Doctor debt is crazy!

[Jluke]

https://www.bogleheads.org/forum/viewtopic.php?f=1&t=264813

[Captain Save]

Great. Take home 350K. Live very nicely on 200K. Put 150K/year toward your loans and in 5 years you're debt-free. Or keep living on 110K like you are now and put 240K/year toward the loans and you're debt-free in 3 years.

Again, these numbers are big but easily dealt with. This is far less of a problem than the folks coming out of college owing 100K or more and earning 30K.

Exactly.. it's all relative .. .the numberr are big but the reason is because it's worth it .. At least they have an idea what they will make.

What's worse is those students taking huge debt for a $50k job. It boggles my mind why are we still paying for a degree that doesn't pay the bills.


As far as doctors though, it would only suck if they fail to earn their degree/ certification .. or if they no longer can perform their duties.. .It's the reason why Dt's get targeted for disability insurance. That is the one thing that can derail that plan.

[~bs]

https://www.bogleheads.org/forum/vie...p?f=1&t=264813

Thank you! I couldnt find it.

[disneysteve]

It's the reason why Dt's get targeted for disability insurance. That is the one thing that can derail that plan.

Yep. That's why I pay a small fortune for my disability coverage. I'm very lucky in that I got my policy back in the early 90s. Since then, they have made the policies more and more restrictive and harder to collect on. Mine is an old school policy that still covers stuff that newer policies don't. I hope I'll never need to use it but it's there just in case.

The good thing is when I do retire, I can drop that coverage which will drop our monthly expenses by a few hundred dollars.

[Gailete]

That kind of money for college/medical boggles the mind. Steve, I know that you can't be exact, but what in the world would all of that money have been spent on? I realize it is a guesstimate. I know years ago, my doctor (GP) and her husband and daughter were over for dinner. As they were leaving, she and I were talking about finances and she perked her ears up at what we were doing. I heard her try and tell the husband who apparently kept the books that perhaps they should try what we were doing. Stupid I know, but I had always assumed that doctors made sufficient money to pay their bills. Of course, they were living in a huge house which in our area probably ran $400K plus or minus. Certainly not the little 1000 sq. ft $60K house we were in. But numbers like $700K are so foreign to me, I can't comprehend them.

[disneysteve]

Steve, I know that you can't be exact, but what in the world would all of that money have been spent on?

I graduated med school owing a little over 100K. That was in 1990 so probably equivalent to 300K today. Where did the money go? About 14K went for undergrad. The rest went for med school tuition, expenses, and living costs. Keep in mind that it's nearly impossible to work during med school. You just don't have the time or energy. You need to pay for school, books, supplies, rent, food, gas, etc. You take out loans to pay for everything in your life because you have zero income. I was very fortunate in that my parents were able to help some which is why I "only" owed 100K. Even back then, a lot of my peers borrowed a lot more than that.

The other thing is how the loans work. Med school loans aren't subsidized. Interest accrues from day one and gets added to the principal (capitalization) once repayment begins. So the 50K loan you took out 7 years ago when you started med school might be a 80K loan when you start repaying it after residency.

[Gailete]

Thank you. I knew that the cost of going to college and med school would be pricey, but I was curious, and I suppose it greatly depends on a person's standard of living how much they fork out for living expenses. I can't imagine working during med school. Even in nursing school, I worked part-time but that was as a library aide at school. But then I did that in college and from 8th grade to HS graduation. Not sure why I didn't go to school to become a librarian.

Does it really make a difference where someone goes for med school? Say they are all basically equal so they can go to one that is in a low cost of living area. Or do those Harvard diplomas really make a big difference?

[disneysteve]

Does it really make a difference where someone goes for med school? Say they are all basically equal so they can go to one that is in a low cost of living area. Or do those Harvard diplomas really make a big difference?

Well obviously not all med schools are equal just as not all colleges are equal. Does it matter? To some extent. It also depends on what your aspirations are. If you want a top-notch residency, you're probably much more likely to get it if you're coming out of a top-notch school.

I went to med school in Philadelphia, which is where I grew up. I had also been accepted to a school in Kansas City, MO. Had I gone there instead, I suspect my cost of living would have been lower and I wouldn't have needed to borrow quite as much. So sure, where you go can influence the overall cost.

[james.hendrickson]

Interesting thread guys. What I do wonder is...does your debt payoff strategy change if you're working with a larger amount of debt vs. a smaller amount of debt. So, lets say you have $200,000 in student loan debt. Would you take a different approach to paying it off than you would $10,000 worth of credit card debt?

[TexasHusker]

The earning power of a physician is about as certain as any profession there is. Many physicians will sign on with corporate practices/hospitals that will repay a chunk of their loans in return for a lengthy contract. Because their credit risk is so minimal, MDs (and DOs depending on the market) can get credit deals from local banks that others of us can only dream of.

[james.hendrickson]

The earning power of a physician is about as certain as any profession there is. Many physicians will sign on with corporate practices/hospitals that will repay a chunk of their loans in return for a lengthy contract. Because their credit risk is so minimal, MDs (and DOs depending on the market) can get credit deals from local banks that others of us can only dream of.

Ummm...so basically you're saying that because physicians have high incomes banks consider them less risky and therefore lend more at more favorable interest rates?

[TexasHusker]

Where I live, the medical school and residency programs matter a great deal. A local surgical group here will not accept a surgeon except from a handful of residency programs. In Texas, a surgeon from UT Southwestern or Baylor is going to command a much better gig than someone from say UT Galveston.

Also, physician salaries vary substantially based upon the specialty. Where I live it looks something like this:

PCP - $200-250K guaranteed
General Surgery - $400-500K gtd
Neurosurgery - $700K gtd and up
Ortho - $1 mil and up
ENT - $700K and up
Psych - 200-250K
Hospitalist- $250K and up

[TexasHusker]

Ummm...so basically you're saying that because physicians have high incomes banks consider them less risky and therefore lend more at more favorable interest rates?

Absolutely, and their incomes are stable and grow substantially. I used to do physician recruitment, and local banks LOVE doctors. A couple here will lend them pretty much on the spot - cars, houses, boats, without going through all the hoops and qualifying that the rest of us do. Zero down, you name it. You show the bank your contract and you're golden.

[LivingAlmostLarge]

Yep pretty much every doctor I've seen has special Dr loans for getting homes with mortgages and still carrying debt. It's a guaranteed income and it usually goes up. But I didn't know about residencies. But I know many people who are scraping to get in will go wherever they get in and they often don't get too many choices.

[TexasHusker]

Yep pretty much every doctor I've seen has special Dr loans for getting homes with mortgages and still carrying debt. It's a guaranteed income and it usually goes up. But I didn't know about residencies. But I know many people who are scraping to get in will go wherever they get in and they often don't get too many choices.

In the residency programs, you earn a salary though it is very meager. Like cars, neighborhoods, and clothing lines, there are different tiers of medical schools. In Texas, tier one would be UT Southwestern , UT Houston, Baylor. A&M might be considered tier one by some. Then you have tier two - UT Galveston, UTSA. Then you have tier three - Texas Tech and North Texas.