How long will it take to pay off student loans from university and medical school, or does differ for everyone?
I'm asking this question because I am scared off the debt that I am going to be in. I want to be a doctor but this is the only thing that is making me question whether I should do it. #doctor #psychology #medicine #finance #pre-med #pediatrics #pediatrician #trauma
Another unfortunate consequence of debt is limiting the student's choices after graduation. If a student has a passion for pediatrics, but crippling debt, they may be forced to apply to residencies with higher future earning potential.
A typical experience would be to complete residency and become an employee of a group. You aren't able to pay down your debt much because you are saving to become a partner. You buy into the group and then start making partnership money. That's when you are able to really tackle that debt.
So the answer depends on 1) how much debt 2) what specialty and 3) how long it takes to become partner.
But typically you are looking at 10-15 years to pay back your student debt.
On a side note, watch this video which compares a UPS driver to a physician. It makes a lot of assumptions about debt and saving/investment, but concludes that the average primary care physician doesn't become financially better off than a driver until age 53.
It is different for everyone. It depends on how much you take in loans and the rate you would be paying it off with. You could also look into applying for scholarships that would reduce your burden.
How it takes will vary since each medical school has different tuition cost. There is a way to come out of med school debt free. Some states and counties who are in need of doctors will agree to pay off your student loans if you work for them for a certain amount of time; most of the time it is a 5 or 10 year commitment and it it in rural or low income areas. You can look at the article before for more information.
- Apply for all the scholarships in High School that you can. A lot good website out there that will help you find scholarships
- If you need Student Loan, go with Federal loan, not private
- In state Tuition, if possible
- Start your first two years at a community college to take your basic courses
It definitely depends on the cost of your tuition over the time you are in school. I will tell you I was under the impression my college would be paid off by the time I was 30 before going to school, which was not the case! I went to a private university where the tuition ranged from $22,000-$24,000 for the 4 years I attended (I graduated in 2011). I was awarded some scholarships and discounts, but I paid for the majority of college by taking out federal loans. I wish I could give you an exact number of the total loan amount, but hopefully some of this helps. I paid over $420 per month on the loans for over 8 years when I paid the first loan off (with a tax return). I am still paying around $250 per month on the remaining loans I have which are scheduled to be payed off in June 2021 (hopefully sooner since I am paying more than the required monthly payment). Medical school is longer than the typical Undergraduate program, so having a financial plan is crucial!
Federal loans are issued by the government. Federal loans are set up to be paid off in a 10-25 year time frame. This depends on the amount, interest, income, and other factors. Federal loans can be subsidized or subsidized. Subsidized loans are based on financial need, may have lower interest rates, and the government pays the interest on them while you are in school. Unsubsidized loans are not based on financial need and interest accrues while you are still in school. The average federal loan interest rate is 4.53% for the 2019-2020 year.
Private loans come from institutions like banks and credit unions. Private loans can be set up to be paid off anywhere from 5-15 years, again depending on many factors. Private loans typically have higher interest rates than federal loans and may be variable rates, meaning the lender can adjust the interest percentage over time. You may start paying 5% interest on your loan this year, but they can adjust it to 7.5% the following year, and so on. You want to get the lowest interest rate possible when looking at loans, regardless of federal or private.
I want to show you an example of how interest works since it really isn't something we teach in schools. Say you take out a $10,000 loan to be repaid over 10 years time. If you have a 4% interest rate on that loan, you will make monthly payments of $101 for 10 years and pay $2,149 in interest during that time. With just a 1% increase in that interest rate, the amount you pay in interest goes up by $579.
$10,000 x 10 years x 4% = $101 monthly payment/$2,149 interest paid
$10,000 x 10 years x 5% = $106 monthly payment/$2,728 interest paid
$10,000 x 10 years x 6% = $111 monthly payment/$3,322 interest paid
$10,000 x 10 years x 7% = $116 monthly payment/$3,933 interest paid
You can use an online loan calculator to check what your payments may be as you look at loan options. Here is one I found: https://www.calcxml.com/calculators/loan-payment-calculator
Once you do start paying your loans off, pay as much as you can toward the payments. Paying them off early will save you money on interest. Make sure you can still pay your rent, groceries, and must-haves, but put anything you can toward your loans. I highly recommend the Dave Ramsey method of snowballing. In my example, I would pay the $420 per month until one loan is paid off. If that loan was $80 per month, I would put that $80 I was paying toward the rest of my loans to help pay them off faster. If I did not put more funds toward my other loans, all of my loans would be paid off in June 2021 instead of paying them off one by one over the last year and a half.
Lastly, I would definitely agree with many of the suggestions above to set you up for success:
- Apply for scholarships and credits as much as you can. I know I got a credit for my ACT score at my university.
- Look for in-state tuition. Some colleges will allow you to pay the in-state tuition even if you don't live in that state (for example I believe Eastern Michigan University includes Ohio as in-state).
- Start at a community college to earn your basic requirements. Tuition is much lower, you can live at home which saves on dorm fees - there is no difference between Econ 101 at a local college than at a big university.
- Shoot for subsidized federal loans to get the best rates and lowest payments. Federal loans will likely be your best bet in general!
Just be sure to pay off your loans immediately after finishing school (or within the 6 month window most student loans give you) and don't allow interest to accrue. Luckily, the medical field should allow you to earn a significantly competitive income to help offset a large student loan debt necessary for someone pursuing that field without the means.
Additionally, student loan debt is typically considered good debt and shouldn't effect your life pursuits outside of a career.
Good luck to you!