As of right now, $300,000 is a low estimate for the cost of my husband’s medical school education. Thus far, we have borrowed $219,000, but he is only halfway through school.
This number is a bit higher than the average medical school student because my husband attends an expensive private school, and he’s also in a 5 year program (as opposed to a typical 4 year one) that includes an extra year to earn a master’s degree in public health.
He already completed the public health requirement and is now finishing the third of his five medical school years.
Needless to say, we’ve spent a lot of time thinking about how we’re going to conquer these loans. To make it not so overwhelming, we’ve come up with what I think is a pretty good plan, but I’d love to hear what you think about it too!
Step 1: Reduce Dependence on Living Loans
In addition to receiving loans for tuition, we also get about $10,000 a semester to live on. We were able to send back a lot of this extra money this year, which felt great, and we’re going to continue to try to rely on just my salary to live on. Since I am switching to full time blogging next year, I’ve saved a lot of my income as an emergency fund, and we’ll just take things one semester at a time, hoping to send back as much as possible depending on how well my business is doing.
Step 2: Get a Good Residency
In two years, my husband will be applying to residency programs. Even though he will officially be a doctor at that time, he still has to complete a few more years of training. Residents make about $45,000-$50,000 a year, which is consistent across the country. So, we plan on living in an inexpensive area (think Georgia instead of New York) so that his salary goes a long way.
Step 3: Start Paying Back Loans During Residency
A lot of young doctors kind of ignore their loans and defer them to deal with them after residency. However, I plan on doing income based repayment, so at least we are putting something towards them. A lot of different calculators have showed that we can save tens of thousands of dollars by just paying some of the interest while he is in residency. It’s not going to be easy, but chipping away at it slowly while he’s still training is going to help us a lot.
Step 4: Live Like Residents for 5 More Years
One of the biggest problems with graduating from residency is that these doctors have worked insane hours for 10 years, and they are so ready to finally buy a nice car or a nice house. I know that’s going to be everyone’s first instinct to reward themselves for their hard work, but we plan on living like we did in residency for at least 5 more years. This means keeping our budget at around the $50,000 a year resident’s salary, and throwing anything extra right at those student loans. With this plan, if we can bring in $150,000 per year together, we should have these loans paid off in 5 years or less.
Step 5: Research Loan Reduction Programs
Lastly, there are some loan reduction programs that offer loan forgiveness if he works in a rural area. Many of these plans are 10 year plans, though, and we want to pay the loans off in 5. So, we’ll just have to do our research and see if any of them are a good fit.
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What would you do if you had 300k or more in student loan debt? I’d love any insight you might have!
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Trying to find a residency in an area with a lower cost of living is a really great strategy. If the income is pretty much the same either way, you can make things so much easier on yourselves that way. Sounds like you guys have a great plan in place.
Matt @ Mom and Dad Money Thanks!! Yeah you would think that the pay would be higher in higher cost areas but not so, although some residencies in places like New York offer some housing bonuses to make rent a little more affordable.
Ouch ouch ouch! Here’s hoping he lands a nice position and that you are able to really ramp up your income, to help you pay that down. My brother was in school for eight years and definitely feels “behind” compared to his friends who graduated after four or five years. Beware the temptation!
Ugifter Thanks Anne! You don’t have to worry about me. Frugal gal over here to the core. ;) All I’m asking for is a nice washer and dryer. No fancy cars or diamonds for me haha!
Ouch, that is a high number! But, it makes total sense with the field your husband is going in. My best friend was in a similar situation and there was no real way around it. He did, I think, everything you’ve got listed to help him knock out his debt. I think the sending the money back and paying back during residency are huge ways to knock it out quicker.
FrugalRules Yes, it amazing how much paying some of the interest during residency will help!
What specialty do you plan to pursue?
I wouldn’t be too worried if I was you. $300,000 sounds like a lot but it should be very manageable. I’m guessing you’ll get a substantial signing bonus that can be used to eliminate a nice chunk of that balance. Living like a resident during your first few years of practice is a good idea.
My wife finished her family medicine residency in 2010 with a student loan balance of $175,000 and we’ve whittled it down to $47,000. If all goes as planned, we should have it paid next year.
DrPepper25 He’s not exactly sure what specialty just yet. I think he will have a better idea once he starts clinical rotations in a few months. I’ve never heard of a signing bonus for joining a practice. Did you wife get one? That sounds great!
BudgetBlonde DrPepper25 Signing bonuses are very popular in primary care. She receives 5-10 emails/mailings from recruiters each week and all of them have a signing bonus. I’ve seen signing bonuses of up to $150K offered.
When she signed, she received a signing bonus of $50K from the clinic and another $25K from the local hospital. We didn’t use all of it to pay back loans though. We bought a house and had to get a different vehicle to replace her 1993 Camry POS residency ride.
If he is thinking about family medicine, I know there is at least one residency that offers a MPH track and another that offers a MPA track. That could knock off a year of med school and he’d get paid to get the degree.
DrPepper25 BudgetBlonde Wow. Are you kidding? That’s incredible about the signing bonuses. He actually already has an MPH. He’s in a 5 year program where he did the MPH for the 1st year and then moved on to medical school but because of the MPH he does have an interest in primary care. Are you in Canada or the US? I’m wondering if it’s different in different places.
BudgetBlonde DrPepper25 We are in the northern part of the US.
BudgetBlonde DrPepper25 If your husband is interested in primary care, he’ll probably be told by a lot of people that it’s a low paying specialty. That may be the case in some areas but not all. I know a lot of family medicine docs that make over $250K but it depends on location.
DrPepper25 BudgetBlonde Thank you so much for all the great information and encouragement. Great to know about primary care and the salaries. I’ve told him to just do what he loves regardless of pay so even if he falls in love with a “lower paying specialty” I’m cool with it. Like you said, it really depends on your location and how many patients you see. I’d personally rather bring in 200k and see my husband and have a family life than bring in 400k because he’s in a super intense surgical specialty. Plus primary care never gets enough credit. As you know, they have to know everything about everything – very challenging and I think he’d love it. We’ll see where we end up but your comments today have been extremely encouraging. I can’t thank you enough. I read all of them to my hubs. :)
I think that living like a resident is a very good plan. A lot of people get caught up in lifestyle inflation once their salary increases. Living in a low cost area will also help. Kind of expensive in NY…although once you’re here, maybe you won’t want to leave =)
Andrew LivingRichCheaply Haha I love New York but on 50k I think it would be pretty rough!
That number makes my eyes bulge out, but you have to remember he is going to have a really, really good salary when it’s all said and done. I think you’d be able to throw more at the loans than $150K if you wanted. Although if you could find a place you don’t mind living that has repayment options, that might be the way to go, even if it takes 10 years. You could throw all that money into retirement or investments and be able to really retire whenever you wanted. That kind of makes me wish I’d gone to medical school, but knowing how I was, I would have probably just racked up more debt.
Eyesonthedollar You make a really good point about spreading it out to 10 years and investing instead. If he does primary care, it will def be something we will look at!
That number makes my debt sound like pocket change but like someone said below, he will be making a good salary once residency is over and if your plan to live an inexpensive lifestyle goes well, you guys will be able to pay down the debt quickly.
BorrowedCents Thanks, we really hope so!
I think it’s really smart to try to live in a low cost area. That makes a huge difference in so many ways – housing, daycare, groceries. Your 50K will stretch so much farther.
Holly at ClubThrifty Exactly. I know we can do it!
Low cost of living can make such a difference. It’s great that you’ve been able to send some of those living loans back already!
brokeandbeau Yeah we sent back $13,000 this year. It felt awesome.
I agree about living in a low cost area. Side hustle as much as possible. I think living like a student for a long period of time will really be helpful in this situation. Take all windfalls and throw it towards debt.
deardebt Luckily my husband can finally be the side hustler! It’s called moonlighting. Once he has his license he can work at clinics at night etc!
Sounds like a good plan, but my jaw dropped a bit when I saw the title of your post! Low cost of living is a really great idea. As a NYC resident I can tell you it’s really painful to see so much money just to go rent.
BrokeMillennial Exactly. NYC is awesome, but there’s no way we’d make it!
Man I really don’t know what I’d do! That amount hurts my stomach and it’s not even me. But I know there is a big ROI obviously when it comes to being a doctor. I think you are approaching things in a very smart way.
Beachbudget Thanks. It doesn’t make my stomach feel great but at least we have a plan in place. I mean, that’s what some people mortgages are. We just chose to invest in hubby’s brain instead lol.
That’s really smart to move to a place that has a low cost of living to make the most of that residency income. I can officially vouch for Georgia for being quite cheap – and you don’t even have to be out in the boonies to take advantage of the low costs! When my husband’s aunt first visited us in our new home, she could not stop making comments about how our house was “huge” and saying things like “how on earth could you afford this?” – our house ISN’T huge, it’s actually a little smaller than average for our metro area, and it was extremely cheap! (Or else we COULDN’T have afforded it). She couldn’t understand it because she lives up north, and our house in her area would have been about three times what we paid for it down in the south. Just about everything costs less down here!
CSMillennial Things cost less, the people are nice, and the food is great. What’s not to love? ;)
Thats a really good plan you have there! Also, if you can’t find a residency in Georgia, try going for programs that will cover your cost of living. I know someone doing their radiology residency in Brooklyn and he gets his housing covered (he’s living in a $1500/mo place).
KariFunSizeVu Hey Kari – Great to see you here! Oh yeah Georgia was just an example since places in the south are typically more affordable, but good to know about the housing!
BudgetBlonde yes I created an acct just so I can put my comment lol. Love ur blogs thats why!
KariFunSizeVu BudgetBlonde Aw that’s so sweet!!! I know David, the owner of this site, appreciates that!!!
Definitly find residency in low cost area and there may be bonuses you’re not aware of
For ex if you work in a remote area around here (and they’re never that remote) the goverment basically eliminates government issued student loans for doctors amd nurses
He may also get a signing bonus depending what/where he works
You guys will be fine!
PlungedinDebt You’re the second person to mention a signing bonus. I’ve never heard of this. I wonder if its just in Canada?
BudgetBlonde PlungedinDebt My brother in law is a general surgeon and he moved to a town of about 100,000 people in KY and got a huge signing bonus. Of course, he used it to join a ritzy country club, but I know you’d never do that.
Eyesonthedollar BudgetBlonde PlungedinDebt This is all so interesting!! I am totally doing research on this signing bonus thing! Thanks for the insight. And you’re right. I would jump in a lake before joining a country club haha.
You guys have a great plan. I can’t imagine having that much, but I also did not major in anything medical related.
SenseofCents Thanks!!
First, I would throw up for having that much debt. I don’t understand why the people that deal with our health have to pay do damn much for their education. I think their education is super important, but so are they.
I would follow your plan. I would act like I was poor and live like that for a number of years. Good luck!
DebtRoundUp I know; it makes me sick too. We crunched a lot of numbers before agreeing to jump on this crazy train and we knew we could get out of it at the end if we were smart about it!
I think you have a great plan Cat. I think the biggest key is to avoid lifestyle inflation. As you mentioned, many docs get out of school and start spending money left and right because they have been deprived for so long. My dad did that when he graduated, and so did my brother-in-law who is a dentist. Both of them regretted it a lot. If you can spend five years living at your current expense level, you guys will be way ahead of the game!
ayoungpro Thanks so much for the encouragement. You know I’ll be a frugal gal to the core! ;)
And I feel like I have a lot of debt! I can’t even imagine having that much. You guys seem to have a really great plan though!
BoldButtercup Thanks! I just consider it like a mortgage except the investment is in hubby’s brain and not a piece of property!
Wow, $300k is rough! I think I would have a really hard time trying to deal with that much debt. Kudos to you for being able to face it and creating a plan to pay it all off.
Erin My Alternate Life Yeah girl, we’re going to rock it I hope! :)
I think you have a pretty solid plan. Your plan definitely makes sense. Sometimes it benefits to move to like some odd place like Utah because I heard before from a doctor who was in huge debt as well that there is way less competitiion for jobs than in big cities and some hospitals tend to pay higher. Thats what he said. I’m not sure how true it is.
MonaSez Interesting. I love doing research like that so I’ll definitely be scoping out the best places to live!
A daunting number but one that will be worth it in the end. You two sound as though you have carefully thought out a workable plan to eliminate as quickly possible. Chipping away at the payments while your husband is still in residency is a smart idea too. Plus not inflating your lifestyle will make a huge difference too. And I know you’re moving to freelance full-time shortly so you income potential while variable is also unlimited. I have no doubt that your income will only continue to grow as well. :)
TheHeavyPurse I love that positive way of thinking about an income being unlimited. I need to print out this comment and refer to it. You always know just what to say, Shannon!
That’s a really solid plan, and I love the idea of using geographic arbitrage to stretch out the residency & freelance income farther. I’d recommend Arizona as a frugal location to consider: it’s crazy cheap here and I’ve found salaries to be just as high (or higher) in my field here than they were in San Diego. Plus, my wife and I are here, making the place cool just on that count. :)
DonebyForty You’ve convinced me. Let me know when the lot next door to you is available! ;)
BudgetBlonde DonebyForty Ha! It is available right now. Our neighbor across the street is selling her place. Corner lot, upgraded kitchen…
:)
DonebyForty BudgetBlonde LOL no way!! Going to talk to the hubs right this second. Forget this Caribbean island. ;)
This sounds like a really good plan. I think you’ll be able to pay off more loans than you think on his residency salary and yours combined. You can easily live off of $30k a year.
Ca$hFunny Good point! I was thinking of throwing some kids into the mix, ya know just to keep things interesting, haha. But then again, there are are a lot of families that live on 30k a year, so there’s no reason why we can’t if we’re in a somewhat affordable area.
That’s awesome that you have everything laid out for how you plan on attacking the debt now. There are way too many students (myself included) who don’t even consider what they are doing until they get the bill at graduation. Glad to see you are being much wiser than I was.
MicrosMissions Ah well you should read my posts on here about my own student loans haha. I was not so smart with those but learned my lesson so now that we have these big ones from him, we’re much more careful about it!
Sounds like you guys have a great plan. I’d hope the both of you can earn more than $150k after he gets out, but even at that level you should be able to do some massive damage on the student loans at that point. It stinks, but it’ll be worth it in the long run and I’m sure your husband loves what he does.
Money Life and More I hope we can too. I’m hoping that’s a low estimate for a combined income, esp. for his part of it! And yes he really does love it so much! :)
Hey Catherine,
Although the costs of his education are high once he is done his income will or should be more than enough to cover those loans over time as long as you don’t have more debt on top of it. i don’t know how much money doctors make where you live but over here they aren’t hurting for cash that’s for sure. If you are a dentist or a lawyer… you’re golden. I’d be more worried if I had 300k in school debt and a degree with no hope in hell of getting a job. I think you are both 2 financially smart people and you will knock that debt on the head faster than you can think because you want it gone. Well done to him for going the extra mile.. the world is always in need of more doctors.
CanadianBudgetB Thanks so much!! I’m sure the salaries for doctors will continue to change as the US gets new healthcare laws, but I do think there will always be a need for physicians and that they will hopefully always be highly compensated for the sacrifices they have made to get that far!
I’d cry, but that’s because I don’t have a $150k a year salary to dig myself out of that kind of debt. I think as long as you have a plan (and you do) and you follow it, you’ll be fine. It’s just like that old saying “if you live like a doctor when you’re a med student you’ll live like a med student when you’re a doctor”
StudentDebtSurvivor Haha well to be fair, I don’t have that kind of salary yet either. ;) I loved your quote. I put it on my blog’s facebook page!
This is a great plan!
LisaVsTheLoans Woo hoo! Thanks!
that is huge, and I get people’s party mood once the hard working part is over but your plan is great, bear with it a bit longer and you’ll have a head start with your finances.
RFIndependence Oh yeah no party party for us!! ;)
Oh Gosh, that’s a tough hypothetical to address….
Putting five years, $300k, and 7%, into Excel spits out a monthly payment of almost $6k, which would be annual payments of $72k. If you pay that from a combined income of $150k, you’d be left with around $40k after taxes to live off of — that’s definitely doable.
That said, if it were me, I would, of course, prefer to make good on the loans, and pay them off as aggressively as possible. But at the $300k+ level, I would also take a long hard look at the federal loan forgiveness options and make the most educated, most brutally honest guess about what my income would look like over two other time horizons — 10 years and 25 years — to see if the PSLF or PAYER/IBR loan forgiveness would make more sense.
Good luck! I’m definitely rooting for you guys and excited to see your story play out :)
Debt Blag Thanks for doing that!! We were also thinking around 6k too. Seems outrageous now but that’s what it’s going to take. We will definitely take a look at all the different options because you’re right – they might be better I’m definitely one of those people who feel debt “emotionally” and want it gone vs. the level headed people who can comfortably hold loans for 30 years because they know they have more investing power etc. I’m working on it! :D
Glad you are so optimistic and I agree that living like a resident after us very important. But 6k a month off a 150,000 salary is a over estimation. I am a new attending and make 140,000 a year. My husband is stay at home dad. Our monthly check is 7,000 because you have to calculate all the taxes taken out, health care and we are putting away for retirement because my job matches it. So with a 6k payment a month that would only leave 1000 a month which wouldn’t cover basic bills. And we live very modestly in a small 2 bedroom apt and I drive a 99 Honda that has 170,000 miles on it. So keep up the optimism and being frugal but realize its harder than you are making it out to be. I personally have 290,000 in loans and I went to a residency in a cheap place. Def reccomend that because we started paying my loans in residency.
That’s a huge student debt, but as long as you have a plan (which you clearly do) it will certainly be a good investment in the long term!
moneystepper Thanks! We hope so!
I wonder if you mentioned your loan servicer somewhere in your blog. Would that be a big factor. here they are recently rated https://twitter.com/GLAdvisor/status/386186057773228032.
I’d cry. Yikes! Are the dependence on living loans necessary? I know you’re sending most of the money back, but why take it out in the first place? Definitely pay whatever interest you can while he’s still in residency. Capitalized interest is your enemy and will make your 5 year plan a whole lot longer.
Thanks for your comment. Yes the dependent loans are necessary, and we’re doing everything we can to pay it off quickly. We took out the loans because we needed them, and when I got a raise I sent back as much as I could.
Oh wow! I think I would be looking at loan reduction programs like crazy and doing all that I could to get it reduced.
But just a note, I had a 13k student loan canceled this year. Be prepared to pay a TON back in taxes if you try to go this route. Maybe start saving for that road just in case!