Total indebtedness

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kp11

kp11

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Hello fellow SDN-ers

I am trying to calculate "total indebtedness" of two schools, however it might be useful if calculations could be made for multiple schools so that the greatest good may come from this thread. I lack the exact knowledge on how to calculate such values exactly.

So to start off, I have AZCOM. This upcoming year the tuition is going to be 58k. The inflation rate has been about 5 % every year (Roughly 58k 1st year, 61k 2nd, 63k 3rd, and 66k 4th). On top of this, federal loans are going to be 5.4% compounding (I think). However, everything over $40,500 is through the PLUS loan, which has the compounding interest of (I think) 6.4%. I plan on using 10 year repayment while deferring during residency.
HOW MUCH IS THE TOTAL INDEBTEDNESS?


2nd school: CUSOM. Tuition to be $40,500. I have to assume the annual inflation will be 3.0% (national average).
HOW MUCH IS THE TOTAL INDEBTEDNESS?

More than anything, does anyone know a useful formula for this question?

Much appreciated
 
If you're trying to decide between both schools, just round up and say after 4 years, and residency, and interest, you'll prob be ~$120k more in debt at AZCOM vs CUSOM. I did similar calculations for AZCOM and another school. Whether it's $100k or $150k, it would take a LOT of outside influence to make the money worth it (aka family proximity).
 
kp11 said:
Hello fellow SDN-ers

I am trying to calculate "total indebtedness" of two schools, however it might be useful if calculations could be made for multiple schools so that the greatest good may come from this thread. I lack the exact knowledge on how to calculate such values exactly.

So to start off, I have AZCOM. This upcoming year the tuition is going to be 58k. The inflation rate has been about 5 % every year (Roughly 58k 1st year, 61k 2nd, 63k 3rd, and 66k 4th). On top of this, federal loans are going to be 5.4% compounding (I think). However, everything over $40,500 is through the PLUS loan, which has the compounding interest of (I think) 6.4%. I plan on using 10 year repayment while deferring during residency.
HOW MUCH IS THE TOTAL INDEBTEDNESS?


2nd school: CUSOM. Tuition to be $40,500. I have to assume the annual inflation will be 3.0% (national average).
HOW MUCH IS THE TOTAL INDEBTEDNESS?

More than anything, does anyone know a useful formula for this question?

Much appreciated
Click to expand...

What is the COA for AZCOM?
 
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Trust me, whatever new school hiccups you run into at CUSOM will be worth the 18+K saved per year. Save yourself what is eventually 100K or more.
 
chizledfrmstone said:
Yeah but who really needs $3k in health insurance and another $5k for books and supplies?
Click to expand...

Those are actually reasonable costs but, in a market-based education market, those costs would be covered by the school. Instead, that money is going to overpaid academic administrators and other nonsense.
 
Silent Cool said:
Those are actually reasonable costs but, in a market-based education market, those costs would be covered by the school. Instead, that money is going to overpaid academic administrators and other nonsense.
Click to expand...

The insurance might cost that much but what about books? I've had a lot of current students tell me not to buy textbooks because 90% of the stuff is in the notes.
 
chizledfrmstone said:
The insurance might cost that much but what about books? I've had a lot of current students tell me not to buy textbooks because 90% of the stuff is in the notes.
Click to expand...

Most of the books are a waste, but sometimes they are valuable. Just depends on your school.
 
chizledfrmstone said:
The insurance might cost that much but what about books? I've had a lot of current students tell me not to buy textbooks because 90% of the stuff is in the notes.
Click to expand...
Apparently the only book worth buying is the anatomy book (like Netters) which you'll use frequently. Otherwise it's not worth the money, since most of your tests will be based off lecture notes. YMMV depending on your school and whether or not lectures are recorded and your instructors' style but so far most of the students I've talked to at my future school have told me not to bother buying books
 
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kp11 said:
Hello fellow SDN-ers

I am trying to calculate "total indebtedness" of two schools, however it might be useful if calculations could be made for multiple schools so that the greatest good may come from this thread. I lack the exact knowledge on how to calculate such values exactly.

So to start off, I have AZCOM. This upcoming year the tuition is going to be 58k. The inflation rate has been about 5 % every year (Roughly 58k 1st year, 61k 2nd, 63k 3rd, and 66k 4th). On top of this, federal loans are going to be 5.4% compounding (I think). However, everything over $40,500 is through the PLUS loan, which has the compounding interest of (I think) 6.4%. I plan on using 10 year repayment while deferring during residency.
HOW MUCH IS THE TOTAL INDEBTEDNESS?


2nd school: CUSOM. Tuition to be $40,500. I have to assume the annual inflation will be 3.0% (national average).
HOW MUCH IS THE TOTAL INDEBTEDNESS?

More than anything, does anyone know a useful formula for this question?

Much appreciated
Click to expand...

Here's a quick excel file I hope helps answer your question. To compare different schools, alter the values in the green-shaded boxes. Everything else (interest rates, etc) should stay the same. I used your given numbers for interest rates and COA at AZCOM. This is only figuring the indebtedness at time of graduation when you walk on stage and get your diploma, not residency (and before any repayment of loans). Disclaimer: it's 2:30 am and I assume no responsibility for any mistakes in this spreadsheet.

**Edit: spreadsheet with more accurate interest rates later in thread
 

Attachments

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kp11 said:
Unfortunately...90K on a "thrifty budget". I Did not think about that number being so high. I'm looking for CUSOM's COA (harder to find). Elevencents is probably right, I'm just looking for specific numbers. When you take a spouse, every angle has to be examined.

http://www.midwestern.edu/Documents/Financial Aid documents/COA Forms/MEDICAL COA_AZ1415.pdf
Click to expand...
You better become a spine surgeon if you are matriculating at AZCOM! Lol...

A lot of us are counting on IBR etc... but these plans might not be available when we need them. You are talking about half million dollars student loan (interest included)... What the monthly payment would be if one want to pay back that loan in 10 years? 4k-5k/month...
 
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chizledfrmstone said:
The insurance might cost that much but what about books? I've had a lot of current students tell me not to buy textbooks because 90% of the stuff is in the notes.
Click to expand...

Most books should be available for free via your schools online library. Additionally, I would recommended buying used or crappy medical equipment. You will never use it in real life. The only exception is a stethoscope; you should get a decent stethoscope.
 
kp11 said:
Hello fellow SDN-ers

I am trying to calculate "total indebtedness" of two schools, however it might be useful if calculations could be made for multiple schools so that the greatest good may come from this thread. I lack the exact knowledge on how to calculate such values exactly.

So to start off, I have AZCOM. This upcoming year the tuition is going to be 58k. The inflation rate has been about 5 % every year (Roughly 58k 1st year, 61k 2nd, 63k 3rd, and 66k 4th). On top of this, federal loans are going to be 5.4% compounding (I think). However, everything over $40,500 is through the PLUS loan, which has the compounding interest of (I think) 6.4%. I plan on using 10 year repayment while deferring during residency.
HOW MUCH IS THE TOTAL INDEBTEDNESS?


2nd school: CUSOM. Tuition to be $40,500. I have to assume the annual inflation will be 3.0% (national average).
HOW MUCH IS THE TOTAL INDEBTEDNESS?

More than anything, does anyone know a useful formula for this question?

Much appreciated
Click to expand...

Projected stafford/grad plus interest rates in coming years (remember they are based on 10 year treasury bill rates now)

2014-2015: 6.3/7.3
2015-2016: 7.1/8.1
2016-2017: 7.9/8.9
2017-2018: 8.6/9.6

tuition/fees will make up the VAST MAJORITY of one's debt. lets stop fussing over books or living expenses and get back on topic.
 
I have bought one book (The Kimberly Manual) and that's because I wanted it. Other than that, I have bought none and done well my first year.
 
user3 said:
Projected stafford/grad plus interest rates in coming years (remember they are based on 10 year treasury bill rates now)

2014-2015: 6.3/7.3
2015-2016: 7.1/8.1
2016-2017: 7.9/8.9
2017-2018: 8.6/9.6

tuition/fees will make up the VAST MAJORITY of one's debt. lets stop fussing over books or living expenses and get back on topic.
Click to expand...

I understand your point. I am just trying to get a feel of the complete picture (including how much I would need to to ask for on the federal PLUS loan). Also, it gives me an accurate depiction of GENERAL cost of living.

However, I do understand your point. Someone could live out of a van and not buy 1 textbook. Tuition IS the largest cost. I just like to account for everything.

Just to finish out my original thought:
COA CUSOM: $68,650
 
kp11 said:
I understand your point. I am just trying to get a feel of the complete picture (including how much I would need to to ask for on the federal PLUS loan). Also, it gives me an accurate depiction of GENERAL cost of living.

However, I do understand your point. Someone could live out of a van and not buy 1 textbook. Tuition IS the largest cost. I just like to account for everything.

Just to finish out my original thought:
COA CUSOM: $68,650
Click to expand...
The COA of CUSOM is much more manageable...
 
Updated to include User3's interest rates. All you really need to do is change the green shaded cells to match your school's tuition/cost of attendance.

And yes, these numbers are depressing to look at. le sigh
 

Attachments

Just did the math. With interest factored in, and if I use PAYE in residency, I will owe $405,206 at the end of PGY-4. If interest rates go up, it'll look even worse.
 
user3 said:
Projected stafford/grad plus interest rates in coming years (remember they are based on 10 year treasury bill rates now)

2014-2015: 6.3/7.3
2015-2016: 7.1/8.1
2016-2017: 7.9/8.9
2017-2018: 8.6/9.6

tuition/fees will make up the VAST MAJORITY of one's debt. lets stop fussing over books or living expenses and get back on topic.
Click to expand...

Based on these numbers, I ran a quick calculation and found out that the average rate over the next 4 years (assuming 50% stafford and 50% grad plus) will be 7.44%. It's quite high, but a little less than how it used to be (6.8/8.5).
 
Mad Jack said:
Just did the math. With interest factored in, and if I use PAYE in residency, I will owe $405,206 at the end of PGY-4. If interest rates go up, it'll look even worse.
Click to expand...
But if you do PSLF on top of that, your life will be happy!
 
How does deducting student loan interest impact everything? If you make 200k per year and net 150k, are you really paying 60k per year back in student loans?
 
victoriah said:
How does deducting student loan interest impact everything? If you make 200k per year and net 150k, are you really paying 60k per year back in student loans?
Click to expand...
I believe, but do your own research, that the tax bracket that physicians fall into excludes us from deducting interest for tax purposes.
 
tripl3s3v3n said:
I believe, but do your own research, that the tax bracket that physicians fall into excludes us from deducting interest for tax purposes.
Click to expand...

As residents, we'll make little enough to qualify for student loan interest deductions. For those whose filing status is 'single,' you can make up to $60k and take the full deduction. Between $60-75k, the amount is reduced, and $75k+ there is no student loan deduction allowed. But after residency, yeah...no more deductions for student loans.

The maximum amount to deduct is $2500, regardless of how much in interest you paid that year.
 
Mad Jack said:
Just did the math. With interest factored in, and if I use PAYE in residency, I will owe $405,206 at the end of PGY-4. If interest rates go up, it'll look even worse.
Click to expand...
No, if you do PAYE then there is a fixed maximum (less than 10% of your income) you will pay before debt forgiveness kicks in. It is doubtful you will pay even $400,000 over the next 16 years before the loan is forgiven. Basically you guys with $400K and $500K loans are going to be paying negative interest rates on your loan. Borrow $500K, only pay back $400K total, what exactly is the interest rate over 20 years on those terms?

PAYE loan forgiveness is currently a taxable event, so you will want to set aside some money for that event 20 years after you graduate. But the loan scenario isn't nearly as dire as folks think, because with income based repayments and loan forgiveness, these aren't normal loans at all.
 
sazerac said:
No, if you do PAYE then there is a fixed maximum (less than 10% of your income) you will pay before debt forgiveness kicks in. It is doubtful you will pay even $400,000 over the next 16 years before the loan is forgiven. Basically you guys with $400K and $500K loans are going to be paying negative interest rates on your loan. Borrow $500K, only pay back $400K total, what exactly is the interest rate over 20 years on those terms?

PAYE loan forgiveness is currently a taxable event, so you will want to set aside some money for that event 20 years after you graduate. But the loan scenario isn't nearly as dire as folks think, because with income based repayments and loan forgiveness, these aren't normal loans at all.
Click to expand...
We were talking about PSLF, not PAYE. Do you honestly think they won't pull the same tricks with PAYE down the road, cutting payouts and increasing the time for it to kick in? Don't ever trust the government to pay your loans, because they'll drop the ball at the last minute and screw you, as they did with everyone that was close to collecting on the PSLF program.
tyrion.jpg
 
I guess I'm really ignorant on the subject because I just don't understand how everyone is so nonchalant about their loans.

Paying less than 10% of your income for 20 years and watching your loans grow doesn't put me in a comfortable position. Everyone these days is jumping on the PAYE, PSLF or whatever is the current flavor of the month to take care of their ballooning debt.
 
chizledfrmstone said:
I guess I'm really ignorant on the subject because I just don't understand how everyone is so nonchalant about their loans.

Paying less than 10% of your income for 20 years and watching your loans grow doesn't put me in a comfortable position. Everyone these days is jumping on the PAYE, PSLF or whatever is the current flavor of the month to take care of their ballooning debt.
Click to expand...

Jumping is not the word choice I would use here. Rather, it's being forced into it. Someone like me who has some undergrad debt, adds on another 400k during med school, and then accumulate another 150k during postgrad training will be very limited to what he/she can do.
 
Yeah, I would definitely bank on PAYE and IBR to forgive our loans. The government and general public realize the sacrifices that we have made and will be more than happy to relieve us of our debt. We have nothing to worry about.
 
sazerac said:
No, if you do PAYE then there is a fixed maximum (less than 10% of your income) you will pay before debt forgiveness kicks in. It is doubtful you will pay even $400,000 over the next 16 years before the loan is forgiven. Basically you guys with $400K and $500K loans are going to be paying negative interest rates on your loan. Borrow $500K, only pay back $400K total, what exactly is the interest rate over 20 years on those terms?

PAYE loan forgiveness is currently a taxable event, so you will want to set aside some money for that event 20 years after you graduate. But the loan scenario isn't nearly as dire as folks think, because with income based repayments and loan forgiveness, these aren't normal loans at all.
Click to expand...
Once you calculate for inflation the returns will be even more. $400k in 20 years will seem like a drop in the bucket, and premeds will be complaining about paying that per year.
 
TheWeeIceMan said:
Yeah, I would definitely bank on PAYE and IBR to forgive our loans. The government and general public realize the sacrifices that we have made and will be more than happy to relieve us of our debt. We have nothing to worry about.
Click to expand...

Yea, I agree, I seriously doubt any of these programs will survive.
 
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In reality, if I do primary care, there are many reimbursement programs. If I don't, I'll easily pay off my loans with the higher income and frugal living. Easily doable.
 
Mad Jack said:
We were talking about PSLF, not PAYE. Do you honestly think they won't pull the same tricks with PAYE down the road, cutting payouts and increasing the time for it to kick in? Don't ever trust the government to pay your loans, because they'll drop the ball at the last minute and screw you, as they did with everyone that was close to collecting on the PSLF program.
tyrion.jpg
Click to expand...
PSLF has not been changed. What your talking about was a budget proposal to cap the loan forgiveness at 57.5k. But that budget proposal was dead in the water and did not pass. Had it actually passed, if you had started taking any student loans out prior to July of 2015, your PSLF would remain unchanged.
I spoke to a financial aid counselor as well expressing my concerns that in the future this would be a problem and she said that it's highly unlikely they'll change anything anytime soon (the way congress behaves) but even if they were to change it would not affect current students. Not to mention there would be a lot of lawsuits against the government if they tried to
 
guylewis said:
PSLF has not been changed. What your talking about was a budget proposal to cap the loan forgiveness at 57.5k. But that budget proposal was dead in the water and did not pass. Had it actually passed, if you had started taking any student loans out prior to July of 2015, your PSLF would remain unchanged.
I spoke to a financial aid counselor as well expressing my concerns that in the future this would be a problem and she said that it's highly unlikely they'll change anything anytime soon (the way congress behaves) but even if they were to change it would not affect current students. Not to mention there would be a lot of lawsuits against the government if they tried to
Click to expand...
Perfectly said.
 
TheWeeIceMan said:
Yeah, I would definitely bank on PAYE and IBR to forgive our loans. The government and general public realize the sacrifices that we have made and will be more than happy to relieve us of our debt. We have nothing to worry about.
Click to expand...
but reading through the DOE's q&a regarding the proposed changes, apparently since these are mentioned in the promissory notes they cannot be revoked. the MPN is a contract.
 
guylewis said:
PSLF has not been changed. What your talking about was a budget proposal to cap the loan forgiveness at 57.5k. But that budget proposal was dead in the water and did not pass. Had it actually passed, if you had started taking any student loans out prior to July of 2015, your PSLF would remain unchanged.
I spoke to a financial aid counselor as well expressing my concerns that in the future this would be a problem and she said that it's highly unlikely they'll change anything anytime soon (the way congress behaves) but even if they were to change it would not affect current students. Not to mention there would be a lot of lawsuits against the government if they tried to
Click to expand...
Given that it's the dems proposing limits on a funding item, I wouldn't be surprised if it was incorporated into the final budget. And there will be a budget, as I don't think the Republicans want another backlash like they recently suffered. Sure, changes wouldn't be retroactive, but that doesn't help those of us that aren't graduating for a few years. I am just saying, it's probably safest if you don't bank on the government paying off your loans. You need to have a plan in the event such programs don't exist in the future, because you never know how things'll look before you take out your final loans.
 
Mad Jack said:
Given that it's the dems proposing limits on a funding item, I wouldn't be surprised if it was incorporated into the final budget. And there will be a budget, as I don't think the Republicans want another backlash like they recently suffered. Sure, changes wouldn't be retroactive, but that doesn't help those of us that aren't graduating for a few years. I am just saying, it's probably safest if you don't bank on the government paying off your loans. You need to have a plan in the event such programs don't exist in the future, because you never know how things'll look before you take out your final loans.
Click to expand...
If you started taking any student loans prior to July 2015(medical school or undergrad) this budget proposal would not apply to you. Again this proposal was rejected. I don't deal in speculation of how the bad guy government is going to screw me over in the future. The facts as we have it now is that this budget won't pass. We've had no budget pass for the past six years because of obstruction and they don't mind not having budgets. They just go on with continuing resolutions and probably will keep doing this until we have one party rule both the white house and the congress (unlikely until at least 2016). I wouldn't rely on PSLF in its current form being available for all future med students but as of right now it's untouched and probably safe for any current and incoming student's
 
DoctorKrieger said:
Updated to include User3's interest rates. All you really need to do is change the green shaded cells to match your school's tuition/cost of attendance.

And yes, these numbers are depressing to look at. le sigh
Click to expand...

great job on the excel program. does this include the amount the sum will become after 10 years of repayment including interest?
 
user3 said:
but reading through the DOE's q&a regarding the proposed changes, apparently since these are mentioned in the promissory notes they cannot be revoked. the MPN is a contract.
Click to expand...

What I read from the DOE was certainly not what I'd call an "air tight" answer regarding a grandfather clause. Also, from the promissory notes that I've read, PSLF was always framed in a way that said "your student loans MAY be forgiven after a certain period."

Also, no one is actually enrolled in PSLF.

I've said this a lot on SDN lately, but I will believe that the government will forgive a physician's student loans when I actually see that someone has done it. I will remain a skeptic until that point.
 
kp11 said:
great job on the excel program. does this include the amount the sum will become after 10 years of repayment including interest?
Click to expand...

As it is, it is only the amount of debt at the time of graduation. I'm not near a computer right now but I'll try to take a look at adding that when I am.
 
lol, at the bottom there is a list of similar threads and one is from 2002

Here are the stats from the AAMC on medical student debt, they seem to be close to this poll:

Class of 2001 debt:
Mean all schools: 99,089
Median all schools: 97,000
Mean public schools: 86,630
Median public schools: 86,000
Mean private schools: 118,546
Median private schools: 120,000

Percent at 150K or higher
All schools: 15%
Public: 7%
Private: 35.5%
Click to expand...

cm7b5 said:
Half of the people have under 125K in debt.
Click to expand...

ginseng said:
From undergrad, I went to UCLA, I owe about $10,000 and that's because I wanted to live really lavishly for the past four years. Whether I go to UCLA or UCSF, both schools have an average indebtness of $60,000. Not bad huh?
Click to expand...

I'm not sure if the last one was just being silly...
 
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