Theoretically, can a specialist pay back their 200k loan in 2-3 years?

[streampaw]

Let's say someone becomes a dermatologist, graduates residency, and has 200k debt. They start out making 250k a year. Malpractice costs 50k a year, so they end up with 200k a year (dermatologists usually don't work for hospitals, so have to pay their own malpractice insurance). Minus taxes, equals 160k a year (assuming they pay like 20% taxes total? Idk. Correct me on this). Let's say they live off of 40k a year (plenty of families live off of that amount) and don't get any other loans (they will only get used cars for under 5k, and will rent a cheap apartment for this time).

That leaves them 120k a year to pay back towards the loan. Let's say they have 200k loan right after residency.
They pay 120k first year. 80k left. Let's say percent interest is 10%. That means they have 88k to bay back. Second year, they pay 88k, and still have 32 extra k to spend on themselves.

I have posted on other forums about this, and everyone kept telling me how "this is impossible" and "it takes doctors 10+ years to pay back debt". But assuming that the doctor lives with THIS lifestyle (even if they have kids; lots of families live on 40k a year with kids) for a couple of years, without any expensive vacations, car payments or house payments (hey, it's only 2 years), can they pay back their loan in those 2 years?

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[TheWeeIceMan]

A couple things:

1. Dermatologists don't make 200k (think higher).
2. Taxes are more than 20%.
3. Interest is less than 10% on student loans.

It is probably possible to pay back 200k in 3 years in certain specialties, but it is very difficult and you must be prepared to make sacrifices.

 

[kyamh]

It is probably possible to pay back 200k in 3 years in certain specialties, but it is very difficult and you must be prepared to make sacrifices.

I know someone who did this on a non-specialty salary, so I would say it's possible even then. There are other circumstances to take into account. The person I know is married and so contributed relatively little to the income in order to pay of loans asap...then again they had children so this person couldn't get away with putting it all into the loan. The hardest part is controlling yourself - it takes real dedication and self control to not spend money when you have $5-10k coming in every 2 weeks.

 

[streampaw]

A couple things:

1. Dermatologists don't make 200k (think higher).
2. Taxes are more than 20%.
3. Interest is less than 10% on student loans.

It is probably possible to pay back 200k in 3 years in certain specialties, but it is very difficult and you must be prepared to make sacrifices.

I looked on salary.com, and it says the average dermatologist makes about 300k in my area. I assumed that this comes after experience, and that the starting salary would be somewhere around 250k. How many % would the taxes be?

How much money would the dermatologist "take home" after malpractice insurance and taxes?

 

[DokterMom]

Married to your lawyer boyfriend, with a full-tuition scholarship and assuming you don't spend all the money jetting cross-country every two weeks, you should be OK

But that was before the four kids...

 

[yehhhboiii]

there was an anesthesiologist whose job offer fell through so he went around doing per diem work in be and ended up paying off all of his loans in a year

 

[terp720]

Married to your lawyer boyfriend, with a full-tuition scholarship and assuming you don't spend all the money jetting cross-country every two weeks, you should be OK

Agreed.
Also isn't this 12 years down the road for you (you're still 4 years away from starting med school)? You're really not going to know whether this will be possible for you given your lifestyle/situation until it's a bit closer...

 

[karayaa]

But theoretically, yes, it probably is possible. It's just rare becauses most people don't care about their debt that strongly.

 

[SN12357]

Let's say someone becomes a dermatologist, graduates residency, and has 200k debt. They start out making 250k a year. Malpractice costs 50k a year, so they end up with 200k a year (dermatologists usually don't work for hospitals, so have to pay their own malpractice insurance). Minus taxes, equals 160k a year (assuming they pay like 20% taxes total? Idk. Correct me on this). Let's say they live off of 40k a year (plenty of families live off of that amount) and don't get any other loans (they will only get used cars for under 5k, and will rent a cheap apartment for this time).

That leaves them 120k a year to pay back towards the loan. Let's say they have 200k loan right after residency.
They pay 120k first year. 80k left. Let's say percent interest is 10%. That means they have 88k to bay back. Second year, they pay 88k, and still have 32 extra k to spend on themselves.

I have posted on other forums about this, and everyone kept telling me how "this is impossible" and "it takes doctors 10+ years to pay back debt". But assuming that the doctor lives with THIS lifestyle (even if they have kids; lots of families live on 40k a year with kids) for a couple of years, without any expensive vacations, car payments or house payments (hey, it's only 2 years), can they pay back their loan in those 2 years?

Still with the hypotheticals it's pointless to think about at this stage of life, eh? Because you're 17.

But to address the question seriously: numerically, it is possible. In practice, almost never, because when you are an adult there are sacrifices you aren't willing to make.

So you got married, and you have kids, and sure, you can stay alive on 40k a year. But you want your kids to be safe. You want them in good schools. You want to keep up with the Joneses, so they have every advantage you either had or have been killing yourself for them to have. So you aren't going to tolerate living in the run down part of town with bad public schools. You're going to buy a house in the nice part of town, with nice public schools. Or you'll put your kids in private school.

That's just one narrow example. But essentially, a main reason people don't attack their loans like that is because they don't need to, and the lifestyle sacrifices a single person in their early twenties is willing to make are very different from the sacrifices someone with a family in their 30s is willing to make.

You'd still serve yourself better by not posting hypotheticals on SDN. I'd tell you to go get a drink with friends except that's illegal. Because you're 17.

 

[TheWeeIceMan]

I know someone who did this on a non-specialty salary, so I would say it's possible even then. There are other circumstances to take into account. The person I know is married and so contributed relatively little to the income in order to pay of loans asap...then again they had children so this person couldn't get away with putting it all into the loan. The hardest part is controlling yourself - it takes real dedication and self control to not spend money when you have $5-10k coming in every 2 weeks.

Yeah, a working spouse certainly changes the dynamics. I got the impression that OP wanted to know if the debt could be tackled simply based on one physician salary, which I think it can be if the person is disciplined enough.

Also, if you are years away from applying to medical school, asking what derm makes now is probably pointless (so is estimating students loans). No idea what they will make in 15 years.

 

[streampaw]

But theoretically, yes, it probably is possible. It's just rare becauses most people don't care about their debt that strongly.

Thank you guys. This is just what I wanted to know, because I've had people on the college board forum tell me that it's impossible to pay back that debt, but I just didn't understand the logic.

 

[streampaw]

Still with the hypotheticals it's pointless to think about at this stage of life, eh? Because you're 17.

But to address the question seriously: numerically, it is possible. In practice, almost never, because when you are an adult there are sacrifices you aren't willing to make.

So you got married, and you have kids, and sure, you can stay alive on 40k a year. But you want your kids to be safe. You want them in good schools. You want to keep up with the Joneses, so they have every advantage you either had or have been killing yourself for them to have. So you aren't going to tolerate living in the run down part of town with bad public schools. You're going to buy a house in the nice part of town, with nice public schools. Or you'll put your kids in private school.

That's just one narrow example. But essentially, a main reason people don't attack their loans like that is because they don't need to, and the lifestyle sacrifices a single person in their early twenties is willing to make are very different from the sacrifices someone with a family in their 30s is willing to make.

You'd still serve yourself better by not posting hypotheticals on SDN. I'd tell you to go get a drink with friends except that's illegal. Because you're 17.

I turned 18 yesterday

 

[streampaw]

I turned 18 yesterday

i meant the day before. last week

 

[TheWeeIceMan]

You have better things to do than worrying about this at 18.

 

[streampaw]

I am trying to get into medical school on a full scholarship, so I am doing my best starting early.

 

[mcloaf]

I am trying to get into medical school on a full scholarship, so I am doing my best starting early.

Flipping out about hypotheticals involving your future dermatologist salary at age 18 isn't getting you any closer to a full ride to med school.

 

[streampaw]

Flipping out about hypotheticals involving your future dermatologist salary at age 18 isn't getting you any closer to a full ride to med school.

I am just looking at my backup options. For example, if it really takes more than 4 years to pay back that loan, then why not go to mstp programs and get a free phd along the way? But apparently it can take as littleas 2 years, so I guess I am all good.

 

[mcloaf]

I am just looking at my backup options. For example, if it really takes more than 4 years to pay back that loan, then why not go to mstp programs and get a free phd along the way? But apparently it can take as littleas 2 years, so I guess I am all good.

Because anybody with any knowledge of MSTPs will tell that that's a horrible plan.

 

[TheWeeIceMan]

Actually paying for medical school isn't a "backup plan." It is, in fact, what the vast majority of students have to do. This isn't UG. Scholarships aren't handed out like candy.

 

[streampaw]

Actually paying for medical school isn't a "backup plan." It is, in fact, what the vast majority of students have to do. This isn't UG. Scholarships aren't handed out like candy.

I know, but med schools like umich, uchicago, and washu give fulls. I want to be competitive for that.

 

[karayaa]

I am trying to get into medical school on a full scholarship, so I am doing my best starting early.

If that's honestly your #1 priority, the military has a full ride + living expenses scholarship just for you. But they probably won't take you if you just care about the money.
http://en.wikipedia.org/wiki/Health_Professions_Scholarship_Program

There almost might be full scholarship BS/MD programs out there. If you're an amazing person.

But MSTP for a free PhD? Do you have any idea what you're talking about? Do you want to be a scientist? Have you done any research?

Seriously, most people take out loans for med school. It's normal. Hence all the discussions/worries about debt. And most people pay them off within 15 years without a problem. It's not that big of a deal.

 

[karayaa]

I know, but med schools like umich, uchicago, and washu give fulls. I want to be competitive for that.

What are the criteria? Merit? Need?

 

[streampaw]

What are the criteria? Merit? Need?

My parents probably dont qualify for need, they make like 70k/yr.

If that's honestly your #1 priority, the military has a full ride + living expenses scholarship just for you. But they probably won't take you if you just care about the money.
http://en.wikipedia.org/wiki/Health_Professions_Scholarship_Program

There almost might be full scholarship BS/MD programs out there. If you're an amazing person.

But MSTP for a free PhD? Do you have any idea what you're talking about? Do you want to be a scientist? Have you done any research?

Seriously, most people take out loans for med school. It's normal. Hence all the discussions/worries about debt. And most people pay them off within 15 years without a problem. It's not that big of a deal.

To be honest, id rather spend an extra 4 years doing phd rather than 15 years paying off debt. I am volunteering at a research lab already.

 

[streampaw]

They make 70k a year combined

 

[username456789]

You're also forgetting that, for most loans, interest will continue to accrue during the 4 years of medical school and 3-7 years of residency. So although technically your proposed scenario of "$200k out of residency" is certainly plausible, this would mean that the actual money borrowed was probably a good bit less, assuming that $200k figure includes all the interest that has accrued.

 

[mcloaf]

I know, but med schools like umich, uchicago, and washu give fulls. I want to be competitive for that.

That's nice, but you also need to realize a few things. Getting into any medical school puts you ahead of most people. Getting into one of the schools you mentioned (or some of the others noted for merit aid) puts you in a much smaller group of more competitive applicants. Getting full merit aid puts you in a very, very select group of people. It's hard enough to get accepted to those schools, nobody can count on being one of the likely fewer than 10 applicants to whom they may offer a full ride every year. There are 3.9/40+ applicants paying full tuition at these places.

 

[streampaw]

You're also forgetting that, for most loans, interest will continue to accrue during the 4 years of medical school and 3-7 years of residency. So although technically your proposed scenario of "$200k out of residency" is certainly plausible, this would mean that the actual money borrowed was probably a good bit less, assuming that $200k figure includes all the interest that has accrued.

Oh. I guess mstp might not be such a bad idea.

 

[mcloaf]

Oh. I guess mstp might not be such a bad idea.

 

[mvenus929]

Oh. I guess mstp might not be such a bad idea.

I agree with mcloaf.

If you want to be a clinical physician, an MSTP is a terrible idea. Do you have any idea what goes into getting a PhD? I don't, and I'm friends with a number of people in our MSTP.

Seriously. Stop posting these hypotheticals. Focus on doing the things to get into med school first--prereqs, MCAT, and research. You will need significant research if you want to try for MSTP, otherwise they'll laugh at your application. We're talking publications.

 

[streampaw]

I dont get it. What is so absurd about my logic? If it takes me 4 extra years toget a phd, vs 10-15 extra years to pay off loan, what is so bad about getting a phd? If its going to take me at least 4 years to pay off a loan that large including interest, then why not get a phd for safety?

 

[Escape_Goat]

I turned 18 yesterday

Oh well that changes everything.

 

[mcloaf]

I dont get it. What is so absurd about my logic? If it takes me 4 extra years toget a phd, vs 10-15 extra years to pay off loan, what is so bad about getting a phd? If its going to take me at least 4 years to pay off a loan that large including interest, then why not get a phd for safety?

Because you have no idea what goes into doing a PhD. It's years of hard work and luck, not something you waltz through because you want a free medical education. If you don't love research then every minute of that three or more years out is going to be terrible. Volunteering in a lab during undergrad is nothing like what it is to work in one as a grad student. Then there's the opportunity cost of doing the PhD, I've never bothered to do the math but many argue that if you're putting off making an attending's salary for three to four years you end up just about breaking even. This is all assuming that you get into an MSTP, for which admissions are generally more competitive that regular MD.

 

[karayaa]

Because you're focused on the financial benefits to yourself, rather than your interest in the field. It comes off as disrepectful and ignorant.
From a finance POV, it's a great idea. But it sounds idiotic because a) it's unrealistic - it's v difficult to get into MSTP programs, requiring a lot of passion and dedication and discipline and sacrifice over multiple years. b) it assumes that you don't care what type of job you do in life - that your personality and values are so nonexistent as to be able to fit yourself into any career you want. c) shortsightedness - yes, you'll get financial safety, for a little while, but there's no guarantee that you'll get a job as a MD/PhD, so you might sacrifice some loans for a lifetime of higher income.

 

[circulus vitios]

Unless you are starting your own practice or are working for some third world dump of a physician group, YOU WILL NOT HAVE TO PAY YOUR OWN MALPRACTICE INSURANCE. I don't know why SDN keeps thinking that physicians have to pay for their own malpractice.

20% taxes is hilarious, too. Try 40-45%.

 

[Mr Avante]

I turned 18 yesterday

gratz!

 

[ToldYouSo]

I dont get it. What is so absurd about my logic? If it takes me 4 extra years toget a phd, vs 10-15 extra years to pay off loan, what is so bad about getting a phd? If its going to take me at least 4 years to pay off a loan that large including interest, then why not get a phd for safety?

The 4 years of missed salary (your highest earning 4 years as an attending) as a grad student greatly outweigh the money saved by doing the MSTP.

 

[notbobtrustme]

I dont get it. What is so absurd about my logic? If it takes me 4 extra years toget a phd, vs 10-15 extra years to pay off loan, what is so bad about getting a phd? If its going to take me at least 4 years to pay off a loan that large including interest, then why not get a phd for safety?

Opportunity cost. You get what, maybe 300k in total compensation (~200k for medical school, ~60k-80k in a stipend) but it takes at least 7 years to finish the program. That is essentially sacrificing 3-4 years of attending salary, which can be more than $1 million in the more lucrative specialties.

 

[Chir0nex]

To be honest, id rather spend an extra 4 years doing phd rather than 15 years paying off debt. I am volunteering at a research lab already.

You also have to realize that it is not a binary choice between paying off in 2 years or 15. Many people do 10 year payment programs, or loan forgiveness programs if they are doing primary care or in an under-served area.

Is there a particular reason you are so focused on paying off the debt right away? The vast majority of professionals who have gone through grad school (especially doctors and lawyers) spend many years paying the debt off slowly, and still are able to start families, buy homes, etc...

Finally, to echo everyone else, don't worry about this now. Focus on your grades and ECs. In a year (or two) when you are applying, talk to your premed advisor about options. Until then, just try and appreciate college and have some fun.

 

[karayaa]

Unless you are starting your own practice or are working for some third world dump of a physician group, YOU WILL NOT HAVE TO PAY YOUR OWN MALPRACTICE INSURANCE. I don't know why SDN keeps thinking that physicians have to pay for their own malpractice.

20% taxes is hilarious, too. Try 40-45%.

Or 30%?
http://www.bankrate.com/finance/taxes/tax-brackets.aspx
edit: My bad. That's ONLY federal income tax.

 

[circulus vitios]

Or 30%?
http://www.bankrate.com/finance/taxes/tax-brackets.aspx

That's income tax. You're forgetting state, local, social security, medicare, etc. Plug some numbers into http://www.paycheckcity.com/

It depends on the state and city, but you'll be paying anywhere from 35-45%.

 

[QuantumJ]

Yes it's possible. I've talked to a few that continued to live in the same apartment and the same lifestyle for 2 years after residency and pretty much paid most of it back. They also had spouses though so perhaps they only took what was needed for tuition while the spouse provided living expenses; I didn't delve too deep at the time. Besides this, most physicians pay it back over time and it's just something you have to accept if you want a career in medicine unfortunately.

 

[ciestar]

Wow. At 18 I was worried about getting a date for prom (didn't, btw ) not about how much debt I was about to accrue as an UG.
I now have my bachelors and I'm sitting on 50k in debt from UG. It's normal to have debt. Just suck it up and deal with the reality that you're likely going to be in debt if you make it to med school. From what I've read, this is what, 8 years away for you? Stop worrying about this stuff, be an 18 year old and grow up a bit and realize that the world works a certain way, whether we like it or not.

 

[premed3445]

i meant the day before. last week

With all due respect, aren't you a little too young to be worrying about such hypotheticals? You have a long road ahead of you, starting with your undergrad, and that starts with getting a decent GPA, a good MCAT score, research and clinical experiences, volunteer experiences, and all that other jazz. You haven't made it to the medical school application stage yet, much less start worrying about residency.

I understand that long-range planning is good, and in fact I do applaud your efforts, but I think there are far more important things to worry about right now, such as getting a good start in college. College itself is a huge adjustment from high school, including living away from home for the first time.

I do wish you the best of luck though, you'll do fine, but sometimes we need to worry more about the present.

 

[gettheleadout]

It depends a lot on the specialty, practice setting, etc...

Do neurosurgery (or maybe plastics), take a private practice position out of residency, make $800k+ in your first year as an attending (seriously), and yeah you can pay back $200k loans in a year or two no problem.

Most doctors? No.

 

[gettheleadout]

Unless you are starting your own practice or are working for some third world dump of a physician group, YOU WILL NOT HAVE TO PAY YOUR OWN MALPRACTICE INSURANCE. I don't know why SDN keeps thinking that physicians have to pay for their own malpractice.

20% taxes is hilarious, too. Try 40-45%.

lol

 

[gettheleadout]

They make 70k a year combined

This would get you $200k+ need-based scholarship aid at HMS, just by the way.

 

[streampaw]

Lol you guys, I'm living with my parents and going to state school, because they are paying for tuition. No debt in undergrad. But they arent rich enough to pay for any of med school whatsoever.

 

[streampaw]

This would get you $200k+ need-based scholarship aid at HMS, just by the way.

So how much would I end up paying total for tuition with that need based scholarship?

 

[Burla]

FYI If you're in the 33% tax bracket for federal income tax, you don't pay 33% on all your money. It's only 33% on the money you made over the previous tax bracket. Seems like people make this mistake on here a lot

 

[sazerac]

In theory, a medical graduate could do a three year residency, and then "live like a resident" for another two years while an attending, and make huge loan payments. Is this really possible? Of course it is. Graduates do five year residencies all the time, or do a two year fellowship.

In reality, doctors are financially ******ed and live paycheck to paycheck. If their income goes up by $150,000 then so do their expenses. Instantly. It's just the nature of the profession.

There was a funny thread here a few years ago where payroll had a snafu and was going to be two days late. Doctors called payroll frantically because all these mortgages and boat payments and car payments and private school tuition payments were going to bounce. Doctors making $30,000 a month had so little float they were going to be insolvent on account of their paycheck showing up on a monday instead of the previous friday. It was unreal.