Will my debt be too much?

[Brodo Swaggins]

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I'm a 2nd year DO student but am posting here in hopes of this post garnering more attention. My tuition is slightly over 40k/yr which I cover with stafford and PLUS loans and I have also taken out about 5-7k both years to pay for fees and other expenses both years. I am trying to live as frugally as possible and am currently living with my parents so I don't have to pay any rent or housing related expenses. Nonetheless, at this rate it seems that I will eclipse the 200k mark in loan debt by graduation if I continue to pay for things the way I have been so far, especially considering that I will likely have to rent an apartment at some point 3rd and/or 4th year. I have pretty minimal undergrad debt (~15k).

This concerns me because I always hear horror stories about how too much debt can cripple you financially for the rest of your life. I'm also stuck because I don't really know what specialty I'm going to pursue so I can't estimate accurately what my future salary will be. There are some scholarships for primary care physicians in my state, but I have no idea if that's what I want to do. I also don't think I'd like the military.

Anyone have any experience dealing with a similar situation? Are there other options that I haven't considered? Any advice is appreciated. Thanks!

 

[screenjunkie]

I know residents with 300-500k in debt, so you're definitely not the worst off. that said, look for locum tenens positions once you graduate for some extra cash would be my advice

 

[Glandzburg]

Was this not something you considered before you started medical school???

 

[Brodo Swaggins]

Was this not something you considered before you started medical school???

It was, I think I did a good job of convincing myself everything would be ok before I started though. Especially considering I knew I'd go to a school with any people in a similar situation.

 

[gettheleadout]

Run some numbers! For example, you could assume a conservative $175k/yr attending and $45k resident pre-tax income for yourself, and estimate your total debt at graduation. Look at your state tax brackets if applicable and figure out what you'd have to work with after graduating. Since you're living with your parents (a good money-saving move) I would assume you're not married, correct? If you're in a relationship, do you anticipate being married during residency? If so, you can try estimating your future spouse's income, and thus what sort of loan payments you could make during residency, rather than going into forbearance for the full 3-6 years (I'm excluding longer residencies here; if you do neurosurgery you'll make enough as an attending to not worry about paying off your loans.)

Six-figure debt loads are scary, I feel you there. But try to put it in perspective! If you're worried about how your debt might impact your life, try to figure out how it might do so!

 

[Brodo Swaggins]

Run some numbers! For example, you could assume a conservative $175k/yr attending and $45k resident pre-tax income for yourself, and estimate your total debt at graduation. Look at your state tax brackets if applicable and figure out what you'd have to work with after graduating. Since you're living with your parents (a good money-saving move) I would assume you're not married, correct? If you're in a relationship, do you anticipate being married during residency? If so, you can try estimating your future spouse's income, and thus what sort of loan payments you could make during residency, rather than going into forbearance for the full 3-6 years (I'm excluding longer residencies here; if you do neurosurgery you'll make enough as an attending to not worry about paying off your loans.)

Six-figure debt loads are scary, I feel you there. But try to put it in perspective! If you're worried about how your debt might impact your life, try to figure out how it might do so!

Ok, I'll try to look into the tax brackets. But yes I'm single and have no intention of being married soon, so brunt falls squarely on me. Really it's just scary because I feel that I went into medicine for the right reason, but I also want to be able to potentially have a family and not have to worry about how to care for them financially etc. I feel ignorant for not having considered where I'd be sitting financially sooner.

 

[Mad Jack]

I'm a 2nd year DO student but am posting here in hopes of this post garnering more attention. My tuition is slightly over 40k/yr which I cover with stafford and PLUS loans and I have also taken out about 5-7k both years to pay for fees and other expenses both years. I am trying to live as frugally as possible and am currently living with my parents so I don't have to pay any rent or housing related expenses. Nonetheless, at this rate it seems that I will eclipse the 200k mark in loan debt by graduation if I continue to pay for things the way I have been so far, especially considering that I will likely have to rent an apartment at some point 3rd and/or 4th year. I have pretty minimal undergrad debt (~15k).

This concerns me because I always hear horror stories about how too much debt can cripple you financially for the rest of your life. I'm also stuck because I don't really know what specialty I'm going to pursue so I can't estimate accurately what my future salary will be. There are some scholarships for primary care physicians in my state, but I have no idea if that's what I want to do. I also don't think I'd like the military.

Anyone have any experience dealing with a similar situation? Are there other options that I haven't considered? Any advice is appreciated. Thanks!

I'll be 320k in debt, maxing out at 400k post-residency. If you don't need to live like a Swaggins immediately after residency, you can pay your debt down fast, regardless of specialty, so long as you put in some hard work and extra hours and don't go into academia.

 

[Mad Jack]

Loan Balance: $300,000.00
Adjusted Loan Balance: $303,030.30
Loan Interest Rate: 7.80%
Loan Fees: 1.00%
Loan Term: 30 years
Minimum Payment: $50.00
Enrollment Status: In Repayment
Degree Program: Doctor (M.D.)
Monthly Loan Payment: $2,181.43
Number of Payments: 360
Cumulative Payments: $785,308.73
Total Interest Paid: $485,308.73

There's the monthly payment amount on a 30 year extended repayment plan.

• Monthly Gross Pay$16,333.33
• Federal Withholding$3,484.94
• Social Security$911.40
• Medicare$213.15
• Connecticut$819.50
• Tax Deductible Garbage$1,633.33

Net Pay

• Net Pay$9,271.01

Calculation Based On

• Check Date 06/25/2015

Above is the amount of income you would be earning as an internal medicine physician, on average, per Medscape's 2015 salary report, in a high tax state (CT), with 10% of your paycheck going to tax deductible things (401k max-out and health insurance, etc). I picked Connecticut because it's a high tax burden state with few local tax issues to factor in. Also factored as single for state and local taxes, which costs you a bit more, and did zero deductions, because that's your worst case. So in a worst of the worst case scenario, you end up with over 7k post-tax a month to spend on whatever. Not a fabulous existence, but certainly not poverty. Put in some extra shifts or get a second job, and you can bury that debt and get back the extra 2k a month you're pissing away to loans.

• Gross Pay$196,000.00
• Gross Salary YTD$0.00
• Pay FrequencyMonthly
• Federal Filing StatusSingle
• # of Federal Allowances0
• Additional Federal Withholding$0.00
• State for withholdingConnecticut
• Additional State Withholding0
• Withholding codeF
• Exempt Statefalse

 

[Brodo Swaggins]

Loan Balance: $300,000.00
Adjusted Loan Balance: $303,030.30
Loan Interest Rate: 7.80%
Loan Fees: 1.00%
Loan Term: 30 years
Minimum Payment: $50.00
Enrollment Status: In Repayment
Degree Program: Doctor (M.D.)
Monthly Loan Payment: $2,181.43
Number of Payments: 360
Cumulative Payments: $785,308.73
Total Interest Paid: $485,308.73

There's the monthly payment amount on a 30 year extended repayment plan.

• Monthly Gross Pay$16,333.33
• Federal Withholding$3,484.94
• Social Security$911.40
• Medicare$213.15
• Connecticut$819.50
• Tax Deductible Garbage$1,633.33

Net Pay

• Net Pay$9,271.01

Calculation Based On

• Check Date 06/25/2015

Above is the amount of income you would be earning as an internal medicine physician, on average, per Medscape's 2015 salary report, in a high tax state (CT), with 10% of your paycheck going to tax deductible things (401k max-out and health insurance, etc). I picked Connecticut because it's a high tax burden state with few local tax issues to factor in. Also factored as single for state and local taxes, which costs you a bit more, and did zero deductions, because that's your worst case. So in a worst of the worst case scenario, you end up with over 7k post-tax a month to spend on whatever. Not a fabulous existence, but certainly not poverty. Put in some extra shifts or get a second job, and you can bury that debt and get back the extra 2k a month you're pissing away to loans.

• Gross Pay$196,000.00
• Gross Salary YTD$0.00
• Pay FrequencyMonthly
• Federal Filing StatusSingle
• # of Federal Allowances0
• Additional Federal Withholding$0.00
• State for withholdingConnecticut
• Additional State Withholding0
• Withholding codeF
• Exempt Statefalse

Was the 300k post residency loan balance you used just hypothetical? I feel like it would be higher with the interest during residency. Also, in your mind is the difference between having 9k/mo and 7k/mo the difference between an unfabulous and 'doctor' lifestyle?

 

[Mad Jack]

Was the 300k post residency loan balance you used just hypothetical? I feel like it would be higher with the interest during residency. Also, in your mind is the difference between having 9k/mo and 7k/mo the difference between an unfabulous and 'doctor' lifestyle?

What you consider a doctor's lifestyle depends entirely on your tastes. I need about 6k a month to maintain every expense I could possibly want, everything above that is gravy. If you have more expenses or live in a higher CoL area, YMMV. You should be barely over 220k when you graduate, so 300k is probably the worst loan balance you'd end up with, though I can't say for sure since I don't have the time to calculate it. Keeo in mind that your loans will not compound until you enter repayment.

 

[Brodo Swaggins]

What you consider a doctor's lifestyle depends entirely on your tastes. I need about 6k a month to maintain every expense I could possibly want, everything above that is gravy. If you have more expenses or live in a higher CoL area, YMMV. You should be barely over 220k when you graduate, so 300k is probably the worst loan balance you'd end up with, though I can't say for sure since I don't have the time to calculate it. Keeo in mind that your loans will not compound until you enter repayment.

Yeah this all makes sense. Including my undergrad loans I'll probably be around 230-240k total. That may change things a bit, but how much I'm not sure.

 

[Banco]

230k isn't that bad, I think you've done a good job limiting it to that alone.

 

[KaBoom'd]

I haven't applied yet and I'm sure these are obvious recommendations but it's become a hobby of mine - The White Coat Investor and the personal finance subreddit have more info to digest than you have free time. From what I've read, the fact that you're thinking about the debt and not blindly signing your name puts you ahead of the curve.

 

[doc05]

yes, it's too much.

 

[Brodo Swaggins]

yes, it's too much.

thanks bro

 

[Dares Dareson]

My debt will be about $450,000-500,000 when I'm in residency. I'm not worried because I will either:

(1) Win the lottery
(2) Patent some medical device or procedure that will be worth millions
(3) Marry Jennifer Lawrence
(4) Marry Jennifer Aniston
(5) Get a $1 million inheritance from an estranged great uncle whose will also offers me a chance to earn $300 million if I can spend $30 million dollars in 30 days, with a number of rules in place to make it exceptionally difficult (such as not being allowed to purchase any assets or tell anyone about the deal), thus generating plenty of hilarity.

Trust me, you have nothing to worry about. But seriously, your debt isn't that much. Especially if it's federal. Lots of options there. Just try not to think about it now.

 

[pageantry]

Become interested in working for underserved or rural populations.

 

[Brodo Swaggins]

Just out of curiousity, does anyone know if you can decide to join the military after school and they'll pay your loans?

 

[Spinach Dip]

I WISH I was looking at having that little debt after graduation.

 

[Spinach Dip]

(5) Get a $1 million inheritance from an estranged great uncle whose will also offers me a chance to earn $300 million if I can spend $30 million dollars in 30 days, with a number of rules in place to make it exceptionally difficult (such as not being allowed to purchase any assets or tell anyone about the deal), thus generating plenty of hilarity.

I love that movie

 

[pageantry]

Just out of curiousity, does anyone know if you can decide to join the military after school and they'll pay your loans?

Yes, they will, assuming you're not too old and considered physically/ethically fit for military service.

 

[NeuResurgens]

Debt in the 200K range is pretty common. Just don't spend your money like a reality star and you'll be fine.

 

[TaroBubbleTea]

Maybe it's much, maybe it's not, though you're already in too deep so you have no choice but to make it work.

 

[Dares Dareson]

I love that movie

My favorite part is when he mails the stamp