<p>what does debt do that is so debilitating?
I plan on entering med school so i'm sure to face this problem within the next 6 years, i'm just wondering as to how debt hinders your financial life. thank you</p>
<p>If you have undergrad debt and med school debt you have a lot to pay off. He will limit where and how you live. Few banks will want to loan you money to buy a house because you have all that debt. Forget vacations and toys. Te bank will own you for a long time.</p>
<p>Use this to see how much you will owe: <a href="http://apps.collegeboard.com/fincalc/parpay.jsp%5B/url%5D">http://apps.collegeboard.com/fincalc/parpay.jsp</a></p>
<p>See how much per month will be going to service the debt. It can be a lot of $.</p>
<p>Perspective
BECOMING A PHYSICIAN (New England Journal of Medicine)</p>
<p>PreviousPrevious<br>
Volume 352:117-119 January 13, 2005 Number 2
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<p>Mortgaging Our Future — The Cost of Medical Education
Gail Morrison, M.D.</p>
<h2>This Article</h2>
<p>The cost of obtaining a medical education has been spiraling upward for the past 20 years. Despite a lot of rhetoric in articles1,2 and at meetings of the Association of American Medical Colleges, nothing has happened to change the alarming pattern. The average tuition and fees at public medical schools during the 2003–2004 academic year amounted to $16,153, and the corresponding figure for private schools was $32,588.3 Adding $20,000 to $25,000 for living expenses, books, and equipment brings the estimated cost of four years of attendance to about $140,000 for public schools and $225,000 for private schools.</p>
<p>The continuing increases in tuition are the primary reason why a medical education is less affordable today than it was two decades ago. In the 1984–1985 academic year, average tuition and fees were $3,877 at public medical schools and $12,973 at private schools. Thus, in 19 years, the costs increased by 317 percent and 151 percent, respectively (see graph).3 Despite low inflation during the past several years, this escalation continued. Recent shortfalls in state budgets have caused major budget crises at most public medical schools, resulting in a need for marked increases in tuition, which went up by 11.9 percent in 2003 and 17.7 percent in 2004. Private medical schools, though not as reliant on state money, raised tuition by 4.4 percent in 2003 and 5.7 percent in 2004 — increases well above the rate of inflation.</p>
<p>View larger version (9K):
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Relative Increases in Debt, Tuition and Fees, and the Consumer Price Index, 1984–2004.</p>
<p>Data are from the Association of American Medical Colleges.3 The special mean is the product of the median for indebted students and the fraction of students who have debt.</p>
<p>Accompanying this continuing escalation, there has been an enormous increase in the average indebtedness of graduating students. The average debt carried by 1984 graduates was $22,000 for public school and $26,500 for private school. By 2004, the debt had increased to $105,000 for public school and $140,000 for private school, and only about 20 percent of medical students graduated with no debt.4</p>
<p>Although the consumer price index is less than twice what it was 20 years ago, medical-student debt was 4.5 times as high in 2003 as it was in 1984. Tuition, however, has increased at only 2.7 times the rate of the consumer price index at private medical schools and at 3.8 times that rate at public schools. The greater increase in student debt suggests that medical students have chosen to borrow money not only for tuition but also for other costs associated with attending medical school. Since more students now live in apartments rather than dormitories, are married or marry during medical school, have children, need to buy cars for travel to affiliated hospitals and outpatient facilities, and buy computers and other electronic equipment, these other costs have increased dramatically. Most students, even if they come from affluent families, prefer to take out low-cost educational loans to pay for their expenses. Moreover, unlike law or business students, who enter the workforce immediately after graduation and can begin to pay off their debt, the average graduating medical student spends an additional three to six years in postgraduate training programs while interest continues to accrue.</p>
<p>All of this means that a 2003 graduate with $100,000 in debt who begins repayment after a three-year residency will generally pay $15,000 per year for 10 years. Consolidating the debt and extending repayment over a period of 25 years will result in payments of $12,000 per year for a quarter-century. In 2003, the consolidated interest rate for Stafford loans was only 2.82 percent. When interest rates reach the maximum allowable rate of 8.25 percent, as they have been known to do, or when students need to borrow additional money from private sources, repayments can well exceed these estimates.</p>
<p>What have been the effects of these increases? Although there has been a decrease in applications to medical schools from about 47,000 in 1996 to 35,700 in 2004, there are still two applicants for each of the 16,000-plus yearly medical-student positions. In 2003, the average salary of a practicing physician ranged from about $146,000 for a family practice physician to a bit more than $400,000 for an invasive cardiologist.5 So far, physicians' salaries have allowed them to pay off their debt, generally without defaulting on their loans.</p>
<p>At the same time, for the past two decades, approximately 60 percent of medical students have come from families in the top quintile of income, with the bottom three quintiles together accounting for about 20 percent,3 arousing concern that medical education may be beyond the reach of students from middle-class and working-class families. A recent national survey of underrepresented students indicated that the cost of attending medical school was the number-one reason they did not apply. An Institute of Medicine report found that though Hispanics constituted 12 percent of the population, they accounted for only 3.5 percent of all physicians, and though 1 in 8 Americans is black, fewer than 1 in 20 physicians is black. Continuing this trend has far-reaching consequences for the national health care workforce, which needs diverse physicians in order to address the needs of an increasingly heterogeneous patient population.</p>
<p>Moreover, 32 percent of students who graduated in 2002 indicated that their level of debt influenced their choice of specialty. Indeed, the latest match conducted by the National Resident Matching Program shows a continuing decrease in the number of medical students pursuing careers in primary care (37 percent in 2003, as compared with 49 percent in 1997) and an increase in the number gravitating toward careers in radiology, orthopedics, ophthalmology, and dermatology, which offer higher discretionary income.</p>
<p>How do we stop this vicious circle of increasing tuition and student debt? Although the federal government contributes to undergraduate medical education by guaranteeing low-cost student loans, it needs to do more. Securing adequate funding for Title VII health professions programs, reauthorizing the Higher Education Act, expanding and protecting the National Health Service Corps Loan Repayment Program, and broadening the tax-exempt status of medical scholarships would ameliorate debt. But these initiatives may not be top priorities for a government dealing with war in Iraq, a growing national debt, and threats of terrorism.</p>
<p>State legislatures could provide additional financial support to public medical schools to enable them to cap tuition, allow tax deductions for interest on loans, and authorize more programs whereby new physicians can pay off loans in the form of state service. But most states are also facing a precarious financial balance.</p>
<p>Perhaps, then, our best hope lies in individual medical schools' finding creative ways to reduce the need for loans and to adjust financial policies so as to reduce tuition. Schools that can increase grants and scholarships and develop subsidized loan programs will be able to ameliorate their students' debt — a solution, however, that depends on each school's ability to raise funds and increase its endowment. Most important, medical schools must take another look at the costs of education and determine how to halt the rising cost of tuition. This is a difficult task, since only a third of medical-school administrations have the authority to set their own tuition; in about half of U.S. medical schools, tuition is set by a board of trustees, and in others, it is set by the state legislature or other state authorities. A few medical schools have recently taken the bold step of capping their tuition; it is time for all medical schools to consider this option. As more and more medical students accumulate more debt than many Americans amass in their lifetime, medical schools must take the lead in decreasing this financial burden. The future of our health care workforce depends on it.</p>
<p>Source Information</p>
<p>Dr. Morrison is the Vice Dean for Education, University of Pennsylvania School of Medicine, Philadelphia. </p>
<p>You have to pay it back, or else bad things happen. If the debt is large, the payback burden can be so great that it effects your options and degrades your lifestyle to the level that makes you regret your decision to take on the debt, but by then it is too late. There are no "do-overs."</p>
<p>you also don't know what the future holds -- my husband attended medical school for 3 years -- with medical complications the last two. It was finally determined that he could not continue in med school (he almost died three times the last semester and spent over 4 weeks in ICU).</p>
<p>so -- no med school degree, but three years worth of debt. We are still paying and it has impacted him greatly. On top of that, he feels guilty that the debt is a burden to his family and prevents his children from doing things because all our money goes to the debt.</p>
<p>
[quote]
what does debt do that is so debilitating?
[/quote]
You have to pay it back, for one thing ;)</p>
<p>Seriously, though, one thing HS kids don't understand is how much of your income will disappear in taxes. Loans get paid back out of money you have left after taxes.</p>
<p>Even ignoring the AMT which makes it worse, if you live in a state such as CA which has a state income tax (9.3%) then by the time you pay state, federal, medicare, social security, disability, and tuck away some money in a 401K you will find that you have perhaps 50% of your salary left. A debt that doesn't sound so bad when you think of what you owe based on $70K dollars becomes a lot larger when you're annual income in your pocket is $3,000 a month. That $3K has to pay for everything: housing, food, car, vacations, loans, etc.</p>
<p>Adding to mikemac:</p>
<p>Lets say you graduate on May 31 and start your new job on June 1. June has 30 days (although maybe 20/21 working days). Let say you make $500 a day. Your school loan repayment is $500. You think thats not too bad, one day of work to pay the debt. But, depending on where you live and the taxes involved (income, FICA, sales, etc.) for you to have $500 in your hand left over after taxes to pay this debt, you might actually have to work 2/3 days to pay the debt. Extrapolating this out to include other monthly expenses (housing, food, utilities, transportation, insurance, medical, clothing, etc.), you may find yourself using some of Julys work days to pay all of Junes expenses. And so the downward spiral begins.</p>
<p>No attempt to be rude but seriously...if the OP hasn't a better clue of why debt is debilitating, perhaps not quite sharpe enough for medical school? Sounds like back to the age old question of book smarts vs common sense</p>
<p>It is debilitating when you have more bills than money coming in to pay the bills. YOu can be a physician and have your MD, and the money you bring home after taxes will not be enough to pay for everything. THe burden can be so great that you pay for the loan payment first, then food, then cars and basic living expenses and may not have enough left for a decent house payment. You pay rent instead, and have trouble having enough left to save. You have trouble saving for a down payment on a home. No money for starting a nest egg early for retirement, and the problem with that is that you are already starting it late.....you might be 30-35 before you are done with residency. This is an age where you need to squirral money away into college funds for kids and retirement. But you can't. And being a doctor, you are "expected" to be able to live a certain lifestyle. So while you are buying nice clothes, and eating out at fancy resturants, and maybe driving a nice car, you can't seem to make ends meet. Really. Managed care and HMO's etc are paying you less and less. And liability insurance and expenses are going up. And if you work for yourself, open a practice, the start up costs mean MORE DEBT. And your level of debt may be so big that the bank will not loan you the money. And it means there is no one but you to fund your retirement. And it means that if you take time off for vacation or medical meetings, you are not generating income while you are gone. </p>
<p>Getting through med school with as little debt as possible may seem like it narrows your possibilities for undergrad and med school, but for the rest of your like, it OPENS up many more possibilities because you will not be burdened with such debt.</p>
<p>Debt can be such a burden, and if you have never carried that burden, it can be hard to understand. But it can be like trying to get up over the mountain. a really steep one, carrying another person on your back.</p>