What To Do With $500K in Student Loans?

[The White Coat Investor]

Question via a forum PM:

Good afternoon!

I am a current PGY-1 EM resident in a ton of debt, surprise, and was wondering if you could offer some insight since you are a fellow EM doc.

I have ~500k in loans currently, 30k is no-interest loan with great repayment plan and another 30k is refinanced with laurel road (DRB) that was originally a private loan. As an EM doc I see that most job opportunities are not through non-profits which takes me out of the 10years PSLF, so is it worth sticking with the government over a service like sofi/DRB with lower monthly payments while in residency?

I live in NYC now so COL is high but have no dependents nor planning to in next 3-4years. I just applied and qualified for the REPAYE plan as well. In either scenario I guess I am more worried about the long run than paying an extra $1-200 per month right now and would rather pay the least over the life of the loans.

Any insight is appreciated and thank you for your time. Also, I have your book and read it a couple years back, loved it, but thinking I may need to run through it again now that I am in residency. Have a great day!

[The White Coat Investor]

My response:

$500K huh and $440K of it is federal. Are you SURE you couldn't tolerate staying on at your residency program as faculty for 7 years after residency? That seems like a great option to me to take advantage of PSLF.

But if you don't want to do that, then stay in REPAYE until you graduate, consider moving to a lower COL area, refinance the loans, bust your butt, live like a resident and send your lender $100K+ a year until they're gone.

I'm going to cross post this to my forum and you can see what others advise there.

What say you? Did you know there are people with $500K in student loans out there or is this news to you?

[FIREshrink]

I only know becuse you've mentioned it before. I guess medicine "pays off" even with $500,000 of loans but don't people think about an exit strategy before signing for the loans?

Just basically have to live on 'beans and rice' for 5-7 years. Move outside of NYC or the like after residency and it should be pretty easy to live as a single person on under $50,000 per year.

[RocDoc]

Live like a resident until those loans are gone. Fortunately Emergency Medicine is paying well and you should be able to knock 500K out in 3 or 4 years in a low cost of living area with no dependents.

[Hatton]

Do not buy a house until you pay a huge chunk off.

[hightower]

Scary stuff. I say scary because if I had gone to medical school when this guy did and lived in a place like NYC, I probably would have signed up for that stupid amount of debt too. Fortunately I got out with “only” 220k. (Graduated in 2008 and went to a school in a lcol area). I genuinely feel sorry for recent grads with this kind of debt. It sucks working so hard as an attending and throwing all your money towards debt for so long.

[jhwkr542]

I think moving to lcol area would be best. Or some serious moonlighting and living poorly. The problem with the latter is it's a long time to do medical school, residency, and then still bust your tail without enjoying the higher salary. Unfortunately, the hole has been dug.

[CordMcNally]

Put your nose to the grindstone. Go to the lowest cost of living area with the highest pay and work extra until it's paid off. Once it's paid off, relax and do whatever you'd like to do.

[DMFA]

Just because you're a 40 hr/wk employee of a non-profit doesn't mean you can't also earn more money elsewhere...

[SValleyMD]

Definitely em is the way to go
I would look at a three year residency and do what others said - getting out asap as an attd is imperative imo

[q-school]

It’s only an issue if early retirement is a goal. Otherwise it is very manageable with the expected income. Obviously careful attention to spending will help achieve financial independence sooner

[FCP]

im a psychiatrist who finished training a few months ago. my autopay on student loans has been set at 10k/wk since august and im paying my loans very rapidly as a result. i work 7 days a week and have minimal expenses, and am still maxing out my tax deferred accounts and contributing to my taxable accts. its no big deal and can be taken care of in less than 1-2 yrs if you find the right gig(s) and watch your expenses

[Bonez]

How are you paying $10k per week as a fresh out of training psychiatrist? Assuming you live on minimal expenses, your repayment rate suggests you make >$1M before taxes??

[FCP]

1. locum tenens gig paying 40k/mo
2. locums pays for all my biggest expenses (house, car, gas, etc)
3. my only expenses as a result are food, dining out, clothes, etc
4. i make about 500k/yr doing inpt and outpt private work on weekends and occasional evenings

[FCP]

also i work about 14 hrs a day every sat sun. total income should be about 1 million gross for my first year out