How long does it take to pay off loans?

Pre-Med & Medical School Pre-Med Topics
21

<p>Good approach to estimating the financial implications, but a few considerations:</p>

<ol>
<li><p>starting incomes for most docs are well below means for the field. Takes a while to build a practice and work efficiently.</p></li>
<li><p>Grossly overestimating income taxes due. Apparently assuming total income = taxable income.</p></li>
<li><p>Many undergrads, few medical students, and many residents moonlight. Once you have a medical degree and license, there are actually worthwhile side employment opportunities that can earn a useful amount of money.</p></li>
<li><p>Malpractice premiums for neurologists are much lower than for neurosurgeons. Pediatricians' malpractice premiums also are very cheap. </p></li>
<li><p>Many sources of data for physician income report net income AFTER professional expenses. Thus, one would not subtract malpractice costs from this reported income.</p></li>
</ol>

<p>Therefore, although it is expensive, the medical school debt figures are not as depressing as some of the above comments would imply. That said, it makes sense to go in state tuition if you have the choice. Same for pursuing merit money.</p>

<p>Even if we go to single payor, you will be able to pay off your loans, buy a house, and educate your kids. Maybe not a penthouse in Manhattan, but live a good material life. There is definitely a concern in medicine about people with large loans feeling forced to choose high income specialties (not pediatrics), but more talk than action about this.</p>

22

<p>2.) I definitely overlooked any possible exemptions for things like charitable giving, etc. This was mostly because I couldn't find a reasonable way to quantify the averages. After including payroll taxes, state and federal income taxes, etc., the percentage works out actually lower than I was expecting it to. (I guess the progressive nature of the lower brackets.) Property taxes, sales taxes, capital gains and estate taxes have not been included. These things would increase the tax burden.</p>

<p>4.) We estimated $20K for neurologists where the neurosurgeons affiliated with my school pay seven times that.</p>

23

<p>BDM,</p>

<p>You're right, you figured a realistic number for neurology malpractice. I was responding to the idea that it was close to neurosurgery. It is not.</p>

<p>On figuring taxes: One would also have benefits (life and health insurance, etc) that would be taken out of income pre tax. This would be reported to surveys as income, but it would not be taxable. There would also be retirement programs that permit thousands of dollars to be contributed to a retirement plan (usually 401 or 403 plans) before tax. </p>

<p>Although the cost of malpractice premiums usually would be deducted before reporting these income figures, other professional expenses, such as membership in societies, travel to professional meetings, and journal subscriptions, would not be subtracted before reporting income. All these expenses would be deductible on income taxes.</p>

<p>Taking these together, the income reported on a tax return as "adjusted gross" would be thousands, and almost always more than 10,000, less than the income one would report to a survey. Depending on the structure of the retirement program, AGI could easily be tens of thousands of dollars less than the income reported to these surveys.</p>

<p>Of course charitable contributions and other deductions would further reduce taxable income. And we are assuming here that the person does not have a house, no mortgage, and thus no mortgage deduction.</p>

<p>So, on the one hand, you don't get to spend the full amount of money reported as "income", much of it disappears before you ever see it. On the other hand, you don't pay income taxes on it either.</p>

<p>Lot's of medical students enter internship $100,000 in debt. They finish training, get jobs, buy houses, and have good material lives. Maybe not wealthy, particularly if they enter cognitive fields, but they do not spend a lifetime in debt.</p>

<p>Three hundred thousand in debt? Well I have never heard of a figure anywhere close to that.</p>

<p>It is expensive, but not as bad as portrayed above.</p>

24

<p>I suspect that three of our largest assumptions contribute to the extremeness of the situation above:</p>

<p>1.) No financial aid, meaning your parents can afford to pay for medical school. (At least, in the eyes of a finaid committee.)
2.) No parental assistance whatsoever despite that.
3.) Not married, meaning no spouse's income, even during residency years.</p>

<p>Come to think of it, $26K in living expenses strikes me as rather high as well. Mine are $15K, and I already live pretty nicely. The link I posted above no longer works.</p>

25

<p>what i'm making out of this is don't go to med school</p>

26

<p>Don't take that out of this. Lot's of people get through med school and pay off their debts. The numbers sound overwhelming to a student who lives on vastly smaller sums, but it really is manageable.</p>

<p>Remember, many people with the academic ability to go to medical school will be eligible for merit money in college. Or will go to their flagship state university, or honors college. Many will get some scholarship, as opposed to loan, financial aid. It would be unusual for a family to have enough income that the student gets no financial aid from college, but the family refuses to contribute anything to that student's education. This might be more common for the medical school part of the expense, but rare for college.</p>

<p>Even for those kids whose parents refuse to pay any college costs, and who are not eligible for fin aid, if they are strong students they can save a lot by going state/merit.</p>

<p>Most doctors did not go to expensive elite private colleges. The Amherst/Princeton type schools may have a large proportion of alumni who are MD's but on total numbers, the state universities turn out far more docs. </p>

<p>Ultimately, it is bad idea to go into medicine for the money. The financial payoffs are not as good as corporate law, or entering the finance industry. If you want to be rich, there are better routes. But becoming a doctor because that is what you want to do with your life is not a vow of poverty.</p>

27

<p>Yeah, my husband has about $300K in debt. You can defer loans payments while in residency, giving you an extra 3-4 years (although they are accruing interest). Good thing, because residency salaries aren't good enough to do loan payments too.</p>

28

<p>Heck, a cardiologist friend's number were $400,000+ from UG and med school (and probably some more during his residency years). Of course he borrowed everything and had a wife and three kids to support (Although his spouse worked some , she was popping kids out like a Pez dispenser. ;))</p>

29

<p>bluedevil mike, I would like to know were you got some of that info, because from what I have read, the 208,000 a year that a neurologist makes is AFTER malpractice insurance and all other expenditures including staff costs and such have been taken out, but is not the figure after taxes. </p>

<p>Second your numbers dont add up, I dont see how you get 70k a year from all that, assuming your tax deductions are correct, and 20k a year malpractice is correct, your making 96,000 a year, not 70k and year, and that is pure profit.</p>

<p>third, your time seems to be flying because at the end of this all your guess is that your 37, lets say you graduate college at 21, medschool at 25, enter a 5 yr residency, now your 30, not 37, but I assume you were adding in a fellowship, but no fellowship lasts 7yrs that I am aware of, more like 3 or 4. putting you at 34, with 96,000 a yr in pure profit.....</p>

30

<p>If you want to make $96,000 a year at age 34, there are probably easier ways w/o having to go $150k in debt.</p>

31

<p>In addition to all of that, lets say you decide to become a neurosurgen specializing a the spine, and lets say that you become good enough to be payed in the top 10% if neurosurgens, you will be making over 1,000,000 a year AFTER malpractice and staff expenses. take roughly 75% of that, and thats what you can expect to make as PURE PROFIT after taxes, you would be able to afford to wipe your ass with silk tp, and run your toliet with deionized fiji water.......</p>

32

<p>yes, but norcalguy, what you are missing is that 96k a year is after taxes, and all other expenses, what easier way is their to make that much money with nothing taken out of it?</p>

33

<p>pretty much any sort of top banking, consulting, corporate law, etc. etc. kind of work (actually in most of those you'd be making FAR more than 96k after a year after taxes by the time you're 34 if you did all of your schooling straight through)</p>

34

<p>I never said it was THE MOST profitable career, its just that in this thread its being made to sound like hell and like an unprofitable one. NO ONE in their right mind can even try to say that 96K pure profit a year is a bad deal, its way more than most people make even before taxes....</p>

35

<p>actually, you asked "what easier way is their to make that much money with nothing taken out of it?" I merely replied to said question</p>

36

<p>"I never said it was THE MOST profitable career, its just that in this thread its being made to sound like hell and like an unprofitable one. NO ONE in their right mind can even try to say that 96K pure profit a year is a bad deal, its way more than most people make even before taxes...."</p>

<p>Most people also don't have to go through the 4 years of hell that is med school, 4 years of hell that is residency, and possibly more years of low pay during fellowships. Most people also aren't $150,000 in debt when they come out of school. Sure, most people don't make 96k but most people also aren't smart enough to become a doctor. Those with the intelligence and social skills to get into med school can usually be successful in many other high paying careers as well.</p>

37

<p>These threads always seem to come down to "is it worth it? " I think it's worth it if you are not doing it JUST for the money. There will be many a day when you will feel NOTHING could be worth THIS. Those days are not rare, in practice, with certain patients, and certain situations. And you will HAVE to do it anyway, and not let on how you feel about it. You cannot have a fit, walk away, "get even", "call in sick", or any of the other things that I imagine might work in other careers. If you are in it for the "right" reasons, you will get over it, and go on to the next patient, and the next day.</p>

38

<p>HT: Your complaints would be alleviated if you read what I wrote. Please pay attention. </p>

<p>1.) It takes seven **post-residency **years. Pay attention before you indignantly claim that I am doing basic arithmetic incorrectly.</p>

<p>2.) We're not discussing post-tax income. We're discussing funds with which to repay debt. It is therefore correct to subtract living expenses. Pay attention before you indignantly claim that I am doing basic arithmetic incorrectly.</p>

<p>3.) If you'd like to assume that you place into one of the most difficult residency programs and furthermore end up among the top 10% of those, then you may feel free to select whatever numbers you wish.</p>

<p>As long as we are inventing scenarios, however, I will also discover unicorns tomorrow and become rich by cloning and selling them.</p>

<p>4.) Find me a source that says even upper-echelon neurosurgeons make $2M in pre-tax income. I will happily concede your point once you provide data to prove this. Until then, I will suspect that your happy-dreams scenario is probably closer to $1.2M. Which is still extremely good money.</p>

<p>5.) I remain insistent that my scenario is optimistic if you are actually carrying that much debt. Starting neurologists do not get "payed" at their industry's average. The gap is likely to be significant.</p>

<p>6.) "With nothing taken out of it." If you'd like to call $360,000 worth of debt and eight years of your life "nothing," then your point is certainly conceded.</p>

<p>7.) Look. I enrolled in medical school. I think it's a good idea for some people, myself obviously included. I'm not disrespecting the profession. But I also majored in economics and I understand how to do basic arithmetic.</p>

<p>Medicine requires that you sacrifice a great deal of money to participate. If you're okay with that, then by all means apply. I am, and I did.</p>

<p>But I was presented with an interesting hypothetical scenario and I did the math and I came up with an answer. If you can find an actual flaw, find an actual flaw. One physician, for example, has pointed out that malpractice insurance is tax-deductible, meaning that my estimates about available funds to repay debt are off by about $10K a year. Another physician has hinted that a more robust model would include payments for health insurance, which would reduce funds to repay debt but also decrease tax payments. Both of these are legitimate criticisms which affect the outcome of the model, although I suspect not seriously.</p>

<p>But read what I said before you issue hostile and aggressive accusations of bias and incompetence. I'm perfectly capable of adding and subtracting.</p>

39

<p>going back to BDM's first few posts, a neurologist who makes 210k does not take home only 65k. Can't be right. My dad makes 65k and he brings home 50k/year so a neurologist making 210k bringing home 65k does not sound right.</p>

40

<p>Go back and read it again. That's $65K with which to pay off debt. Not net income.</p>