Tuesday, March 20, 2018
There’s a little term I like to use when I talk about medical school.
For some reason my phone used to autocorrect to this, when I tried to type med student. But really it is kind of a funny (and very fitting) term.
Let’s talk about the elephant in the room; one of THE MOST COMMON questions I receive on a daily basis.
How do you deal with the debt from medical school??
I’ll be totally honest with you about my debt. I graduated medical school with $240K in student loans. This was somewhat average at the time. I have personal friends who acquired much more than this, and some with less debt due to scholarships, help from family, etc.
When I started residency, I found myself wondering, “how the hell am I going to live off of this salary AND start paying back my loans?”. I literally made $3-4K monthly, and living in Orange County is not cheap. Many of you may know, that you can defer paying your student loans, until after residency is completed. This however, may not be the best decision for you, based on the fact that the interest will continue to accrue, and capitalize.
Let’s think about that for a minute.
I graduated with 240K in loans. The interest rate through my lender was about 6% annually. Do the math. If I chose to defer payment in residency, my new total at the end of the year would be $14,400 more, just based on interest alone. That’s a LOT of money.
I chose to start paying my loans back right away. I couldn’t stomach the fact that although it may feel like I had more money to use on life right away, I would be compounding all this interest and be hit with it later. It wasn’t easy to pay back my loans during residency. I was lucky that I had some help, in doing so, but that was not the case for most of my friends.
In medical school, I was able to focus on studying because becoming a fully-trained doctor felt so far away. In residency it clearly became a reality, but so did being an adult. I was 27 after all! I thought about every purchase. “Do I really need that? Because I cannot afford that”. I started to think about buying a house, buying a more reliable car, having a family, etc. It all seemed so impossible because I was so far in the hole and would never be able to save for a down payment on a home, for quite some time.
One option I wish I had during residency? Refinancing my student loans.
I refinanced as soon as I graduated, and am currently on a 10-year plan to pay them off. The payment and interest rate is MUCH lower than it would be, had I not refinanced. Refinancing may allow you to pay back your loan with better terms, and a lower interest rate.
So for those of you out there starting residency soon… check this out. There may be a new option for you. Refinancing as soon as you start residency.
There is an online personal financing company out there, called SoFi, that has just introduced a medical resident refinancing product. SoFi has been around for a long time, but this program was just released in October 2017. By refinancing your loans (earlier than I was able to), you can reduce your payments to a much lower monthly rate, and have extra money to spend and use during your stressful residency, while not ignoring your loans altogether.
I was super pumped when SoFi reached out to me, and asked me to introduce this new program to you! My goal is always to educate you all, on the truth behind this career and life of a professional. So I’m asking you to continue to educate yourself on your options. Read about it, ask questions, think about what is right for you.
SoFi offers refinancing options of your private and federal loans, with a range of excellent rates and terms. Their current medical residency refinance plan can reduce loan payments to just $100/month during medical residency or fellowship (up to 54 months). In addition, there are no origination fees, and no prepayment penalty (meaning you can pay more on your loans if you have it, and it won’t penalize you). With this includes access to personalized financial advice, career coaching, and networking/community events.
My BIGGEST issue with being in medicine, was feeling like I could never enjoy my money. Just knowing that I have all this debt, used to bother me internally. Once I educated myself on the options for loan payback, I was able to accept what worked best FOR ME. I wanted to have extra cash flow. My goal was never to pay back my loans as fast as possible. For some individuals, that may be your goal, and that’s ok too.
I felt that because I spent so much time in school and training, I deserved to enjoy my new income. The income I spent YEARS working towards, and still work very hard to achieve on a regular basis. Maybe it makes me a little entitled, but I feel I deserve to finally spend some of that money. Whether it’s a nice dinner out, better groceries, a Chanel bag (yes I love to shop), it took me years of blood, sweat, and tears (lots of tears) to get here!
I deserve these things.
Honestly, I look at myself as the big sister to all of you. I have been through it, I know ALL of the feelings, the questions, the doubt. It’s normal, and there IS light at the end of the tunnel. I am lucky enough to have this platform to help educate you all, but you have to continue to educate yourselves and search for what is right, for you! You will hear so many people talk about the options and it’s overwhelming.
If you’re training to be a doc, I know the last thing you want to do is worry about finances. But trust me, it’s worth it and important to think about it.
Once I got my finances and fixed, refinanced loan payments in line, I stopped worrying. True story. So now I really can enjoy all the finer things in life that I choose to have, knowing that my debt is stable and slowly declining by the day!
I remember the day I refinanced. My previous lender sent me an email that said “Congratulations, your loans are paid off”! Even though it wasn’t literally true, I still felt like I took the first step in kicking my debt’s butt!! And that sure feels good!
Photos by Zo’e Fraley