Seriously worried about debt

[skeptastic]

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 |

Those stats are alarming.

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[skeptastic]

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.

I just finished a minority studies course that explored this very topic. In my opinion, your views are spot on. This process is grueling in general. It can feel dang near impossible for those living in poverty. When the going gets tough, I always remember how important it is to try and help my family break the cycle seen in the AAMC data that @riverrunner posted. Seeing the large percentage of African-Americans (and other groups) matriculating to medical school from households raking in less than $50k/year is saddening and motivating, all at the same time.

 

[Med Ed]

I already have a decent amount in my IRA, actually. I planned way ahead. (Im also 28..)

That's good. Depending on which financial advisor you talk to, if you're used to making ~$200,000 then you'll need to accrue $4-5 million in your nest egg to seamlessly continue your lifestyle after retirement.

 

[riverrunner]

I hate to pile on, but my job is advising families with high school students heading to college.

Physician families are in a double bind. They often start their families before they start their high-earning years, like @samuelhatfield
Unfortunately, FAFSA and CSSProfile formulas make some broad assumptions. They assume you have been making $400 K for a long time, and that you've been able to save for college. The formula assumes that up to 47% of family annual income is available to pay for college each year. That means your child's EFC might be over $99,000, and would be full-pay for all colleges. Ironically, the middle/low-income family down the street may be able to say "yes" to Harvard because their net price would be much lower than yours.

These formulas don't factor in that the parents are often still paying off their own student loans (two-physician families have two buckets of loans), are finally buying a house, and so on.

My advice is the same as others here have given: live beneath your means and save for retirement and for college for your own children. It doesn't work to be a high earner with no savings for college. I keep hoping these calculations will be revised to factor in things like parents' student loans. Cost of college is a much higher proportion of family budgets than ever in history, and that's not reflected in these numbers.

 

[Goro]

Can some of you worrying about debt show me the gun that was placed to your temple and forced you to go to medical school?

 

[puahate]

All of this could be solved by not going into medical school. That way you dont have to worry about debt.

 

[Chibucks15]

Can some of you worrying about debt show me the gun that was placed to your temple and forced you to go to medical school?

I mean cmon now...yea nobody is forcing anyone to go to med school but that's not an good take. Tuition has gotten out of control and it is honestly going to approach a point where being a doctor is no longer feasible. Most complaints about school I agree with this stance but I feel like this is a genuine concern a lot of people have, especially not coming from money like many of our classmates. For most people (going into it for the right reasons) being a doctor outweighs the debt, but its becoming a huge issue by the day.

The debt bubble is gonna pop and its gonna pop hard

 

[Vladimir7]

Y’all please do not forget that if anything happens and you can no longer practice, you still need to pay off your debt. And if you die, your family picks it up.

So yes, debt matters. But not enough for you to throw away your dreams and/or lock yourself into only being a doctor if you get into NYU. Think I saw someone say that earlier lol.

 

[kepler16b]

High tuition creates unnecessary risk for those trying to become doctors, especially those coming from low income backgrounds with no safety net.

It is already insanely expensive and risky to apply to medical school. If tuition continues to rise, medicine will continue to be a field reserved for the children of upper class families.

 

[ciestar]

Y’all please do not forget that if anything happens and you can no longer practice, you still need to pay off your debt. And if you die, your family picks it up.

So yes, debt matters. But not enough for you to throw away your dreams and/or lock yourself into only being a doctor if you get into NYU. Think I saw someone say that earlier lol.

Federal loans go away if you die.

 

[Vladimir7]

Federal loans go away if you die.

Which helps but doesn’t cover the problem entirely. Private student loans etc...

 

[LizzyM]

Y’all please do not forget that if anything happens and you can no longer practice, you still need to pay off your debt.

Disability insurance is really, really important for anyone with debt, a good job, and family responsibilities (or who just likes to sleep in their own bed on their own schedule).

 

[Boola Boy]

Honestly not too worried about the debt.

Single, live in a studio apartment in a city so that you're not bored. No need for a fancy car, just walk or take the metro around. Cook your own meals.

i think the biggest thing that someone said earlier is comparing yourself to your physician peers. I hear that.

Solution: Befriend poor people! Lol, or people that don't make as much as you.

The major caveat for me is that I have no desire for children or getting married. Lol so while y'all worry about paying for college, I'm just tryna figure out which city I want to live in for medical school

It's nice being able to choose my responsibilities

 

[Chibucks15]

Which helps but doesn’t cover the problem entirely. Private student loans etc...

if you took out that much private loans that;s on you. All my medical school is covered by federal and I honestly don't know anyone who went the private route

 

[907914]

Honestly not too worried about the debt.

Single, live in a studio apartment in a city so that you're not bored. No need for a fancy car, just walk or take the metro around. Cook your own meals.

i think the biggest thing that someone said earlier is comparing yourself to your physician peers. I hear that.

Solution: Befriend poor people! Lol, or people that don't make as much as you.

The major caveat for me is that I have no desire for children or getting married. Lol so while y'all worry about paying for college, I'm just tryna figure out which city I want to live in for medical school

It's nice being able to choose my responsibilities

How presumptive of you to assume that those of us with children didn’t choose this pathway as our own responsibilities. I mean, most of us did take the Bob Ross approach with our happy little accidents however, still presumptive of you

 

[DrStephenStrange]

if you took out that much private loans that;s on you. All my medical school is covered by federal and I honestly don't know anyone who went the private route

Some people can't get grad plus loans because of adverse credit history, so they only get the unsubsidized loans which doesn't cover the whole COA. Also, in some situations, if you go to a new school that hasn't graduated a class and therefore not eligible for federal loans yet, you have to take out private loans. So it's not always on the individual to take out a lot of private loans to go to medical school.

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[puahate]

Honestly not too worried about the debt.

Single, live in a studio apartment in a city so that you're not bored. No need for a fancy car, just walk or take the metro around. Cook your own meals.

i think the biggest thing that someone said earlier is comparing yourself to your physician peers. I hear that.

Solution: Befriend poor people! Lol, or people that don't make as much as you.

The major caveat for me is that I have no desire for children or getting married. Lol so while y'all worry about paying for college, I'm just tryna figure out which city I want to live in for medical school

It's nice being able to choose my responsibilities

Basically how i see it too. I am at a point where risks can be taken and i dont dont have to worry about anyone else. That means i can be as frugal as i need to be. My money will not be funnelled to kids or anyone else.

 

[medschoolzombie]

It is already insanely expensive and risky to apply to medical school. If tuition continues to rise, medicine will continue to be a field reserved for the children of upper class families.

You say it like it already isn’t. The vast majority of med students come from wealthy families. For the class of 2022, only 33% of all matriculants had any student debt and the median was 27k. The majority of students are not struggling for money here

Basically how i see it too. I am at a point where risks can be taken and i dont dont have to worry about anyone else. That means i can be as frugal as i need to be. My money will not be funnelled to kids or anyone else.

Totally agree. A nice thing about being single lol

 

[ciestar]

That's good. Depending on which financial advisor you talk to, if you're used to making ~$200,000 then you'll need to accrue $4-5 million in your nest egg to seamlessly continue your lifestyle after retirement.

You are describing a problem we’d all love to have. $5,000,000 at a very conservative 4% throws off $200,000 a year. Kids will be grown and no longer an expense. Retirement is obviously no longer expense. No commuting costs. Where do I sign up?

The key is to never live beyond your means. What you are describing sounds like a spending problem. As a datapoint, the average household income in this country is about $48,000...

 

[skeptastic]

Disability insurance is really, really important for anyone with debt, a good job, and family responsibilities (or who just likes to sleep in their own bed on their own schedule).

Absolutely! LTD insurance is far more important than life insurance, yet folks are more likely to get life insurance than LTD insurance.

 

[Chibucks15]

Some people can't get grad plus loans because of adverse credit history, so they only get the unsubsidized loans which doesn't cover the whole COA. Also, in some situations, if you go to a new school that hasn't graduated a class and therefore not eligible for federal loans yet, you have to take out private loans. So it's not always on the individual to take out a lot of private loans to go to medical school.

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I don’t think most of the things you mentioned change my point though. I get that it isn’t always the persons fault but if you have terrible credit, usually it’s because you messed up along the way

Adverse credit history? On you. New school that hasn’t graduated anyone? On you (but less so).

School Debt is school debt. gone are the days where docs make stupid money and have 9-5s. People need to wrap their head around it and not live beyond your means. Personally the respect and unmatched job security, especially when financial markets are being so volatile, is enough that people should be banking on

 

[NITRAS]

The OP is really afraid of the wrong things.
1. What happens if they go to medical school and either don't graduate or can't get a medical license. This is actually pretty rare, but does happen more than people think.
2. What is the opportunity cost of going $400k in debt. You plug that into a financial calculator and you are going to be sick.
3. $400k in debt will change the trajectory of your life. Want to take x job in y city, but it only pays $120k. . . . . you shouldn't do it.

At this moment in time, pretty much any physician can make $300k. With all the political winds out there. . . who knows how long that will last.

 

[Med Ed]

You are describing a problem we’d all love to have. $5,000,000 at a very conservative 4% throws off $200,000 a year. Kids will be grown and no longer an expense. Retirement is obviously no longer expense. No commuting costs. Where do I sign up?

The key is to never live beyond your means. What you are describing sounds like a spending problem. As a datapoint, the average household income in this country is about $48,000...

I don't see the desire to continue one's income into retirement as indicative of a spending problem.

 

[libertyyne]

I hate to pile on, but my job is advising families with high school students heading to college.

Physician families are in a double bind. They often start their families before they start their high-earning years, like @samuelhatfield
Unfortunately, FAFSA and CSSProfile formulas make some broad assumptions. They assume you have been making $400 K for a long time, and that you've been able to save for college. The formula assumes that up to 47% of family annual income is available to pay for college each year. That means your child's EFC might be over $99,000, and would be full-pay for all colleges. Ironically, the middle/low-income family down the street may be able to say "yes" to Harvard because their net price would be much lower than yours.

These formulas don't factor in that the parents are often still paying off their own student loans (two-physician families have two buckets of loans), are finally buying a house, and so on.

My advice is the same as others here have given: live beneath your means and save for retirement and for college for your own children. It doesn't work to be a high earner with no savings for college. I keep hoping these calculations will be revised to factor in things like parents' student loans. Cost of college is a much higher proportion of family budgets than ever in history, and that's not reflected in these numbers.

Call me callous but I am not very empathetic towards the plight of high earners and their children not receiving financial aid. Compared to low earners who wont even make the equivalent over a decade of work. Yes , I get that debt is bad, and that higher earning families can be leveraged. Higher SES applicants have had the benefit of better schools, tutors, and educated parents and family. As a result there is a direct correlation between ses and mcat scores. So you have to take 300k to attend medical school or 200k to attend harvard, still in a better position compared to the person whose family made 20k during their formative years and continues to make 40k now. The other aspect of this in terms of determining aid is if you are a high earner and a large chunk of your money is tied up in assets like real estate or your personal business you still have the ability to liquidate those, people making 40k dont have that luxury.

 

[riverrunner]

Call me callous but I am not very empathetic towards the plight of high earners and their children not receiving financial aid. Compared to low earners who wont even make the equivalent over a decade of work. Yes , I get that debt is bad, and that higher earning families can be leveraged. Higher SES applicants have had the benefit of better schools, tutors, and educated parents and family. As a result there is a direct correlation between ses and mcat scores. So you have to take 300k to attend medical school or 200k to attend harvard, still in a better position compared to the person whose family made 20k during their formative years and continues to make 40k now. The other aspect of this in terms of determining aid is if you are a high earner and a large chunk of your money is tied up in assets like real estate or your personal business you still have the ability to liquidate those, people making 40k dont have that luxury.

Agree. My point is that some physician families I work with have a lot of pent-up spending going on and need to be reminded that the need-based awards they might have received for college won't be there for their children, and they'll need to save accordingly. It's a good problem to have.