A money question

[126990]

most med students live poorly and many don't work. i'm a post-bac, age 30, with a 6-fig salary, so when i go to med school, we're going to be living off of my wife's (high) 5-fig salary.

are there loans that allow a person to borrow more than what the cost of school will be, so that i can have some money, as opposed to no money?

thanks!

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[ScubaEMT]

I was wondering the same thing. My wife and I make roughly the same amount of money and are expecting our first child in December. Unless I can get loans to cover some of the lost income, we are going to be pretty strapped.

 

[cabinbuilder]

You can get loans in med school for the cost of living and tuition expenses - roughly $40,000/yr max. That covers everything. You get the first check the end of August and the second the end of January. The school takes what is owed to them and you get a check cut to you for the remainder, approx 10,000 per semester to cover rent, food, supplies.

 

[Captain Fantastic]

The medical school presents a budget that includes tuition, fees, and living expenses. This is what lenders will base your loan amounts on.

Private lenders might be willing to lend more than the school's budget, but the rates will be pretty high in comparison.

 

[Empi]

I'm in the same boat and only take out tuition (no living expenses,) not even textbooks or transportation.

The debt is still nagging me, however.

 

[Non-TradTulsa]

most med students live poorly and many don't work. i'm a post-bac, age 30, with a 6-fig salary, so when i go to med school, we're going to be living off of my wife's (high) 5-fig salary.

are there loans that allow a person to borrow more than what the cost of school will be, so that i can have some money, as opposed to no money?

thanks!

There used to be some reputable lenders that would loan you more than the cost of attendance based on credit strength - but, last time I looked, the reputable lenders had cut back to cost of attendance only. As you may have noticed lately, the easy credit train done left the station.

If your wife has a "high-5-figure" salary, what on Earth do you want more money than the allowable cost of attendance for? Look, I was a fairly high-powered hospital manager and CPA. I now live on loans and a little bit of savings for just a few extras. I would say to you, I don't live the least bit "poorly" (nor do I live in a high-cost area, however). Modestly, yes, but I'm certainly not feeling deprived. All I did was pay off the plastic and pay off my cars, and I can live comfortably in a modest rental house in the city where I attend school.

If you live in California, I understand your predicament. However, I've seen several non-trads on SDN who are determined to maintain their current lifestyle, come h*ll or high water - and it's ridiculous. Every dollar you spend now that is loan money is going to cost you $2 to pay back - do you really want to spend twice retail to support your lifestyle? The simple fact is, in medical school your time is going to be so limited that you'll spend far less on restaurants, expensive clothes, entertainment - you don't have time for those things, so you won't miss them - trust me, I'm 45 and I learned.

As far as the other posters - you can apply for an increase in your budget for a legitimate purpose. Legitimate means something like being a single female and paying higher rent than the standard allowance in order to live in a safer neighborhood. You can't borrow extra to support a spouse or children (except day care) - fin aid is only for the student. You can borrow for car repairs, but you can't borrow for car payments. You definitely cannot borrow to make payments on plastic.

Loan limits aren't there to be mean, they're there to keep you from getting in so far over your head that you can never dig out. Old saying in the fin aid department: "live like a student now and live like a doctor later, or live like a doctor now and live like a student later." It's very true.

 

[Twitch]

most med students live poorly and many don't work. i'm a post-bac, age 30, with a 6-fig salary, so when i go to med school, we're going to be living off of my wife's (high) 5-fig salary.

are there loans that allow a person to borrow more than what the cost of school will be, so that i can have some money, as opposed to no money?

thanks!

It's a tough transition. I was a consultant before starting school and it is quite a life style change. For the most part you don't have time to do a whole lot of other things so that taps off aux cash flow drains. Meals, IMHO, is where the biggest challenge was (for me anyways). What you were used to spending for one meal now pays for several and then some.

 

[Law2Doc]

Private lenders might be willing to lend more than the school's budget, but the rates will be pretty high in comparison.

Yes. Private lenders will generally loan you whatever you need, on the strength of your future degree, but it is a dangerous proposition since salaries are not what they once were, interest can be high, and you certainly can borrow more than you can reasonably pay back.
The goal should be to borrow the absolute minimum you can afford to to get by, not to duplicate a former 6 digit lifestyle. Expect med school to be very lean years.

 

[AKN]

I worry about how to afford life, too. I'll be quitting my upper-5-figure income and we'll be trying to live off my husband's low-5-figure income. I have several children. I suppose we'll be living in a dump so we can keep everyone fed & clothed. But, it's going to be hard to find a cheap place in a safe spot near the campus with room for all of us and in a good school district...

 

[queenbee]

+1 here.

i've already transitioned out of a 6-figure salary and working part-time while i take my postbac classes. it's already difficult to adjust and i really fear what my day-to-day life will be like when i finally/hopefully start med school in 2 years. i'm saving as much as i can, but i already see the money being depleted on all the postbac classes i'm taking, the mcat class, and then i'm sure applying will be another chunk of change.

has anyone had to tap into their 401k or any of their outside savings (stocks, bonds, etc)? will lenders not be as willing to lend me more money than just the tuition if i have a lot of money tied up in stocks, mutuals funds and my 401k?

 

[J ROD]

http://www.aamc.org/programs/medloans/loanchart.pdf

 

[DrMidlife]

will lenders not be as willing to lend me more money than just the tuition if i have a lot of money tied up in stocks, mutuals funds and my 401k?

Last I checked, for federal funds, your house and your retirement savings are not counted as assets. Everything else is.

The money forum I'm sure will have current specifics.

 

[2008orbust]

most med students live poorly and many don't work. i'm a post-bac, age 30, with a 6-fig salary, so when i go to med school, we're going to be living off of my wife's (high) 5-fig salary.

are there loans that allow a person to borrow more than what the cost of school will be, so that i can have some money, as opposed to no money?

thanks!

IT sounds like you guys are doing great. We are in pretty much the same boat and here's what we did (just for an example) IF your family can sacrafice a bit, ok, a lot... We bought a smaller house (still very nice but just smaller) and spent the last year paying off EVERY CENT of debt. No mortgage, no credit cards, no car payments, nothing. Now our monthly carry costs are just food, gasoline, gas/power bill, phones, internet and twice a year we have property taxes. We did EVERYTHING we could think of to get our monthly expenses down down down. Now living off of one smaller income doesn't seem that bad. I will use my 401k for tutition and work casual shifts in the ER as an NP whenever we need a bit more flow.

Can you guys sacrafice now in order to get your montly expenses down? We did the math and that was the only way we saw it was possible for us. We've cut out a lot of things that we had grown accustom to and were surprised how it added up! (Don't worry, we didn't give up golf, that is the one luxery we held on to ) Stopped vacations, ate out MUCH LESS, found free stuff to do with our kids and then used every penny saved to pay down debt--now all I have to do is convince a school to let me in.

Good luck, you can do it!

 

[thegenius]

most med students live poorly and many don't work. i'm a post-bac, age 30, with a 6-fig salary, so when i go to med school, we're going to be living off of my wife's (high) 5-fig salary.

are there loans that allow a person to borrow more than what the cost of school will be, so that i can have some money, as opposed to no money?

thanks!

If you don't have dependents then you and your wife should be able to live off a high 5-fig salary. There are only a few places in the US where you won't get by with that kind of money. Any school in Manhattan, San Francisco, and maybe a few other wealthy areas in big cities.

Re: loans that exceed tuition, it varies school by school. At mine I am taking out 53K/year, and our tuition is 39K/year. I have 3 dependents including my wife.

 

[thegenius]

Every dollar you spend now that is loan money is going to cost you $2 to pay back - do you really want to spend twice retail to support your lifestyle?

There are a few financially savvy medical students who borrow money at 6% and make 10% in the stock market. Obviously I don't advise that unless you were a professional investor in your previous career.

You can't borrow extra to support a spouse or children (except day care) - fin aid is only for the student.

That is not a hard-fast rule at all medical schools. At my school our financial aid department does take into account your dependents as they contribute to your living expenses. I am borrowing several thousand above my tuition costs for my two children. I don't think you can get financial aid for your spouse though, but I can't recall.

 

[Non-TradTulsa]

We bought a smaller house (still very nice but just smaller) and spent the last year paying off EVERY CENT of debt. No mortgage, no credit cards, no car payments, nothing. Now our monthly carry costs are just food, gasoline, gas/power bill, phones, internet and twice a year we have property taxes. We did EVERYTHING we could think of to get our monthly expenses down down down. Now living off of one smaller income doesn't seem that bad. I will use my 401k for tutition and work casual shifts in the ER as an NP whenever we need a bit more flow.

Hooray! Somebody who's a smart financial planner. If Suzie Ormon were here, I'm sure she'd give you a pat on the back on PBS or something nice. Paying off my credit cards in the last year before medical school was really painful - but, by the time I eliminated plastic payments, my car payment, and other "fluff" expenses, it really wasn't that hard to fit my expenses into the medical student budget. Unless you live in a high-cost area, the medical student budget isn't really painful - just kinda modest. As it should be.

My career as a CPA was in healthcare, not personal financial planning - but I'll give you my perspective on using your 401(k) for tuition. Don't. If you have any kind of decent portfolio, your long-term returns should certainly exceed the Stafford 6.8% fixed interest. I have enough in my 401(k) to pay for my education, but no way am I touching it. Not only because of the returns, but - consider this - education loans can go into permanent forebearance or be cancelled if you're sufficiently disabled to no longer practice as a physician. If that did happen - and people become disabled more often than you might imagine - then you still have your 401(k) money. If you spend it, it's gone for good no matter what. Your 401(k) money has incredible legal protections - it's virtually impossible for anyone else to get to it for any reason - and that's why mine is going to stay right where it is. Just my $.02...

 

[Non-TradTulsa]

That is not a hard-fast rule at all medical schools. At my school our financial aid department does take into account your dependents as they contribute to your living expenses. I am borrowing several thousand above my tuition costs for my two children. I don't think you can get financial aid for your spouse though, but I can't recall.

Not a medical school rule - federal law for federally-backed loans. You were probably permitted to borrow some for your children because additional money for daycare is allowable, and I'm sure that can be twisted around a bit. Some fin aid offices are more liberal than others, but they all have to work inside of federal rules (at least, until they get audited!).

 

[thegenius]

has anyone had to tap into their 401k or any of their outside savings (stocks, bonds, etc)? will lenders not be as willing to lend me more money than just the tuition if i have a lot of money tied up in stocks, mutuals funds and my 401k?

I strongly advise against tapping into tax-deferred investments. Not only will you have to pay taxes when you withdraw the money, but you will also pay a stiff penalty. If you work out the numbers in most cases it is better to let your tax-deferred investment vehicles grow as long as they can, and borrow money now to pay for your tuition. This is especially true given the current low interest rates. You end up saving (or make more) money this way.

Actually, lenders are more likely to lend you money if you have collateral. So they would prefer someone with assets such as 401K, Roth IRA, stocks, mutual finds. Note that if you have stocks in a taxable account, that will count against your ability to finance your education, as lenders will expect you to liquidate those assets.

 

[thegenius]

Last I checked, for federal funds, your house and your retirement savings are not counted as assets. Everything else is.

That is generally true, but there might be a few schools where that is not the case as it is at my school, to my chagrin. I've argued with the financial aid officers, to no avail.

 

[thegenius]

IT sounds like you guys are doing great. We are in pretty much the same boat and here's what we did (just for an example) IF your family can sacrafice a bit, ok, a lot... We bought a smaller house (still very nice but just smaller) and spent the last year paying off EVERY CENT of debt. No mortgage, no credit cards, no car payments, nothing. Now our monthly carry costs are just food, gasoline, gas/power bill, phones, internet and twice a year we have property taxes. We did EVERYTHING we could think of to get our monthly expenses down down down.

This is an excellent approach. If you have funds, I recommending going into medical school as debt free as possible. Financially you'll be in less debt coming out and it will be easier to handle. It will also help your future prospects for borrowing money (for a house, car, etc.) as debt is a liability on your credit application.

 

[Doctor Bagel]

OK, one thing that's been hinted around at but not explicitly stated -- everybody can borrow up the full school's cost of attendance regardless of spousal income or individual assets. The cost of attendance (coa) includes tuition, fees and reasonable living expenses based on the area your school is located in. You might not get subsidized stafford loans, but unsubsidized staffords and GradPlus loans are not need based. So, op, you can borrow about $20k or so above the school's tuition for your own spending money. With your wife making as much as she does, I can't imagine that you'd need more than that.

 

[thegenius]

Not a medical school rule - federal law for federally-backed loans. You were probably permitted to borrow some for your children because additional money for daycare is allowable, and I'm sure that can be twisted around a bit. Some fin aid offices are more liberal than others, but they all have to work inside of federal rules (at least, until they get audited!).

If you mean Stafford loans, then there is a fixed amount of money you can borrow at a fixed interest rate (currently). Stafford loans however are insufficient to cover your entire tuition bill. Medical schools offer loan packages through the school which are backed by private insurers. These companies are not bound by federal lending guidelines.

 

[njbmd]

Moving to Financial Aid Forum for input of the professionals there.