If she is a cardiologist that means 4 yes med school, 3 years residency then another 3-4 fellowship. During residency and fellowship most doctors can’t pay back loans, so they choose to forebear the interest. 8-11 years of compounded interest can rack up quickly.
Even on automatic debt payment, if one throws extra principal at the debt, it would pay off sooner and save all those years of interest. Then money can work for you with the using the years for you instead of against you. The May Money issue has an article “Adulting: A Financial Cheat Sheet” which is about the shift from college to the working world. The first item they mention is ‘tackle your debt’ with suggestions about paying down with extra principal. Those that have a big financial hole like MDs and some other professionals also have a bigger shovel. One can live more frugally at the get-go - paying off debt before major expenditures; driving inexpensive used cars, etc.
I do know a doc that is like @bearhouse that is not paying off the debt early. Both H and W have to be committed to smaller lifestyle until debt is paid off.W jokes “we are paying a long time for his brain”.
True story: friend of mine whose husband was doing a fellowship (so another 2-6 years tacked onto everything else…he was in his low 30’s before he started earning real money) was seeing patients in a pedi follow-up clinic in the inner city. He called his wife and said “I’m tired of the kids in our free clinic dressing nicer than my own kids. Go buy our kids clothes and put it on the credit card.”
He had >$250K in debt by the time he was done.
I am told the starting salary for a cardiologist going into private practice or as private hospital employed doctor in Houston is around 300-350k. So it is not a low paid specialty.
@texaspg I do think doctors are well reimbursed and most of us would say that a 250k debt is worth it if you are going to make a six figure income. However, there is a large lead in time due to the length of training to get to the higher amounts and your debt doesn’t stop growing. As far as the economics are concerned…no sob stories here. It is just an appreciation that after 20 years of employment, you can still carry a large debt burden. Since this board is directed to future students and parents giving advice, I do hope they read this and understand they want to save their debt for medical school.
Well, I have a little experience with this, lol … .
Say she makes $200k/yr. Her marginal tax rate is probably 40-45%, so she’s probably bringing home more like 110k.
Because of her high income, she won’t get any tax deductions for her student loan payments. That high income (especially if her spouse is a similar high earner, likely with similar high loans) means you get nada/zippo/zilch of all those nice student loan deductions, child tax credits, etc. If they’re really “lucky” they get hit with the Alternative Minimum Tax, maybe reducing or eliminating any home-mortgage interest deductions, etc.
She could have easily borrowed 300k, 400k, or more. I know a neurosurgeon who ended up with well over 400k, maybe 500k+, in loans. They borrow say, 300k to get through med school (plus or minus undergrad) and then while they are in their 4-10 years of internships and residencies, they are in forbearance but those loans are accumulating interest . . . In 10 years, that amount could double . . . (And, no, they can’t afford to make payments during internships and residencies. My friend’s family was on food stamps during his neurosurgery residency.)
With, say 3k/month payments over 25-30 years. (I’m extrapolating from my personal experiences . . .)
So, she needs to use 36k of after tax money to make her 25-30 year amortized loans.
She has to work, so she’s paying high $$ for child care, again with after-tax money.
She probably waited to have kids until her 30s or later, meaning she’ll be paying for their college while she is STILL carrying her own student debt.
Since she has such a “high income” and since financial aid formulas don’t give a flying f*** how much of your own student loans you have . . . she’ll get NO need based aid anywhere, so if she wants to send her kiddo to college, she’ll be paying full price.
If she took any significant time off to, say, have babies and stay home for a year or so one or more times, her loans might have gone into forbearance, accumulating interest the entire time . . .
FWIW, my husband’s vet school loans won’t be paid off until our youngest is out of college. The only reason mine are paid off already is because I inherited some money, and I sent it immediately to the student loan people so those damn loans would end.
The people I know who successfully paid off huge loans (i.e, 150k+) in 10 years or less lived like paupers and worked double jobs. (I.e., a day job plus a side ER job) . . . and I mean driving 10 year old cars, no vacations, etc. By the time you get out of residency, you’ve been killing yourself for decades and it’s not many people who can face living like POOR for another decade to get out of debt.
Student loans SUCK.
At least doctors have a pretty stable career and income stream.
6 figure debt without a doctor’s income stream is suicidal.
Profile asks how much the parents paid or expect to repay in educational loans the previous year, and how much they expect to repay in educational loans for the current year. I’m thinking that if these questions are asked, there may be some schools that factor parent educational loans into the FA equation.
@bearhouse - I am not commenting how long it should take to pay off the loan or by what age. Many of these are personal choices. I am only suggesting that a cardiologist in my opinion is by no means a low paid person. We do have to remember though that they are paid during 6 years of training and are considered working but they wont be able to pay back much during that time which means whatever they started with would still be growing.
If they chose to work for a private entity, a cardiologist, after 8 years of college and 6 years of residency and fellowship, is well compensated in private practice or a private hospital. I had a conversation take place in front of me just a few months ago at a dinner where a third year fellow kid of another friend was advised by a well established cardiologist friend on the process in terms of how working for a practice vs hospital will work out contract wise for them and how the current starting rate was 350k and they shouldn’t accept too much less than that number.
Should’ve gone to a resale shop where I bet dollars to donuts is where kids in a free clinic’s parents are getting those clothes from.
@romanigypsyeyes …oh who knows. I think he was just tired and worn down from some long years of very little disposable income.
I’ll quote Ursula from “Little Mermaid” here- Life’s full of tough choices.
I know a reasonable number of doctors. Some made exceptionally smart financial decisions- Reserve Officer, working in an under-served area either urban or rural, ROTC for undergrad, or living at home and commuting for their Bachelor’s etc. They complete their MD and live a modest lifestyle commensurate with their income- both those with loans for med school and those without. (Thank you, taxpayers of America, for the generous subsidies).
Some made exceptionally stupid financial decisions- compounded by their being allegedly so smart as to have gotten into med school in the first place. Chief among these appear to be living a “doctor’s lifestyle” early in their career. I understand that the first big paycheck after so many years of training and schooling has an oversized amount of emotion attached to it. But these aren’t people buying starter homes after years of living in med student housing- these are people buying the whole hog doctors house with the leased cars in the driveway.
Choices matter. Mmom99- working a side job (taking ER shifts for example) is called moonlighting in any other profession and nobody bats an eye at it. I’ve got a relative who is a young lawyer in a small practice who supplements his income teaching writing seminars for first year law students at a local law school. It pays well and he diverts 100% of it to paying off his loans. CPA’s do tax returns (seasonal work) in addition to their day jobs. Teachers tutor for SAT’s, someone in a corporate career moonlights as a counselor for young adults applying to business school, etc. As long as your primary employer signs off on it as having zero conflict of interest or ethical violation- people do it all the time.
Why do we feel sorry for doctors who moonlight but not everyone else? It can take 10 years for someone to become a partner at a Big 4 firm (when the nice salary and goodies kick in), why does a doctor need to be making big bucks ten minutes after completing his/her training?
I drive a ten year old car and don’t feel sorry for myself btw. Life’s full of choices. I paid off my grad school loans (as did my spouse), we were full pay for our kids college education (another choice) and I’d rather spend my money on other things besides a vehicle. Why do doctors need the latest leased Lexus while other well educated professionals are happy with a paid off Honda?
Surgeons have a career akin to pro athletes. Conservatively, 20 high-earning years from mid-30’s to mid-50’s. But in those years, they are very well conpensated. Say an average of 400K a year. Even if taxes leave only $225 a year (being extremely conservative), even with massive student loan debt of $500K, if they can somehow get by on 100K in after-tax money a year, that loan is retired in 4 years. And college costs are crazy. No one says you absolutely have to be full-pay at a private, but say 2 kids go. That’s a little more than 4 more years of living on 100K a year.
But I understand that it’s not all sunshine and roses.
After all, it’s hard to keep up with the Jones with only 100K in annual after-tax income a year, and that must hurt.
Having grown up around doctors, I can attest that doctors make some of the poorest financial decisions. They are particularly big on trophy homes and trophy cars.
I work for/around several successful surgeons who are still doing surgeries every day and who are in their 70s. One of them is incredibly attractive, with full head of gray hair, very dashing, and just the nicest person you’d ever meet. He does take off a couple of months in the summer to live in his second home in Maine.
“Surgeons have a career akin to pro athletes. Conservatively, 20 high-earning years from mid-30’s to mid-50’s. But in those years, they are very well conpensated. Say an average of 400K”
If surgeons only make 400K, they cannot be compared to pro athletes.
Residents do make SOME money (60K)? I can’t see why they would not start chipping away at those loans during that time since they have no time to actually spend.their money!