Should I base my decision solely on $ because of my existing debt?

[palmarislongus]

Hi and thanks for reading this! I've narrowed my school list down to 2 great options. Given where I live, scholarships, etc, option 1 will cost around $100k less than option 2. Option 2 is in an amazing environment and has loads of opportunities that will challenge me, option 1 feels all-around boring and comfortable (to be frank) but it is "ranked" slightly higher than option 2.

My issue is that I'm beginning medical school with over 200k of student debt from undergrad and grad work. I really want to go to option 2, but would it be an idiotic financial move? I want to specialize and work in academic medicine.

I'm particularly interested in hearing from those who have begun their careers with substantial debt (which I will have either way--just more of it with option 2). I'd love to hear some feedback from anyone who wants to offer it! Thanks

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[Mansamusa]

Yes. Minimize the debt unless the schools are $0 vs $100K, in which case choose either. Remember interest.

I talked to a former academic and current community hospital doctor and he said with $360K in debt, I should avoid academics.

I am actually meeting with an academic PD this afternoon and one of my questions will be about loan forgiveness opportunities in the academic world (some employers give $200K to put towards loan repayment in order to recruit- I want to know if that is only community hospitals). I'll let you know what I learn

 

[zedsdead]

C.R.E.A.M.

Go with option 1. 300k debt will become around 400k by the time you start paying it off. Get real, unless you win the lottery or you get a nice inheritance, this is not a choice.

 

[Mansamusa]

@piii come back after residency and let us know what you think. You could be a valuable resource. And actually, I would say it is the attending/resident way, not a pre-allo sentiment. If it was pre-allo sentiment, med schools would not be filling their seats

OP, the PD said she would be shocked if any academic center offered a bonus package and that those kinds of debt repayment options would only come later in the academic world if you manage to build a name for yourself.

 

[zedsdead]

Yes! That's the pre-allo way! Money trumps everything and you shouldn't every consider anything like prestige and reputation, curriculum, culture, fit, happiness, location. All those other things don't matter and anyone that tells you otherwise is an idiot!


/s

In my opinion, once you get to the >300k debt range (life-altering), those things are less important. Especially considering that a "boring and comfortable" school isn't THAT bad in the grand scheme of things.

 

[wanderyonder]

Take the extra 100k.

The only exception would be if you're trying to go into a highly competitive specialty and you believe the resources at the "higher ranked" school would better lead you to accomplish what you want to do in life. Kind of hard to say without knowing the 2 schools though

 

[Lawpy]

Yes! That's the pre-allo way! Money trumps everything and you shouldn't every consider anything like prestige and reputation, curriculum, culture, fit, happiness, location. All those other things don't matter and anyone that tells you otherwise is an idiot!

@piii come back after residency and let us know what you think. You could be a valuable resource. And actually, I would say it is the attending/resident way, not a pre-allo sentiment. If it was pre-allo sentiment, med schools would not be filling their seats

Yeah the whole concept of minimizing debt is emphasized by residents and attendings. I think the confusion arose from that Top 20 IM thread in the residency forums that discusses the difficulty in matching into a top program if you're not from a top school. However, viewing money and resources/reputation as opposing forces is the worst way to make school decisions.

It looks like OP likes Option 2 better despite being stuck deep in debt. Although I don't know how Option 1 is ranked slightly higher than Option 2 if Option 2 has a lot of opportunities available.

 

[occams_razor]

@piii come back after residency and let us know what you think. You could be a valuable resource. And actually, I would say it is the attending/resident way, not a pre-allo sentiment. If it was pre-allo sentiment, med schools would not be filling their seats

OP, the PD said she would be shocked if any academic center offered a bonus package and that those kinds of debt repayment options would only come later in the academic world if you manage to build a name for yourself.

There are also a lot of doctors who say that prestige does matter and should be considered if you want to pursue academic medicine or a competitive field. One of my mentors is a PD and has said this to me many times. By no means do I think that it should be the deciding factor at all costs, but I do think in certain situations it is wiser to go with a more prestigious school even if it means taking on extra debt (within reason).

 

[occams_razor]

In my opinion, once you get to the >300k debt range (life-altering), those things are less important. Especially considering that a "boring and comfortable" school isn't THAT bad in the grand scheme of things.

What debt range would you consider it acceptable to weigh those other factors more heavily?

I read that the average med student graduates with 180k in debt (this is data from 2014, so it's probably slightly higher now). Since OP is starting med school with 200k already from undergrad and grad school, I agree with what most people here are saying about choosing the less expensive school. If OP even takes on the average amount of med school debt, they will be looking at 380k when they graduate, which is a lot.

 

[zedsdead]

What debt range would you consider it acceptable to weigh those other factors more heavily?

I read that the average med student graduates with 180k in debt (this is data from 2014, so it's probably slightly higher now). Since the OP is starting med school with 200k already from undergrad and grad school, I agree with what most people here are saying about choosing the less expensive school. If OP even takes out what most med students take out, they will be looking at 380k which is a lot.

It depends on the individual financial situation in question, but here's a naive pre-allo guesstimate on how the landscape looks :

2015 average specialist salary was $284,000, according to medscape. You would pay $88,667 in federal tax and assuming a random average-cost location of Arkansas you would pay $18,018 in state tax. So your take home is about $177k per year, let's say $15k per month. $300k debt after five years of 6% accrual during residency/fellowship will be almost exactly $400k (assuming you are not paying off during residency, which is common).

For a 15-year repayment (where you are finally debt free at an age of ~46), the monthly payment would be $3,375 per month. 22% of your monthly income. Considering the ceiling for a "safe" debt-to-income ratio on a mortgage is 28%, you are now left with 50% of your monthly take home for living expenses. Adding in family insurance payments, auto loans, and other major living expenses, I don't see any retirement savings or financial security for quite a while. I don't know about you, but after all the opportunity cost and personal sacrifice a medical career entails, this isn't worth it.

(Note that this is close to a worst-case-scenario and doesn't take into account federal repayment solutions. My recommendation is to crunch your own numbers even further and come to an educated decision.)

EDIT: To answer your question, a good debt-to-income ratio is 13%. With these same figures, that corresponds to a med school debt of $172,000.

 

[Mansamusa]

There are also a lot of doctors who say that prestige does matter and should be considered if you want to pursue academic medicine or a competitive field. One of my mentors is a PD and has said this to me many times. By no means do I think that it should be the deciding factor at all costs, but I do think in certain situations it is wiser to go with a more prestigious school even if it means taking on extra debt (within reason).

Op said the cheaper one is technically more prestigious