Do you want to know how much my med school student loans amount to?
Well, in this post, we are talking about money, or in particular, how much money I don’t have because of my med school debt as well as how I expect to pay it all.
Let’s get to it!
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Med School Student Loans
Now, let’s talk about something that I am becoming very familiar with, my med school debt as well as how you go about payments and all of those questions you probably have!
Let’s start with how much debt does the average med student have.
For the graduating class of 2018, the average med school debt was recorded to be around $192,000 (that’s almost 200,000!).
You also have to remember that some of these individuals have loans and debt from their undergraduate degrees so the average increases from $190,000 to about $220,000.
This amount of money may already sound ridiculous, but unfortunately, it doesn’t end there!
Using an average interest rate of anywhere from 3.5% to 7%, these same individuals will end up paying nearly $350,000 of $400,000 by the time that their loan is completely paid off.
That’s just like paying for two Lamborghini’s! And it gets even worse!
Some students will have loans from private institutions from their undergrad as well as med school institution so those are even pricier. That loan amount we just mentioned can easily escalate up into the $600, 000 and $700,000.
It’s crazy! But now let’s talk about me.
My Med School Debt
Now, I’m going to share with you my numbers as well as how that loan breaks down. Then, we’ll talk about common ways to pay it off as well as how I expect to pay my med school loans off.
The anxiety-provoking number, which is my med school debt, is $190,000. Basically, like the cost of a Lamborghini because of the two letters (M.D) that have now been added to my name and four years of training.
Now, I want to break down that loan because that number may seem astronomically high for some or just right on average.
But it also feels like a discount compared to some of my classmates who have done private institutions or have been outside of the state of Texas. I’ve been lucky!
Basically, my tuition every year for four years in medical school is about $21,000 to $22,000 depending on the year. That adds up to about $80,000!
In addition, I also had living costs. I chose to live by myself in a single bedroom apartment instead of getting a roommate.
This is because it was my first time living alone and I just didn’t want to deal with the hassle of med school as well as having a roommate for the first time. So, I did elect to pay a little bit more per month to have my own apartment.
I also made lots of trips back and forth to Austin for almost two weeks for four years to see my then-fiancee now my wife and making those trips were fairly not cheap. It was about $60 a round trip and I have terrible gas mileage!
When you add that in to rent, tuition, food, expenses in med school, Step 1 exams, and residency, you get the final number of $190,000.
Now is it nerve-wracking? Absolutely!
Every time I fill in applications or just look at those numbers, it’s anxiety-provoking but I have a plan and that’s what we’ll get to next!
How To Pay For Med School
Now let’s talk about the different ways that you can pay for your med school loans. Basically, it comes down to four ways (but really there’s five if you considering having someone pay for it as one way).
1: Standard Payment
The first way to deal with your med school student loans is to pay them off on a standard plan.
If you take your generic loan of $190,000, it comes to about to $1000 to $1,200 per month that you’d be paying based on the interest rate.
Ridiculous isn’t it? That’s like the size of my rent right now.
But most residents just don’t have that kind of extra income laying around so then you have to go to the other options.
The other way to pay for your med school student loans is to refinance them.
Refinancing means taking the interest rate within which your loans are currently given by the government which minor about 5% to 5.5%. Then, using a private company like SoFi or Laurel Road, you ask for a lower interest rate.
This can lead you to save a lot of money!
For example, if you had $189,000 in loans (like me) and at 7% interest, that would mean you’d be paying about $74,000 in interest after you’re done paying the loan on top of the original payment which is the principle.
But if you are managed to lower that rate from 7% to 5.5%, then your total interest payment comes up to about $57,000. So, you almost save 20 grand just by refinancing!
Note: If you think that refinancing is the way to go for you, then check out this link for Laurel Road and you’ll be able to get a little bit of a discount.
3: Income-Driven Repayment Plan
The third way is the most common way that residents, including myself, will be paying for their med school student loans and that’s through an income-driven repayment plan (IDRs).
What it means is; when you make less money as a resident, you’re paying less based on your lower income. And when you get a higher salary as an attending, you now start paying more per month.
That’s perfect for somebody like me who doesn’t have $1,000 sitting around but may have $300 or $500 that they can throw at their loans (though I really don’t).
However, if I have to, that’s a much better option. Then, when I’m already an attending and I make a little bit more, I can have more flexibility to pay a higher payment.
Now, there are different forms of income-driven repayment plans. The two most popular ones are PAYE and REPAYE.
You don’t need to know too much about the difference, but if you guys want me to compare them in a future video, I’m happy to do so!
But most people nowadays are going for the REPAYE plan. Basically, it is when you have low monthly payments of anywhere from $200 to about $400 for that average of $190,000 loan.
But here’s the cool thing…
If you know that your normal payment would have been, say $1500 but your REPAYE payment is $500 then there’s still $1,000 that’s not being covered. Where does that go?
Normally that would go into your interest and just keeps accumulating until you become an attending and you can start slashing away at those bigger payments.
But with a REPAYE, the government will take that extra thousand dollars that you’re not paying and just forgive 50%! They’ll subsidize 50% of it!
If you have $1,000 that you’re not paying interest, those only add $500 to your total loan balance which is a great way to save money and it works for a lot of people.
So, definitely consider REPAYE. If you want me to make more specifics on the pros and cons because there are some cons of using the REPAYE plan, then let me know in the comments below and I’m happy to make a post in the future.
But again PAYE and REPAYE are the most popular methods!
4: Public Service Loan Forgiveness
Public Service Loan Forgiveness programs are the ones you hear about the most but, unfortunately, isn’t widely used at all.
In the United States, there are laws indicating that if you work for a nonprofit or a public institution (which most hospitals happen to be), and you make 120 payments on your loans, in 10 years, you can apply to have your loan forgiven!
This sounds nice especially if you are somebody who has $600,000 or $700,000 in debt because it may not be possible to pay it off in 10 years. So, this is an option you may consider!
The one caveat is that this plan has been going on for a while and so far only 1% has been approved and given loan forgiveness.
There’s a little bit of caveat against that too which are that loan payment plans have now become a little bit easier to understand and the forms that you have to fill out yearly became easier.
People understand what to do and a lot of the doctors that are in new plans like REPAYE are just starting to get closer and closer to that 10-year mark.
So, we really don’t know if the government, at least the United States, will actually be able to back up their promise.
But the one thing I will say is; you should act to get public service loan forgiveness if you see yourself working in those kinds of institutions but just don’t plan on it.
Have a backup plan on saving enough money when you’re attending then just pay off your loans. If the public service works out, then awesome if it doesn’t, then, at least you have a plan to pay those loans away.
My Med School Loan Repayment Plan:
So quickly, I want to end this post on basically what I’m doing with my loans. My $190,000 loan (Yikes, just had a mini heart attack saying it out a lot again.).
1. Consolidate Loan
The way I’m going to be handling it is first; I consolidated my loan. So, every year that you get a new med school loan, it is basically considered to be a different loan.
So, instead of having to pay $75 here, $50 here, $100 here based on your interest and amounts, I’m just putting them all under one bundle, under one interest rate, that you can do after you graduate med school.
2. Pay With REPAYE
Then, I’m going to be doing the repay plan and ideally, I will be paying anywhere from $300 to $500. All of that is based on obviously your income, the amount of loans you have as well as your spouse’s income.
All of that considered I’m hoping I’m paying about $400 a month (fingers crossed).
3. Taking Money Out From My Paycheck Into A Debt Savings Account
Also, just to help plan, my wife and I are taking money out of my paycheck and putting it to our savings and acting like we don’t have it.
That way, when the loan payment does come, we’re paying it and we don’t feel like we’re missing out on anything.
That is my med school debt, how much I have, what I plan to do and how you can also overcome all of those med school student loans for those two letters that you’ll be getting after you graduate med school.
Hope you found this post on my med school student loans helpful! Make sure to comment down below with any financial or medical school questions that you may have.
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This is a video course that will help you learn how to study and stay productive despite your busy clinical schedule! Get that honor you’ve always wanted!
Again, thank you for your time!
Until the next post my friends…