Author Topic: The deceptive income of physicians  (Read 12496 times)

projekt

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The deceptive income of physicians
« on: February 05, 2013, 10:46:12 AM »
This pissed me off today.

http://benbrownmd.wordpress.com/



WAAAAAAH!! I didn't make any loan payments and now I have tons of loans! WAAAAAH!! I'll never be middle class.

MDs start out as RESIDENTS making as much as veterinarians do as associates. If they don't sign up for interest-only and negative-amortization mortgages using their predicted income instead of their current income, they could probably pay off a large chunk of student debt during that residency. I suppose they're bad at arithmetic. I also like how the chart appears to be painting the area under the curve, when it's really just a line chart. So they're bad (or deceptive) at stats too.

dragoncar

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Re: The deceptive income of physicians
« Reply #1 on: February 05, 2013, 11:30:55 AM »
I know a dentist with over $400k total debt.  Part of the problem is that students tend to take loans on the full "cost of living" estimates, which tend to be inflated (24k living expenses on top of tuition, books, health insurance, etc.).  Cost of living can be very low in school -- lots of free food, entertainment, etc.

Spork

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Re: The deceptive income of physicians
« Reply #2 on: February 05, 2013, 12:32:38 PM »
I would agree that is deceptive.

I'd also like to point out how "it used to work" using a very close friend as an example.

This friend cash flowed his way through (MANY MANY years ago).  He and all of his doctor friends lived all in one house, sharing expenses.  Every month they bought a 50lb sack of beans.  (I'm not joking here.)  They cooked the beans every day and ate for pennies a day.

His starting salary as a resident was $25 a month.  A MONTH.  Yes, there has been a bit of inflation.  If you run that through an inflation calculator, that's 185 a month ($2200 a year) for an MD.

The graph definitely doesn't represent the only way to do things.

sol

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Re: The deceptive income of physicians
« Reply #3 on: February 06, 2013, 01:43:00 AM »
What kind of douchewaffle pre-med goes 100k in debt as an undergrad?  Look, if you're not smart enough to get merit scholarships as an undergrad, you're probably not smart enough to be practicing medicine.

For all of the talk of student loan debt in this country, I think it's worth remembering that roughly the top 5% of all high school students go to college for FREE through some combination of merit, athletic, and private scholarships.

And don't even get me started on accruing an additional 50k/year in debt while in medical school.  Effing ridiculous.

happy

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Re: The deceptive income of physicians
« Reply #4 on: February 06, 2013, 04:47:33 AM »
Its a bit whiny isn't it? The problem with becoming a physician is the huge expectation of wealth held by the general public and the profession: this leads to mathematical blinkers, whereby drug doses can be calculated readily, but financial lunacies cannot. Once you are "in", there is an assumption you will be $$ set for life. Easy kool-aid to drink.

I do  agree with the $/hour issue: medicine has a work profile similar to "Big Law"... you can make big $ but sell your soul and your life (sometimes literally) to the job by working huge hours, so that in the end your hourly take home rate, whilst more than enough, is not nearly as good as it might seem.




Jack

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Re: The deceptive income of physicians
« Reply #5 on: February 06, 2013, 05:13:23 AM »
For all of the talk of student loan debt in this country, I think it's worth remembering that roughly the top 5% of all high school students go to college for FREE through some combination of merit, athletic, and private scholarships.

It's also worth thinking about the implications for percentile #6 and below. There is a gap between "full merit scholarship" and "ghetto welfare queen," you know!

aclarridge

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Re: The deceptive income of physicians
« Reply #6 on: February 06, 2013, 07:47:23 AM »
I know a guy who did med school, he's my age. I did 3 years of postgrad stuff too and he stayed on 1 more year to finish up med school. I finished with no debt due to some scholarships and part-time work. It's 2 years later and I think he said he's more than 100k in debt still working as a resident - he'll pay it off no problem, but it'll take a few years. Apparently all med school students get approved for these giant loans at low/deferred rates and the mentality is just "I'll be a millionaire later anyway, let's party!". Banks must love them.

Although I think it's definitely possible to come out with a lot less debt by simply going for whatever scholarships/bursaries you can, working part time and living frugally, the fact remains med school is expensive in terms of time and money, early on in the game. I don't think it's a great profession for somebody looking to FIRE early.

Forcus

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Re: The deceptive income of physicians
« Reply #7 on: February 06, 2013, 09:22:39 AM »
I don't know why anyone would do it nowadays except for the drive to be an MD. The time, the debt, and the uncertain future with medical reimbursement, I can't imagine that it is a financial decision. In that way I am not surprised if the debt is accepted as a necessity to pursue their dream.

Ethan

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Re: The deceptive income of physicians
« Reply #8 on: February 06, 2013, 03:05:53 PM »
Even if assuming 0 dollars in living expenses, the state med school here charges 50k per year in tuition alone, which is why racking up 50k a year in loans is entirely possible.  Given this, it seems reasonable that the national average debt for a graduating med student is 170k. 

Given the high expenses of med school, it is no surprise that the average combined income of parents of medical students is over 170k per year.

dragoncar

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Re: The deceptive income of physicians
« Reply #9 on: February 06, 2013, 06:45:48 PM »
I recently learned you can go to med school abroad for, like, $5k / year (tuition, but low COL too).  Of course, it's not as prestigious, and you have to take extra tests to get a US license.  For return on investment, it's probably better (but likely not if you consider opportunity cost of those years)

Kriegsspiel

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Re: The deceptive income of physicians
« Reply #10 on: February 06, 2013, 07:14:12 PM »
What kind of douchewaffle pre-med goes 100k in debt as an undergrad?  Look, if you're not smart enough to get merit scholarships as an undergrad, you're probably not smart enough to be practicing medicine.

Word to the street, yo.

Kriegsspiel

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Re: The deceptive income of physicians
« Reply #11 on: February 06, 2013, 07:16:47 PM »
You know what else, and current doctors correct me if I'm wrong, but I've been told that it used to be (still is?) practice that once a doctor completed schooling and training, that whatever group he joined would help pay off their student loan debt. 

I'd think that if this were true, it would have gone away in our era of insane tuition. 

johnnylighthouse

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Re: The deceptive income of physicians
« Reply #12 on: February 06, 2013, 07:27:54 PM »
Heck Med school is free in Cuba, even for Americans: http://en.wikipedia.org/wiki/ELAM_%28Latin_American_School_of_Medicine%29_Cuba

TN_Steve

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Re: The deceptive income of physicians
« Reply #13 on: February 06, 2013, 07:36:27 PM »
You know what else, and current doctors correct me if I'm wrong, but I've been told that it used to be (still is?) practice that once a doctor completed schooling and training, that whatever group he joined would help pay off their student loan debt. 

I'd think that if this were true, it would have gone away in our era of insane tuition. 

Unusual; we've not seen this (or heard of it from any of our med friends across the country) and my wife's two groups have never offered it to new hires (1990-present, in flyover states).  When we moved states in 2004, we tried to get new group to pay the Illinois malpractice tail (200,000 for an OBG with no claims in history) and it flew like an Acme anvil.

Anecdotal, but our friends/relatives cast a decent net around flyover country, nonacademic practices ranging from family practice to orthopedic subspecialities (not that the latter are too concerned about the issue!).

Steve

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Re: The deceptive income of physicians
« Reply #14 on: February 06, 2013, 08:27:51 PM »
This is how myths get started - everything everyone has said is true.  Kind of. Sort of. Almost. I'll try to straighten some of this out.
Sol was accurate about asking about douchewaffle premeds (college grads) with $100K in debt. Most are smart enough to avoid this, but not all - $40k is pretty common, as it's hard to study enough to get into med school and work full time. Also, the application fees/interviewing trips cost $5k, without breaking a sweat, so there's that.

Once you get in, working outside of school borders on impossible. I only know of two people who tried (out of hundreds). One pulled it off, mostly, and the other failed (literally) miserably. A full load in college is 12 to 18 credit hours. A light load in med school is 23 hours. Also, there are no scholarships to speak of one, maybe two per class (of 200) - since everyone will be well off, clearly there is no need for charity, you know. Tuition, fees, books, living expenses, etc are $50k/year as an in state student most places. Can reach $100k for out of state/private schools.

Medical school in a foreign land is an option, and a lot of people do it, with varying degrees of success. Many schools are willing to take your money, and not provide an adequate education - leaving you worse off than if you'd never gone. If you don't pass the tests mentioned in the reference article, you don't practice. Ever. Then, assuming  you do pass the tests, your choice of fields is severely limited. Admission to residency is competitive - and now you're only competing with highly competitive people (the marginal never made it this far). As a foreign medical grad, unless you walk on water, only primary care (pediatrics, family medicine, internal medicine) are open to you.

Forcus is right. Financially, it is a very poor choice. People smart enough, disciplined enough and motivated enough to make it through residency, are smart, disciplined and motivated enough to make a much bigger pile of money in any other field. One of the problems that society is beginning to acknowledge, but not address is that if the becoming a physician/practicing as a doctor becomes much more onerous, or less well reimbursed, there won't be enough of the "best and brightest" willing to follow that path. When coupled with the massive cost of completion, it will only be a viable option for the wealthy - leaving American medicine in a sorry state.

Kriegsspiel is also partly right, in that there is student loan assistance available. But it is far less common than it used to be, almost always involves unsavory locations (either remote from civilization like in "Northern Exposure", dangerous, or both), primary care only, a long time commitment (multiple years) and sub-market reimbursement (yeah, they pay your loans, but you could make 20% more elsewhere).

So to sum it up, everyone is kinda right. But not completely.

projekt

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Re: The deceptive income of physicians
« Reply #15 on: February 07, 2013, 06:42:32 AM »
Attending the priciest med school in the US (Tufts) with their budget of $27,344 of living expenses costs $86,261. So $100,000 is either going way out of whack or rounding up way too much. Plus, the high living budget is created by the university to make it possible for people in special situations (single mothers, etc.) to attend without special additions to their loans. Unfortunately, med students think they're royalty and they usually do take out all that loan money and spend it on unnecessarily lavish apartments and impulse purchases, sometimes taking out additional loans to pay for the cost of interviewing for their residencies.

That said, there is no need to attend the priciest med school in the country. Most of the 10 most expensive schools are nowhere near the top 25 ranking.

In reality, the average american med student graduates with $170k in total debt. Only 6% hit that $300k mark.

Now, the income-based repayment option is going to create, unnecessarily, a whole lot more med students who choose to "live well" instead of paying off debt during residency. Even paying some of the accrued interest would be a good idea, instead of capitalizing it all. Imagine if these doctors paid $1200/mo in loan and $1200/mo in rent. They would still have at least $2000/mo. left over.

Or, you could pay $2000/mo in loan instead and living frugally. Imagine getting out of your 5-year residency with only 5 years left on your loan! Stay frugal and you could pay off the remainder with your big doctor salary in 2 years. And then you can save for early retirement in 5 years.

CALL 911

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Re: The deceptive income of physicians
« Reply #16 on: February 07, 2013, 08:05:11 AM »
I'm not interested in arguing, but several of your premises are flawed. I selected CO, since it is the home of MMM. CU medical school out of state tuition is $83,290, excluding several thousand dollars in fees (the website is hard to decipher who pays which ones which years), books, or living expenses (estimated at an almost but not quite mustachian $1600/month). You're over $100k per year.
http://www.ucdenver.edu/student-services/resources/CostsAndFinancing/tuition/graduate/Pages/SchoolofMedicine.aspx

I'm a bit confused about your point regarding paying $1200 a month in loans, $1200 a month in rent, and $2k left over. If the average intern salary is about $44,000 annually, how do they spend the $52,800 you just budgeted, without including federal, state (and sometimes local) income taxes? Many residents make less than minimum wage, on an hourly basis.

Ultimately, it is very expensive to become a doctor in America, both in terms of time and money.

projekt

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Re: The deceptive income of physicians
« Reply #17 on: February 07, 2013, 07:09:33 PM »
U of Colorado non-resident tuition is way out of whack. Somehow you managed to pick the most pathological example. If MMM were to go to med school, he would pay $32,683 in tuition.

The average resident gets $52k. The average P1 gets $49k. So the P1 has $1683, not $2000. Big deal.

I will remind you that we're on a forum where a $25k/year budget, including rent, is considered lavish.

Med school is very expensive. Nobody disagrees there. It is made much more expensive by going an extra $100,000 in debt for no good reason, and then buying an expensive house with a negative-amortization loan. My premise is that there is no good reason for a med student to end up $400,000 in debt. It still holds.

Anyhow, my work is done here: http://xkcd.com/386/

capital

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Re: The deceptive income of physicians
« Reply #18 on: February 07, 2013, 07:14:18 PM »
I'm not interested in arguing, but several of your premises are flawed. I selected CO, since it is the home of MMM. CU medical school out of state tuition is $83,290, excluding several thousand dollars in fees (the website is hard to decipher who pays which ones which years), books, or living expenses (estimated at an almost but not quite mustachian $1600/month). You're over $100k per year.
http://www.ucdenver.edu/student-services/resources/CostsAndFinancing/tuition/graduate/Pages/SchoolofMedicine.aspx

I'm a bit confused about your point regarding paying $1200 a month in loans, $1200 a month in rent, and $2k left over. If the average intern salary is about $44,000 annually, how do they spend the $52,800 you just budgeted, without including federal, state (and sometimes local) income taxes? Many residents make less than minimum wage, on an hourly basis.

Ultimately, it is very expensive to become a doctor in America, both in terms of time and money.
A graduate student is only going to pay out-of-state tuition for at most one year, since they'll become a Colorado resident within one year. It looks like a 2-bedroom right next door to campus there runs ~$900, and can be had at $700 at a bit more distance, which put one person's share of rent at $450/mo. One has to be a pretty profligate student to accumulate $1150 in other expenses. That $100k+ per year can easily be cut to $50k a year or less once residency is established.

dragoncar

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Re: The deceptive income of physicians
« Reply #19 on: February 08, 2013, 01:09:24 AM »
Here's the breakdown from UC Denver (year 1):

Tuition: 83,290
Fees: 2,044
Books & Supplies: 2,120
Academic Travel: 450
Exams:0
Health Insurance: 3,412
Living Expenses: 16,360
TOTAL: 107,676

Sure you can get in-state after the first year.  But not everyone does, for a variety of reasons.  Just like some people walk into a dealership and pay sticker price for a new car.

CptPoo

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Re: The deceptive income of physicians
« Reply #20 on: February 08, 2013, 10:18:32 AM »
The only knowledge I have to share is that my sister is attending a public medical school as an in-state resident and she accrues more in debt for tuition alone each year than I will spend for my entire undergraduate and graduate education. Then when we both finish, it will have taken me 7 years and her 8 and I will likely be earning more than her for at least 2 - 4 years.

Med school, for all intensive purposes, is a full time job, and I think someone would be out of their mind to attempt to juggle another job on top of it. She also has to take out another $25k a year to pay her cost of living because the school is downtown Indianapolis, forcing her to choose between 1. a low cost of living with a long commute, 2. a very high cost of living with a walking commute. 3. Living as a single woman in an area with high crime and a medium commute.

...And we wonder why there is a shortage of general practitioners.

bo_knows

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Re: The deceptive income of physicians
« Reply #21 on: February 08, 2013, 11:33:27 AM »
My brother is entering med school this coming fall (a little "late" at 28, but whatever) and doesn't have the best track record with personal finance.  I really hope to get some financial sense into him before he's making an absurd amount of money.  Or, maybe it'll just work itself out...

grantmeaname

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Re: The deceptive income of physicians
« Reply #22 on: February 09, 2013, 07:54:22 AM »
Sure you can get in-state after the first year.  But not everyone does, for a variety of reasons.  Just like some people walk into a dealership and pay sticker price for a new car.
Or you could go to med school in your state.

Here in the midwest, OSU and University of Michigan (which is the top ranked state school's med school) both run under $30k annually. Even at OSU, hardly a school that's got deep alumni pockets, one in 15 students gets merit-based aid from the med school. Then there are external scholarships. And since you're in grad school, you're not on your parents' FAFSA, so there's all the need-based aid. And you could always work a couple years before med school at your highly lucrative biomedical engineering job... unless you did your undergrad in only 2 years to quickly get to med school.

If you don't want to be crushed by the financial weight of your dumbass decisions, you don't have to. If you do, that's your prerogative.

Ethan

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Re: The deceptive income of physicians
« Reply #23 on: February 09, 2013, 07:48:44 PM »
Sure you can get in-state after the first year.  But not everyone does, for a variety of reasons.  Just like some people walk into a dealership and pay sticker price for a new car.
Or you could go to med school in your state.

Here in the midwest, OSU and University of Michigan (which is the top ranked state school's med school) both run under $30k annually. Even at OSU, hardly a school that's got deep alumni pockets, one in 15 students gets merit-based aid from the med school. Then there are external scholarships. And since you're in grad school, you're not on your parents' FAFSA, so there's all the need-based aid. And you could always work a couple years before med school at your highly lucrative biomedical engineering job... unless you did your undergrad in only 2 years to quickly get to med school.

If you don't want to be crushed by the financial weight of your dumbass decisions, you don't have to. If you do, that's your prerogative.

Depends on the state, and not all state schools are good deals. Some states are generous like Texas, where I went, which only charge 12-16 k a year, and other states charge 48k a year like Oregon.

Unfortunately, med schools are not so easily fooled.  Otherwise the entire incoming classes full of fresh college grads would need extensive financial aid.  They require you give your parents income and assets as a prequisite to be considered for additional need based aid beyond the Stafford and Perkins loans.  Also most scholarships are need based as well, dependent on your parents income as well (I got a merit scholarship, but I'm in the minority)

Also, the majority of med students are not engineering majors but instead liberal arts and bio majors.