get's really tough to stay in the one bedroom apartment above the bowling alley.

Put it all together and you can start to get an idea of how a disturbing number of docs end up scraping by on a quarter million a year.

I guess a benefit of having the kids before medical school is that I know my daughter will be just about starting high school by the time I get out of fellowship...so...yay to that money spending route?

 

[ciestar]

You may change your tune someday. It's not that $200,000 isn't a hefty amount of money, it's that new attending physicians often find themselves jammed between a peculiar set of circumstances: (1) delay, (2) debt, and (3) expectations.

Delay references the fact that you have suffered and sacrificed for many years and feel that you deserve to live in a decent house, with decent furniture, in a decent neighborhood, send your kids to decent schools, and drive a decent car, often with zero down. You also need to jumpstart saving for retirement (for which you're way behind) and funding 529 plans. Oh, and your spouse wants to stay at home and raise the kids. This will soak up a large amount of your cash flow.

Debt is self explanatory.

Expectations references the insidious habit of people to compare their lifestyles to those of their peers. This is in part what makes delaying gratification so tough. When you feel that all the physicians you interact with are effortlessly buying things, taking vacations, and sending their kids to private school, it get's really tough to stay in the one bedroom apartment above the bowling alley.

Put it all together and you can start to get an idea of how a disturbing number of docs end up scraping by on a quarter million a year.

I already have a decent amount in my IRA, actually. I planned way ahead. (Im also 28..) I was also brought up in not the best circumstances, so I think my perspective is skewed comparatively. I have a very supportive spouse as well.

Regardless, based on my peers from high school and college.. i’ll still be doing fine.

Perspective.

That, and I also know some public schools are quite good. Credit card points fund most of our trips.

However, I get how people can get sucked into it so easily. You see that money in your bank account and get tempted.

 

[allantois]

I guess a benefit of having the kids before medical school is that I know my daughter will be just about starting high school by the time I get out of fellowship...so...yay to that money spending route?

So she will be close to going to college then, and we all know where the costs of tuition are heading

 

[907914]

So she will be close to going to college then, and we all know where the costs of tuition are heading

I will give her the same conditions the Army gave me: Tuition up to $18,000 a year plus inflation adjusted, regional COA monthly stipend. Anything beyond that is too extravagant. And you know what, if I have to switch from paying $100,000 of my student loans a year to the minimum payment for 4-10 years so she can go to college/ professional school then sweet I will do that.