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Old 08-09-2009, 07:39 PM
 
298 posts, read 551,217 times
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Default How many years does it take to break even with Med school debt?

If you're a doctor, how many years, on average, of working does it take to pay off all your loans?
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Old 08-09-2009, 08:43 PM
 
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Shouldn't you be asking this more in another forum, like one more relevant to medical school? It all depends on how much loans the student takes out... some have parents that save every penny to put them through medical school whereas some take loans and get other forms of financial aid and even some have wealthy parents who provide a free ride. I know people who owe as much as 300k and I know people who owe $0... the typical student probably has around $120k (but I know a lot of people who owe lots more)... Interest rates right now are at 6.8% FIXED interest rates... most people will consolidate their loans over a period of 30 years... so to answer your question, it could be zero years, 10 years, or 30 years...
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Old 08-09-2009, 08:55 PM
 
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what he said ^

also depends on how long your residency is, and how much you will earn.
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Old 08-09-2009, 08:59 PM
 
Location: Pasadena
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From what I understand...most medical students have about 200-250k in debt (4 years med school @ 30-40k each, 4 years living expenses @ 20-25k each, plus sometimes living expenses indebted through residency). I don't know how you want to calculate opportunity cost, but if you assume someone will earn 45k after undergrad with 6% salary increases every year (and you subtract out 40k a year for residency pay in years 5-8) that amounts to $285k in opportunity cost - I think that's a fairly conservative number for salary increases for someone talented enough to get an MD (assumes around 70k in salary 8 years out of college...I know I personally reached that point 4 years out of college and I know many many people who make way more than 70k in their 8th year out of school). So you have basically half a million dollars in opportunity cost + student debt. How long that takes back depends on things like discount rates, interest rates, how much money you make as a doctor...some doctors start at 90k others start at 200k. Some increase really fast to 400k and others stay in the middle 100s.

If you choose a specialty that doesn't really pay more than the 150s then you'll basically never make back that money. If you end up making 200k to start and go into the 400k range after a few years then you'll make it back within 5-7 years of graduation. Doctors pay has a huge variance. Also a lot of doctors burn out of high pay specialties because the lifestyle absolutely sucks (unless you're a Derm or some "non-emergency" type of physician).

Some things to consider: MDs will pay 40-50% tax rate, they often won't get to deduct their 200k student loan interest because they are "too wealthy" and they work overtime and they work funky hours. It can be a good deal but it's often not as good as people think it is. A lot of MDs don't make that much money (pediatricians, primary care, etc).

Last edited by drshang; 08-09-2009 at 09:10 PM..
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Old 08-09-2009, 10:28 PM
 
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There's always the option of working in a designated "underserved area" and having some loans written off. Also true in the military medical reserves in a "critical specialty," which might well include any MD, plus, you are automatically an officer.
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Old 08-10-2009, 09:43 AM
 
Location: In the woods next to the ocean
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If you charge the same rates as my doctors, you should have your debt paid off in about a week.
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Old 08-10-2009, 10:01 AM
 
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Quote:
Originally Posted by Fat Freddy View Post
If you charge the same rates as my doctors, you should have your debt paid off in about a week.
That's a strange thing to say.

In what country do you live? Do your doctors there not have costs, like medical equipment and malpractice insurance?
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Old 08-10-2009, 02:13 PM
 
Location: Banana Republic, LA
366 posts, read 608,281 times
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Quote:
Originally Posted by Fat Freddy View Post
If you charge the same rates as my doctors, you should have your debt paid off in about a week.
That is a strange statement. Personally I don't know how my doctor manages to pay her staff and bills, and still come out with decent earnings, off of what my insurance company pays her.

There are a lot of people in this country that I think are over-compensated. Doctors are not one of them.
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Old 08-10-2009, 04:40 PM
 
Location: In America's Heartland
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It depends on how serious the doc is in getting the student loan paid off. Do they want to start living like a doc immediately or are they willing to sacrifice and put most of the cash toward the loan. The latter would be the smart way to go.
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