Advice for med student entering with 100k debt

[Imogen]

I just stumbled across this forum and I was wondering if anyone else on here had experience with entering med school with high undergraduate debt. For various reasons, I unfortunately will be entering med school with just over $100,000 in debt from undergrad. The medical school I be attending this fall will cost me $30,000 (tuition and living expenses), assuming my financial aid package stays the same. This means I will leave medical school with about $240,000 in debt, not including interest. This scares the crap out of me.

So far my ideas for tackling this are to:

1) Pay down interest while in school if I can. My fiance is almost done with grad school and will hopefully have a job within the year. If this is the case, then he'll be able to help me keep up with interest payments at least.

2) Try to work during med school? This idea scares me a little, only because I don't want to sacrifice study time for a low-paying job... but it sure would be nice to have extra money each week to cover groceries or something so that I could put extra towards my loans.

3) My fiance has about $90k in investments from his family. We have discussed using this money to pay my existing loans but I guess historically, his portfolio has performed better than the interest rates on my loans... So fiance votes we don't use that money to pay loans and instead save it towards a house, retirement, etc. I am a little nervous about watching my loans get bigger and bigger while we just have money sitting around, but I obviously understand my fiance's logic too. Not sure if anyone has any advice about this.

4) Paying aggressively during residency. I don't mind living lean for a few years so that I can make a huge dent in my loans once I graduate. What I'm not sure about though, is if this is a bad idea considering PSLF.

5) Avoiding a lower paying specialty, if I can. I know that sounds horrible, and I have nothing but respect for people that go into things like family med, but I honestly just don't know if I could afford it with my debt burden. If anyone would like to tell me otherwise, please do!

Anyway, if any of you have experience or advice with dealing with high educational debt that you'd like to share, I'd love to hear it. I know I'm supposed to be excited about starting medical school (and I am about the medicine!), but most days I also feel really really scared. I worry that I'm not going to be financially stable or able to pay off my loans.

I should note, the military scholarship route is out - I'm ineligible due to a medical condition.

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[sazerac]

The standard path is to not work or make payments during school, take out loans, enter IBR while in residency (making very small payments that don't even cover the interest), and then switching to a standard payment plan (with easily affordable monthly payments) that pays off your loans in full after about ten years as an attending. Yes, even a primary care attending. They get paid a lot more than you think.

In any event you can play with the numbers and scenarios yourself at the AAMC's FIRST page
https://www.aamc.org/services/first/
, paying particular attention to the med loans organizer / calculator tool.

Good luck! It will be all right. I do sometimes worry about our peers with $500K in loans, but I promise you'll be fine.

 

[DrMidlife]

$250k is normal debt coming out of med school now. Not kidding. Avoiding debt is critical and almost impossible unless you have family support.

Very important thing: is your $100k debt entirely federal? If not, then you are limited in terms of getting payment deferred. Figure this out. The name of your lender is irrelevant. The name of the loan program is what matters (Stafford, ParentPlus, Perkins, etc). Private loans are not eligible for any of the repayment programs such as IBR/PSLF/etc. [Edit: your mileage may vary - you are responsible for knowing these details.]

Any federal loans can be deferred during med school. If you got those federal loans during undergrad, then you have a lot of subsidized Staffords that do not accumulate interest while you're in school. [Edit: your mileage may vary - you are responsible for knowing these details.]

Interest capitalization is another advantage with federal loans - it doesn't happen until you're in repayment. [Edit: your mileage may vary - you are responsible for knowing these details.]

I recommend investing a good 20 hours in getting educated about your options. Start on finaid.org and progress to your current lender's site and studentloans.gov.

Best of luck to you.

 

[Imogen]

Thank you both for the advice! Dr.Midlife, a portion of my existing loans are private, and I plan to pay them off first as a result. I'm actually aiming to pay them off during med school if I can (with my fiance's help) since it will save us a lot in interest in the long run.

Thanks for helping me to feel a little more "normal" about my debt load though. And glad to hear that you think my debt would be reasonable to carry even with a primary care docs salary Sazerac!

 

[eefen]

I just stumbled across this forum and I was wondering if anyone else on here had experience with entering med school with high undergraduate debt. For various reasons, I unfortunately will be entering med school with just over $100,000 in debt from undergrad. The medical school I be attending this fall will cost me $30,000 (tuition and living expenses), assuming my financial aid package stays the same. This means I will leave medical school with about $240,000 in debt, not including interest. This scares the crap out of me.

I"ll be leaving school with about $260,000 in debt. That's before interest is capitalized and without any undergrad debt. And with a scholarship. And it's my cheapest option. Your situation is not unusual.

So far my ideas for tackling this are to:

1) Pay down interest while in school if I can. My fiance is almost done with grad school and will hopefully have a job within the year. If this is the case, then he'll be able to help me keep up with interest payments at least.

If your fiancee is willing to help cover living expenses, this can cut down on the loans you need to take out. If he's willing to help you pay down your loans - particularly the private ones - then that's even better.

2) Try to work during med school? This idea scares me a little, only because I don't want to sacrifice study time for a low-paying job... but it sure would be nice to have extra money each week to cover groceries or something so that I could put extra towards my loans.

You can see how things go. Maybe you could eventually get some low-level clinical job later on - perhaps one that lets you take histories or something. But I don't think this will be necessary. Definitely don't worry about this the first year.

3) My fiance has about $90k in investments from his family. We have discussed using this money to pay my existing loans but I guess historically, his portfolio has performed better than the interest rates on my loans... So fiance votes we don't use that money to pay loans and instead save it towards a house, retirement, etc. I am a little nervous about watching my loans get bigger and bigger while we just have money sitting around, but I obviously understand my fiance's logic too. Not sure if anyone has any advice about this.

Don't do this. Let it sit. You'll be glad later. Also, make sure that you guys are educated about investing and are doing it properly. I recommend low-cost index funds that cover the entire market. If you guys are interested in learning more, I would read The Boglehead's Guide to Investing to get started. Also, check out the bottom of this post for some more resources. Learn this stuff now, and it'll pay off later.

4) Paying aggressively during residency. I don't mind living lean for a few years so that I can make a huge dent in my loans once I graduate. What I'm not sure about though, is if this is a bad idea considering PSLF.

Pay those suckers off. Live lean and "get them gone." Your fiancee will have an income too, it seems, so you guys will probably be more than fine.

5) Avoiding a lower paying specialty, if I can. I know that sounds horrible, and I have nothing but respect for people that go into things like family med, but I honestly just don't know if I could afford it with my debt burden. If anyone would like to tell me otherwise, please do!

Sounds horrible? Maybe. But it's reality for many students these days. Don't feel too bad.

Anyway, if any of you have experience or advice with dealing with high educational debt that you'd like to share, I'd love to hear it. I know I'm supposed to be excited about starting medical school (and I am about the medicine!), but most days I also feel really really scared. I worry that I'm not going to be financially stable or able to pay off my loans.

I should note, the military scholarship route is out - I'm ineligible due to a medical condition.

Good luck!

 

[Diagnose]

At least you will be able to obtain student loans. Medical Schools are privileged beyond the rest of society. For example, if you were to go and try to get a PhD, you would hit the 120,000 Federal Aid Max before too long. If your credit isn't perfect, then good luck getting loans. We bank on the assumption that we will get into residency, and get able to repay these loans.

I just stumbled across this forum and I was wondering if anyone else on here had experience with entering med school with high undergraduate debt. For various reasons, I unfortunately will be entering med school with just over $100,000 in debt from undergrad. The medical school I be attending this fall will cost me $30,000 (tuition and living expenses), assuming my financial aid package stays the same. This means I will leave medical school with about $240,000 in debt, not including interest. This scares the crap out of me.

So far my ideas for tackling this are to:

1) Pay down interest while in school if I can. My fiance is almost done with grad school and will hopefully have a job within the year. If this is the case, then he'll be able to help me keep up with interest payments at least.

2) Try to work during med school? This idea scares me a little, only because I don't want to sacrifice study time for a low-paying job... but it sure would be nice to have extra money each week to cover groceries or something so that I could put extra towards my loans.

3) My fiance has about $90k in investments from his family. We have discussed using this money to pay my existing loans but I guess historically, his portfolio has performed better than the interest rates on my loans... So fiance votes we don't use that money to pay loans and instead save it towards a house, retirement, etc. I am a little nervous about watching my loans get bigger and bigger while we just have money sitting around, but I obviously understand my fiance's logic too. Not sure if anyone has any advice about this.

4) Paying aggressively during residency. I don't mind living lean for a few years so that I can make a huge dent in my loans once I graduate. What I'm not sure about though, is if this is a bad idea considering PSLF.

5) Avoiding a lower paying specialty, if I can. I know that sounds horrible, and I have nothing but respect for people that go into things like family med, but I honestly just don't know if I could afford it with my debt burden. If anyone would like to tell me otherwise, please do!

Anyway, if any of you have experience or advice with dealing with high educational debt that you'd like to share, I'd love to hear it. I know I'm supposed to be excited about starting medical school (and I am about the medicine!), but most days I also feel really really scared. I worry that I'm not going to be financially stable or able to pay off my loans.

I should note, the military scholarship route is out - I'm ineligible due to a medical condition.

 

[Stroganoff]

4) Paying aggressively during residency. I don't mind living lean for a few years so that I can make a huge dent in my loans once I graduate. What I'm not sure about though, is if this is a bad idea considering PSLF.

Agree with all the advice presented already, but wanted to add if you can live off one income (your fiance/husband's) during residency, you can use your entire paycheck to destroy as much student loan debt as possible during residency. After following conventional wisdom of maxing out Roth IRA, maxing out any 401k/403b match if there is one, and a decent emergency fund. You can max out the $2500 student loan interest deduction while in residency too (not taking into account fiance/husband's income phasing this out if you file together).

Agree with not touching the $90k portfolio and using it only for retirement nest egg or house down payment.

At least you will be able to obtain student loans. Medical Schools are privileged beyond the rest of society. For example, if you were to go and try to get a PhD, you would hit the 120,000 Federal Aid Max before too long.

Every PhD program I've looked into -- at least in the natural sciences or engineering -- has come with a full tuition waiver plus a small stipend ($25-35K) per year to cover living expenses with a Teaching Assisantship and/or Research Assistantship requirement. Maybe you're referring to arts and humanities PhDs?

If your credit isn't perfect, then good luck getting loans. We bank on the assumption that we will get into residency, and get able to repay these loans.

Federal loans are independent of credit except for Grad Plus and Parent Plus. And one can dramatically clean up and improve credit in a year or two by following some nuggets of wisdom on credit repair (see http://creditboards.com/forums).

 

[Diagnose]

Agree with all the advice presented already, but wanted to add if you can live off one income (your fiance/husband's) during residency, you can use your entire paycheck to destroy as much student loan debt as possible during residency. After following conventional wisdom of maxing out Roth IRA, maxing out any 401k/403b match if there is one, and a decent emergency fund. You can max out the $2500 student loan interest deduction while in residency too (not taking into account fiance/husband's income phasing this out if you file together).

Agree with not touching the $90k portfolio and using it only for retirement nest egg or house down payment.



Every PhD program I've looked into -- at least in the natural sciences or engineering -- has come with a full tuition waiver plus a small stipend ($25-35K) per year to cover living expenses with a Teaching Assisantship and/or Research Assistantship requirement. Maybe you're referring to arts and humanities PhDs?

Thanks.