Before I begin, let me say this: “White Coat Investor” and a few others will probably faint when they read this, so if you’re a financially savvy individual, you might want to sit down.
It all began several years ago when I started my undergraduate education. As a product of divorced parents, my father was not responsible for me financially anymore. When he was financially responsible and paying child support, he refused to pay one cent over that required amount. My mother has been working for many years as a special education teacher. Needless to say, she was only able to pay for one year of my out of state roughly $57,000/year undergraduate education. The rest of the time? Well, I applied for as many loans as possible. In truth, I forget what they’re even called anymore…direct plus? Parent plus? Those sound remotely familiar. I graduated college with several co-signed loans in my name collecting interest as I entered medical school.
I was extremely fortunate that I received a scholarship covering almost one full year of my medical school education. I was still facing three years of tuition that needed coverage. Again, the loan applications were sent in and I was granted every single possible applicable federal loan. In addition to this, I needed to apply for and take out loans through my medical school institution. I received small amounts of money monthly through my loans, and I was able to graduate from medical school. I thankfully did not have to pay off any undergraduate loans yet, and I was able to defer all of these newly acquired loans throughout my education period. At my financial exit interview, I remember sitting down and learning about my loan servicer and how to contact this entity in order to organize my debt.
I logged in and there it was, staring me in the eye: I owed $309,602.51 to the government. Add that to the $26,000 that I owed to my medical school institution. Don’t forget to add the credit card debt I had accumulated along with the $3,000 relocation loan that I had to apply for through the bank in order to move from one city to another at the start of residency.
Everyone told me to apply for public service loan income-based repayment. It sounds like quite the option, right? I am working at a non-profit institution, so I am eligible, and payments are small every month. Except, I couldn’t even budget in those payments with cost of living in the Washington, DC area in addition to the repayment of my institutional loans, which cannot be deferred. Therefore, my federal loans are all deferred at this point. I still owe $310,000+ to the government. I’ve made monthly payments on my relocation loan, but I have hardly touched the principal, so it’s basically unchanged. Still owe roughly $3,000 to the bank. I currently pay $300 month toward my medical school institution loans, which I’ve been doing since the spring of my intern year. The remaining amount that I owe at this time totals $22,178.24. Pathetic, I know.
Currently, my net worth entering fellowship is -$334,780 plus some change. I hope to be able to start public service income-based repayments, but I’m not entirely sure that it will fit into my budget. Meaning, another three years of deferment and accrued interest. I have put away a small percentage of my paycheck into a 401k during residency, but I must admit, I have no idea what the total is or how to apply it later. Basically, my financial knowledge is quite limited. Could I sit down and teach myself how to invest, save, and potentially recover from this mountain of debt? Probably. Yet, the task seems overwhelming and I never convince myself to do it. Could I consolidate my loans? I guess so. For whatever reason, I just keep putting it off.
As a medical student, I attended a few financial planning lectures, but I didn’t find them tremendously helpful. I met several times with the financial advisor, but I didn’t have many options given my financial situation. I discussed the high cost of living in Washington, DC and how it would be unlikely that I could make any significant headway on these loans despite my relatively high pay. I am now entering fellowship in a location that guarantees lower cost of living, but it also comes with a pay cut. There is no formal education about the business of medicine or how to actually survive paying for medical school on your own, and boy, do I believe there should be.
Thinking about the entire thing truthfully gives me a headache. I’m almost dreading the comments from all of the financial gurus that are guaranteed to land on this post, but maybe these will motivate me to get moving on these money matters. Until then, I’ll just keep deferring until I’m required to make income-based repayments…then I expect to be paying these loans off until I am dead and buried. Perhaps by then, I’ll finally break even.