Tell me about med school debt and the importance of med school prestige!
February 14, 2014 9:37 AM   Subscribe

I'm potentially interested in going to medical school. I have been doing research online, and have lots of questions about this prospect, but I want to limit it to two interrelated questions today.

1. My first question concerns med school debt. Looking at the figures, if I were to go to one of my state's med schools and get no scholarship or financial aid (which looks likely), I would be between $200,000-$270,000 in debt by the time I finished (my state appears to have one of the most expensive in-state med school tuitions, alas). I realize that new changes mean that interest begins compounding from the beginning, and I wouldn't be able to begin making substantial paybacks until I finished my residency/fellowship. I am currently in my late twenties and finishing my PhD, and anticipate being in my mid-30s (maybe 35-36) by the time I would finish med school. (A complicating factor is that I would also like to have children, and I realize children are also very expensive. If I were a decade younger and starting this whole enterprise I wouldn't be worried, but obviously the timing is rather tight and unideal here.) I'm interested in a specialty that I believe pays mid-range ($200,000-250,000), although I realize that interests can change during the 3rd year rotations. Leaving aside the question of whether to have children in med school and/or residency, and focusing solely on the financial aspects, how long would it take a very motivated and frugal newly-minted doctor to pay off a large ($200,000-300,000) loan, assuming a salary around $200,000 but no second income from a spouse/partner, and possibly children? It seems like it would be doable in maybe 3 years if one were to live extremely frugally (something I am very good at doing, having been a grad student forever); however I hear online stories of people taking 10-25 years to pay it off! Assuming one were successful in living very frugally (and obviously it varies by cost of living, etc.), does something like 3 years sound doable? Are there any/many doctors who find themselves unemployed after residency and/or can't pay off their loans (like lawyers)?

2. Somewhat relatedly, I'm also interested in the importance of choosing a prestigious medical school. I have heard multiple doctors/medical professors say that med school prestige isn't such a big deal, and that you should just choose a med school based on which is the cheapest and/or the best fit. In my experience with academia, prestige is very much the currency that it runs on, and one is generally advised to choose the most prestigious university/program/advisor possible in order to maximize the chances of a job at the end of it. Is this not true with medicine? Is there much disadvantage to going to your state med school versus going to, say, an Ivy League med school? Would this advantage primarily surface when trying to match into a good residency, or does it linger when competing for jobs? How much does a good residency matter, anyway, in terms of getting a job? And if you just pass and don't get an A or honors, is there much of a risk of not matching into a residency if you aren't at a "prestigious" med school? At this point, I'm interested in something that would require a fellowship after residency - does that change things? Is the material/grading/etc. at all med schools basically the same, or is it harder (or easier) at a more prestigious school? Is the latter something worth paying more for (if I could even get in, of course!)? Personally, I am very cured of chasing academic prestige after my experience in academia, but if it's important to go after here then that would be useful to know.

I'd love to hear any thoughts about any of this! Thanks.
posted by ClaireBear to Education (22 answers total) 6 users marked this as a favorite
I should note that at this point, the field I find myself drawn to is not one of the primary care fields, so I wouldn't be eligible for any of those government and other schemes that relate to that. Obviously this may change as I get more first-hand experience with the different areas of medicine, but please assume no for the time being.
posted by ClaireBear at 9:41 AM on February 14, 2014

What kind of practice do you want? Hospital based? Private? Group? Something that comes along with an academic appointment?
posted by blue suede stockings at 9:47 AM on February 14, 2014

At the moment, I believe I would like something hospital-based and shiftwork-based (ideally with no call) where I have something like a guaranteed salary but can pick up extra shifts as needed. I suppose I wouldn't be opposed to being part of a group that works out a hospital, although I'm not entirely clear on the various set-ups. Currently I'm thinking Pediatric Emergency Medicine (via Emergency Medicine) is the specialty I'd like to pursue (for lots of reasons largely centering around the nature of the work, although I also think I'd like the lifestyle; obviously I need to confirm this with more shadowing and then 3rd year rotations etc.). I am not set on something that comes with an academic appointment, but am not definitely set against it either. I don't think I want to be in any kind of private practice that involves me negotiating with insurance companies, or otherwise dealing with mountains of bureaucracy and/or effectively running my own business.
posted by ClaireBear at 9:56 AM on February 14, 2014

Also, what is your Ph.D. in? That may have a bearing on this.

If you want to start a family and you want to decrease your debt, how about becoming a Nurse Practitioner or a PA?

It will eliminate a LOT of debt and time for you, and the overall lifetime earnings may work out for you.

Just another thought.
posted by Ruthless Bunny at 10:01 AM on February 14, 2014

Unless you are primarily interested in a career in research-intensive academic medicine, then prestige doesn't matter. And even if you are interested in such a career, the quality of the research program in the field you are interested in matters more than the "ranking" of the university.

Focusing on debt minimization while attending an American medical school will optimize your career path given what you are interested in.

(And you could still change you mind and have a great research/academic medicine career anyway if you decided to focus on that later)
posted by deanc at 10:03 AM on February 14, 2014 [3 favorites]

The debt-to-benefit-to-family-planning ratio, if you're looking for hospital based shift work, might make a P.A. degree make more sense--especially since you state that academic prestige is not a consideration, and if you're not specifically in love with the idea of "being a [medical] doctor". Have you tried shadowing a hospital-based P.A., or volunteered in a pediatric ER to get a sense of team roles?
posted by blue suede stockings at 10:04 AM on February 14, 2014

In the age of Obamacare, it is by no means certain that you'd end up with a salary of $200K/year. Part of "bending the curve down" seems to be shafting doctors on payments.

They already do that with Medicare and Medicaid, and now with Obamacare they're poised to do it for everyone.

If you're prudent, you won't do your planning based on that salary expectation.
posted by Chocolate Pickle at 10:06 AM on February 14, 2014 [4 favorites]

If you're currently a graduate student, your university should have a pre-medical advisor that you should be able to avail yourself of. Another option is to get in touch with the pre-medical advisor at your undergraduate institution -- mine does telephone/email consultation with alumni.
posted by telegraph at 10:07 AM on February 14, 2014

If you want to do private practice, your prestige probably doesn't matter much.

If you want to be on hospital boards, run a hospital, work in a university as a teacher or researcher, and similar stuff, then prestige matters.

Of course, if you got your PhD at Stanford in Molecular Biology, I suspect you could get away with still accomplishing whatever you want, even if you lack prestige power in med school.

And finally, I heard residency prestige is actually more important than med school. So there is that to consider.

Ultimately, if you become a doctor somewhere in the chaos of paying off debt and raising a family, you will come out on the other end with a comfortable lifestyle. But don't do it for the money. The stress, the work, the call, the hours... It's really something else entirely.
posted by jjmoney at 10:37 AM on February 14, 2014

Also, the idea that ER doctors just pick up a few extra shifts.... is unrealistic. Most residencies don't allow it (and you're working too many hours really for it to be viable anyway), and that's just not really how it works for senior doctors in any speciality really. It's not a paid-by-the-hour kind of job. Somebody has to keep the department running and that will be you. You'll have admin (a LOT of admin), teaching, etc when you aren't on the shop floor. ER has plenty of on call (it's probably the worst for work/life balance). If you want that sort of flexibility definitely look into being a PA or NP instead.

Re: salary, don't forget you will not go straight onto $250000 straight from med school. Residents and fellows are on far less. You won't have paid your med school debt off in 3 years, because you'll still be on £40000 in 3 years. That's why it takes so long.

I worry you're kind of blinded by the presige and money associated with being a doctor. Do make sure you do some shadowing before you apply and have a clear idea of what the day to day job will be like.
posted by tinkletown at 10:41 AM on February 14, 2014

does something like 3 years sound doable?

A resounding no, but you can be aggressive about paying down the loans. It all depends on your overhead. I used this payroll estimator and a conservative salary of $200,000 and assumed a high tax state (NY).

The calculator estimated your after tax take home would be about $123,000. Come up with your own number based on where you think you will practice.

From that I annualized and subtracted $2K for rent, $300 for food, $1500 for loan payments (you will have to make your scheduled loan payments first as a budget item), $125 for utilities, $100 for cell phone, $100 for cable/internet, $300 for gas (will you have a car?), $200 to leisure (including dining out/in), and if you have a kid $2000 for daycare, and $300 for baby stuff, and $1000 per year for clothing, and $150 for your share of medical insurance.

Those out-of-thin-air numbers leaves $36K that you could put to the principal of your student loans, and assumes no savings for retirement or a rainy day, that your car (if you have one) needs no repairs, no copays for any doctor visits (and no medications or catastrophic injuries), and no incidentals like furnishing an apartment, buying an iPhone, paying for movers to your new apartment, travel, no gifts, etc., no saving to buy a home.

To be conservative, if you assume you exit school with $300,000 (keeping in mind, as you may be aware, that interest accrues while you're in your residency, and you don't make much money those 3-6 years, and may not be in repayment on your loans).

As you pay down your loan, your monthly loan payment will go down, and you'll probably get some raises. But if you have a kid, that kid will need more stuff, and eventually your car will break, and interest rates are going to go up eventually (assuming your rates float).

I'd say 12-15 years on these (again, totally made up) assumptions would be reasonable.

Since your net take home is "only" $120K or so, to pay $300K off in three years, you'd have to be living on $20K or less--and I'd guess your scheduled loan payments (which are going to be mostly interest) would be about $18,000 a year alone.

My ex wife graduated med school with about $200K in loans, and I graduated law school with about $120K in loans. I'm down to $50K after about 10 years, but my rates are low (lower than you'll get, I expect based on when I consolidated, at 1.4%), so I just leave them open, because I can beat 1.4% on an after tax basis easily. But, I can say from personal experience that it's hard, oh so hard, to finish professional school and still eat ramen for dinner for another five years living in a shared apartment and biking to work, etc.

Good luck. Digging out from under $300,000 in loans--about the price of an average American home--is not easy or quick.
posted by Admiral Haddock at 10:46 AM on February 14, 2014 [1 favorite]

Just to clarify the rest of the questions asked (and with apologies for threadsitting!), my PhD is in the humanities (actually in a subject loosely related to ethics/history of medicine, and one that seems to generate quite a bit of popular appeal especially among the doctors I've met - not sure if that matters at all. It's not in science or quantitative, in any case, though.). While I'm pretty set on the MD/DO route, I have thought about other allied health professions, and it's something I'm still looking into. I'm going to be shadowing in the ER in a few months, which should help clarify for me team roles and fit etc. Also, I don't know if it matters, but I have/will have degrees (in the humanities) from what are generally considered to be the most prestigious institutions, so even if prestige is important in medicine, maybe this would somewhat mitigate the need for me to go to a prestigious med school, since I will already have some on my resume? At this point, I am not primarily interested in a career in research-intensive academic medicine, but I am interested in ultimately being able to get a job with a stable and comfortable (not lavish) lifestyle in the rough location that I would prefer to live, within driving distance of my family (Northeast US). I really don't think I am blinded by the prestige and money associated with being a doctor, and I do realize that it will be another long slog through the next decade (med school, residency, maybe a fellowship) being very impoverished - I guess my big concern is whether, on the other side of it, I can be pretty assured of being able to pay off my loans reasonably quickly and get a stable job in the broad geographic area where I would like to be. I am worried about paying huge tuition and then physician salaries dropping, as you say, Chocolate Pickle. telegraph - please assume no opportunity to speak with a pre-medical advisor, unfortunately.
posted by ClaireBear at 10:48 AM on February 14, 2014

I am a physician, as is my SO. We keep separate finances, and we both have incomes and educational debts in line with the scenario proposed.

1. To answer your first question, a very motivated and frugal physician won't be able to pay virtually a lick of debt until finishing residency/fellowship training. I would say that 3 years is probably unrealistic even after completing training, but a debt like that could be paid off in about 5-7 years.

Here is the problem: you are seriously asking the wrong question. Rather than focusing on paying down debts as quickly as possible, you should be looking at your finances globally, and in virtually no situation does it make any sense to prioritize paying down educational debts for physicians. When you start working, you will: (a) be making an income that will disallow tax deductions for the interest payments on your educational debt; (b) need to prioritize shifting as much of your income towards maximizing tax-advantaged retirement plans to reduce your income tax burden; (c) likely have a higher long-term yield from saving any spare cash in a diversified brokerage account over paying down the interest compounding on your debt. Currently, I'm fortunate to have debts locked in at an interest rate of 2.8%. It makes no sense to devote my next marginal earned dollar to paying that down, when a conservative estimate of the annual growth I have in my diversified brokerage account is easily > 6-8%. It makes no sense to pay down loans the way you are proposing, UNLESS you have already extracted the maximal tax advantage from contributions to available retirement accounts, AND your loan interest rate exceeds a reasonable expected return on a diversified investment portfolio. Doctors are notoriously bad at money management. I would strongly suggest that along the way you bone up on financial planning, and involve a financial planner in the management of your assets, because what you are proposing will really hurt your savings/retirement in the long run.

Finally, another wrinkle in this is that at least at the present time, there are various programs that will allow forgiveness of portions of your educational debt if you happen to pursue work in certain settings (e.g. the NIH loan repayment program for researchers, Public Service Loan Forgiveness (PSLF)). These programs may make financial sense, still be open to specialists as long as they work in the right place, and may require an advanced payment scheduled (income-based repayment) to qualify for downstream loan forgiveness. If your career goals are in line with benefiting from such plans, then their advantages will need to be weighed against the potential opportunity costs of aggressive loan payment.

TL;DR -- what you're planning is a really bad idea, and will very likely benefit from NOT paying your loans down more expeditiously; you will do fine with your loans once you finish school; you will not be nearly as rich as people think doctors are, but you are virtually guaranteed a comfortable upper middle class lifestyle even after addressing the loans. AND most importantly, you will likely benefit considerably from the advice of a professional financial planner.

(2) Prestige does matter, but the amount it matters depends on your long-term career goals, your specialty of choice, and your continuing interest and background in research/academic medicine. Across the spectrum of price tags, there are really only two levels: private or in-state public. Public schools in my state (CA) are a no brainer because UCSF and UCLA are not only more affordable for residents, but also highly prestigious. As a result they are also incredibly difficult to get into. Other states vary but many have prestigious state med schools (Michigan, Virginia, etc.). The answer to this question will depend on where you live. There are lots of other things you should be thinking about before you worry about this, and I wouldn't think too hard about it until you get your acceptance letters. You will likely be applying broadly to both private and public schools, may not have that much choice in the matter, and it really only makes sense to consider the prestige-vs-expense issue in the contex of the schools that actually accept you. Emergency Medicine residencies are fairly competitive, but lots of students who do well at mediocre state schools go into EM.
posted by drpynchon at 10:49 AM on February 14, 2014 [13 favorites]

You might look into other areas of healthcare that aren't medical, as well. For example, getting a masters in public health, health administration, or non-profit administration and utilizing that plus your research skills from your PhD in an area of medicine like an Institutional Review Board (IRB) director or Institutional Animal Care and Use committee (IACUC) director, or in grant writing for researchers, etc.

There are tons of places in health care that are incredibly important that don't require a medical or nursing degree of any kind that you may find just as rewarding, with significantly less debt, and maybe a better quality of life balance, too.
posted by zizzle at 10:58 AM on February 14, 2014 [1 favorite]

re: prestige. As the saying goes:
"What do you call the person who graduated last in their class from medical school? "
posted by k5.user at 11:21 AM on February 14, 2014 [1 favorite]

Or possibly "the defendant."
posted by Admiral Haddock at 11:34 AM on February 14, 2014 [9 favorites]

Like drpynchon, I'm a physician (in one of the lower-paid specialties).

I realize that it is extremely daunting to be facing down 200K in debt, and that, yes, it's really scary to essentially take out a mortgage for your education. It also does result in cramping your style in the early years as an attending, especially if you have a lower-earning partner or dependents.

BUT drpynchon also makes a good point that you really have to look at these large loans in the context of your overall financial planning. While you could pay them off aggressively, the early years of an attending's career often coincide with having very young children, buying a house, and doing all the other things that professionals in their 30s and 40s do. They also often don't have much saved for retirement well into their 30s due to the low pay during residency/fellowship. So it often makes sense to prioritize retirement savings, childcare, etc. rather than aggressively paying down the loans.

I was lucky enough to go to a highly ranked public school and to graduate in a year of low interest (and also to get loan repayment through a program for the underserved) but even though I could write a check for the balance of my loans today, I'm going to let them ride out because I have better things to do with the money right now. Someone who is really, really debt-averse could probably pay them off much more quickly.

It is also totally possible to moonlight. Residents in the (non-EM) program where I work moonlight on their elective and research rotations (as physician assistants). We're talking about 5-6 shifts a year, though, given their other time constraints. Junior EM attendings I've known have also done quite a bit of extra work. I used to moonlight as a hospitalist occasionally, which basically paid for "fun money" for the month, but I don't do it any more now that I have heavier administrative responsibilities and small kids.

Prestige is prestige. Going to a prestigious medical school will help you get a prestigious residency, which will help you get a high-quality job out of residency, which will then help you with future jobs. Whether you NEED prestige is another question. I would not worry too much about prestige vs expense at the moment--apply to the places you think you might want to go, and then figure out where you're accepted and what they're offering you in financial aid. I think a general rule of thumb (and what worked well for me) is to apply to all the in-state public schools and then some number of "reach" schools across the country. Luckily for you, medical schools tend to have much better financial aid for students over 30 because at that point, most of them recognize that you're financially independent from your parents and no longer count parental income toward your expected contribution. There may be a clear winner at that point.
posted by The Elusive Architeuthis at 11:45 AM on February 14, 2014 [2 favorites]

If you think that a mortgage might be 3 times someone's salary and take 30 years to pay off then a loan worth about the same as your salary would likely take 10 years to pay off. Maybe you could reduce that by a couple of years, but not much.
posted by plonkee at 2:37 PM on February 14, 2014

The Student Doctor Network forums can be great for this kind of question.
posted by the young rope-rider at 3:06 PM on February 14, 2014

Take a look at this question about being a humanities almost-PhD going into medicine. There are some places that take it seriously.

RE:1, no that is unlikely that you would pay it off that fast. There is currently almost zero unemployment among new physicians in the US, but some specialties pay less. If you are reasonable about your spending, it is very unlikely that medical school debt will be a real albatross around your neck after you finish training (during residency it is pretty awful). Most people get real jobs and find that their expenses inflate a bit and that paying off med school debt is less than the #1 concern.

RE:2 Med school prestige is not a big deal to other doctors, but where you do your residency is. Going to a top medical school makes getting a top residency easier, which in turn makes getting a good first job easier. In highly competitive specialties, prestige is probably more important and useful in several ways. The explicit curriculum is similar everywhere, but highly ranked schools have the capacity to expose you to exotic interests earlier and are more likely to have productive area-specific research for you to add to your CV. In specialties that require away rotations, the network of connections is useful. The most important line is US allopathic vs IMG. Stay in the US if you can. If you can go to a great med school at in-state rates, that's a nice co-incidence, but you should 100% be applying to where you are competitive.
posted by a robot made out of meat at 3:11 PM on February 14, 2014

lots of students who do well at mediocre state schools go into EM.

My understanding from talking to professors at med schools lately is that residencies have become much, much more focused on raw quantitative results-- "what was your score on your boards?" is a much more important question on your residency application than "where did you go to med school?" You need to focus on where you can get accepted, and then where you will thrive academically. If you assume a lot of debt for "prestige" but then end up not performing well in school and on your boards, your outcome will be much worse.
posted by deanc at 8:52 AM on February 15, 2014

Thanks, all - I really appreciate all of your answers! Lots of very helpful food for thought here.
posted by ClaireBear at 12:00 PM on February 16, 2014

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