Author Topic: Student loans -- I'm f#*%@!  (Read 25533 times)

brandino29

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Student loans -- I'm f#*%@!
« on: May 30, 2014, 01:48:24 PM »
Okay, I've discovered I'm pretty much fucked.  Apparently I've been denying the severity of my student loans and it's all coming to a head right now and I'm having a bit of an "oh shit" moment and need some serious advice.

Here's the deal, I currently owe $114,592 in student loans ($93,957 in principal, $20,635 in accrued interest that has not capitalized to the principal amount).  To date, this has never been a problem in my mind because I am on the Income-Based Repayment plan and work for a non-profit organization and have always planned on going the Public Service Loan Forgiveness route and I'm currently 4 years in.  I didn't worry at all about paying extra because I knew it would be forgiven.  Well, recently I've decided to go to back to school and pursue my dream of becoming a physician, and I start in 2 months. 

Going back to school creates issues, if I defer my loan repayment, interest will continue to accrue on the unsubsidized portion of my loan to the tune of $408 per month ($76,862).  After my in-school deferment ends, I will have the opportunity to pay off any accrued interest before it capitalizes, but any interest that has not been paid off will capitalize to the principal.  At $408 per month, that would be $19,600 of additional interest in the next 4 years of school, in addition to the current interest balance of $20,635.  This means that if I were to pay none of the interest, an additional $40,000 would be capitalized to the principal of $93,957, bringing my loan balance to $134,000 at 6.25% interest ($700 per month in interest alone at that point). 

School will cost me $20,500 in annual tuition and fees, plus books and living expenses.  My plan in going back has been to take out only the loans to cover tuition and to get by on my wife's salary of $40,000 plus a little extra we get in rental income.  However, I have been "awarded" $45,000 in financial aid to cover cost of living and all of the other junk included in the cost of attendance calculation.  The breakdown of my current financial aid offer is up to $42,722 in a direct unsubsidized loan with interest accruing as soon as the loan is disbursed at 5.41%, and an additional $2,602 in a Grad Plus loan at 6.41%, which begins accruing interest immediately as well. 

I'm wondering now if I should take out the full amount possible and use it to pay down my existing student loan debt.  Does that make any sense?  So I would take $45,000 in loans, use $20,500 for tuition and take the remaining $24,500 and pay that toward my existing loans.  In one year I would be able to pay the accrued interest down to $0, and in the ensuing years I could take out most of the principal, lowering the monthly interest that accrues as well.  On the other hand, in doing that, interest would be accruing on my new loans so maybe it's a total wash in the end?

I'm having trouble wrapping my mind around this one in my moment of despair so any thoughts are much appreciated!

Chuck

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Re: Student loans -- I'm f#*%@!
« Reply #1 on: May 30, 2014, 01:58:15 PM »
Jesus fucking Christ dude...

boarder42

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Re: Student loans -- I'm f#*%@!
« Reply #2 on: May 30, 2014, 02:06:45 PM »
i dont know how long the public loan forgiveness time frame is but i would go that path then pursue being a physician and pay for that by working part time on the side.  taking out another 100k ontop of 120k already borrowed seams just insane to me.  especially at those interest rates. 

ambimammular

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Re: Student loans -- I'm f#*%@!
« Reply #3 on: May 30, 2014, 02:09:42 PM »
i dont know how long the public loan forgiveness time frame is but i would go that path then pursue being a physician and pay for that by working part time on the side.  taking out another 100k ontop of 120k already borrowed seams just insane to me.  especially at those interest rates. 

Agreed.  Gotta quit digging that hole.

Cpa Cat

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Re: Student loans -- I'm f#*%@!
« Reply #4 on: May 30, 2014, 02:13:16 PM »
You're totally blowing my mind with your debt, but I suspect you're going to go ahead and go to medical school in 2 months, no matter what is said here.

So here's what I say - live on less than 40k a year. Seriously. Minimize your life. Extreme Money Mustache Budget. Live on $20,000 a year or less while in medical school. At least then you won't accrue additional loans for your med school tuition.

Also - pick a lucrative specialty.

If you can manage to reduce your costs, then you potentially only increase your loan balance by about $20k. Maintain the minimized lifestyle for two years while you're a doctor and you can probably clear off the old loans. 6 years out, you'll be a doctor and your student loan debt will be gone.

But that's some serious lifestyle sacrifice on your part. Hopefully your wife is behind you 100%.
« Last Edit: May 30, 2014, 02:18:48 PM by Cpa Cat »

shotgunwilly

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Re: Student loans -- I'm f#*%@!
« Reply #5 on: May 30, 2014, 02:15:24 PM »
What kind of degree did you get to rack up $120k in loans and go work non-profit???

You better get to hustling is all I have to say.  I would find a good paying job immediately, whether that meant leaving non-profit or not, and start paying it down.

BFGirl

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Re: Student loans -- I'm f#*%@!
« Reply #6 on: May 30, 2014, 02:17:45 PM »
Also, consider how your residency training after med school is going to impact your wife's job.  You will need your residency pay to begin paying down your loans (unless it is deferred during residency).  If you have to move away from your wife's job for residency, will she be able to get another job fairly easily?  If not, then it is going to be really hard to repay your student loans on a resident's salary.
« Last Edit: May 30, 2014, 02:19:32 PM by BFGirl »

innkeeper77

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Re: Student loans -- I'm f#*%@!
« Reply #7 on: May 30, 2014, 02:18:02 PM »
Have you considered trying to refinance your loans? If you have good credit, perhaps you might be able to reduce your overall interest rate..

Using a loan a 5.4% to pay down a 6.25% loan makes sense, yes. I wouldn't even take the 6.4% loan. It's small, you should be able to come up with that money on your own ($2000) and it's a higher interest rate than the rest of your loans. Since it is not subsidized, there is no reason to take it.

Make sure that with whatever combination you end up taking, you should make sure you can make the payments after it is all said and done. Are you confident in your ability to make it through school, and they get a high paying job? If so, this makes sense. If not..


The rest of the posters have a very valid point. Where is that $40,000 going? That is a LOT of debt you are about to get into.. reducing expenses, picking up side jobs (both of you) and keeping the loan amounts down is probably a much much safer option. Student loans don't go away in bankruptcy, so be careful.. over $200,000 is over 1/5th of assets many people here need to retire.

BFGirl

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Re: Student loans -- I'm f#*%@!
« Reply #8 on: May 30, 2014, 02:20:03 PM »
Have you considered joining the military to pay for it?

JoyBlogette

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Re: Student loans -- I'm f#*%@!
« Reply #9 on: May 30, 2014, 02:28:08 PM »
Those numbers are staggering.  I think some serious thought to whether pursuing your dream to become a physician will be at the cost of all other dreams you may have in the near future... home ownership, children, retirement is in order.  Good luck.

hybrid

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Re: Student loans -- I'm f#*%@!
« Reply #10 on: May 30, 2014, 02:56:17 PM »
I'm not convinced, given you went to school once already, that being a physician is really the dream job else you would have gone to med school in the first place. I'm wondering if this is some sort of delusion to escape the hole you dug with a pricey and less than lucrative degree. Knowing very little here, I say stay the course.

rmendpara

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Re: Student loans -- I'm f#*%@!
« Reply #11 on: May 30, 2014, 02:58:28 PM »
It's amazing that our system allows people to take out unlimited loans.

One question I'm not sure you answered, are you starting Med school in 2 months, or going back to undergrad and then studying for the MCAT and then hoping to get into med school?

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Re: Student loans -- I'm f#*%@!
« Reply #12 on: May 30, 2014, 02:59:58 PM »
Lets put things in perspective. How many years of school?

Also what is the expected pay/year after you finish.  Residents get paid little but surgeons get paid well, several hundred thousand/year in come cases.  I graduated with one years salary of debt.  What's your expected ratio? if 200K in debt is your expected salary then it's not really that bad.  If you could earn $300k then it could be paid off in 2-3 years (depending on taxes, lifestyle etc.).

I looked up US pay scales and family physicians average $118K and surgeons average $228K.  It's also a lot easier to pay off big debts when you have big pay. 

brandino29

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Re: Student loans -- I'm f#*%@!
« Reply #13 on: May 30, 2014, 03:00:48 PM »
Man, it's all insane, isn't it?  The stupidest part of it all is that I managed to get out of undergrad with only $11,000 in loans.  I could've been home free in a matter of no time then.  I went back to a private grad school with little consideration of tuition and more of a focus on it being a top tier school for my program (public health) and racked up an additional $70k or so in 18 months. 

I'm confident I will successfully get through school and that my wife will be able to find a job relatively easily if we have to move, most likely I could find a residency where we are however.  I'm just having real trouble reconciling it all right now.  On the one hand, today's average medical school graduate finishes with around $180,000 in student loan debt so if I were able to keep my loans to a minimum I wouldn't be that far off the average debt load for new docs.  On the other hand, it's still a whole shitton of money and it's a scary concept thinking about taking on all of that extra debt.

I've considered the military route, and I'm very seriously considering seeking a health service corps scholarship which would pay for tuition and provide a monthly stipend for a commitment to serve in a high need area for the same number of years I would receive the scholarship.  It's a competitive scholarship though and only about 15% of applicants get it.  I can seek a similar route after graduating and get up to $30,000 per year in loan repayments (on top of regular income, benefits, etc) by committing to practice in a high need area for several years.  Public health is my background and interest, so this all aligns nicely. 

Since having posted my original comment, I was able to confirm that I could still qualify for the Public Service Loan forgiveness program if I were to practice in a non-profit hospital or clinic.  Obviously my monthly payments would go up dramatically as my income would increase but residency could also count meaning that there is a possibility that I could have my current loans of $115,000 forgiven after a few additional years of working and paying on those.

Cpa Cat

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Re: Student loans -- I'm f#*%@!
« Reply #14 on: May 30, 2014, 03:10:36 PM »
I think student loan forgiveness sounds like a trap for you. You're using it to rationalize taking out insane debt.

You should be minimizing your debt so that you can pursue the most lucrative/right job for you, without being pinned down by public service for X years.

You will likely give up more in income by being limited by public service over several years than if you exited school and were free to pursue the best possible opportunities.

Your life will be better and more free in a shorter period of time if you just quit spending so much money and pay your debt off as quickly as possible when you graduate.

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Re: Student loans -- I'm f#*%@!
« Reply #15 on: May 30, 2014, 03:15:31 PM »
You're totally blowing my mind with your debt, but I suspect you're going to go ahead and go to medical school in 2 months, no matter what is said here.

So here's what I say - live on less than 40k a year. Seriously. Minimize your life. Extreme Money Mustache Budget. Live on $20,000 a year or less while in medical school. At least then you won't accrue additional loans for your med school tuition.

Also - pick a lucrative specialty.

If you can manage to reduce your costs, then you potentially only increase your loan balance by about $20k. Maintain the minimized lifestyle for two years while you're a doctor and you can probably clear off the old loans. 6 years out, you'll be a doctor and your student loan debt will be gone.

But that's some serious lifestyle sacrifice on your part. Hopefully your wife is behind you 100%.

this!

PeteD01

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Re: Student loans -- I'm f#*%@!
« Reply #16 on: May 30, 2014, 03:21:28 PM »
Man, it's all insane, isn't it?  The stupidest part of it all is that I managed to get out of undergrad with only $11,000 in loans.  I could've been home free in a matter of no time then.  I went back to a private grad school with little consideration of tuition and more of a focus on it being a top tier school for my program (public health) and racked up an additional $70k or so in 18 months. 

I'm confident I will successfully get through school and that my wife will be able to find a job relatively easily if we have to move, most likely I could find a residency where we are however.  I'm just having real trouble reconciling it all right now.  On the one hand, today's average medical school graduate finishes with around $180,000 in student loan debt so if I were able to keep my loans to a minimum I wouldn't be that far off the average debt load for new docs.  On the other hand, it's still a whole shitton of money and it's a scary concept thinking about taking on all of that extra debt.

I've considered the military route, and I'm very seriously considering seeking a health service corps scholarship which would pay for tuition and provide a monthly stipend for a commitment to serve in a high need area for the same number of years I would receive the scholarship.  It's a competitive scholarship though and only about 15% of applicants get it.  I can seek a similar route after graduating and get up to $30,000 per year in loan repayments (on top of regular income, benefits, etc) by committing to practice in a high need area for several years.  Public health is my background and interest, so this all aligns nicely. 

Since having posted my original comment, I was able to confirm that I could still qualify for the Public Service Loan forgiveness program if I were to practice in a non-profit hospital or clinic.  Obviously my monthly payments would go up dramatically as my income would increase but residency could also count meaning that there is a possibility that I could have my current loans of $115,000 forgiven after a few additional years of working and paying on those.

You are going to be fine as long as you keep an eye on things during med school and residency. I have heard a a lot of moaning and groaning from residents with large debts but the funny thing is that once they are out of training they completely stop mentioning it. Wonder why...
A thirty-five year old physician just out of training is looking at a lifetime (30 years) earning potential of roughly $6000000 - and that is an inflation adjusted lowball number. The job is independent of the economic cycle which means that you can go hog wild in buying stocks during a crash.
There is absolutely nothing to worry about as long as you really want to be a physician.
Go to the whitecoatinvestor website and read up on physician specific financial issues - it'll put you at ease, I can assure you.
« Last Edit: May 30, 2014, 03:23:07 PM by PeteD01 »

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Re: Student loans -- I'm f#*%@!
« Reply #17 on: May 30, 2014, 03:28:56 PM »
Man, it's all insane, isn't it?  The stupidest part of it all is that I managed to get out of undergrad with only $11,000 in loans.  I could've been home free in a matter of no time then.  I went back to a private grad school with little consideration of tuition and more of a focus on it being a top tier school for my program (public health) and racked up an additional $70k or so in 18 months. 

I'm confident I will successfully get through school and that my wife will be able to find a job relatively easily if we have to move, most likely I could find a residency where we are however.  I'm just having real trouble reconciling it all right now.  On the one hand, today's average medical school graduate finishes with around $180,000 in student loan debt so if I were able to keep my loans to a minimum I wouldn't be that far off the average debt load for new docs.  On the other hand, it's still a whole shitton of money and it's a scary concept thinking about taking on all of that extra debt.

I've considered the military route, and I'm very seriously considering seeking a health service corps scholarship which would pay for tuition and provide a monthly stipend for a commitment to serve in a high need area for the same number of years I would receive the scholarship.  It's a competitive scholarship though and only about 15% of applicants get it.  I can seek a similar route after graduating and get up to $30,000 per year in loan repayments (on top of regular income, benefits, etc) by committing to practice in a high need area for several years.  Public health is my background and interest, so this all aligns nicely. 

Since having posted my original comment, I was able to confirm that I could still qualify for the Public Service Loan forgiveness program if I were to practice in a non-profit hospital or clinic.  Obviously my monthly payments would go up dramatically as my income would increase but residency could also count meaning that there is a possibility that I could have my current loans of $115,000 forgiven after a few additional years of working and paying on those.

You are going to be fine as long as you keep an eye on things during med school and residency. I have heard a a lot of moaning and groaning from residents with large debts but the funny thing is that once they are out of training they completely stop mentioning it. Wonder why...
A thirty-five year old physician just out of training is looking at a lifetime (30 years) earning potential of roughly $6000000 - and that is an inflation adjusted lowball number. The job is independent of the economic cycle which means that you can go hog wild in buying stocks during a crash.
There is absolutely nothing to worry about as long as you really want to be a physician.
Go to the whitecoatinvestor website and read up on physician specific financial issues - it'll put you at ease, I can assure you.

Pete's advice is spot on. If you can keep your head down and get through school and residency, you'll make the money back and then some.

forward

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Re: Student loans -- I'm f#*%@!
« Reply #18 on: May 30, 2014, 04:29:07 PM »
Man, it's all insane, isn't it?  The stupidest part of it all is that I managed to get out of undergrad with only $11,000 in loans.  I could've been home free in a matter of no time then.  I went back to a private grad school with little consideration of tuition and more of a focus on it being a top tier school for my program (public health) and racked up an additional $70k or so in 18 months. 

I'm confident I will successfully get through school and that my wife will be able to find a job relatively easily if we have to move, most likely I could find a residency where we are however.  I'm just having real trouble reconciling it all right now.  On the one hand, today's average medical school graduate finishes with around $180,000 in student loan debt so if I were able to keep my loans to a minimum I wouldn't be that far off the average debt load for new docs.  On the other hand, it's still a whole shitton of money and it's a scary concept thinking about taking on all of that extra debt.

I've considered the military route, and I'm very seriously considering seeking a health service corps scholarship which would pay for tuition and provide a monthly stipend for a commitment to serve in a high need area for the same number of years I would receive the scholarship.  It's a competitive scholarship though and only about 15% of applicants get it.  I can seek a similar route after graduating and get up to $30,000 per year in loan repayments (on top of regular income, benefits, etc) by committing to practice in a high need area for several years.  Public health is my background and interest, so this all aligns nicely. 

Since having posted my original comment, I was able to confirm that I could still qualify for the Public Service Loan forgiveness program if I were to practice in a non-profit hospital or clinic.  Obviously my monthly payments would go up dramatically as my income would increase but residency could also count meaning that there is a possibility that I could have my current loans of $115,000 forgiven after a few additional years of working and paying on those.

You are going to be fine as long as you keep an eye on things during med school and residency. I have heard a a lot of moaning and groaning from residents with large debts but the funny thing is that once they are out of training they completely stop mentioning it. Wonder why...
A thirty-five year old physician just out of training is looking at a lifetime (30 years) earning potential of roughly $6000000 - and that is an inflation adjusted lowball number. The job is independent of the economic cycle which means that you can go hog wild in buying stocks during a crash.
There is absolutely nothing to worry about as long as you really want to be a physician.
Go to the whitecoatinvestor website and read up on physician specific financial issues - it'll put you at ease, I can assure you.

Pete's advice is spot on. If you can keep your head down and get through school and residency, you'll make the money back and then some.


I will also agree with this analysis and  I am very familiar with the physician debt models.  You took  a big hit going with the high cost public health degree, but you have to deal with it now.  If you know you want to be a physician, you are absolutely convinced, then the numbers will work.

I know physician students who have worked while in med school, ate cheese sandwiches and study under a bare light bulb in a concrete block room (no lie I've seen this).   They can come out with very little debt.  I think I read on the internets that that was called being mustachian.

The numbers work for the degree BUT you have to seriously avoid lifestyle inflation from now until you have been done with residency for 5 years and fellowship if you do one.  That means from today through the next 12 -15 years.  If you do that and do the job you are training to do, your loans can be paid off and you will have a nice financial cushion you are sitting on.  That means after a very stressful week of tests you don't go to the bar for social time.  You're at home, socializing there inexpensively, week after week.

Its a big commitment from you and a big commitment from your wife.  If you take this path and you don't make this commitment you are just another slave to the debt and there are a lot of physicians out there like that.

ambimammular

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Re: Student loans -- I'm f#*%@!
« Reply #19 on: May 30, 2014, 04:52:44 PM »

You are going to be fine as long as you keep an eye on things during med school and residency. I have heard a a lot of moaning and groaning from residents with large debts but the funny thing is that once they are out of training they completely stop mentioning it. Wonder why...
A thirty-five year old physician just out of training is looking at a lifetime (30 years) earning potential of roughly $6000000 - and that is an inflation adjusted lowball number. The job is independent of the economic cycle which means that you can go hog wild in buying stocks during a crash.
There is absolutely nothing to worry about as long as you really want to be a physician.
Go to the whitecoatinvestor website and read up on physician specific financial issues - it'll put you at ease, I can assure you.

Sure, that's a sweet paycheck. But, debt aside, beginning a career at age 35 seriously cuts down on compounded earnings. Not sure what Brandino29's retirement plans are, but many people on the MMM forum aren't looking to work a lifetime (30 years).

PeteD01

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Re: Student loans -- I'm f#*%@!
« Reply #20 on: May 30, 2014, 05:15:44 PM »

You are going to be fine as long as you keep an eye on things during med school and residency. I have heard a a lot of moaning and groaning from residents with large debts but the funny thing is that once they are out of training they completely stop mentioning it. Wonder why...
A thirty-five year old physician just out of training is looking at a lifetime (30 years) earning potential of roughly $6000000 - and that is an inflation adjusted lowball number. The job is independent of the economic cycle which means that you can go hog wild in buying stocks during a crash.
There is absolutely nothing to worry about as long as you really want to be a physician.
Go to the whitecoatinvestor website and read up on physician specific financial issues - it'll put you at ease, I can assure you.

Sure, that's a sweet paycheck. But, debt aside, beginning a career at age 35 seriously cuts down on compounded earnings. Not sure what Brandino29's retirement plans are, but many people on the MMM forum aren't looking to work a lifetime (30 years).

With paychecks like that you don't really have to worry about compound interest - that's for after you retired. Compound interest is dwarfed by income until very late in the career. Unfortunately, because of that, many physicians never learn to pay attention to the nuts and bolts of investing and so squander their money away via lifestyle inflation.
« Last Edit: May 30, 2014, 06:11:55 PM by PeteD01 »

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Re: Student loans -- I'm f#*%@!
« Reply #21 on: May 31, 2014, 02:02:10 AM »
This is doable.  You've gone through all the work to get a med school acceptance, so you must really, really, want to be a doctor.  Don't give that up just because of money.

Your saviour here is that your med school tuition will only be 20,500 a year for four years.  That is low (Texas?).  Actually, that is about as low as it can get.  You should be jumping up and down for joy that it is so low: there are dozens of med schools which would charge you two or even three times that each year, which means that there are significant numbers of people coming out after four years of med school with debt higher than yours will be, even given the $114,592 handicap you are starting off with.

Your second saviour is that your wife is earning over $40,000 a year and you have some rental income as well.  Your third is that you got into a med school where she can continue working and you can continue living with her.  Really, you should be over the moon: MMM himself could not have arranged this better than you have.

Your costs over the next four years will be $20,500 per annum in med school tuition and $408 per month in interest on your existing unsubsidized loans.  If you take out loans for the tuition, pay none of the interest and live off your wife's income and the rental income, you will exit med school with a debt around $200,000.  You will then have between 3 and 7 years of resident's income at about the same rate as your wife is earning.  You will then have earnings which are mid six figures and above, depending on specialty.

My preference is always to keep things as simple as possible, unless there is a very clear advantage to the more complicated route and you like giving time and effort to it.  So I would say: take a loan to cover tuition.  Live off your wife's earnings in med school, putting surplus income to your existing loans.  In residency, continue to live off your wife's earnings and put your earnings to paying off loans.  After residency, keep lifestyle inflation limited until your loans are minimised or gone entirely.  In this period of aggressively paying down/off loans, don't lock yourself into any more debt (house purchase) that is going to be an anchor on what job you take and where you live.

While you are young and healthy you might find it worth considering disability insurance.  Your risks here are all about getting ill and/or flunking out.  You can't insure against flunking out, but you can insure against a disability which would leave you unable to repay your loans.

Check out the White Coat Investor and Student Doctor Network sites for reassurance or more ideas.

Good luck in med school.

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Re: Student loans -- I'm f#*%@!
« Reply #22 on: May 31, 2014, 02:24:22 AM »
You should follow your passion and become a physician, which also happens to pay quite handsomely.

The student loan forgiveness is absurd and such horrible policy - thank you Federal Govt for creating another program with horrible incentives to wreck our economy/society.

worms

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Re: Student loans -- I'm f#*%@!
« Reply #23 on: May 31, 2014, 02:38:35 AM »
...and be really nice to that wife of yours, because she is what is making this whole plan possible!

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Re: Student loans -- I'm f#*%@!
« Reply #24 on: May 31, 2014, 09:32:12 AM »
I agree with others that if your dream is to become a physician, than do it. You'll have some scary loans for a umber of years, but the income should negate that eventually.

BUT, be sure to do your due diligence on choosing a specialty and your chances of attaining that specialty. It's easy for us to sit here and tell you to be a surgeon, but the reality it is, most physicians aren't cut out (get it?) to be surgeons. If you're going to be a rather standard doctor making a little above $100,000 and working crazy hours, you may want to rethink it or at least hold off on med school until your debt has been brought down a bit.

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Re: Student loans -- I'm f#*%@!
« Reply #25 on: May 31, 2014, 10:54:27 AM »
Okay, I don't know how much you make now, but you need a real job.  Then you need a second job.  Pay this shit off, then consider med school.  FPs only make in the low 100s after deferring income for five years.  Want to make big bucks?  Go defer income for 8-9 years going the cardio, ortho, or neuro route.

Your house is burning down with debt and it's like you want to stand there and toss water on it from a sippy cup.   Go get a second job right now and don't buy anything, anything you don't absolutely need.



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lazysundays

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Re: Student loans -- I'm f#*%@!
« Reply #26 on: May 31, 2014, 02:54:03 PM »
Op, why you are asking mustachians about more debt is beyond me.  I'm sure you don't mean to be trollish.  That said, if you apply for the loan forgiveness program, only certain portions of your loans qualify, and that portion (stafford loans) will go from 30 year loans to 10 year loans= higher monthly payment.  What will the payment actually be when it's adjusted for income?  Will you be able to afford those and private loan payments while at school?  And when you graduate, and no longer qualify for income based reductions, can you afford the full monthly payments?  How much will you ultimately save? Just the interest that has accrued?  Let's say you go yo school for 4 more years (not working) then residency for X years at $30-40k/ yr, for 2 years.you have to make sure that residency is at nonprofit, then get a job as a hospitalit etc, so now living broke bc you no longer qualify for income based payments.  My $188,000 SL is around $1000 min payments per month on 30 year loan.  You will be making more than a pharmacist, so can afford $2000 minimum payments.  But who really wants to be tied down for 30 years with that much debt? Are you willing to say that as a doctor you are living off half your income while throwing rest into SL?  Once paid off, you can treat it like a raise and do whatever.  But while you are obligated to pay SL, you are limited in retirement contributions, house etc... And no family yet? What about eventually daycare slowing you down by 20k/ yr . That's my situation. It works, but I figured all this out before going back to school and racking up the debt. It was totally worth it vs staying in research with my bs in biochem making 50k a year.

totoro

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Re: Student loans -- I'm f#*%@!
« Reply #27 on: May 31, 2014, 03:22:46 PM »
I'm not too concerned about your debt.  Seems to me it can be paid off quite quickly when you start working and you will surpass the alternative income you would have made in your current position even with loan forgiveness.  It is more work though for a number of years which you would need to rely on motivation to sustain.  Are you that motivated?

Rbuckyfuller

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Re: Student loans -- I'm f#*%@!
« Reply #28 on: May 31, 2014, 03:52:57 PM »
The debt is big, but you say you are 4 years in to getting forgiveness?  How long would you have to stick with it to get out?  My research says a total of 10 years, so that is a long time and not a real option (you'll pay them down faster in the for profit world).  Your loans out of med school aren't actually worse than a lot of my lawyer friends.   But you better be SURE that this is actually your dream job, because going into this much debt may require you to take the big paycheck job if it come along and for you to have done well is school.

My advice is this:
(1) If you got into a top med school, one where you will be courted by programs if you do well, then just go.
(2) Otherwise, see if you can get a for-profit job in the medical field to confirm it is your dream job.  Then pay down some of this while you are confirming
(3) call the univeristy and ask for more aid.  Sometimes they say yes.
« Last Edit: May 31, 2014, 03:57:14 PM by Rbuckyfuller »

Rpesek6904

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Re: Student loans -- I'm f#*%@!
« Reply #29 on: May 31, 2014, 08:57:55 PM »
I remember the first time I heard a couple of (now) doctor friends tell me how much their loans were - my jaw dropped to the ground. After a long haul of med school, residency and $250 to $350k in loans they finally started working. Boom, $250k TO START. Both of my friends are family physicians in small towns - not surgeons. PLUS, they get 10% of their loans paid of annually because they work in rural communities (with a low cost of living).

So, if I were you I would ignore the reactions above based on the huge debt. They are totally reasonable but, if they are like I was, not informed. If you want to be a doctor, go to med school. When you finally start earning, don't be an idiot with your money and you will be just fine.

JuSp02

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Re: Student loans -- I'm f#*%@!
« Reply #30 on: May 31, 2014, 09:28:39 PM »
As someone that graduated law school with about $185K in debt, and someone that has a lot of doctor friends, I strongly urge you to reconsider jumping into med school when you already have $115K in loans.  Yes, you can potentially get a very lucrative job, but it is going to be a very long time before this happens.  You are going to graduate med school with about $220K in total debt.  Then you'll have about 3 to 5 years of residency of an annual salary around $50K or $55K.  During your residency, you can put your loans on Income Based Repayment, which will cap your monthly payments to 15% of your salary.  However, all IBR does is defer your payments.  Your loans will continue to accrue interest, which at this point is going to be much less than your IBR payments, which means your loans will continue to increase if you go this route.  Or, you can continue living on only your wife's salary, which will allow you to pay off about all of the interest so your loans will remain the same amount throughout residency.  This means that you will graduate med school with $220K in loans.  And after 3-5 years of residency you will still have $220K in loans.  If you are very frugal and choose a lucrative specialty, you can probably pay off all of your debt in three to five years after you finish residency.  Are you willing to make the sacrifices to put the rest of your life on hold for ten to fourteen years?  This means no kids, no house buying, no going to any restaurants, no traveling, no buying anything other than the bare essentials during this time.  Keep in mind that in general the more lucrative specialties have longer residency programs.

Yes, a lot of med students rack up a ton of debt, but a lot of people start med school straight from college.  This means they're spending their twenties finishing all of their schooling and residency.  By the time they are married and thinking about kids and a house, they have already started their jobs.  You, on the other hand, are already married.  Are you really up for delaying other parts of your life by a decade?

Erica/NWEdible

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Re: Student loans -- I'm f#*%@!
« Reply #31 on: May 31, 2014, 09:38:02 PM »

totoro

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Re: Student loans -- I'm f#*%@!
« Reply #32 on: May 31, 2014, 11:27:26 PM »
As someone that graduated law school with about $185K in debt, and someone that has a lot of doctor friends, I strongly urge you to reconsider jumping into med school when you already have $115K in loans.  Yes, you can potentially get a very lucrative job, but it is going to be a very long time before this happens.  You are going to graduate med school with about $220K in total debt.  Then you'll have about 3 to 5 years of residency of an annual salary around $50K or $55K.  During your residency, you can put your loans on Income Based Repayment, which will cap your monthly payments to 15% of your salary.  However, all IBR does is defer your payments.  Your loans will continue to accrue interest, which at this point is going to be much less than your IBR payments, which means your loans will continue to increase if you go this route.  Or, you can continue living on only your wife's salary, which will allow you to pay off about all of the interest so your loans will remain the same amount throughout residency.  This means that you will graduate med school with $220K in loans.  And after 3-5 years of residency you will still have $220K in loans.  If you are very frugal and choose a lucrative specialty, you can probably pay off all of your debt in three to five years after you finish residency.  Are you willing to make the sacrifices to put the rest of your life on hold for ten to fourteen years?  This means no kids, no house buying, no going to any restaurants, no traveling, no buying anything other than the bare essentials during this time.  Keep in mind that in general the more lucrative specialties have longer residency programs.

Yes, a lot of med students rack up a ton of debt, but a lot of people start med school straight from college.  This means they're spending their twenties finishing all of their schooling and residency.  By the time they are married and thinking about kids and a house, they have already started their jobs.  You, on the other hand, are already married.  Are you really up for delaying other parts of your life by a decade?

Why would you have to delay kids again?   His wife has an income of $40,000 and he will have student loans and residency income and then a very large income.  Many many people live and have children on less than this income and do just fine.   Lots of people live on $40,000 a year with subsidized housing  - which we have on-campus in Canada for families in many universities - not sure about the states.
 
If he keeps working his existing loans will be discharged in six years?  Is that right?  So he will be back to zero loans and a salary of what, $60,000?  Is it more?  And an unfulfilled desire to be a doctor.   This means in 2020 they will have $100 000 in gross income in today's dollars and no debt.  Net the salaries might be, what, $70,000?  Maybe more if they plan well and have kids but the wife will probably need to keep working to save for a down payment.

Now, he graduates in 2020 with $222 000 in debt at 5.5% interest in six years. 

He will earn $250 000 to start and nets $190 000 as wife stops working and the child(ren) will be a deduction on his taxes.  His loan will be repaid 10% per year if he choose a rural location.  Let's say he and his wife decide they will live on $80,000 a year and, in a rural location, they can buy a house with this.  This leaves $110,000 a year to put on the student loan and he gets the 10% forgiveness.  He'll be paid off in about two years and they will have $190,000 a year in income with a stay-at-home parent in 2022. 

Now, I might be way off with numbers because I don't live in the US but, if these numbers are at all ball park, there is no doubt that the second scenario works to their advantage IF he graduates on time, gets a job and his wife supports him through it.

chasesfish

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Re: Student loans -- I'm f#*%@!
« Reply #33 on: June 01, 2014, 06:56:18 AM »
There's no guarantee the poster will be accepted into the high income residency programs.  They're very competitive and there's a good chance he/she could end up as a family practitioner making 1/2 of the income being quoted.   Their income has actually fallen in both real dollars and nominal dollars over the past 10 years.   I personally don't think all the expense pressures are going to help their income either.

Just my two cents



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lazysundays

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Re: Student loans -- I'm f#*%@!
« Reply #34 on: June 01, 2014, 07:54:16 AM »
My concern is that the op had to double check if he qualified for the loan forgiveness program.  That means he hasn't yet applied for the 10 year loan.  That means that the previous 4 years working in non-profit doesn't qualify.  I think he seriously needs to do his research. 

totoro

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Re: Student loans -- I'm f#*%@!
« Reply #35 on: June 01, 2014, 08:03:55 AM »
I remember the first time I heard a couple of (now) doctor friends tell me how much their loans were - my jaw dropped to the ground. After a long haul of med school, residency and $250 to $350k in loans they finally started working. Boom, $250k TO START. Both of my friends are family physicians in small towns - not surgeons. PLUS, they get 10% of their loans paid of annually because they work in rural communities (with a low cost of living).

So, here is information that states that a doctor can make $250 000 to start plus get 10% of their loan repaid per year.  This is what I was referencing.  I don't know the US system because I am in Canada

There's no guarantee the poster will be accepted into the high income residency programs.  They're very competitive and there's a good chance he/she could end up as a family practitioner making 1/2 of the income being quoted.   Their income has actually fallen in both real dollars and nominal dollars over the past 10 years.   I personally don't think all the expense pressures are going to help their income either.

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And here is information that seems to indicate you need to be accepted into a high income residency to make this. 

I'm not sure what the realistic outlook in the States is but Canadian doctors have an average annual income (after expenses but before taxes) of a little more than $225,000: http://www.theglobeandmail.com/life/health-and-fitness/health/how-much-are-canadian-doctors-paid/article7750697/


Mutton Chop

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Re: Student loans -- I'm f#*%@!
« Reply #36 on: June 01, 2014, 08:11:45 AM »
If you go forward with Med school, just make sure you have a terrific support network and stay focused on the long term goal.

Also, you'll need to find some inner strength to commit to seeing the whole thing through. No quitting when times are tough.

I know two local Dr.'s who wrapped up with $250k in debt. You should read Dave Ramsey. Good luck, best wishes.

fitzgeralday

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Re: Student loans -- I'm f#*%@!
« Reply #37 on: June 01, 2014, 08:25:32 AM »
For what it's worth, if you have a background in public health and a strong desire to get a medical degree - you might want to consider the MD/PhD route (https://www.aamc.org/students/research/mdphd/).  This way, your medical training would be $0 but would (understandably) entail a longer time commitment as you would be getting two degrees.  A PhD an Epidemiology might be an option for you since you already have the MPH, and there are a few programs that offer a joint MD and a PhD in Epi.  Just my $0.02, but I wish you all the best as I too am strategizing how best to pursue my academic desires without accumulating student loan debt.   

Roland of Gilead

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Re: Student loans -- I'm f#*%@!
« Reply #38 on: June 01, 2014, 08:58:24 AM »
The usual advice is don't take out more in student loans than you expect to make in your first year of employment.

Fail.

If you were an investment, I would run screaming the other direction.  Or short the crap out of you.

hybrid

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Re: Student loans -- I'm f#*%@!
« Reply #39 on: June 01, 2014, 09:37:54 AM »
There's no guarantee the poster will be accepted into the high income residency programs.

Shit, there is no guarantee he will even finish med school. I've seen dreamers crash and burn before. Only the OP will know for sure whether this is a very high risk, high reward gamble he is 100%, absolutely fully committed to or simply purest folly that will bury him in a hole so deep only emigrating will fix it. But I do suggest he look reallllllly hard in the mirror first.

I have a personal friend who is not in her early 30s any more and is swimming in a giant pool of student loan debt but practices law and has a good-not-great law gig to right her financial ship with. She will be fine in the long run, so it is doable, but it will take years of hard work to get there. It will take even longer for this guy.

chasesfish

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Re: Student loans -- I'm f#*%@!
« Reply #40 on: June 01, 2014, 09:56:27 AM »
I wasn't sure if the OP was in the US or in Canada.

Our messed up third party reimbursement system causes the FP who choses to go into business for themselves to have to employ massive administrative overhead to manage through the billings/collection processes.  The best I've seen at this can make $200,000+, but I see plenty struggling through in the low $100,000s with large student loan debt payments.

Because of this, many large hospital groups are buying up the Family Practices and putting the doctors in as wage employees in the $130,000 range.  To me, that's not a lot of money relative to the debt incurred and the delay in income generation.

To each his own, but the math doesn't work for me in this scenario.

erae

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Re: Student loans -- I'm f#*%@!
« Reply #41 on: June 01, 2014, 11:16:19 AM »
FWIW, a close family member is finishing his residency in internal medicine and looking to work in an underserved (likely rural) area for a few years to pay down debt.  Communities are falling over themselves to hire him, and he's looking at a base pay around 180-200K, plus signing bonuses round 20K and 20K in relocation fees.  If your spouse can work from home, this could be a nice option.  Sometimes they even include housing as part of the package. 

Dibbels81

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Re: Student loans -- I'm f#*%@!
« Reply #42 on: June 01, 2014, 11:24:59 AM »
I think you should go for it and begin medical school.  I also would make an appointment with a military recruiter and discuss that option (wouldn't you get free tuition plus a decent monthly stipend?)   You've got one chance at this life thing, so you should go down the path that compels you (and pay off that loan like it's on fire when you are able) 

Bearded Man

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Re: Student loans -- I'm f#*%@!
« Reply #43 on: June 01, 2014, 12:23:26 PM »
Jesus fucking Christ dude...

This...

I really think your parents failed on this one. I had to take out loans to go to school but much more reasonable ammounts. I really wish I had it paid for by my family or a company I work for. Actually I changed jobs toward the end of my undergrad studies and managed to get my last 2 or 3 classes paid for by the time I qualified for the benefit. I also did a lot of FEMA courses to submit to PLAC and managed to shave 6 months and 8K off my eductional costs.

IMO People should not have kids they can't afford to setup for success in life to an extent. It's one thing if they set you up to join the military or make you study your butt off as a child so that you get a scholarship. Or perhaps get you into a trade so that you earn a good living that you can use to get a traditional college education if you want. But situations such as your should never be allowed. Ugh.

erae

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Re: Student loans -- I'm f#*%@!
« Reply #44 on: June 01, 2014, 05:05:22 PM »
I really think your parents failed on this one.

Super harsh, Bearded Man.  If you read above, you'll see that only 11K came from undergrad.  The rest came from the decision OP made as an adult to go to a prestigious Masters program.  Don't think mom and dad can take the blame for that. 

PeteD01

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Re: Student loans -- I'm f#*%@!
« Reply #45 on: June 01, 2014, 05:12:25 PM »
Okay, I've discovered I'm pretty much fucked.  Apparently I've been denying the severity of my student loans and it's all coming to a head right now and I'm having a bit of an "oh shit" moment and need some serious advice.

Here's the deal, I currently owe $114,592 in student loans ($93,957 in principal, $20,635 in accrued interest that has not capitalized to the principal amount).  To date, this has never been a problem in my mind because I am on the Income-Based Repayment plan and work for a non-profit organization and have always planned on going the Public Service Loan Forgiveness route and I'm currently 4 years in.  I didn't worry at all about paying extra because I knew it would be forgiven.  Well, recently I've decided to go to back to school and pursue my dream of becoming a physician, and I start in 2 months. 

Going back to school creates issues, if I defer my loan repayment, interest will continue to accrue on the unsubsidized portion of my loan to the tune of $408 per month ($76,862).  After my in-school deferment ends, I will have the opportunity to pay off any accrued interest before it capitalizes, but any interest that has not been paid off will capitalize to the principal.  At $408 per month, that would be $19,600 of additional interest in the next 4 years of school, in addition to the current interest balance of $20,635.  This means that if I were to pay none of the interest, an additional $40,000 would be capitalized to the principal of $93,957, bringing my loan balance to $134,000 at 6.25% interest ($700 per month in interest alone at that point). 

School will cost me $20,500 in annual tuition and fees, plus books and living expenses.  My plan in going back has been to take out only the loans to cover tuition and to get by on my wife's salary of $40,000 plus a little extra we get in rental income.  However, I have been "awarded" $45,000 in financial aid to cover cost of living and all of the other junk included in the cost of attendance calculation.  The breakdown of my current financial aid offer is up to $42,722 in a direct unsubsidized loan with interest accruing as soon as the loan is disbursed at 5.41%, and an additional $2,602 in a Grad Plus loan at 6.41%, which begins accruing interest immediately as well. 

I'm wondering now if I should take out the full amount possible and use it to pay down my existing student loan debt.  Does that make any sense?  So I would take $45,000 in loans, use $20,500 for tuition and take the remaining $24,500 and pay that toward my existing loans.  In one year I would be able to pay the accrued interest down to $0, and in the ensuing years I could take out most of the principal, lowering the monthly interest that accrues as well.  On the other hand, in doing that, interest would be accruing on my new loans so maybe it's a total wash in the end?

I'm having trouble wrapping my mind around this one in my moment of despair so any thoughts are much appreciated!

You are not going to be very much above the student debt load of other physicians at the beginning of their career and, if you can behave yourself, you can manage this with little trouble. The market for physicians of all stripes is great and will stay like that for a long, long while. You have to be careful taking advice from people who have never experienced very high income. The advice regarding how to be frugal and what to value in life is ok though - in fact essential in order to tackle the issue at hand.
If you do not intentionally seek out low paying positions and are somewhat geographically flexible, you won't have a problem. If your wife continues to work after graduating from residency your household could be pushing beyond 300k/year. Things are really different at these income levels and that's why you should get your advice from whitecoatinvestor and such.

http://www.acepnow.com/article/tips-managing-medical-school-student-loans/

Alectejas

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Re: Student loans -- I'm f#*%@!
« Reply #46 on: June 01, 2014, 07:08:15 PM »
Have you already been accepted into medical school or are you going back to take pre-med classes?  If you have already been accepted to US medical school then I would tell you to go.  If you have yet to take the MCAT or need other classes, then things are very different.  There is a big difference between wanting to be a doctor and getting accepted into medical school.

totoro

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Re: Student loans -- I'm f#*%@!
« Reply #47 on: June 01, 2014, 07:27:55 PM »
He's been accepted.  He starts in two months.

erae

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Re: Student loans -- I'm f#*%@!
« Reply #48 on: June 01, 2014, 07:45:25 PM »
Yeah, but is it med school or a post-bacc where he'll take classes for two years, take his MCATs, and then apply.  They tend to have high placement rates in med schools, and some have linkages that let you cut out the "glide year" you lose in applying, but it is certainly different than going directly to med school.

Alectejas

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Re: Student loans -- I'm f#*%@!
« Reply #49 on: June 01, 2014, 08:04:12 PM »
Yeah, but is it med school or a post-bacc where he'll take classes for two years, take his MCATs, and then apply.  They tend to have high placement rates in med schools, and some have linkages that let you cut out the "glide year" you lose in applying, but it is certainly different than going directly to med school.

That was my point.  If he is working towards an application to med school, then MCAT scores, undergrad GPA, quality of undergrad school  and other factors will help determine if its worth spending the money.  For example if he has a 2.5 GPA in Art History from a small school and poor MCAT scores then the odds are poor.  If, on the other hand, he has a 4.0 from Yale and a bronze medal from the last winter olympics then that would be different. 
If he's got into med school already then he should go (in my opinion).