When you think of the word “doctor,” what comes to mind?
Plenty of money to go around?
Sure, it’s true that some doctors make a good living. But plenty of medical school grads find themselves saddled with six-figures of student loan debt.
Student loan debt is a growing concern, and med school grads aren’t exempt. The average graduating debt of medical students is $183,000, according to the Association of American Medical Colleges (AAMC). Once you factor in interest, repayment amounts can range from $329,000 to $480,000.
It can take decades to pay off that kind of debt.
Is medical school worth it?
As with most degrees, it all depends on how you approach medical school and what you do after. Here are four questions to ask before you get too deep in med school debt.
1. What’s your desired specialty?
How quickly you can repay your student loans depends on your specialty. Medscape’s 2017 report on physician lifestyles indicates that pediatricians can expect to make around $202,000 a year. Go into orthopedics and you could rake in $489,000 a year — nearly 2.5 times more than you stand to make in pediatrics.
That’s a wide range of possible salaries after graduation. And your annual income will have a direct effect on your ability to repay your debt.
Say you graduate with the average $183,000 of medical school debt. With a 10-year term and a 5.7% interest rate, you can expect to pay about $2,004 a month, according to our student loan payment calculator.
Of course, it’s not just student loans you have to make payments on — you have plenty of other living costs eating into your income. And don’t forget taxes. Most physicians are in the top three tax brackets, and top specialists are in the highest tax bracket.
With a higher-paying specialty, you’ll be better prepared to repay your debts. Though money isn’t the only thing to consider when deciding on your career path, it is an important aspect.
2. How much does your school cost?
According to the AAMC, the average 2016-17 cost of attendance for one year at a public medical school (tuition, fees, and health insurance) is $34,592 for in-state students. Out-of-state tuition averages $58,668 and private medical schools cost more than $50,000 a year — not including books, food, and housing.
It’s possible to save by going to a less expensive school, however. U.S. News & World Report released a list of lower-cost medical schools, many of them located in Texas. In-state tuition at Texas A&M Health Science Center is $16,432 — half the average cost of in-state tuition.
Reducing the overall cost of medical school means you’ll have less to repay later, allowing you to save or invest more of your income.
3. Where will you live?
Your return on investment from medical school also depends on where you live when you finish. The Medscape report looks at how much you can make depending on where you practice.
If you’re willing to live in the upper midwest, you could make a pretty decent living as a doctor. Plus, many of the states where you can earn the most also have a relatively low cost of living.
According to CNN Money’s cost of living calculator, your money goes further in Minneapolis than in Chicago. Move to a state like Utah or Iowa and you can really see a solid return on your investment.
If you can earn far above the national average, your costs will be much lower. Do that for a few years and you can pay off your debt faster.
4. Could refinancing your debt help?
If you have a lot of student loan debt, you might be able to manage the cost of medical school by refinancing your student loans.
Refinancing your debt to a new loan with a lower interest rate can save you tens of thousands of dollars over the life of your loan. If you have medical school loans with multiple lenders, refinancing also has the added benefit of combining all your loans into one, meaning you’re responsible for just one monthly payment.
If you’re struggling with your monthly cash flow, you might benefit from refinancing to a longer repayment term. Switching from a 10-year term to a 15-year term will take you longer to repay your debt, but could lower your monthly payments. However, since you are taking longer to repay your debt, you will most likely pay more in interest with this method.
Start by using a student loan calculator to see exactly how much you could save by refinancing.
You have to decide if medical school is right for you
So, is medical school worth it? For many medical school grads, a career as a doctor makes it worth the expense.
“I definitely feel that the educational debt is worth the costs financially and the time commitment,” said Edna Ma, M.D., an anesthesiologist. “I went to a public institution and graduated in 2004 with low interest rates, amortized over 30 years.”
But not everyone feels the same. Dawnmarie Risley, D.O., is in orthopedics, one of the most lucrative specialties. “If had to do it all over again, I wouldn’t do it,” she said.
Dr. Risley graduated with $147,000 in student loan debt in 1996. She moved from one residency to the next, delaying her training.
“I realized that I did not want to continue in a surgical specialty,” Dr. Risley explained. “By the time I graduated from residency in 2005, that original loan had escalated to $255,000.”
Since becoming an attending, Dr. Risley has paid $200,000 on her student loans. However, she still owes $180,000.
In the end, it’s up to you to determine whether or not medical school is worth it. Think about how much time and money you’ll put into it, and consider the end result.
For the best return on your investment, plan ahead. Choose a specialty that pays well. If you’re passion lies in a less lucrative specialty, choose a less expensive school. Also, research different markets. Where you live can impact how quickly you’re able to repay your loans.
Not every med school graduate has a great ROI. But with a little planning, medical school can be a great investment.
Want to learn about repayment options? Check out our full student loan repayment guide for doctors.
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
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