Would you pay out of pocket for medical school?

[ChePibe]

If you could pay it with savings or what not (not your parents). Would you do it or still get loans? Let's say you had enough to cover the 4 years but then would be left with nothing in savings.

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[armybound]

i'd take out the max amount of subsidized loans I could, then pay the rest in cash.

that way the amount you saved by taking out loans would be drawing interest in the bank and your loans wouldn't be drawing any interest.

 

[Wylde]

usually student loans can be pretty low interest, so not getting loans is probably always a bad idea.

just put the money in a savings account that earns more interest than your loans lose

 

[LucidSplash]

i'd take out the max amount of subsidized loans I could, then pay the rest in cash.

that way the amount you saved by taking out loans would be drawing interest in the bank and your loans wouldn't be drawing any interest.

Ditto this, including grants, scholarships, etc. of course.

And the money would be in my high-interest savings account, not those wimpy standard savings account.

 

[Inuranic]

I agree with army. You should leave a cushion for yourself (especially because you won't be working).

Other than that, I would suggest investing the money you were planning on dropping on school.

 

[LucidSplash]

usually student loans can be pretty low interest, so not getting loans is probably always a bad idea.

just put the money in a savings account that earns more interest than your loans lose

Probably does not exist. Federal Staffords are fixed 6.8% and the highest interest on savings accounts in usually no more than 5%. You can try and find CDs but those have other restrictions and still are probably not high enough interest to cover the loan interest.

 

[Bananas Foster]

well, if you have 150k in personal savings you're not likely to get too many subsidized loans, but to answer this as a hypothetical

subsidized loans are a great deal, the gov. pays interest for 4 years or more, then you get a generous rate while you are repaying the loan. if you were to take out loans you could keep your savings invested, hopefully you'll be earning more on your investments than you would be spending on the loans.

private loans are not a great deal, and unless you're warren buffet and have extremely good credit you will likely spend more in loan fees and interest than you make on your investments

 

[Bananas Foster]

wow, 5 people replied while i was writing that last post

 

[Hurricane95]

Hell no!

You're going to pay back the loans when you're making money anyhow, and frankly, the debt is not that big a deal. I know docs who paid off massive debt for years after they were already in private practice and they didn't give a damn...it didn't impinge on their lifestyle and was a non-issue. However if you wipe out your savings, which, who knows how long you're been saving, you will graduate and suddenly find yourself naked and defenseless if God forbid something were to happen and you needed emergency money for something. Sure, you have no debt, but there goes all the hard-earned money you had saved. No way. I'll borrow my way through med school and keep my safety in the bank.

 

[moe_4eva]

i'd take out the max amount of subsidized loans I could, then pay the rest in cash.

that way the amount you saved by taking out loans would be drawing interest in the bank and your loans wouldn't be drawing any interest.

That only works if you're getting a better interest rate on your savings than you pay on the student loans, otherwise you're still losing money to interest.

 

[armybound]

That only works if you're getting a better interest rate on your savings than you pay on the student loans, otherwise you're still losing money to interest.

subsidized loans draw no interest

 

[xiaoyi666]

well, if you have 150k in personal savings you're not likely to get too many subsidized loans, but to answer this as a hypothetical

subsidized loans are a great deal, the gov. pays interest for 4 years or more, then you get a generous rate while you are repaying the loan. if you were to take out loans you could keep your savings invested, hopefully you'll be earning more on your investments than you would be spending on the loans.

private loans are not a great deal, and unless you're warren buffet and have extremely good credit you will likely spend more in loan fees and interest than you make on your investments

Definitely pay with max amt of subsidized loan and then out of pocket. Subsidized loan = no interest and when you pay back, you actually pay back "less" due to inflation. Why would anyone want to incur unnecessary debt with unsubsidized loans if they dont need it?

 

[exeunt]

well the plan has always been to pay with savings...the only reason why i wouldn't is if i couldn't

 

[XerxesMD]

Get as much subsidized loan as you can and pay off the rest with your savings/investments if you are able. There is no tax benefit to having a student loan like there is with a mortgage (if this were a question about buying a house with cash instead of paying for a medical education, then it would be probably be best to get a mortgage depending on your tax bracket as it might generate significant tax savings for you). Anyway, the interest rates for student loans are currently around 2% higher than the majority of high yield savings accounts.

I appreciate the argument that you should keep some cash in reserve to fall back on in case of some unforeseen circumstances. But you can get an emergency loan from some schools in such a situation and you can always get a 5 or 10 thousand dollar student loan if you really need the money in your fourth year or whenever. Otherwise pay for it in cash if you can. After all...cash is king 🙂.

 

[nogolfinsnow]

as other people have said, I'm not sure if the OP will get any subsidized loans if he/she has 150k in savings. But, if it's your parent's money and you are not a dependent, then file FAFSA as an independent and you will be able to get the same standardized loans as everyone else.

 

[etf]

interest rates on student loans are fixed. so inflation erodes away the value of the loan. plus you can usually consolidate at some point for a lower rate.

 

[pride4jc727]

Although I am still waiting to hear from the three schools I have interviewed, I honestly would consider going to a more expensive, private school rather than a cheaper, state school. I have gone to a Jesuit institution and I have thrived in atmosphere where having personal attention and a mentor has allowed me to be successful. Going to a state school may be financially better but I would not be as comfortable than if I went to a Jesuit medical school. You may think I am sounding crazy by spending an extra 20K a year, but I am all about atmosphere, support, and goodness of fit. If all else were equal, that would be the school I would choose to attend, regardless of tuition and other school fees. Anyways, come to think of it, when we become doctors we will be able to pay off our debt, though some will be done sooner than others.

 

[xrevision]

Although I am still waiting to hear from the three schools I have interviewed, I honestly would consider going to a more expensive, private school rather than a cheaper, state school. I have gone to a Jesuit institution and I have thrived in atmosphere where having personal attention and a mentor has allowed me to be successful. Going to a state school may be financially better but I would not be as comfortable than if I went to a Jesuit medical school. You may think I am sounding crazy by spending an extra 20K a year, but I am all about atmosphere, support, and goodness of fit. If all else were equal, that would be the school I would choose to attend, regardless of tuition and other school fees. Anyways, come to think of it, when we become doctors we will be able to pay off our debt, though some will be done sooner than others.

I think you should totally go to a school where you could perform your best. A lot of people feel like they could perform really well anywhere, but some need that something extra, and 20k a year is a drop in the bucket for a experience you enjoy and if it gets you better scores/results.

 

[172858]

Max out subsidized loans. Max out whatever loans I could with an interest rate lower than what I could get on an investment return of my cash (t-bills, money markets, stocks, bonds, futures - a diverse, moderate risk portfolio). Pay the difference in cash, if necessary.