Debt in Med school

[canjosh]

So, I'll try to keep this brief. I'll be starting med school in Texas in August, with a wife and two kids under age 5 in tow. I'm pretty non-traditional (30 yrs old), and my wife and I have been working full-time/living 'house-poor' for a several years. We've been making too much money to get subsidized money for my undergrad (25k in signature loans). In addition, we've got the usual family debts (cars/credit cards). The highest balance credit card will not get paid off within a decade...seriously. It probably won't get paid off till I'm an attending. Obviously, we're wondering how to make ends meet. Thankfully, my wife is a nurse, so she can get a job--but obviously she can't work all the time and leave me as a single parent in medical school.

Basically, I'm wondering what funding options are out there that take our other expenses into account. We don't even know where to start when it comes to renting a new place without knowing something about what our funding options are. Any thoughts?

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[plauto]

First and foremost, get rid of your CC debt. It will sink you like you won't believe.
You'll qualify for Stafford loans no problem in your situation plus Texas schools are very cheap, so you should be ok as far as loans for tuition and living expenses. But again, get rid of your CC debt. Honestly, there is no reason why 2 people with full time jobs should have CC debt in the first place. You might be able to get additional private loans (depending on your financial history) but you will have to buckle down. Your wife might not have a choice with staying home and you might need to get a cheap car with no payments. That's what I would do in your shoes.

 

[canjosh]

Thanks for the reply. There are lots of reasons for 2 people with full-time jobs to have CC debt. I'm not being disrespectful, but don't you think that most people in this country that are in CC debt work full-time, yet can't just pay off the debt? Appliances break, fences fall down in windstorms (multiple instances), people need surgery/hospitalization, MCAT course/school application fees--interview travel expenses, etc. Not to mention the wife doesn't get paid maternity leave. Things add up over a long time. (This particular CC wasn't charged up over a short time frame).

So...unless we find the money tree or win the lottery that payment is going to be with us through medical school. It's a fact. We are resigned to the fact that she will have to work.

I've heard people say "I took the max allowable student loan"...what exactly does that mean? For instance, my school estimates 20k in direct educational expenses and 22k indirect for MS-1. So, what are the options if somebody wants/needs more than that amount of money per year?

Thanks for the input about the car, it's one of the ideas we've been kicking around.

Our credit is decent (no negative items); debt-to-income ratio is the issue. Thanks again for the help.

 

[plauto]

I understand. Your financial aid office is your friend. Talk to them about having kids and your expenses and the fact that you're having a hard time financially due to unforeseen medical expenses. Also, explain to them that your EFC for the next year might be skewed upward because of your job (assuming you are working at the moment). The best thing for you is to maximize the Stafford loans without going to private loans. Subs limit is $8500 and unsub is $32,000. Your school might also have institutional loans available. Get in touch with the financial aid folks ASAP.
the financial aid office at my institution is great to work with.
Being at Baylor you're in a good position in that the tuition is low and it gives you a nice reserve to borrow more. They'll help you navigate the requirements. You should also be able to get decent health coverage for you and your family.
The loan interest rates are lower than you CC rates probably so I'd use them to pay off your CC as much and as quickly as you can. Good luck!

 

[canjosh]

Thanks for your help. I called the financial aid folks the other day and all they would tell me is that award letters won't go out till late March at the earliest. I guess I'll try to talk to them again. I don't want to have to throw this all together at the last instant, especially with the added stress of selling our current home, etc. BCM does have institutional loans, though I don't really understand how those fit into the picture. Health insurance is over $800/month, but they supposedly throw that into the indirect expenses. Thanks again for your help, I truly appreciate it.

 

[plauto]

Thanks for your help. I called the financial aid folks the other day and all they would tell me is that award letters won't go out till late March at the earliest. I guess I'll try to talk to them again. I don't want to have to throw this all together at the last instant, especially with the added stress of selling our current home, etc. BCM does have institutional loans, though I don't really understand how those fit into the picture. Health insurance is over $800/month, but they supposedly throw that into the indirect expenses. Thanks again for your help, I truly appreciate it.

write a letter explaining your circumstances before they send you the award letter. address it to the director of the office.

 

[babel]

Yeah, main thing here is that you have to get approval from your financial aid office. You can only take out loans up to your COA (cost of attendance), which is set by your school and includes all tuition/fees + living expenses. They will have a standard amount set for living expenses, but do have the ability to adjust this up for approved expenses (housing, car, medical etc), with appropriate documentation (i.e. copies of your bills). However, you will NOT be able to get extra loans to cover CC debt (I came into medical school with that godforsaken CC debt as well) - so to the extent that it sticks around, make sure to maximize your funding in all other available categories on paper, and then shift around as need be.

I don't know if other people noticed this, but I swear my FICO score dropped significantly (720s to 650s) within 6 months of starting medical school, and all of my CC were effectively shut down within another 6mo. This is with NO late payments, over the limits, or any change in the amount of debt on the cards. Now, the closing/decreased limits/increased interest rates of the cards could be explained by the general economy (this was 2007-2008), but not the FICO score - should be an objective measure, right? I think that was simply due to my soaring educational debt - I foolishly didn't realize student loans get lumped in with the CC's on my credit report!

I guess I'm just saying be cautious - just because the CC companies haven't come after you yet doesn't mean they won't in 6mo to 1 year when you've lost your income and are piling on educational debt. Though, I guess with the new laws, maybe you'll be protected from all that nonsense.

 

[canjosh]

write a letter explaining your circumstances before they send you the award letter. address it to the director of the office.

Will do. Thanks for helping.

 

[Twitch]

...I don't know if other people noticed this, but I swear my FICO score dropped significantly (720s to 650s) within 6 months of starting medical school, and all of my CC were effectively shut down within another 6mo. This is with NO late payments, over the limits, or any change in the amount of debt on the cards. Now, the closing/decreased limits/increased interest rates of the cards could be explained by the general economy (this was 2007-2008), but not the FICO score - should be an objective measure, right? I think that was simply due to my soaring educational debt - I foolishly didn't realize student loans get lumped in with the CC's on my credit report!...

I'm in the same boat with no late payments/over limits/etc, though I haven't seen any lines drop / score drop. My lines have been unchanged for the most part, though my utilization ratio has gone down tremendously (I used to travel a lot for business previously so had a lot of business expenses I charged on my cards previously - and ofcourse the cc companies in turn provided very generous lines). Though I've noticed they have jacked up some rates though those rates always did vary. Now the score is interesting. I haven't pulled it recently, but last I checked I want to say they were pretty constant. Anyone else see this?

 

[meister]

They won't change your cost of attendance for anything other than approved expenses like emergency medical bills and daycare or pre-school depedent expenses. They will not give you more for credit card bills.

They will tell you that student loans are not meant to "raise a family." They will conveniently ignore the depression we are in and the unemployment rate.

There are zero private uncertified loans right now. None. You are only going to be able to borrow up to your cost of attendance amount (usually $26k or so) with increases for what I said before up to approved amounts. They will give you $1750 for a computer and a PDA but that's not really helpful I guess.

What I'm saying is that if you still have a job, pay off your goddamn credit cards as fast as you can. They are poison. Having been in your exact position, I completely understand your predicament.

There are certain actions you can take to significantly help your situation. Feel free to PM me if you are interested.

 

[Psych2014]

These are big picture ideas, which may or may not help you. I'm also married, with kids, doing med school. And wen't into it with debt which I knew would not be paid off until after residency as well. Long story short, we way understimated our cost of living during med school, and ended up scrambling for loans during year 1, almost needing to withdraw, etc.. No excuse, but kids, famiily, marriage, life in general goes through some serious changes during med school, unless I suppose you are a genius and only need an hour or 2/day to study.

So, if you know it's the right thing, there are options, such as paying the CC's with a loan, or closing the card, usually thusly freezing the interest rate where it is for the duration, on and on. But do be aware that it will probably overall be more expensive than you might be considering... such as you may have more uninsured med expenses, you're wife may not need to be able to work as much because of your stress level, emotional toll causing lost productivity and higher medical bills, less efficient/cost effective lifestyles (ie. less time to cook, more need to buy prepared foods, etc... ad nauseum as I'm sure you can imagine having a family...). I'm not discouraging you, rather encouraging, but be prepared. It was challenging, rewarding, mind and soul warping at times, extremely stressful, and ultimately enriching. It was a serious wake up call during about month 3 I simply forgot the payment on one CC, and they jacked the rate up to 29% ( I believe), no pleading would stop them (***and this relates to teh question above of did my credit score and attractiveness to CC/financing co's take a dive during med school? Yes, because my debt/income ration went insane, and I'd missed maybe 2 payments on anything in about 10 years). So, I schedule all the payments strictly on my outlook and pda, with a bajillion reminders, and then missed again about 8 months later, thank God no disaster on that one, but... again, suffice it to say med school is quite unlike anything else I've ever done.

 

[CATrtb]

I am also entering medical school this fall. I'm 31, have two kids, and my wife is due with our third in July. We have normal family expenses, CC bills, car payments, a house that needs to be sold...etc. Sorry, I am working 72 hours a week now and CCs will be no where paid off by the time I start, neither will my cars. My wife is a full-time mother which is more than a full time job-just uncompensated. No, I am not defering medical school until my bills are paid off. It is what it is. The numbers are what the numbers are, and this is what I have to work with. I am looking at my school's "cost of attendance" and feel there is no way I can live within thier maximum. Where does one go for loans that don't factor in a COA? Will schools increase the COA for individual students? What have other people done? I figure we will need at least $36,000 in living expenses outside of school. Outside of tuition my school allows about 22,000. I don't see anywhere I can make up the 14,000 a year. Any help will be greatly appreciated.

 

[babel]

Start by contacting the financial aid offices of the places you are considering. For example, the standard budget at my school allows for ~$800/mo for rent. My second year I found out that - although it isn't published anywhere - that they allow for up to $1500/mo for rent so long as you can provide the proper documentation (e.g. your lease or mortgage paperwork). Your strategy can be to try to maximize your COA in all of the allowed categories, and then you'll have to shift money around accordingly - e.g. they may give you $$ for clothing or books, but instead you can put that toward your CC. I would try to do as much as possible through your fin aid office before looking for private non-ed loans.

 

[plauto]

I am also entering medical school this fall. I'm 31, have two kids, and my wife is due with our third in July. We have normal family expenses, CC bills, car payments, a house that needs to be sold...etc. Sorry, I am working 72 hours a week now and CCs will be no where paid off by the time I start, neither will my cars. My wife is a full-time mother which is more than a full time job-just uncompensated. No, I am not defering medical school until my bills are paid off. It is what it is. The numbers are what the numbers are, and this is what I have to work with. I am looking at my school's "cost of attendance" and feel there is no way I can live within thier maximum. Where does one go for loans that don't factor in a COA? Will schools increase the COA for individual students? What have other people done? I figure we will need at least $36,000 in living expenses outside of school. Outside of tuition my school allows about 22,000. I don't see anywhere I can make up the 14,000 a year. Any help will be greatly appreciated.

yes, that is probably too much of a gap. You might have to decrease your expenses even further. Get an older car with no car payment and move into a smaller place (I know, it's tough). You're going to have to sacrifice. Try to maximize your spouses's income if possible. Let the fin aid office know, they might be able to help you a bit. Private loans are a road I'd not go down for several reasons and they might not be easy to get in your position. Good luck.

 

[canjosh]

write a letter explaining your circumstances before they send you the award letter. address it to the director of the office.

As a follow-up: I'm meeting with the director of financial aid office in a couple of weeks. She said she would give me specific numbers that apply to our situation to the best of her ability. Thanks again to everybody for the input!

 

[CATrtb]

yes, that is probably too much of a gap. You might have to decrease your expenses even further. Get an older car with no car payment and move into a smaller place (I know, it's tough). You're going to have to sacrifice. Try to maximize your spouses's income if possible. Let the fin aid office know, they might be able to help you a bit. Private loans are a road I'd not go down for several reasons and they might not be easy to get in your position. Good luck.

My wife does not have an income, she is a high-school graduate and full time mom. She will not work minumum wage just to pay the daycare bill. You can't pack 3 carseats in the back of a corrola so I'll keep our old SUV (only 18 more months of payments). I would love to downsize my home, but unfortunately I bought our current house in Aug. 2006 (the peak of the housing market). I have been trying to sell (for way less than we paid for) for the last 18 months. Either way I will try to talk to the financial aid office ASAP. I know I will and have to decrease my expenses, but the big expenses are here to stay at least for the short term and this is what worries me.

 

[dotdash]

It sounds as if you are in a pretty tight situation -- so much potential and yet so much current (and next 6-7 year) trouble.

I have an odd-ball idea -- have you thought of a micro loan? There are these websites that support direct small investor-to-borrower loans. You might be able to make the case for yourself (combination of "I'll be a solid-income doctor some day" and "Please help out my starving family") well enough to find lower-interest loans on good terms. And since they would be direct loans, they might not show up on credit checks, etc.

Just a thought...

 

[MDToBeInNC]

It's so good to hear from others in my situation. I'm 26 with one child and a 2nd one on the way. We've got one car paid off but there's no way the 2nd one will be paid off and we have a little bit of cc debt which we're trying to get paid off but it won't be completely taken care of prior to school starting. I've been the primary breadwinner in our family and we're very concerned about how we're going to survive on the school's budgeted COA. We live cheap - small, simple apartment, 100% home cooking (beans and rice anyone?), scholarships for son's extracurricular activities, etc - but the COA is geared towards 1 person, not a family! The last thing I want is to be busy juggling school and family AND worrying myself silly about whether the monthly bills can be paid. I've not yet heard of any feasible options except for the suggestion of trying to negotiate with the school. We're definitely going to try that but are at a loss as to what other avenues are available. I really don't understand why the COA can't be adjusted more easily towards having a family. We're not asking for free money here; we're asking for LOANS that we will be responsible for paying back. Doesn't it seem a little unfair?! If we have to do private loans to make it through we will but even those don't seem available. ack!

canjosh can you keep us updated on what your school's fin aid director says when you meet with her? And if anyone else finds private loans or other reasonable options please share! As will I as I begin to look into this more asap.

 

[canjosh]

canjosh can you keep us updated on what your school's fin aid director says when you meet with her? And if anyone else finds private loans or other reasonable options please share! As will I as I begin to look into this more asap.

Absolutely.

 

[CATrtb]

My wife is expected to be a contributer to my medical education, if she is not, then that is tough. You are right MDToBe, the financial aid aspect of medical school is behind the times, it was not designed for a Nontrad w/family. All I want is to not worry about getting kicked out of my house, or having my car repossesed while trying to be a med student. I just need a little more than what a traditional, single, 22 year old would need, and I'm not understanding why schools don't understand that. Thier COA is what controls all this.

dotdash- I have thought about the "microloan" thing, but only in terms of asking my friends and family for "microloans". I have not reasearched if there is anything on the internet for this sort of thing, but I will.

 

[CATrtb]

My school's website suggested I find a benefactor.

 

[sumstorm]

I hate to suggest this, but if you haven't already, cut out all luxury expenses. no cable TV, no meals out, buy clothes and household goods at goodwill and salvation army. Learn to cook and eat cheaply, switch to meatless meals based around rice and beans which can be puchased in dry bulk. Stay out of stores. Beg to borrow texts books from M2/M3 students or buy second hand. I have yet to meet a family that can't cut expenses somewhere. for now, build a buffer and chip away at the highest interest debt. consider taking a loan out to pay of the CC then freeze it. Sell things if you have things worth selling. Try garage sales for reducing excess books, toys, clothes, etc. desperate measures and big dreams require sacrifice and diligence.

 

[CATrtb]

I talked to a few different people at my financial aid office. There is no exceptions to the COA. According to them "the federal government limits the amount of money loaned to a student for living to that of a single person." Thier hands are tied. They say they absolutley cannot go over. There are also no private loans out there.

There are fixed expenses and there are variable expenses. My fixed expenses per month, right now and for this fall at least, are not changing. They are out of my control. There is no cutting something that is fixed. So my fixed expenses are greater than the living expenses alotted according to the COA. So if I cannot take care of the fixed expenses, it does not matter if I cut my variable expenses to $0.

Thus, I will probably keep working weekends and cash out my 401k. (you may scream in horror now)

 

[dotdash]

Thus, I will probably keep working weekends and cash out my 401k. (you may scream in horror now)

Yes, the 10% penalty is a killer. On the other hand, you will be able to deduct your tuition payments because you will have income (from your 401K) that most students do not have. It might not be enough to make back the 10% penalty, but it's a small silver lining....

Hey, wait a sec. If you work and you have a child, you might (?) also qualify for the earned income credit, which would pay you cash back! You'll have to check the guidelines to see if full-time students qualify... but I think that as long as at least one of you worked at least a little, you could get thousands back. That might be worth a look or two at the IRS website....

 

[rbnsafsadgf]

According to them "the federal government limits the amount of money loaned to a student for living to that of a single person."

BS.

"Dependent care expenses may be taken into consideration as educational costs." - www.[B]ohsu[/B].edu/finaid/childcare1011.pdf

 

[CATrtb]

BS.

"Dependent care expenses may be taken into consideration as educational costs." - www.ohsu.edu/finaid/childcare1011.pdf

This is if childcare expenses are incurred. Since my wife will be at home taking care of our newborn, there will be no daycare expenses incurred. Unless, somehow I can pay my wife (I will check into this!).

Now if my wife worked and put our newborn in daycare, then we could borrow more for those expenses incurred by daycare. The money that my wife would make (which would probably minimum wage) would then not have to go to paying for the daycare.

So the question becomes, how much money makes it worth it to put our newborn in daycare everyday? For us, and this is a personal decision, it would take way more money than my wife would ever hope to make. So until the child is maybe 2 (MIII for me) , and we can put him in a church preschool somewhere, my wife will stay at home.

 

[canjosh]

Ok, so this is the way that my financial aid office explained the child expenses: To be reimbursed for daycare expenses, obviously you have to use daycare and have receipts.

But there is a different consideration for dependent care expenses. These costs include diapers, clothes, food, uncovered medical costs, etc. At my school, they said that this could increase the annual budget approximately 8K-10K for 2 kids.

The cost of living allowance at my school is approx $2,000/month. Rent and car payment alone are approx $1,800/month. Time to tighten up the belt considerably. We will also be liquidating our 401k/403b etc after talking with a financial advisor.

 

[CATrtb]

I will have to check into this dependent care expense thing. I will also be liquidating my 401k.

 

[MDToBeInNC]

It's interesting that different schools seem to have different policies. Canjosh your school seems to be really trying to work with you by differentiating documented childcare costs and the more general dependent costs. A financial advisor at my school told me there's no such thing as "dependent costs" and that the only change in my COA that's permissable is 1/2 of documented childcare costs (since I'm married). sigh....

 

[Daddywarbucks]

My son is in med school and had a friend who joined the National Guard to help with additional income and it helped pay his tution. His commitment was to serve in state for 5 years to began during residency. Plus he has the advantage of being in the military residency program, only the best for the service men and ladies. It allowed him to stay in school an feed his family. Just a thought, by the way I have the greatest respect for med students and the burden you carry on your shoulders. Good Luck