If the payment plan is one that is based on premise that after 10 years, the balance of the debt is forgiven because you’re working for a nonprofit, I think you have to be wary that although hospital/institution might be nonprofit, the group practice itself is a profit based and you would not qualify for any loan forgiveness. Right?
PSLF = Public Service Loan Forgiveness–that is the program where working for non-profit for 10 years will get the balance of your federal loans forgiven. (Though you will need to pay state and federal income taxes on the forgiven amount)
Yes, many group practices are not non-profits and working for one will not qualify you for the program even if you do work at a non-profit hospital or clinic setting. You must be a direct employee of the non-profit.
Another reason to be cautious on PSLF is there is action pending in Congress which will cap the maximum amount forgiven at $57000.
If a PGY-1 is doing income-contingent repayment, assuming that the income before tax is about $50K a year, how much is the repayment each month, roughly speaking?
Try using this calculator.
https://studentloans.gov/myDirectLoan/mobile/repayment/repaymentEstimator.action
Monthly payments are going to depend on marital status, household size, amount of debt, interest rate, state of residence, and AGI.
@mcat2 <<< We actually do not know that. We thought that because it is a parent’s contribution, we have to pay it.
<<<
Med schools can’t force parents to pay. No parent “has to pay.” Most “regular folks” probably don’t pay a dime. Many/most med students are borrowing the full COA.
This is stressing me out reading about all the loan stuff!!! The “help” we will give financially is keeping her on our health insurance, car insurance, and pay her cell phone. My parents are going to give each grandkid that goes on to post-secondary school $75 a month of blow money. They’ve already started, so she’s using the money to buy her kitchen stuff. Since she’s living at home and working full-time, she’s been saving a lot to help with the move, and first year expenses. She is 99% sure she is going with her in-state school. It has a great reputation, she liked it, she already has friends there, and it’s so much cheaper than the private school. She met a friend for lunch who went to her undergrad and was also accepted, they are probably going to get an apartment together if they both decide to matriculate there. So that’s exciting!
State schools usually don’t ask students to provide parental support and so it shouldn’t be an issue. The Government allows students to borrow something like 40,000 or 45,000 per year based on the school’s input about COA at their school. It just means accumulation of debt.
Take a deep breath. This will all work out. 85% of new doctors graduate with substantial debt. ($180K was the median for 2015 public grads; $200K was the median for private grads) It’s the norm.
https://www.aamc.org/download/447254/data/debtfactcard.pdf
There are things that can be done to minimize debt–going in-state for lower tuition rates, sharing living quarters/expenses, minimizing discretional spending–and it sounds like your D is doing those things. Since she will also have a financial cushion (her savings) to help her transition to med school, she’s in a better place than many.
AMCAS provides a lot of information about loans and debt repayment and some medical schools are now requiring students to attend a finance seminar on how to deal with loans & debt & repayment. (And anecdotally from D1, MS4s spend a lot of time discussing various repayment options/plans among themselves.)
There are lots of options for newly graduated doctors to deal with debt. I promise they won’t be living in poverty–even during residency–due to student loan debt. (OK, won’t be living in poverty so long as they don’t run out and buy that Lamborghini or a vacation home in Aspen as graduation gifts to themselves…)
Some things to consider–
There are over 90 federal and state-based service-for-loan-repayment programs. These are exclusively for primary care docs–though some programs also include psychiatry and emergency medicine. Sure, your D might not be living in her first choice location, but it’s only for 4-5 years. Also consider that many popular suburban areas are saturated doctor-wise and jobs for new MDs may not be available there anyway. (And you may be surprised at how close to “desirable” areas some of these hardship posts are located.)
Some medical practices offer loan repayment as a sign-on inducement–even for high-paying specialties like radiology or gastro. (But note, most of these inducements are only offered in areas that aren’t popular urban/suburban NE/NW/CA areas and are conditional on the doctor remaining with the practice for X years–typically at least 5.)
Hopefully, DS discussed with his peers (especially one of his closest “peers” LOL) about this and has some idea about repayment.
He has never discussed this with us. Likely it is because he believes we do not know it (the repayment part.) He does know how much loans he has accumulated.
Just curious, would BF/GF discuss such an issue between them?
I’m guessing it would depend on the seriousness of the relationship and whether it’s long-term, committed and will continue forward past med school.
I know D1 has discussed her debt situation with her fiancé because her debt (he has none) will impact their lifestyle and their decisions going forward–everything from how much they can afford for rent next year to whether or not they’ll have a pre-nup to when they’ll have kids.
S mentioned to us that when he was in school, signing loan documents and debt seemed something very unreal. Even when he began IBR, the monthly amounts were ridiculously low and the true meaning hadn’t hit him. But as statements now show up in the mail/online(?) regularly, the reality of borrowing has become quite real and debt repayment has become a very popular topic among the residents with attendings and fellows chiming in. He and girlfriend who is also a resident talk about subject often.
The debt is a scary thing. I know at least at my Ds med school, they had several sessions early in the year to discuss debt. We got a couple frantic phone calls about how stressed she was over the debt she was taking on. But both Ds knew that we would get them through undergrad with zero debt (they both had good scholarships, and we paid the rest), but that for the most part, grad school was on them (older D went to law school). We are in our 50s and we can’t jeopardize our financial future so they have no debt - they will both make more than I do or their dad does currently in their first year of employment.
We do help them out though to reduce debt some. Ds school is a state med school, so is much less expensive than most privates, and we were not required (and we did not) submit financial information. We have helped pay rent periodically, we furnished their apartments, we buy food from time to time, we send spending money or Starbucks cards, we keep/kept them both on our cell phone plan, car insurance, health insurance while in school.
^^^^That was one of the most stressful and deciding factors of which med school son picked. He lined up all the offers and then made “realistic” budgets that included how much he knew he would spend at each school. Some schools really had low COL in areas he knew would be more than they estimated. Other programs had really inflated values for “rent”, food, travel and other expenses so he really looked very closely at each tuition and expenses and some more hidden “fees”.
It seemed very real to him before he made his decision because he faced the same decisions for his undergrad. Since it was all on him he wanted to make sure he didn’t financially strap himself that he would later regret going so far into debt. He also knew after research how rare it would be to receive financial assistance for an MBA later in his career and how sometimes life gets in the way time-wise. So when the offer included an additional fellowship for an additional degree he took that into account, both as a time-saving mechanism and cost-wise. Some of the schools offered the joint degree without the time saver factor and no additional funds and that could almost double his med school loans.
He opted for the best financial offer for the type of doctor he was contemplating, primary care with a fellowship that was not necessarily high paying. The school he choose was tops for that and the b-school was also one he was excited about. So for him he was a happy camper, and is now pretty excited for residency.
He was concerned about the debt, still is, but feels it is manageable especially with so many re-payment programs available and other avenues offered to mitigate the debt. Even still the amounts make me cringe!
This was/is our situation except that we are older (so having even fewer years to increase the size of our retirement account.) We can not be as generous to DS as we could for his UG education.
I think DS has never initiated a discussion about student loans with us. Maybe he only discussed it with his circle of friends.
If we have a chance to talk to him about this, we would likely tell him that he should be responsible for his student loans, and she (his GF) for hers.
If debt is not government backed guarantee student loan (where it would be forgiven if student dies or becomes disabled) - otherwise it would be wise to have 30 year term life insurance in place - rather cheap for level of coverage - want 10X income - so can buy when at optimum health and best rates. Parents can help with getting this lined up. Once someone becomes married and has other responsibilities, it would be terrible to not have this coverage for the private student loans.
Maybe someone can correct me, but a potential problem for girlfriends and boyfriends who get married is the total household income then becomes the baseline for each of the student loan repayments, correct?
^^That is correct.
It’s going to bite D1 on the butt this fall when she gets married. (Though I believe monthly loan repayments amounts only get re-calculated annually on the anniversary of first loan payment due.)
It is best to know what the student loan situation is and earning ability. If able to lean in and accelerate the payments while living very frugally, work 2nd job etc.
There are many students taking out heavy loans for law school and they may not find a job, or have to work as a paralegal while getting a job. Everyone wants to top students, but most do take out loans for law school. Nephew went to a summer law course overseas, and only he and another student were not taking out student loans. The 26 students acted like they got their allowance when their student loan money was available.
Physicians have higher earning ability than many (versus vet school, law school, etc) but often do take out heavy loans. Smart ones continue to live like a student and pay the loans off early (before purchasing a house, new car, etc). Some have an opportunity to buy into a practice, and that costs money too.
Anyone still waiting for an acceptance?
“It is best to know what the student loan situation is and earning ability. If able to lean in and accelerate the payments while living very frugally, work 2nd job etc.”
- It is a great unknown. The residency takes different number of years depending on specialty. I can only tell bout my D’s experience. She is a first yer resident and is paid in low 50’sK. She will have total of 4 years of residency + (maybe?) 1 year of fellowship. Her salary may go down next year, we do not know that yet. She is going to a totally different place for her specialty next year. Her first year is a required for her specialty Prelim year. She does not have loans. She lives comfortably, but if she had loans, she would not be able to pay some reasonable amount towards the loan. No, they cannot work a second job, they work up to 80 hours / week with unpredictable schedule, some hospital floor shifts are straight 30 hours, the normal shift is 12 hours and an easy shift is 10 hours. She has it easier than many others, since she is not in her specialty yet. So, she has some clinical periods when she works normal “human” schedule / hours at various clinics, including her own - she has about 25 patients that visit her on a regular basis. However, the many in the hospital who are actually “Internal Medicine” specialty work crazy schedule on a regular basis and also have to take exams periodically, for which they have to study. The studying will start for my D. next year when she is in her chosen specialty.
So, I do not see how one can work a second job. Also, keep in mind that some have families / kids. We are not talking about very young people here. My D. is one of the youngest and she is 26 y o. Living frugally…for many years…possibly while raising kids…? I am not sure how it could be accomplished, not to the point to be able to pay off the loan which may be $300k
I was also scared by that…so we decided to pay for D’s medical school after we did not have to pay her college tuition. I feel that I actually paid for my own peace of mind. It was worth it for me.