Helping Pre-Med Run Numbers in Medical School

A post recently appeared on the WCI subreddit:

“I’m going to take out a loan to attend orthopedic medical school and, for living and housing expenses, I’m going to take out about $500,000. Given the results of the One Big Beautiful Bill Act (OBBBA), about $300,000 of this will be a private loan. Now, according to my calculations, if I do a three-year IM and $1 million I’m looking at residency and $1 million. million in loan balance total, about $800,000-$900,000 private.

I have four questions:

1. Isn’t that a ridiculous number?
2. If I don’t fit into cardiology or another high-paying specialty, will I be hurt financially?
3. Will I be able to buy a nice house?
4. Would you attend this school or try going to PA/anesthesiologist assistant school? (I don’t care about acceptance)

My whole family is always telling me to relax and I will be fine but they are not the best decision makers in this regard. Without forgiveness options on $800,000 of that loan, I can’t help but worry.”

My biggest problem with this post wasn’t that pre-med was worrying about these things (some concerns seem justified), but that I didn’t think the numbers were accurate. And effective numbers don’t do much good if the numbers aren’t reasonably accurate.

Is $1 Million+ in student loans unreasonable?

Yes, $1.1 million in student loans is a ridiculous amount today. But maybe not in a few years. As humans, we tend to ignore inflation. That’s a bad idea when doing long-term calculations.

I was so worried about student loans when I applied to medical school back in the 1990s that I signed four years of my life away to pay for a school where I could probably graduate with only $75,000 in student loans. The average income for an emergency physician in the year I left residency was about $225,000. I would have to live as a resident for about 4-5 months to pay off my entire medical school loan balance. Instead, I spent four years saying hello, putting on a gas mask, doing six patients an hour on sick call on Monday mornings, and broadcasting around the world. It had its pluses and minuses, but paying for medical school in time instead of money was not the way, shape, or form to make a wise financial decision in my case. I once ran the numbers, and I realized that I was out $180,000 for doing that.

My point is that this future doctor will probably be earning more than they think by the time they get out of the fellowship in 11 years. Maybe twice as much. A million in student loans is a lot if you make $300,000. Not much if you’re making $600,000.

More info here:

Considering Student Loan Refinancing Now? What You Need to Know After OBBBA

Will I Be Hurt Financially?

If you don’t fit the specialty, yes, you will be ruined financially. This growing physician financial impact is a legal disaster with few ways out, especially since OBBBA passed and medical students have a large portion of private loans that cannot be discharged with 10-year PSLF forgiveness or 25- or 30-year IDR forgiveness. But you don’t have to go with a high-paying specialty for this to work for you. I suspect pre-med does a disservice with numbers and measurements. Not only are they likely to earn more than doctors currently earn due to inflation, but they probably won’t owe as much as they think. Let’s run the numbers ourselves to see for ourselves.

Midwestern University has two DO schools, in Chicago and Arizona, which are generally considered expensive. The cost of transportation (COA) for the Chicago school is about $116,000. If you borrow all the costs of living (ie, no savings, no job, absolutely no help from parents), the total loan is $116,000 x 4 = $464,000, plus interest. How much interest? That depends on the type of loan and the interest rates at the time it is issued. As I write this, student loans for medical student associations are at 7.94%, although that may drop slightly next year. The OBBBA, however, only allows individuals to borrow $50,000 per year for medical school using federal loans. The rest must be borrowed privately. Those prices are usually high. It’s hard to say how high it is since no one has taken out a private loan for so long, but a 1%-2% rise seems possible. It seems fair to use these numbers for 7.5% federal and 9% private.

While you don’t have to withdraw the entire $116,000 at the beginning of the year, it’s certainly easier to do the math that way. Let’s do a $50,000 loan and a $66,000 private loan each school year and see what the total is at the end of four years.

• Year 1, Federal $50,000 grows to =FV(7.5%,4,0,-50000) = $67,000
• Year 1, Private $66,000 grows to =FV(9%,4,0,-66000) = $93,000
• Year 2, Federal $50,000 grows to =FV(7.5%,3,0,-50000) = $62,000
• Year 2, Private $66,000 grows to =FV(9%,3,0,-66000) = $85,000
• Year 3, Federal $50,000 grows to =FV(7.5%,2,0,-50000) = $58,000
• Year 3, Private $66,000 grows to =FV(9%,2,0,-66000) = $78,000
• Year 4, Federal $50,000 grows to =FV(7.5%,1,0,-50000) = $54,000
• Year 4, Private $66,000 grows to =FV(9%,1,0,-66000) = $72,000
• Total Corporation = $240,000
• Net Worth = $329,000
• Total Federal + Private = $569,000

That’s certainly not $1.1 million, at least not yet. But there is still sitting and obviously participating in the programs. Let’s consider each of the three years. What happens to residential association loans and partnerships under the OBBBA? At the very least, they’ll be down $50 a month despite making smaller payments that don’t even include the interest rate. Therefore, we will assume that after six years of post-graduate training, the federal loan remains at $236,000, about the same as at graduation.

What happens with a private loan on a residence? Yes, they should be renewed early and often. Payments can usually be set at $100 per month during training (which we will not ignore in our calculations). Bottom line: they will grow, but probably not to 9%. Let’s assume they can be refinanced to 6%. After six years of $329,000 growing at 6%, the personal loan grows to =FV(6%,6,0,-329000) $467,000.

Upon completion of training, this doctor will owe $236,000 in federal loans and $467,000 in private loans for a total of $703,000. Now, $703,000 is an awful lot of money. But it’s not $1.1 million. Not even close. And federal loans may qualify for PSLF in just four more years. In fact, this doctor probably only owes about $500,000, assuming he is willing to stay on faculty or work at the VA for a while. And a doctor is likely to make something between $500,000-$1 million.

That rate certainly doesn’t look like a financial disaster to me. It seems that for two years I have been living as a resident.

Other Options for Paying for School

If the prospect of owing $700,000 is overwhelming, there are other options. One can join the military through the Health Professions Scholarship Program or other options, like I did. One can commit to MD/PhD program, National Health Service Corps, Indian Health Service, and others. Time or money, your choice.

Will I Be Able to Buy a Good House?

This is a more reasonable question than the others. People these days, even the highest paid doctors, have every right to worry about the housing crisis in this country. Many who were there today could not buy their current houses with their income. We don’t know where our children will live, but they won’t be in the places we live unless part of the payment comes from us.

If I had to deal with the housing crisis as a young person today, I would rather do it on a doctor’s salary than the average American. Yes, you will have the ability to buy a nice house. But it may not be as good as your dreams, and you may not buy it as quickly as you hope.

Should I Go To An APC School?

Becoming an APC of some type (PA, NP, CRNA, AA, CNM, etc.) can be a great career. However, it is not a solution for someone who wants to become a doctor but is worried about financial costs. Your career choice is very important to make with finances as the first consideration. This is your life we’re talking about. What do you want to do with it?

Most of us in medicine were not talking about it. We are very motivated by type A people who want to be the captain of the ship. I love the PAs I work with, but it’s not fair to not be the captain of the ship. I am not. I would have felt bad as a PA, especially if I had chosen that because I was worried about that $75,000 (seems silly in retrospect, right?) student loan burden.

More info here:

How to Go to Medical School for (Almost) Free

Cheapest Medical Schools in the US

Medical School Still Makes Financial Sense

Yes, going to medical school is still a good investment, even if you have to pay for it with debt. Four things must happen:

1. Matches the specialty you want.
2. You get a decent job and work full-time at it, at least for a while.
3. You don’t burn out before entering at least mid-career.
4. You learn to manage money well.

Those are the real risks here, and the first three have been increasing over the past few years. But for many WCI employees who really want a career in medicine, this still works well—even if you pay for everything with credit, as long as you learn how to manage money. As I’ve been telling doctors for years: don’t give up on your dreams for fear of the student loans you can pay off in three years living as a boarder.

If you’re thinking about refinancing your student loans, there’s no better place to do it than through one of our partners.

WHAT DO YOU THINK? Does medical school still make financial sense after OBBBA? Why or why not?