The following is a guest post by fellow personal finance blogger, Catherine Alford, of Budget Blonde. You can also follow her on twitter @BudgetBlonde. Enjoy!
Many of you might read that title, and think, “Absolutely not! That’s what’s wrong with our country!” And, you would be right. The student loan debt in our country is a massive problem, one that’s surpassed a trillion dollars in recent years.
Yet, that’s exactly how much money my husband and I are borrowing so he can attend school at a private American owned international medical school.
Why didn’t we just pick a public medical school? Wouldn’t it be cheaper?
Medical school is one of the most competitive and most difficult forms of education that someone can go through. Less than 9% of applicants get accepted. Unless you have unbelievable MCAT scores, the average student who wants to go to medical school doesn’t really have their pick of schools if they even get accepted at all. If they get to choose between two schools, they are lucky. We’re thrilled with the international school my husband attends. They have students from 180 different countries, and it’s been the experience of a lifetime.
Won’t it be easy to pay it back once he starts working as a physician?
We’re not naïve enough to think that once he becomes a physician, we’re going to have piles of money. That’s a very common misconception, but I feel that many people are starting to realize that physicians do not make the same salaries that they did 10-20 years ago. We’re not sure how the health care reform will affect his potential salary, but money is not why we did this to begin with. No one in their right mind would undergo this rigorous of a curriculum just to make six figures, when you can make that in many other fields and have a much better lifestyle. All we ever hope for is that we will make enough to comfortably pay these loans back and raise a family.
How are you going to do that?
There are many different programs that physicians can take part in to have their loan amounts lowered. Listed below are some of these options:
- They can work in a rural area for a specified amount of time.
- They can become officers in the military.
- They can do what’s called a Public Service Loan Forgiveness program and work for 10 years in a public service position.
We’re not exactly sure how we personally are going to tackle this, but as of right now, we’re going to enroll in income-based repayment during residency. Essentially, when my husband graduates from medical school in 3 years, his loans will start being due 6 months from that. The problem is that he’s not done with his education yet, and will be in residency for another 3-7 years depending on the program. Residency is not considered being “in school” because you get a salary, so the loans are not deferred. However, the salary of a resident on average is $50,000, and if you do the math, it’s hard to pay back $300,000 when you only make $50,000. So, we’re going to enroll in income-based repayment to start paying it off slowly while he’s in residency. We’re choosing that over hardships or forbearance, because I know that just paying it a little over time will help us in the end.
Times have certainly changed both in terms of student loans and also health care. Just a few years ago, medical schools students were borrowing money at 2% and 3%. Now, we don’t have subsidized loans anymore, and our interest rate is 7.9%. However, when you want to do something that you believe in, and the only way to fund it is through U.S. loans, we think it’s worth it. We’re living simply now, we’re watching what we spend, and we have a plan for the future so that one day we can pay this off quickly and more importantly, with no regrets.
How about you all? What techniques have you used in the past to pay off your student loans? Did you take advantage of any loan forgiveness or relief/deferral programs?
Share your experiences by commenting below!
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