Debt pissing contest

[TeddyMeddy]

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[xffan624]

Oh, HPSP and military definitely doesn't count. I guess I'm more talking about the kids whose parents pay their entire tuition and fees out-of-pocket.

The AAMC counts them in them in the 16%. If you deduct them, 10% of medical students paying their tuition in full either through parents or scholarship is not too crazy.

 

[Cytarabine]

That sounds pretty high, but it depends on where you live. It's around that much for a semester via my schools plan. My wife gets it through work: she pays significantly less, for better coverage.

My quote was around 220/mo for bronze IIRC

What's the wisdom on keeping student debt for a long time to take advantage of the interest tax deduction (max of 2500$?) Say you're on the edge of the 183K 28% - 33% tax bracket as an attending and want to put yourself down into that lower tax bracket for a long time. Each year the 5% savings on your taxes would be 9,000 dollars. So you just keep paying 2500 dollars in interest and getting 9000 dollars in tax refunds. Over a period of time, that's a lot. Am I missing anything?

That we use a progressive tax? Or am I missing something

 

[el_duderino]

What's the wisdom on keeping student debt for a long time to take advantage of the interest tax deduction (max of 2500$?) Say you're on the edge of the 183K 28% - 33% tax bracket as an attending and want to put yourself down into that lower tax bracket for a long time. Each year the 5% savings on your taxes would be 9,000 dollars. So you just keep paying 2500 dollars in interest and getting 9000 dollars in tax refunds. Over a period of time, that's a lot. Am I missing anything?

That's not how tax brackets work. The 33% tax only applies to the amount of income over $183,251. It's not like you pay less tax if you make $184,000 than if you make $182,000.

 

[TeddyMeddy]

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[Meh.meh]

Presumably the employer is covering a large percentage of this premium.

Yup. Sorry for the stream of consciousness reply, that part didn't really add much to the conversation.

What I intended to imply was that people with spouses who work should consider enrolling on that plan: we're shifting that way soon. I'm not sure why I thought that description was adequate explanaton

 

[pathologyDO]

Apparently the cost of healthcare is not budgeted into our loans for 3rd/4th years when we are all coming of age (26) to require our own healthcare coverage aside from our parents. Yet, we are only allowed a "budget adjustment" of maximum $125/mo for healthcare? How do I come up with the additional $375? that is a huge monthly budget cut from our already frugal living situation.

 

[TeddyMeddy]

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[pathologyDO]

Its 26 not 24.

Yeah, that's what I meant. Can you tell I had a Skin, Blood, and Lymph exam today

 

[Meh.meh]

Apparently the cost of healthcare is not budgeted into our loans for 3rd/4th years when we are all coming of age (24) to require our own healthcare coverage aside from our parents. Yet, we are only allowed a "budget adjustment" of maximum $125/mo for healthcare? How do I come up with the additional $375? that is a huge monthly budget cut from our already frugal living situation.

Age of coverage lasts till 26
http://www.dol.gov/ebsa/faqs/faq-dependentcoverage.html

COA doesn't require you to match exact amounts so far as I know (someone please correct me if I'm wrong), it requires that overall you are under the max. If you're close to the max, I'd talk to a financial aid person at your school.

Also, if that's what they're offering, check to see if they have a policy available for you to use.

Example: if your rent is $400/mo and COA allows up to $700, there's $3600 dollars of room still in COA. You could put part of that towards health insurance.

 

[pathologyDO]

Yeah we live off the max $1760/mo or so right now that we are given in the budget. There is really no wiggle room to take away a few Benjamins

 

[Meh.meh]

Yeah we live off the max $1760/mo or so right now that we are given in the budget. There is really no wiggle room to take away a few Benjamins

Sorry to hear that.
Given that situation, I'd definitely speak with financial aid.

Does your wife work? Or do you have kids?

$21,120/y is a fair chunk of change, although I guess that depends on where you live. Did the health insurance you applied for include the subsidies?

If not, is there a way to change living arrangements to something cheaper?

 

[Cytarabine]

Apparently the cost of healthcare is not budgeted into our loans for 3rd/4th years when we are all coming of age (26) to require our own healthcare coverage aside from our parents. Yet, we are only allowed a "budget adjustment" of maximum $125/mo for healthcare? How do I come up with the additional $375? that is a huge monthly budget cut from our already frugal living situation.

I was under the impression COA was calculated with the assumption you would be paying for insurance 1st and 2nd year (thus, no bump after)

 

[pathologyDO]

Sorry to hear that.
Given that situation, I'd definitely speak with financial aid.

Does your wife work? Or do you have kids?

$21,120/y is a fair chunk of change, although I guess that depends on where you live. Did the health insurance you applied for include the subsidies?

If not, is there a way to change living arrangements to something cheaper?

I'm not asking for advice on how to cut costs, I know how to do that. I do appreciate your time and concerns though. When I said how am I supposed to pay for the other $375 I was meaning to be rhetorical but my posts aren't coming across as they should today, sorry. It could be possible to move and dish out extra for security deposits and moving fees, but I would much rather prefer our arrangements to stay the way they are.

I was under the impression COA was calculated with the assumption you would be paying for insurance 1st and 2nd year (thus, no bump after)

We were all (well, most) still eligible for medical insurance coverage through our parents when we started so it was never an issue that was discussed, but rather mentioned in passing by during orientation week that our "budget" for loans didn't include health insurance. Guess I thought maybe insurance wouldn't be so much more than that $125/mo they give us

 

[Cytarabine]

I'm not asking for advice on how to cut costs, I know how to do that. I do appreciate your time and concerns though. It could be possible to move and dish out extra for security deposits and moving fees, but I would much rather prefer our arrangements to stay the way they are.



We were all (well, most) still eligible for medical insurance coverage through our parents when we started so it was never an issue that was discussed, but rather mentioned in passing by during orientation week that our "budget" for loans didn't include health insurance. Guess I thought maybe insurance wouldn't be so much more than that $125/mo they give us

How's that logical though? We file independently from parent finances when applying for student loans - I'd be surprised if it was presumed that students would have insurance coverage from parents since that assumes students have insured parents, students are traditional state out of college only, etc.

 

[pathologyDO]

How's that logical though? We file independently from parent finances when applying for student loans - I'd be surprised if it was presumed that students would have insurance coverage from parents since that assumes students have insured parents, students are traditional state out of college only, etc.

Traditional students are still at the age where they can use their parents insurance. It is therefor logical to assume if given the chance by their parents, many will use their parents health insurance rather than spend loan money to buy their own. I haven't polled our class or anything, but the few people I have talked to on campus about healthcare during MS1 told me they were still insured by their parent plan

 

[pathologyDO]

Anyways, obviously every school has different budgets and policies about healthcare insurance so I guess I will talk to the financial aid dept. Our school doesn't have any medical insurance to purchase so it is an independent endeavor. Will have to research and find something that is hopefully cheaper than $500.

 

[Cytarabine]

Traditional students are still at the age where they can use their parents insurance. It is therefor logical to assume if given the chance by their parents, many will use their parents health insurance rather than spend loan money to buy their own. I haven't polled our class or anything, but the few people I have talked to on campus about healthcare during MS1 told me they were still insured by their parent plan

I'm not sure how that replies to what I was saying

 

[pathologyDO]

I'm not sure how that replies to what I was saying

Sorry, I guess I don't understand what you're asking.

 

[RJGOP]

I'm not sure how that replies to what I was saying

I'm not sure how it doesn't.

 

[Meh.meh]

I'm not asking for advice on how to cut costs, I know how to do that. I do appreciate your time and concerns though. When I said how am I supposed to pay for the other $375 I was meaning to be rhetorical but my posts aren't coming across as they should today, sorry. It could be possible to move and dish out extra for security deposits and moving fees, but I would much rather prefer our arrangements to stay the way they are.

But don't you know you have so many problems and need fixing (kidding).

I think you were fine. I'm kind of bossy, enjoy micromanaging, and don't always read social cues well (in written form).
^what my personal statement should have been, without the parentheses.

 

[RJGOP]

Oh, HPSP and military definitely doesn't count. I guess I'm more talking about the kids whose parents pay their entire tuition and fees out-of-pocket.

It doesn't? How come? I didn't know that.

 

[Cytarabine]

I'm not sure how it doesn't.

How would it be fair to allocate loan money on the assumption that a student will be covered by parental insurance when the school has no idea what the parent's insurance status is?

 

[Meh.meh]

I'm not sure how that replies to what I was saying

It might be a problem with me reading too quickly, but it seems to me you asked "how is that logical" and he replied with a justification. It might not be a great answer (which he acknowledges), but it answers your question in my reading.

 

[Cytarabine]

It might be a problem with me reading too quickly, but it seems to me you asked "how is that logical" and he replied with a justification. It might not be a great answer (which he acknowledges), but it answers your question in my reading.

If they calculate COA based on the assumption that students are covered by parental insurance, where does it leave those students who aren't? Where do they come up with 2-3k a year? Given that, why would a school calculate COA with that assumption made?

 

[RJGOP]

How would it be fair to allocate loan money on the assumption that a student will be covered by parental insurance when the school has no idea what the parent's insurance status is?

They will know whether or not a student is eligible for loan money. It doesn't really matter whether or not they are on their parents plan. It is safe to assume that they have the same insurance as their parents, however, assuming they're a traditional student.

 

[pathologyDO]

If they calculate COA based on the assumption that students are covered by parental insurance, where does it leave those students who aren't? Where do they come up with 2-3k a year? Given that, why would a school calculate COA with that assumption made?

Good question and probably hard to answer. My school has an exemption policy that I posted a pic of in this thread stating if you need extra for insurance, they will allow a $125 budget increase to be taken to help. This obviously means that they know that the budget will be maxed in some people and that if you do need insurance they can increase your budget but only by $125. This obviously doesn't cover the whole thing, and is exactly why I am concerned about it for my wife and I.

 

[Cytarabine]

They will know whether or not a student is eligible for loan money. It doesn't really matter whether or not they are on their parents plan. It is safe to assume that they have the same insurance as their parents, however, assuming they're a traditional student

The student's parents could very well be uninsured themselves...

 

[RJGOP]

The student's parents could very well be uninsured themselves...

In that case it's irellevant. They would certainly be eligible for loans.

 

[Cytarabine]

In that case it's irellevant. They would certainly be eligible for loans.

We're not talking about eligibility for loans. We're talking about calculation of COA to determine the amount to disburse. My school did not ask me for my parent's insurance status and whether I would be covered under their plan prior to calculating my COA

 

[pathologyDO]

We're not talking about eligibility for loans. We're talking about calculation of COA to determine the amount to disburse. My school did not ask me for my parent's insurance status and whether I would be covered under their plan prior to calculating my COA

Did you receive a detailed budget from the school with a breakdown of how your loan money should be spent?

 

[RJGOP]

We're not talking about eligibility for loans. We're talking about calculation of COA to determine the amount to disburse. My school did not ask me for my parent's insurance status and whether I would be covered under their plan prior to calculating my COA

That can be a problem. What people would do in that case is use their loans to pay for insurance. Even if they didn't ask you (not you neccesarily, just anyone in general) for your insurance, or lack thereof, it is is still possible to obtain insurance.
Unless they gave you a budget.

 

[Meh.meh]

If they calculate COA based on the assumption that students are covered by parental insurance, where does it leave those students who aren't? Where do they come up with 2-3k a year? Given that, why would a school calculate COA with that assumption made?

I'm not the person originally questioned, so I can't answer those for him. It appears he answered you again above. My point was just that you asked for a justification, and he gave you one, so it "answered your question."

I agree that the questions posted above are valid criticisms of his answer.

 

[Cytarabine]

Did you receive a detailed budget from the school with a breakdown of how your loan money should be spent?

For the loan money that goes right back to the school (tuition, tech fees, etc.) yes, but not for our "spending money"

 

[pathologyDO]

For the loan money that goes right back to the school (tuition, tech fees, etc.) yes, but not for our "spending money"

Ohh I see. Ok there is the difference b/w our schools. Our school gave us a detailed budget for the loan money for our personal spending (housing, food, etc, but didn't include insurance in it). If they didn't include a detailed budget for you like that then they might be assuming you will use the loan money for insurance. I can see how that wouldn't seem fair. You would have to pay the extra for insurance while the other students get that money for living expenses only.

 

[Cytarabine]

How's that logical though? We file independently from parent finances when applying for student loans - I'd be surprised if it was presumed that students would have insurance coverage from parents since that assumes students have insured parents, students are traditional state out of college only, etc.

Traditional students are still at the age where they can use their parents insurance. It is therefor logical to assume if given the chance by their parents, many will use their parents health insurance rather than spend loan money to buy their own. I haven't polled our class or anything, but the few people I have talked to on campus about healthcare during MS1 told me they were still insured by their parent plan

I'm not the person originally questioned, so I can't answer those for him. It appears he answered you again above. My point was just that you asked for a justification, and he gave you one, so it "answered your question."

I agree that the questions posted above are valid criticisms of his answer.

In my first post I said I would be surprised if the assumption was made that we would be covered by parent insurance, as that assumption requires that the student is traditional (or at least younger than the age cut off) and that the student's parents are insured. The reply to my post notes that it is reasonable to assume that a traditional student whose parents have insurance would be covered by that parental insurance. That reply does not address the issues I brought up.

This isn't @ you pathologyDO, just trying to resolve this side discussion

 

[Cytarabine]

Ohh I see. Ok there is the difference b/w our schools. Our school gave us a detailed budget for the loan money for our personal spending (housing, food, etc, but didn't include insurance in it). If they didn't include a detailed budget for you like that then they might be assuming you will use the loan money for insurance. I can see how that wouldn't seem fair. You would have to pay the extra for insurance while the other students get that money for living expenses only.

In retrospect, there may have been a rough breakdown of that stuff during 1st year (which was 3 years ago for me now, so the memory there is a little fuzzy). What I recollect is not a detailed budget, but similar to what you're saying (housing, food, misc). Not a true budget, e.g. housing, food, transportation including car insurance, health insurance, etc.

 

[Meh.meh]

In my first post I said I would be surprised if the assumption was made that we would be covered by parent insurance, as that assumption requires that the student is traditional (or at least younger than the age cut off) and that the student's parents are insured. The reply to my post notes that it is reasonable to assume that a traditional student whose parents have insurance would be covered by that parental insurance. That reply does not address the issues I brought up.

This isn't @ you pathologyDO, just trying to resolve this side discussion

Relevant:


"I'm not sure how that replies to what I was saying"

I read this, and remembered it as "I'm not sure how that answers my question." That was the error.
The only question was "how is that logical?" Everything else was a statement. I thought his reply answered the initial question, and the rest was commentary to further explain the question. Your phrasing indicates he should have answered the other points. You are correct

 

[deleted390966]

An MD generally earns about $4 million dollars of discretionary income in the first twenty years post graduation (this includes residency). PAYE takes 10% of that and then the loan is forgiven. It will be extremely rare for any medical student to pay off more than $400K on any student loan, ever.

Under PAYE, is the remaining amount (after 20 years) taxable? If yes, it's gonna be a huge amount!

 

[deleted390966]

You know, I've seen this sentiment a lot on SDN throughout the years, and I think it may explain why we are feeling the financial crunch. Ask any SDN member, up to his or her eyeballs in student debt, what they plan to do when they are making bank, and one of the first things they say is Pay for my children's education instead of letting them fall into student debt. In another words, not only are we paying educational costs for ourselves, but we have the burden of multiple educational costs for the next generation too.

Getting an education should not hurt anyone; it behooves a country to have higher educated citizens. Young people will leave university hideously in debt and enter the world of work with no chance of marrying, buying their own homes and starting their families until they are about 40!
What infuriates me is that the politicians who have brought this misery down on young people did not have to start their own working lives in debt and were not faced with a property market which was impossible for them to enter.
The higher education system needs a revolution.

 

[deleted390966]

Well rich can mean either upper class, or, it can be somewhat of a subjective idea.

I do not think that making 250k a year, which turns out to be something around 125k a year after taxes, can make you rich. You work 40 years you can save back 5 mil total, and with investing and interest rates that are good enough maybe add another 1 or 2 mil. Then look at Joe Schmoe making maybe 30K per year post taxes, which after 40 years is 1.2 mil. To me comparing 1.2 to 5 mil doesn't at all make a doctors salary rich comparatively.

If you own a successful PP and make $1mil a year or something.... Maybe we can talk about you hitting it rich. But that is very rare.

Wow, if 125k POST-TAX is not rich then what is? I have the impression that you hope to strike gold with Medicine or something If I made that amount post-tax, I would be so happy!

I don't know too much about tax rate, but that 50% tax rate is high on a 250k salary unless the state that person is in have state tax, county tax, municipality tax etc...

No, you won't pay that much on tax. http://www.dinkytown.net/java/TaxEZ1040.html

 

[Pacna]

$343k here. I like to joke that I have an invisible house. The old lady doesn't laugh at it anymore for some reason.

 

[Meh.meh]

Wow, if 125k POST-TAX is not rich then what is? I have the impression that you hope to strike gold with Medicine or something If I made that amount post-tax, I would be so happy!


No, you won't pay that much on tax. http://www.dinkytown.net/java/TaxEZ1040.html

I'm guessing you're pre-medical based on this. "Wow, if 125k POST-TAX is not rich then what is? I have the impression that you hope to strike gold with Medicine or something "

tone it down a notch. The judgement is annoying. Here are some thoughts to chew on.

Those numbers are missing state tax, which in some cases can be 20k +. They're also missing sales taxes and a host of smaller taxes. And with your remaining money, you also need to pay off loans, which will be a fair chunk of change for the first 10 years for most (think 20k+).

After all that, you still have a fair chunk of change left. However, if you're doing things right, you should be insuring your life, disability, home, car, malpractice and an umbrella policy. Some of those may be covered through work, but that often comes at the expense of salary. The costs of malpractice insurance vary by specialty, but can easily reach into the tens of thousands of dollars.

That's not worrying about paying for kids,a mortgage, etc. Those costs exist for everyone, but the point is that they'll drain your income substantially. You also need to save for retirement, probably at least 25-50k a year if you want to retire at 65 with a similar lifestyle. Then, if desired, you need to save for kids college funds.

The point is, yes you will live comfortably (if you made it through college, medical school, and residency). You will not be scrooge mcduck. You will have a choice: live modestly and live well in retirement, or live extravagantly and work forever. That choice is on a sliding scale, but it's still a reality.

 

[pathologyDO]

Wow, if 125k POST-TAX is not rich then what is? I have the impression that you hope to strike gold with Medicine or something If I made that amount post-tax, I would be so happy!


No, you won't pay that much on tax. http://www.dinkytown.net/java/TaxEZ1040.html

I never said I wanted that much, did I? I simply stated that it wasn't rich. Cmon guys, why so harsh on my statements?

 

[pathologyDO]

I'm guessing you're pre-medical based on this. "Wow, if 125k POST-TAX is not rich then what is? I have the impression that you hope to strike gold with Medicine or something "

tone it down a notch. The judgement is annoying. Here are some thoughts to chew on.

Those numbers are missing state tax, which in some cases can be 20k +. They're also missing sales taxes and a host of smaller taxes. And with your remaining money, you also need to pay off loans, which will be a fair chunk of change for the first 10 years for most (think 20k+).

After all that, you still have a fair chunk of change left. However, if you're doing things right, you should be insuring your life, disability, home, car, malpractice and an umbrella policy. Some of those may be covered through work, but that often comes at the expense of salary. The costs of malpractice insurance vary by specialty, but can easily reach into the tens of thousands of dollars.

That's not worrying about paying for kids,a mortgage, etc. Those costs exist for everyone, but the point is that they'll drain your income substantially. You also need to save for retirement, probably at least 25-50k a year if you want to retire at 65 with a similar lifestyle. Then, if desired, you need to save for kids college funds.

The point is, yes you will live comfortably (if you made it through college, medical school, and residency). You will not be scrooge mcduck. You will have a choice: live modestly and live well in retirement, or live extravagantly and work forever. That choice is on a sliding scale, but it's still a reality.

This is very well explained, thank you for helping my sleep deprived comments today. My focus last night should have been on these factors tbh, but I literally was tired to the point of feeling drunk.

 

[Mr DebtAnatomy]

I love discussions like this. Thanks to everyone for participating. As a medical student looking at graduating with a little over 200K in debt, I know the only thing that I can reliably count on is my own ability to budget like a madman and learn how to be happy on less. Now is the best time to learn healthy financial habits, and destroy the expectation of, "I will be happy once I take home $$$". Learning to be happy while living on a tiny budget will be much more advantageous than simply budgeting because your circumstances require it. Unfortunately I don't think we can expect the same lifestyles as doctors before us. I wish it was different, but those seem to be the cards on the table. Prepare for the worst and hope for the best.

 

[mdr8]

It makes me want to faint even writing this, but I will most likely be close to the 600k mark. How? Attending pharmacy school first for an additional 200k (tuition and living expenses combined in loans)..... Luckily my parents paid for 3 years of my undergrad before pharmacy school, so I only have one year of undergrad to pay for at ~16k. I have been accepted to one medical school, 52k/year tuition. If that is the only place I am accepted and I attend....... yup, I will be close to 600k I believe. At times it makes me consider just staying in pharmacy but MAN I have always wanted to be a doctor and pharmacy does not make me happy at all. I wish I could just get a mulligan on my pharmacy tuition.

 

[Meh.meh]

It makes me want to faint even writing this, but I will most likely be close to the 600k mark. How? Attending pharmacy school first for an additional 200k (tuition and living expenses combined in loans)..... Luckily my parents paid for 3 years of my undergrad before pharmacy school, so I only have one year of undergrad to pay for at ~16k. I have been accepted to one medical school, 52k/year tuition. If that is the only place I am accepted and I attend....... yup, I will be close to 600k I believe. At times it makes me consider just staying in pharmacy but MAN I have always wanted to be a doctor and pharmacy does not make me happy at all. I wish I could just get a mulligan on my pharmacy tuition.

I am really sorry to hear that, puts my 150k in perspective
The problem I would see is that every year you work as a pharmacist is also a year you can't collect attending salary...that's a rough choice. With interest, I guess it might make sense, but I don't envy you that choice.

At least pre-clinical medical school will be easier? Not a great consolation prize, sorry again man

 

[TeddyMeddy]

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[Meh.meh]

I guess the upside is, i dunno, being part of an artificially scarce profession that has life-giving powers to do complex procedures or prescription powers that are pretty much inescapable costs for pretty much anyone? Probably the best kind of educational debt to have if you have it.

There's a good balance to be found between cynicism and idealism. I don't think this is it