You think your debt is bad..

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btbam

btbam

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btbam said:
While browsing Reddit, I came across this thread. This must take the cake for record amount of debt no? It's honestly hard to even wrap my head around.
http://www.reddit.com/r/personalfin..._to_pay_off_about_1_million_in_student_loans/
http://www.reddit.com/r/personalfin..._to_pay_off_about_1_million_in_student_loans/
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Sounds like a person that tried as hard as possible to get as deep in debt as possible.

1) Go to expensive private undergrad and take out loans to pay every cent of tuition/room/board
2) Go to expensive private dental school and again pay with loans for every cent
3) Go to expensive dental "residency" and again pay with loans for every cent
4) Only work part time at a job that severely under pays you.
 
5) Lease a car
6) Food costs more than half of the rent
 
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If he's spending $500 a month on food he must not be too worried about money. At $17 a day he isn't exactly living on rice and beans. He also isn't driving a $500 beater car like I did when money was tight. Anyhow, I'm sure he'll just go on IBR and let his loans get written off after 25 years. If he keeps his income just over the poverty line he won't even have to make payments. If he does that the government will end up writing off $5,179,442 in loans, assuming he's paying 6.8% interest.
 
Chip N Sawbones said:
If he keeps his income just over the poverty line he won't even have to make payments.
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That's not exactly winning at life either. A bachelors, a professional degree, a residency ... then poverty level income so he won't have to make payments. Yay?


The only way these stories happen is denial. He was clearly smart enough to do the math. He knew how much he was borrowing. He knew what payments would be. But he just kept plugging along and borrowing more money. Like an 18-year-old college kid with his first unsecured credit card.

The only number that doesn't add up is the $105K salary as a residency-trained dentist. If ever there's a guy who needs to move to BFE and work overtime, he's that guy.
 
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pgg said:
The only number that doesn't add up is the $105K salary as a residency-trained dentist. If ever there's a guy who needs to move to BFE and work overtime, he's that guy.
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Obviously. An average general dentist in small town America can easily make 350-450K salary (excluding benefits). This is somebody that took a crappy part time job in a nice area they wanted to live in. I mean 100% of their patients are either paying cash or have insurance.
 
pgg said:
That's not exactly winning at life either. A bachelors, a professional degree, a residency ... then poverty level income so he won't have to make payments. Yay?


The only way these stories happen is denial. He was clearly smart enough to do the math. He knew how much he was borrowing. He knew what payments would be. But he just kept plugging along and borrowing more money. Like an 18-year-old college kid with his first unsecured credit card.

The only number that doesn't add up is the $105K salary as a residency-trained dentist. If ever there's a guy who needs to move to BFE and work overtime, he's that guy.
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It wouldn't be winning, but no matter what he won't be starving. I agree it was dumb of him to get into so much debt and then take such a low paying job. I'm sure he won't actually be living close to the poverty line, but it would be an option. I was mostly just including it so I could see how much his total writeoff would be if he went on IBR and never made payments. More likely he'll keep making about $100,000 a year until he finally gets smart enough to find a higher paying job. At a $100,000 income his IBR payments will be capped at $12,400 a year, which should leave him enough money left over to have a pretty good life.
 
This post just emphasizes how important it is to start financial planning EARLY. The 200K from college I can accept since most college students have no idea about how to handle their loans but 500K debt from dental school?! That means he borrowed about 125k per year! How is this even remote acceptable? He could not have been living within his means if that is how much he borrowed a year. I lived in one of the most expensive cities in the world during medical school and did not borrow that much.

How often had I seen my fellow medical students blow wads on money during the weekends because they needed to "release some steam?" You can't take the old saying, 'live everyday as if it were your last' literally if you plan to have a future.
 
There is a lot of judgment in this thread. My wife and I are not in an altogether different boat (expensive private medical school education, thankfully full scholarships/no undergad debt for either of us). We are slogging our way through paying down the debt and in a lot of ways delaying our gratification in spite of making in excess of $700k gross/year.

We both wanted to be physicians. Neither of us had family money or any other means to support our way through school so we paid with loan money (at historically bad interest rates for student loans). Neither of us got in to our state schools so we paid more to go to a private medical school (again historically high tuition - why? because they can). We couldn't afford to pay anything towards the loans as residents, so the debt rolled up.

Do I regret it? No. Does it mean I will be driving my crappy car longer than I want? Yes. Driveable vacations instead of going to Tahiti? Yes. But we are secure financially and we like what we do, so it was worth it.

When I talk to premeds the thing I recommend is that they weigh their choices of med school (if they are fortunate enough to have a choice) carefully and really consider that school A and school B will probably give equivalent educations but the difference in debt coming out (and more importantly debt at the time you start repaying it after residency) may be dramatic. I am a firm believer that for most US medical schools what you get out is what you put in in terms of effort and personal drive, so cost (and future indebtedness) should be the deciding factor often. Just my 2 cents.
 
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okayplayer said:
There is a lot of judgment in this thread. My wife and I are not in an altogether different boat (expensive private medical school education, thankfully full scholarships/no undergad debt for either of us). We are slogging our way through paying down the debt and in a lot of ways delaying our gratification in spite of making in excess of $700k gross/year.
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Respectfully you are in a completely different boat. You've got 2 very high incomes instead of 1 person making roughly 100K per year. Debt in and of itself isn't bad. But taking a job that doesn't even let you make the interest payments on debt is a very bad thing.

If you gross 700K per year, you are probably paying about 300K per year in taxes between state, federal, property, etc. That means you've got 400K per year in take home pay to use as you see fit. 50K per year towards a mortgage and 100K towards every other living expense and vacation still gives you 250K per year after tax to pay loans and save for retirement.

So in your situation you can easily afford to pay 100K per year towards your loans and probably much more if you wanted to. Unless you had $1.5M in combined loans, you could knock them down pretty good after 5-10 years of 100K per year.
 
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okayplayer said:
There is a lot of judgment in this thread. My wife and I are not in an altogether different boat (expensive private medical school education, thankfully full scholarships/no undergad debt for either of us). We are slogging our way through paying down the debt and in a lot of ways delaying our gratification in spite of making in excess of $700k gross/year.

We both wanted to be physicians. Neither of us had family money or any other means to support our way through school so we paid with loan money (at historically bad interest rates for student loans). Neither of us got in to our state schools so we paid more to go to a private medical school (again historically high tuition - why? because they can). We couldn't afford to pay anything towards the loans as residents, so the debt rolled up.

Do I regret it? No. Does it mean I will be driving my crappy car longer than I want? Yes. Driveable vacations instead of going to Tahiti? Yes. But we are secure financially and we like what we do, so it was worth it.

When I talk to premeds the thing I recommend is that they weigh their choices of med school (if they are fortunate enough to have a choice) carefully and really consider that school A and school B will probably give equivalent educations but the difference in debt coming out (and more importantly debt at the time you start repaying it after residency) may be dramatic. I am a firm believer that for most US medical schools what you get out is what you put in in terms of effort and personal drive, so cost (and future indebtedness) should be the deciding factor often. Just my 2 cents.
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I'm going to add a bit more judgement to this thread: why couldn't you and your wife start paying off your loans, or at least pay the interest on them, while you were residents? You had a joint income well over the national median, and repayment of debts (at what, 6.8% interest?) should have been a priority.
 
shopsteward said:
I'm going to add a bit more judgement to this thread: why couldn't you and your wife start paying off your loans, or at least pay the interest on them, while you were residents? You had a joint income well over the national median, and repayment of debts (at what, 6.8% interest?) should have been a priority.
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That's actually a reasonable point. I was single in residency and still managed to make small monthly payments towards my loans. Double income means way more than double disposable income.
 
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Mman said:
That's actually a reasonable point. I was single in residency and still managed to make small monthly payments towards my loans. Double income means way more than double disposable income.
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Maybe they have kids? My husband and I were residents at the same time and basically all of one income went straight to paying for the nanny/ backup childcare/ etc. It would've been impossible to do residency without a nanny though given our hours so we just figured it was the price we had to pay (and yes, I'm sure some people think you should just avoid having kids in residency...)
 
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lyn2006 said:
Maybe they have kids? My husband and I were residents at the same time and basically all of one income went straight to paying for the nanny/ backup childcare/ etc. It would've been impossible to do residency without a nanny though given our hours so we just figured it was the price we had to pay (and yes, I'm sure some people think you should just avoid having kids in residency...)
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We had a child and also did residency in an expensive city. We made less than 15% of the salary we are making today. There was not a lot of extra money to go around.
 
My larger point is that the newest generation of physicians and dentists is saddled with historically bad debt at historically bad interest rates (unless they were independently wealthy or had rich relatives). A lot of them had the same motivation for going into this field that previous generations of physicians did: help people, make a good living, academic interest. But many will spend the first half of their career paying off their educational debt.

I don't think it makes them stupid, financially illiterate, etc. but rather, the beneficiaries of bad timing. Now at some point maybe this will be reflected in waning interest in med school the same way as it has for law school, but I don't think that has happened yet.
 
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Agreed. Many of my classmates will have >$300k in non-subsidized debt at 6.8%+ before beginning residency. It's getting to a point where that is a real concern for a career in medicine (especially primary care). I know plenty of people interested in vet med or law who decided to stop at a bachelor's because of very high debt/income ratios in those fields... and it seems like medicine has the potential to follow down that road.
 
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BuzzPhreed said:
Well, that was your first problem. Swimming in the cesspool of the internet.
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Sorry my Internet browsing habits don't meet your high standards.
 
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student debt is rising too much faster than salaries, and institutions of higher ed are laughing to the bank all the while. this whole situation will hit critical mass sooner or later.
 
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btbam said:
While browsing Reddit, I came across this thread. This must take the cake for record amount of debt no? It's honestly hard to even wrap my head around.
http://www.reddit.com/r/personalfin..._to_pay_off_about_1_million_in_student_loans/
Click to expand...

A few comments:

1) I actually posted a thread similar to this last year:

http://forums.studentdoctor.net/threads/first-educational-pathway-costing-1-million-in-debt.974639/

2) Accruing 500K of debt upon graduation from a private dental school is par for the course now.
http://www.dental.upenn.edu/academic_programs_admissions/dmd_program/tuition_fees
https://dentistry.usc.edu/programs/dds/cost-of-attendance/

If you have even a modest 50K of undergrad loans and attend one of these schools and then complete a GPR, you will have 600K + of debt.
Most new grads make 120K their first year out with no benefits.

3) For dentists to make higher incomes, they need to BUY a practice. That's MORE debt.

4) Most dental residencies charge tuition. UPENN's orthodontic program is about 110K per year COA.

So, if you attend UPENN dental school with 50K of undergrad debt, you will end up owing ~850K of debt if you attend their ortho program afterwards.

Last, my question to all on this thread is this:

If you could not obtain a military scholarship, at what principal borrowed amount would you pursue a different career?
 
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My debt was"only" about 200k. I looked long and hard at the military. This was immediately post 9/11 and I decided if I was going into any primary care field, I'd have signed up. I thought my debt would be unsustainable without a specialist income.
But these guys, just, wow!
 
Silent Cool said:
3) For dentists to make higher incomes, they need to BUY a practice. That's MORE debt.
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Having several family members that are dentists, that just isn't true. General dentists in small town American can easily make 300K+ first day on the job.
 
I had very little financial assistance but lucky enough to go to a good state university and good medical school. Far from the best and far from having a nice plaque on my wall where everyone ohhhhhs and ahhhhh at.

I tell all HS student/premed students who asks me about med school. I tell them go to the cheapest good state college. Go to the state school. When you get out of med school, no one will care about where you went to college or medical school. But you sure will care if you have 4x the loans going to private vs state.

I was lucky to get out with less than 100K taking loans out throughout state university/medical school. Paid off my loans in 6 months.
 
Mman said:
Having several family members that are dentists, that just isn't true. General dentists in small town American can easily make 300K+ first day on the job.
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But they need to OWN the practice to do that. You will not get that kind of money from being an associate.
 
Silent Cool said:
But they need to OWN the practice to do that. You will not get that kind of money from being an associate.
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No, they don't. If they own the practice they can clear 400-600K per year.

My dad hired a new grad with zero experience for starting pay of 350K per year. That was several years ago. The going rate hasn't dropped any. And that's in the middle of nowhere with dirt cheap cost of living.

100% of dental patients are insured or paying cash. That's why their income is so good.
 
emergentmd said:
I had very little financial assistance but lucky enough to go to a good state university and good medical school. Far from the best and far from having a nice plaque on my wall where everyone ohhhhhs and ahhhhh at.

I tell all HS student/premed students who asks me about med school. I tell them go to the cheapest good state college. Go to the state school. When you get out of med school, no one will care about where you went to college or medical school. But you sure will care if you have 4x the loans going to private vs state.

I was lucky to get out with less than 100K taking loans out throughout state university/medical school. Paid off my loans in 6 months.
Click to expand...

I recommend the same to everyone, but that isn't always an option. Some students who have moved around a lot won't meet the residency requirements of any state, and others won't get accepted because their state schools are highly competitive. I'm going to an outrageously expensive private school because it was the only MD med school I got accepted to. My state program rejected me, and in any case it would only have been cheaper if I practice in Alaska after residency.
 
Silent Cool said:
A few comments:

1) I actually posted a thread similar to this last year:

http://forums.studentdoctor.net/threads/first-educational-pathway-costing-1-million-in-debt.974639/

2) Accruing 500K of debt upon graduation from a private dental school is par for the course now.
http://www.dental.upenn.edu/academic_programs_admissions/dmd_program/tuition_fees
https://dentistry.usc.edu/programs/dds/cost-of-attendance/

If you have even a modest 50K of undergrad loans and attend one of these schools and then complete a GPR, you will have 600K + of debt.
Most new grads make 120K their first year out with no benefits.

3) For dentists to make higher incomes, they need to BUY a practice. That's MORE debt.

4) Most dental residencies charge tuition. UPENN's orthodontic program is about 110K per year COA.

So, if you attend UPENN dental school with 50K of undergrad debt, you will end up owing ~850K of debt if you attend their ortho program afterwards.

Last, my question to all on this thread is this:

If you could not obtain a military scholarship, at what principal borrowed amount would you pursue a different career?
Click to expand...
The real questions is would you delay professional school for a year if you only got into the most expensive one? And if so, why would you apply to a school you wouldn't attend?
 
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