I will be going to medical school next year and trying to figure out how to best finance. I have looked at the options, just want some other opinions.
Tuition is $37,000/yr
Can borrow: $8,500/yr at 6.5%, interest and payment deferred $11,500/yr at 6.5%, payment deferred, interest accrued $33,000/yr at 8.5%, payment deferred, interest accrued
In my pocket come start of school - about $200,000 (probably more but no more than $250,000 but using $200,000 for my spreadsheets)
Will be moving to the SF Bay Area so need to consider housing (buy/rent)
Essentially no other debts - 3 years old Honda paid for.
Consider for at least 3 years of residency (in unknown location) salary will be $35,000-55,000/yr and can probably still defer loan repayment (with all the juice going).
Can not guarantee 3rd and 4th year in medical school will be in same locale so moving is a possibility half way through 2011, but staying in SF area is likely for 3rd and 4th year.
Ultimately, San Fran or California is not my desired location.
My questions:
How much to borrow, buy (live alone small house)/buy (rent out to classmates in big house)/rent, where to put my stash of cash.
As I said, I know the numbers - just want opinions given the current climate and opinions on housing options and where to stash the money with no/low risk.
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posted: Dec. 6, 2008 @ 2:11p
psychtobe
Senior Member - 2K
posted: Dec. 6, 2008 @ 2:35p
are you not eligible for cheaper rates - they were called Perkins loans when I was in med school and they were 5% for 10 years.
I would personally borrow all you can at 6.5%, and pay the rest from your 'stash o cash' and I cannot imagine buying in the SF Bay Area at this time, especially because your time horizon is as short as 2 years.
I would rent a cheap place as close to school as possible (walking distance if possible).
Starting medical school with $200K cash? That will put you in about the top 0.00000001% of medical school students as far as money in the bank.
If CA is not your cup of tea, why did you apply for school there? If you were able to get into school there, surely you could have got into another state somewhere since CA tends to be slightly more competitive because people think its a great place to live (regional bias)?
That tuition sucks... in-state for me was under 10K per year...our out of staters got automatic scholarships to match our tuition. I took all interest deferred loans out only. Owed like 37K when I finished. I am PGY2 now and just this month, my loans started to tack on interest. (18 months after medical school graduation).
I hear CA housing market sucks. I bought a brick home in TX for mid 50s, sold for upper 80s when I finished. I doubt 50s buys a vacant lot in the ghetto in CA... renting sucks but might actually be better there...
Good luck and just remember you will be setting better than any medical student you ever meet. I was able to work a sideline job that did not require tons of time to supplement my income greatly but I did not have 200K when I started medical school and I was better off finacially than any of my peers. The rare exception is the kid that 'daddy' buys them everything and pays for all their schooling... I wouldnt want it that way.
Pakman0209
Senior Member
posted: Dec. 6, 2008 @ 3:20p
what school? UCSF and Stanford or even UCD all have most of their 3rd/4th year rotations in Cali. Are you at a DO school?
Anyways, don't buy. If it was me, I would take the loans and find a better use for your cash. Its what I did when I started med school and I would not be surprised if over the time horizon of your payment period you find several ways to get tuition breaks...especially as the healthcare system changes
Take out all the loans you can, when the hyperinflation comes as a result of all the cash being currently pumped into the system, you'll be glad you did. 60 is the new 40, $100k is the new $10k.
xja884
Member
posted: Dec. 6, 2008 @ 8:01p
3rd and 4th year there are away rotations - may want to do some time overseas - so I may not be in SF for the whole time.
Where is a good place to park $200k now? Just spread them out in various term treasuries?
SbstncT
Tired Member
posted: Dec. 6, 2008 @ 9:08p
Did you really get into medical school already or are you just planning? Doing 3rd year rotations away is almost unheard of unless it is at a satellite campus of some kind and it is likely that they tell you when you get accepted where you will be. As for 4th year rotations away, especially overseas, is very difficult to do for very extended times. Remember, nearly half of your 4th year is interviewing and that is even harder to do if you are not in the country.
If you have been accepted already and do not have the details about where you will be your 3rd and 4th year it is time to start asking some serious questions of your program.
As been mentioned already start looking into government programs/grants. Are you pretty sure what you want to do already? The only reason why I ask is that if you are going to go into primary care many states have programs that will pay for your entire medical school if you agree to return for 4 years or so. Here in Illinois I was able to do this and walk away without any loans. All I have to do is return to practice away from Chicago/suburbs as I was already planning on doing. If the military is something you are interested in doing they have some great options as well.
Good luck with it all and try to enjoy this summer time off as it is likely that it is going to go by way too fast for you.
xja884
Member
posted: Dec. 6, 2008 @ 9:45p
I know where the 3rd and 4th year rotations can be and as I said, most likely in SF - but there are a few options that would have me away for a month or more at a time in 3rd and 4th year. I am leaning towards EM and would want to do an away elective at some of the better programs in the east coast.
I wouldn't buy in San Francisco unless you're certain you can find enough roommates to cover the nut on the mortgage. But even then you can expect that "investment" to depreciate in value by the time you're ready to leave San Francisco.
If it was me, I'd either rent a room in someone else's house.......or I'd rent a house and still find enough roommates to cover my costs.
Absolutely borrow the $8500/year with deferred interest.
But with $200K in the bank, I probably wouldn't borrow the other $44K/year unless you were getting a good rate of return on the $200K.
Strike the 33k @ 8.5 from your spreadsheet. Pay cash. Or better yet see if your school charges no fees for using CC. I don't see why you're wanting to park $250k. You realize it'll need to be reported on your FAFSA, unless you shelter it. You didn't talk about retirement funds. Is that money in a tax sheltered account? If not, you realize there are limitations on how much you can contribute from your 250k+ salary you'll be getting out as EM. The $8500 is sub money and depending on your overall financial situation is, you may not qualify, though this is may be an unlikely scenario. The $11.5 @ 6.5% doesn't sound right. Most medical students in the US have access to a lot more unsub money esp if your COA > $37k (add on living exp - this # is available from finaid office). Other things that will effect your finaid, is if you are married and your spouse is bringing in money. Sub/unsub rates for us are typically 6.8% unless you are getting a subsidy from your loan servicer. So I'm not sure who gave you that 6.5% rate. I would inquire who you're school goes through. If it's direct lending, there is little wiggle. If you can pick your own lender, there are ways (or atleast there were) ways to knock that down to 5.8% though it requires jumping through hoops and some never see that additional saving. Also not sure if you're dead set on going to that school but I'd look around at other schools as well. My tuition at my state school is $12k / year. It doesn't have to be a state school either. Mayo is a great example where you can go for very very cheap. So if you're waiting on other schools that you've applied to, there is still time.
On the issue of house, you've made it clear you plan to live for a short while @ SF. While it is true that you could get a good deal in the current housing market and will provide you a good fafsa shelter (primary residence is not counted) for your funds, keep in mind buying/selling/ and more importantly maintaining a house can take time - something which most med students don't have as much. Yes there are ways around it which involve throwing money at the problem, e.g. if you have someone to let in the plumber while you're taking a test but that's something to consider.
As you may have already read the deferral rules are changing and depending on how much you take out, not everyone will qualify for loan deferment - forbearance is a separate issue though.
My advice: school will keep you plenty busy. yes it's good to plan for retirement and such, but focus on school minimize any trading or portfolios that require you to keep up more often than your tests and pay cash rather than borrow @ 8.5%. Also I'd look to using COA for estimation purposes rather than just tuition in your excel. You may have done this already but stretch out that interest payment @ 8.5% (till after residency) and multiply the amount you're planning to borrow x4 and you'll notice that # is probably quite a bit.
xja884
Member
posted: Dec. 7, 2008 @ 3:19a
For Stafford Loans - from studentaid.ed.gov
If you're a graduate or professional degree student, each year you can borrow up to:
* $20,500. No more than $8,500 of this amount may be in subsidized loans.
comfortcove
Member
posted: Dec. 7, 2008 @ 9:38a
This thread is interesting to me because my son who is graduating from UVA next spring is going to be applying to med school. He will be taking a year off in between. Undergrad has been on us, but he will need to finance med school.
There is a site called Student Doctor Network that has lots of information about all aspects of med school, including $$.
Good luck to you. I am impressed that you would know about the FW Finance Board!
Not to knock on osteopathic doctors, but this doesn't sound like an MD program, it really sounds like a D.O. program based on your description. Is that affecting your loan options or potential earnings?
Pakman0209
Senior Member
posted: Dec. 7, 2008 @ 4:43p
I agree with gaspasser! There is nothing wrong with a DO program, but they have a much harder time landing competitive residencies and are often forced into primary care, which affects their long term income potential. That could influence your financing decisions!
I know this year the "R.O.A.D. to success residencies" have seen over a 22% increase in applicants and I see that trend continuing!
SbstncT
Tired Member
posted: Dec. 7, 2008 @ 9:42p
Unless Student Doctor dot Net has changed a lot over the past couple years or so be careful. The site is 'mostly' made up of undergrads trying to get into med school and/or the 'type of people' that may act like they know more than they do. Just my opinion.
xja, so where are you going?
Gas, I was actually putting my bet on a foreign program that will do the basic sciences overseas then sets you on your own to find your clinical work. I ran into some of these guys back in Chicago when I was a 4th year and my gawd that sucks. But hey, you gotta do what you think you gotta do.
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