Psych and student loan repayment

[doctahdoctah2019]

I'm only an M1, but can't shake the stress of my impending student loan debt. I'll be taking out about 360k in loans (before any interest), which is on top of ~35k in undergraduate debt. I'm pretty set on going into psych, and want to work in private practice after residency. I'm a nontrad who won't graduate residency until I'm turning 35, and I don't have any retirement savings. Am I screwed, or is it possible to pay this off in 5-10 years *and* save for retirement *and* not have to live like a resident until well into my 40s? I know a lot of job offers include loan repayment options and it's easy to moonlight during psych residency, and who knows what is going to happen with federal loan forgiveness with everything Covid, so I'm hoping some of those things may help.

---

Members don't see this ad.

 

[PikminOC]

I'm only an M1, but can't shake the stress of my impending student loan debt. I'll be taking out about 360k in loans (before any interest), which is on top of ~35k in undergraduate debt. I'm pretty set on going into psych, and want to work in private practice after residency. I'm a nontrad who won't graduate residency until I'm turning 35, and I don't have any retirement savings. Am I screwed, or is it possible to pay this off in 5-10 years *and* save for retirement *and* not have to live like a resident until well into my 40s? I know a lot of job offers include loan repayment options and it's easy to moonlight during psych residency, and who knows what is going to happen with federal loan forgiveness with everything Covid, so I'm hoping some of those things may help.

What's the other option?

 

[doctahdoctah2019]

What's the other option?

Not sure there is one lol. Just hoping to get some peace of mind.

 

[doctahdoctah2019]

What's the other option?

I guess possibly applying for NHSC scholarship could be one, but I've heard some scary things about it.

 

[nexus73]

I took out slightly less loans than you will have. Looking back I sometimes wish I would have joined the Air Force to have tuition paid instead. I still owe a lot of money, and will probably use PSLF.

 

[wolfvgang22]

Very few people are able to actually get PSLF due to the rigorous adherence to the program rules. I wouldn't count on it or loan forgiveness from the government. If there is any forgiveness forthcoming it won't be for "rich doctors." The wisest course is to either go private practice and be prepared to work a lot, or get a job that has a loan repayment assistance. Of course, you can still join the military, but that is also a sacrifice.

You will be OK. Whether you just get by or get wealthy depends on how much you want to or can grind. You can actually make an estimate given median psychiatrist income.

 

[WisNeuro]

It's doable if you still live somewhat frugally and grind a little bit. Physician spouse had ~350k in loans, paid off a little in residency, but really started paying back in mid 2017. Finished it off a month ago. Granted, I make a good salary and had 0 in loans, so that helps, But we also did it with having a baby in there somewhere. We also live in a moderate COL area.

 

[Mass Effect]

Depends entirely on your choices. Working in academics in Manhattan where you're likely making <200K and taking home <10K/month while spending 5-6K on rent alone? It'll be tough. Working in a private practice in TX or WI making 350K and spending only 2K a month on mortgage? You'll be fine. There's also tons in between.

I wouldn't give up on PSLF. The first two years were rough because it was a new program for people in 2007 and people didn't have the necessary paperwork/certifying done. We're only year 3 into forgiveness so we'll see how it goes.

 

[asdf123g]

make sure you're grandfathered into PSLF.
Assuming it doesn't change, upon graduation consolidate your loan to enter repayment immediately and simultaneously sign up for PAYE. Max out your Trad 401k and IRA to lower your AGI, which will minimize payments. -> profit

Read ben whites book (free online). Its better than WCI imo.

 

[J ROD]

living in debt is the new American Dream

 

[JKinSC]

living in debt is the new American Dream

Reminds of this commercial from a hundred years ago...

 

[Merovinge]

You will be fine in psychiatry, take a deep breath and focus on medical school. When you need a study break the free book by Ben White as above is definitely the first place to start. PSLF is very likely to be a possibility for you, but even if it is not, you can certainly pay the loans back and live a solid lifestyle.

If you were hoping to rail snow off of hookers on private islands, I would drop out now and have connections in IB, M&A, PE, VC, or corporate law. But a dramatically above average life where you can travel, have a nice house, car, afford everything your family/children need, and easily retire before 65, that's all attainable with that loan burden in psych.

 

[Psychresy]

Work 70 hours a week your first year out of residency and pay the loan off in a year. End of story.

 

[toros102]

Let’s say after taxes you’re making 200,000. That’s ~16,500 per month. If you enter a 10 year payment plan, that’s ~3750 per month you’d be paying. So, can you live off 12,750 per month? Probably much better off than you are now, and if you’re willing to keep living like a resident after residency (keep expenses under $3k/mo) then you can be out of debt very quickly. Or, you can enter a 30 year repayment plan and take out a mortgage on a mansion, get a luxury car...up to you!

 

[dl2dp2]

I'm only an M1, but can't shake the stress of my impending student loan debt. I'll be taking out about 360k in loans (before any interest), which is on top of ~35k in undergraduate debt. I'm pretty set on going into psych, and want to work in private practice after residency. I'm a nontrad who won't graduate residency until I'm turning 35, and I don't have any retirement savings. Am I screwed, or is it possible to pay this off in 5-10 years *and* save for retirement *and* not have to live like a resident until well into my 40s? I know a lot of job offers include loan repayment options and it's easy to moonlight during psych residency, and who knows what is going to happen with federal loan forgiveness with everything Covid, so I'm hoping some of those things may help.

1. if you are meticulous with paperwork, you will get PSLF if you work for a PSLF eligible entity. It will take time but it will happen.

2. If you work for a non-PSLF eligible entity, you should aim for salary 350k+ and live with an expense ~50k a year for about 5 years. This will knock out 100-150k of student loan per year. This is quite doable in psychiatry in this day and age, and will not require "working 70 hours a week". Keep in mind 50k consumption a year per capita is higher than the average living standard of an average American.

Please be also mindful of tax implications, when your salary > 350k and you live in a high tax state, with total marginal tax rate > 50%. It often is more tax-efficient to pay your student loan slightly slower but increase contribution to tax-deferred retirement plans.

3. Either way, this means you'll not be "living like a resident" in your 40s.

4. There are private refinancing options right now that has a very low interest rate (into the 3%). This will make your loan ineligible for PSLF, but you can increase consumption sooner.

5. Retirement savings should be independent of student loan saving. You need to start this now to enjoy compounding. I would recommend getting some kind of part time job during medical school to have a small stream of income to deposit to an IRA account.

Please read whitecoatinvestor.com These topics are standard physician financial literacy content.

 

[Stagg737]

I guess possibly applying for NHSC scholarship could be one, but I've heard some scary things about it.

As someone who got pretty far into the HPSP application process, I strongly recommend knowing what you're getting into and talking to actual physicians who have already done this or are currently doing this and not just recruiters or reps of the program who will make it sound like an amazing deal.

I also strongly agree with some others that geography can make a massive difference. If you're only willing to live in large urban areas on the coasts, you're going to have a really difficult time. If you're willing to move to more mid-sized cities, the midwest, or even rural you will be fine.

 

[clozareal]

Am I screwed, or is it possible to pay this off in 5-10 years *and* save for retirement *and* not have to live like a resident until well into my 40s?

You can definitely pay it off in 5-10 years and save for retirement. The anxiety is likely coming from not knowing the method or approach to do this, but know that it is definitely possible. One approach is to live like a resident during residency and a few years after, but that's not the only approach.

Get as much financial education as possible: read Ben White's book, read the white coat investor book, follow the WCI forum, listen to podcasts from WCI, Financial Residency, Money Meets Medicine, Passive Income MD, and absorb as much financial education as possible. You'll soon start to realize that the same 40-50 financial questions tend to come up and you'll develop an approach to tackle them.

You can also get a financial advisor who works specifically with physicians. Find one who is free during training. They can provide guidance on debt management specific to your situation.

If you really want to do psychiatry, I wouldn't let the debt management prevent you from doing it. Sounds like you've already recognized that debt and finances will contribute to your decision on where to do residency, if you will do fellowship, and what kind of career to choose afterwards. That's the smart way to do it and will prevent you from being in a financial hole into your mid or late career, which tends to happen with many physicians regardless of specialty.

 

[doctahdoctah2019]

As someone who got pretty far into the HPSP application process, I strongly recommend knowing what you're getting into and talking to actual physicians who have already done this or are currently doing this and not just recruiters or reps of the program who will make it sound like an amazing deal.

I also strongly agree with some others that geography can make a massive difference. If you're only willing to live in large urban areas on the coasts, you're going to have a really difficult time. If you're willing to move to more mid-sized cities, the midwest, or even rural you will be fine.

Thanks, that's good advice and I'm planning on asking for the list of previous NHSC recipients when I have my 1:1 meeting with my school's financial aid office next week that's required of everyone.

I go to school in New England (where I'm from), an am ultimately hoping to stay here so I realize that could make things harder for me. Not sure what I'm going to do about that yet.

 

[Stagg737]

make sure you're grandfathered into PSLF.
Assuming it doesn't change, upon graduation consolidate your loan to enter repayment immediately and simultaneously sign up for PAYE. Max out your Trad 401k and IRA to lower your AGI, which will minimize payments. -> profit

Read ben whites book (free online). Its better than WCI imo.

Which book are you referring to? I went to his website and the only ones I could find were on student loans for medical students and one about the match. Is there a different one that he has for general finance?

 

[clozareal]

Which book are you referring to? I went to his website and the only ones I could find were on student loans for medical students and one about the match. Is there a different one that he has for general finance?

Medical Student Loans: A Comprehensive Guide

He doesn't have one for general finance.

 

[asdf123g]

Which book are you referring to? I went to his website and the only ones I could find were on student loans for medical students and one about the match. Is there a different one that he has for general finance?

You can get it for free on his website if you provide your email for newsletters or something, unless that's changed in the past 6 months.