By Alaina Trivax, WCI ColumnistMy generation, the avocado-toast-eating millennials, often talks about our student loan debt in what seems like the same way that previous generations talked about their mortgages.
I remember overhearing my aunts, uncles, and various family friends compare mortgages and mortgage rates when I was a teenager. It wasn’t the amount they were talking about—at least, it didn’t feel like they were competing over who had the biggest/best/most expensive house—as much as it was a comparison of the length of time until they’d be free from their mortgage payment. I’d hear things like, “Just 10 more years, and we’ll have the place paid off,” or, “We’re thinking we’ll use some of the inheritance from Uncle Bob to pay it down a bit.”
The conversations I’ve had as an adult with friends about our student loans sound very similar to those chats I’d overheard as a kid. Especially in my 20s, when I talked with friends about student loans, it was assumed that everyone had them, that they were a burden on our budgets, and that you’d keep paying them for a long, long time. We’d complain about how, “I’ll be paying these for the next 20 years,” and, “These student loans are the reason I can’t buy a house.”
My experience with student loans changed in a few ways when I married my husband. First, my student loan burden increased tenfold. Brandon, my husband, is a partner in a private practice PM&R group, and I work as a middle school teacher. When we got married around five years ago, we had a little more than $330,000 in combined student loans. Today, we’re down to about $70,000 and on track to have the balance paid off by the end of 2024.
Everybody’s Got Them (Student Loans)
I earned my undergraduate degree at a private (read: expensive) liberal arts school. My financial aid package of federal grants and scholarships helped reduce the expense, but I still graduated with more than $30,000 in student loan debt. As a student, it seemed like all of my friends had loans. Taking out student debt was just the thing you did to go to college. Like me, my friends planned to pay them off as they could.
I pursued a master’s degree at a state university and went into teaching, figuring I’d make lots and lots of money and could pay off my loans easy-peasy. (Obviously, I'm kidding.) Most of my friends from undergrad also pursued a secondary degree and then entered a public service-type job. We all had student loans, and it was just the norm.
Was it a good thing that it was so expected to have student loans? Probably not. It made the reality of the debt we each signed for a lot fuzzier—especially in those first few years out of college and before we had a meaningful understanding of how money worked. We’d often commiserate about our student loan payments and how much they were taking out of our budgets. We’d talk about how we’d all be paying them for the next 20 years. Certainly, none of us could afford a mortgage on a home. We all rented and shared our apartments with a roommate or two to help reduce costs.
My husband accrued quite a bit of debt while pursuing his medical degree, too. Though he was a few years out of undergrad, he says he doesn’t think he was mature enough to sign for that much debt. When you’re a college or medical student, it’s hard to understand the impact loans will have on your future financial situation. You want this degree. You have to pay for it. Loans are the way you’ll do it, and lots of other people are taking them out, too. So, you sign the paperwork and figure you’ll pay it off eventually. You have no idea it means you’ll be squeezing your family of four and a dog into a 1,100-square-foot ranch home for much longer than you’d like, simply because you can’t afford a bigger mortgage payment on top of your student loan bill.
More information here:
Paying Off Spouse’s Student Loans Together
We’re (Finally) Broke! Why Being Worthless Feels Amazing
Student Loans vs. Mortgages
According to Pew Research Center, “the share of young adult households with any student debt doubled from 1998 (when Gen Xers were ages 20-35) to 2016 (when millennials were that age). In addition, the median amount of debt was nearly 50% greater for millennials with outstanding student debt ($19,000) than for Gen X debt holders when they were young ($12,800).” More millennials have student debt than previous generations, and the amount they owe is greater than the average student loan burdens in the past.
Forbes claims that “millennial homebuyers are waiting longer to buy a first home than previous generations. Due to the effects of the Great Recession and rising student debt, millennials have been slower to buy their first homes than older generations.”
It seems clear that student loan burdens are impacting the lifestyle and net worth of younger generations, including by hindering their ability to purchase a home. But are they equivalent? Although both are a common consumer debt, mortgages and student loans aren’t quite comparable.
They're Not the Same
The student loan process is a little like a circular loop of Monopoly money. You take out this absurd amount of debt. Then, after almost a decade of school and training, you start earning a similarly absurd amount of money. But a huge percentage of this money has to go to paying down the debt that enabled you to get to a point where you’re earning that money anyway.
A medical school degree—or any degree, really—is a continually depreciating investment.
You’ve got the credentials now, but you still have to invest time and money into maintaining your expertise. The debt feels enormous, and the money doesn’t feel real. And, unlike a mortgage, you don’t even get a house for it all! Instead, you’ve earned a degree that becomes less and less valuable as time goes on. With a mortgage on a home, though, there are protections against lenders setting low payments that result in the principal growing over time as interest is compounded into the initial loan. With some income-based repayment plans for student loans, the payment doesn’t even cover the interest, and the balance keeps adding up. Unlike with a mortgage, you’ve got to be sure you’re making a sufficient payment toward your student loans to ensure the principal will actually decrease. The minimum payment identified by your lender might not be enough.
The refinancing options for mortgages and student loans don’t operate quite the same either. Mortgages and some student loans can be refinanced to take advantage of decreasing interest rates. Federal student loans, specifically, cannot be refinanced with the government—instead, you’ll have to refinance with a private lender to get your lower interest rate, and in doing so, you will lose the federal loan protections and eligibility for student loan forgiveness. During my husband’s out-of-state fellowship training, for example, we had a difficult time affording our mortgage and his rent, along with the minimum student loan payment set by the government. To get through the year, we refinanced all of his student loans with a private lender that offered us a $100 per month minimum payment until he completed his training. The principal grew, but what were we going to do? There was not the same flexibility available to us with our mortgage.
Likewise, interest rates aren’t calculated equivalently. I remember feeling a little excitement when I took out my first student loan with a private lender. The naivety, I know! It just felt like such a grown-up thing to do. My local credit union offered me an interest rate of around 6% in 2012. Interest rates were very low in the early 2010s, and a rate of 6% was exceedingly high. Student loan interest rates are generally higher than those of mortgages, and though I wasn’t in the market to buy a house, I probably could have gotten a home loan at a lower rate.
And, of course, mortgages and student loans are treated differently in cases of bankruptcy and death, too. Mortgage debt can be discharged through bankruptcy, though in death it becomes a part of the estate. Student loans are rarely dismissed through bankruptcy. In cases of death, it depends on the lender; federal student loans and some, but not all, private loans are discharged. The policy of dismissing the debt upon the borrower’s death was a major criterion for me when we refinanced my husband’s medical school loans. We don’t plan on him dying, but I wanted the additional protection just in case.
More information here:
Rolling Student Loans into a Mortgage – Should Doctors Do This?
With Our Expanding Family, We’ve Had to Break Our Financial Plan – Twice
What We’re Doing About It
We’ve been aggressively paying down my husband’s medical school loans for the past three years and hope to be done with them within the next year. Adding two kids to our family increased our expenses quite a bit, and after maxing out our 401(k) accounts, hitting our other savings goals, and then making our student loan payment, that annual income doesn’t stretch quite as far as we’d like. We’re staying on track, though, and working to get these loans gone as quickly as possible.
Student loans are not the new mortgage, no matter how we talk about them. They’re a depreciating investment, and they’re managed differently by the government and financial industry at so many points of the process.
In our case, as soon as we have my husband’s shiny degree all paid off, we’d like to start looking for a new house. We just can’t have both—the big mortgage and the giant student debt payment. Even though it feels like everyone has them, we are beyond ready to be done with our student loans. We’ll take on more debt, but at least we’ll get something for it.
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Can you relate to this at all? Do you talk to your friends and colleagues about your student loans? Do you feel stuck in the same boat? How can you break free?
I focused on paying off my student loans the first few years out of residency and also put off buying a house until those were paid off. You will never regret it. It was such a huge weight off my shoulders, and I have so much more financial freedom now without having to worry about student loan debt.
Couldn’t agree more.
Preach it! One can certainly argue that you don’t HAVE to live like a resident but nobody can argue that it doesn’t work.
I paid mine off quickly, but have some regrets now. Looking at starting my own practice, banks like you much better if you have $350,000 in the bank and $350,000 in loans at 2.5% interest, vs minimal cash on hand and no student loans. So think twice about the quick student loan payoff if starting your own practice is a possibility—build the side fund just like the prior PSLF recommendations, pile up cash, and keep your options open. DO NOT blow the cash if you don’t pay off the loans quickly.
…. How is a medical degree a depreciating investment? Where is it that you can spend 200-300k (for medical school) and get $150-500k more in returns year after year vs no medical degree until you retire?
[Ad hominem attack removed.]
I’m sure Alaina can defend herself here, but this is unnecessarily harsh (and dare I say, a bit out of touch). I am a male medical professional and I like Alaina’s articles very much. My wife is not a medical professional and likes to read this blog on occasion too. Point is you aren’t the only reader, take what you like and leave what you don’t.
I very much understand your point, that med school debt is generally a very good investment and is a near foolproof ticket to an upper middle class lifestyle (or even better). But, she made her point about a depreciating investment pretty clearly:
“You’ve got the credentials now, but you still have to invest time and money into maintaining your expertise. The debt feels enormous, and the money doesn’t feel real. And, unlike a mortgage, you don’t even get a house for it all!”
I took out $300K for a 400K house and sold the house a couple years later for 600K, guess who got to keep the extra $200K! I took out $300K for med school 15 years ago and it allowed me to make a great living, but I don’t feel that same appreciation because I am just working a job now. If I stopped paying my mortgage, I could just sell my house to someone else and pocket a gain. If I stopped paying my student loans, I would get nasty letters and collection calls, I can’t (literally) sell my brain to someone else and make a profit. It just feels different…
To your point about a mortgage: there’s tons of expenses people commonly gloss over. Updating, maintenance (new roof, lawn care, ac unit, etc), property tax, mortgage interest, etc often do not get taken into account when people calculate their “profit” vs if they just rented. If the market is good, everything is gravy. But tell that to the thousands who’ve lost money on their house or had to foreclose. Now I’m 100% for buying a house given the right circumstances. It’s a well established way to build wealth (if only because it’s a forced way to build saving/equity which most people don’t have the discipline to do). But it’s not a slam dunk decision.
Student loans are usually significantly less than a doctor’s mortgage. A doctor should not take 30 years to pay it off. And honestly with the doctors’s income, a mortgage could be paid off in half that time as well. Just like taking a loan for an expensive house in a bad neighborhood would be a poor decision, taking out a proportionately large loan to your projected income is a bad decision. Most people need a certain amount to live on, and past that is where wealth/ debt paying can go. If that number is $40k and you’re only making $50k a year, then yea you should think twice about taking out a $100k loan. If you’re making $400k a year, even after taxes you could pay this off in a year. In fact you could justify taking out magnitudes more. Even more nuanced is to calculate how much more you would be making with a degree versus without a degree to justify your loan.
Your medical student loan/education requires you to put in your time, energy, have a certain level of academic achievement, and there’s risk involved (ie you become disabled). But if you took a loan on a rental or mortgage, there’s risk there too (house could burn down or depreciate).
We should remember and appreciate that doctors aren’t the only ones to work hard and sacrifice. Plenty jobs out there where the effort and long hours are not compensated as well as physicians. So you’re working anyways. The question is how much of a difference that degree confers.
Often it boils down to the choice we made (ie to decide to go for the MD or DO instead of nursing degree). Nothing about intelligence or academic achievement or altruism forces you into the doctor route instead of becoming a nurse (or NP or PA). But most of us made a calculated decision, especially if our upbringing did not make us “fear the student loan.” So it seems inconsiderate to complain about how high this debt is since we all made this decision. Rather just focus on strategies to get rid of it.
Regarding the lack of flexibility of student loans: Not sure there are many banks out there that would allow you to refinance to pay $100 a month on your mortgage during your time of financial hardship, however temporary.
Perhaps she is advocating for more governmental control and regulations to limit private lenders from lending out student loans to “non-professionals.” The high interest rate is supposed to deter people from making silly decisions and to protect the bank, since they do not have a house to seize unlike a mortgage … predatory lending is a real thing but I’m not sure these student loans qualify as predatory lending. When you die, the bank will recover money from the sale of the house. Of course they’re different, but it seems the author is arguing somehow student loans are worse? And I’m not sure that’s true. They’re different beasts for a reason. You could argue education should be cheaper or 100% free but thats a different issue and not our reality. But yes, do 100% agree not enough financial education is taught to young people.
Education costs have gone up. But the appetite for it has not gone down. More of the younger generation want white collar jobs than before, so yes, more young people have student debt. I see that more as a problem of the younger generation not valuing blue-collar jobs more than a student debt issue (and I am technically young generation). Talking to older generation physicians, incomes now are proportionately better than they ever were before (granted debt is more too). I do agree that a “good house” now is proportionately more expensive than the 50s. At the same time in the 50s, a 1000 square-foot house for a working class family was the standard, not the expectation. I’m not sure where this idea came from that young people/family shouldn’t live tight in the beginning.
I guess what got to me was a lack of deeper understanding of how privileged it is to even get a loan (not to mention physician home mortgage), especially since they made a great decision, in my opinion, in the end as opposed to a lot of other young people who truly are stuck, not having a way to realistically pay off their student debt given their career. I’ve read superficial pop culture finance articles about how saving money on Starbucks is not going to solve their student debt, and I feel this way of thinking has missed the plot…. A lack of frugal mentality bleeds to all aspects of life.
It’s not fair to say the $150-500K is JUST a return on a a $200-300K investment. You’re also putting in a heck of a lot of work, both in school afterward, to produce those returns.
It’s also not fair to go ad hominem in your comments. You don’t have to like every post but it’s generally considered rude to publicly berate the poster. If you have constructive feedback, send it privately.
And yes, there are many people in the WCI community who aren’t doctors or medical professionals at all, including many spouses of medical professionals.
While most doctors should be able to pay off their loans in a reasonable amount of time once they have finished training, I think it’s important none-the-less to expose how insane the student debt crisis has become. The costs of an education in this country have skyrocketed, far outpacing wage gains (need I remind you physician reimbursement has trended down not up over the past few decades). We are asking an 18 y/o with little real world financial experience to take on potentially hundreds of thousands of dollars of debt to go to school for the next 4-8 years. The fact our leaders/parents allowed this to happen is a disgrace. I see lots of articles that love to lay the blame at the foot of that idealistic 18 y/o who signed on the dotted line, but where is the outrage at the educational, governmental and financial institutions that have made this possible and encouraged it? We have laws that prevent young adults from drinking alcohol until age 21 on the assumption they lack the maturity to think about their future health, yet we’ve deiced to allow them the autonomy to set themselves on a potentially ruinous fiscal path starting at age 18.
It is truly a national shame.
# 1 Physician incomes on average have not trended down. I’ve written a post on this that should run soon. We all think there was a golden age a few years before we started. There never really was it turns out when you examine the data carefully.
# 2 I’m actually less worried about doctors paying for their education and more worried about being able to buy a home these days, especially with SAVE and PSLF becoming ever more generous and house prices skyrocketing in most locales.
# 3 I do agree with your main point that the cost of the education/tuition is the main issue. That’s why I was so excited to see a donor give Albert Einstein medical school a billion dollars to eliminate tuition for its medical students going forward. But it’s not as much of an issue for undergrad as it is for professional school. An undergraduate education basically costs what you are willing to pay. There is no need to go to a school with a $50K+ cost of attendance when there are schools with a $15K cost of attendance. A student can still work their way through that debt free and scholarships are plentiful.
On your first point, I was speaking to physician reimbursement. According to the AMA, medicare reimbursement has gone down 26% from 2001 to 2003. Granted, I don’t have the data on private insurance reimbursement, but as Medicare is big payor for just about any physician group, it’s a significant drag at the very least, and only getting worse. We are working more to make up for the declining reimbursement, but I don’t think that’s a great trade off. I look forward to your write up, though.
Agreed on your second point. As a young physician in a “starter home” and looking to buy a new home, we feel very stuck at the moment. You could buy a brand new build in our neighborhood for about 1.0-1.5 million when we moved into our neighborhood in 2018. Today, assuming you can even secure a lot for a new build, you’re looking at more like 1.7 million minimum and most are going for closer to 2 million. A gut and remodel of an older home can easily run you over 1 million in our neighborhood, as teardowns sell for 750k. This neighborhood was solidly middle class a few decades ago, but has now transitioned to solidly upper middle class and is not looking back. I guess we can try to move out to some far flung suburban neighborhood, but that does not mesh at all with our preferred lifestyle. And even the suburbs are no refuge. A popular suburb in my area with good schools is almost just as expensive as our more centrally located neighborhood.
Between the astronomical rise in schooling costs and housing costs. my generation is without any doubt worse off compared to prior ones in financial terms.
We’ll resume the argument after my post runs, but rest assured I’ve addressed all of your arguments in it.
I empathize with your issues purchasing housing. The housing crisis is very real, even for high earners.
However, I disagree that your generation is “worse off” than prior ones. I’m not sure what generation you are, millenial probably. But I just read an article that says you’re going to be the richest generation ever just as soon as your parents (boomers) keel over and leave it all to you.
https://nationalpost.com/news/asset-transfer-millennials-richest-generation-in-history#
Plus you’ve been able to carry the world’s accumulated knowledge on a six inch device in your pocket for your entire life. I didn’t even have the internet in high school. I took a word processor (not a computer with a word processing program) with me to college. There was no SAVE and no PSLF for me when I came out of med school. We actually used to sign up for the military and go to war to pay for medical school. Now all you have to do is stay on as faculty for a couple of years after fellowship and voila, your student loans are gone. Our student loans used to actually grow during residency. In fact, the average student loan debt for MD grads hasn’t grown in the last five years and the % of indebted students is falling. Not to mention the 3 1/2 year long 0%/$0 payment student loan holiday. The houses we bought when we came out of residency went down in price and didn’t come back for more than a decade afterward. I came out of medical school knowing nothing about personal finance and investing and there was no where easy to learn it. Now you have The White Coat Investor to show you how to easily build wealth as a doc. #perspective #countyourblessings #itsnotallbad
Haha, I guess for those of us lucky to have inheritance that may be true. The rich get richer I think.
And don’t get me wrong, I do believe most of us in the world are better off than we were 100 years ago, or even 50 years ago. We have made great progress in many ways, and will continue to. My generation doesn’t have to deal with polio, we have real treatments for cancer, we have better sanitation, indoor plumbing, widespread AC. The list goes on. I’m ultimately an optimist in this regard.
But sadly housing and educational costs are not on the lists of recent improvements. But in fairness to the cost of housing, our houses are bigger and nicer than ever. We do have to take that into consideration.
I’m a millennial and I agree with everything you said and I’m glad you said it … I suppose I get/got a bit fed up with all the complaining from the “younger generation” and that led me to write something snide which I regret. I consider myself a liberal in a lot of aspects and I get if it’s a widespread issue it’s probably more of a system problem than individual; but at the same time there’s reason/wisdom behind the stop complaining and pull yourself up mindset…as in playing the victim is not healthy. Even in an area with an expensive cost of living, there are people who make “middle wage” for the area and they may live in a neighborhood you don’t think a doctor should…. what happened to the idea of a starter house and the struggle being an expectation and maybe you don’t get everything you think you deserve until mid-career (when maybe your kids are teenagers)? Maybe I feel less entitlement because my parents are immigrants. It’s a wonderful thing that there are entities out there willing to lend a person money instead of making 7% (or whatever) in the stock market, with nothing to back it/hold as collateral. In other countries it’s not so easy to get a loan. Could you imagine the wealth/ opportunity disparity if you had to pay for school without loans or military repayment programs? Also pet peeve is people writing with such authority over topics they clearly don’t understand…. I usually don’t bother but my expectations for WCI are high since all your posts are quality.
I would appreciate some constructive thoughts as I battle through the decision to accept the medical school seatI have been granted or let it go. While there are thousands of factors involved, let me summarize just a few of what I consider the most important ones, not in any certain order.
1. I maxed out my salary 15 years ago and while I have several years of clinical team management experience the remaining positions that I have applied for (those with a greater level of responsibility such as Chief Clinical or Hospital CEO) refuse to interview me since I am not an RN and do not have an MBA. 2. My home is paid for. 3. My kids are on full rides for athletic academic scholarships. 4. I am bored stiff in my current position. 5. I have a good 25 years left in me to complete school (7 years) so at least 18 years as a practicing physician. 6. While my employer cannot pay me anymore nor grant me an interview of a higher level of responsibility, they are willing to pay 75% of my medical school tuition. I have it in writing. 7. I wish to work in family practice or psychiatry which we are terribly short on nationwide, but especially in the rural states where I live. Please do not scream at me with potential negative thoughts such as “why didn’t you do this earlier?” Instead, please offer me some thoughtful considerations from those of you likely as experienced in life as I am. Thanks!
If you are currently bored, have hit a career ceiling, your tuition is 75% covered, and this is what you want to do, go for it. You have worked a while, seen what your options are, and hopefully know what is inside you and what you are passionate about. Be aware that med school or residency obligations might conflict with kids’ athletic competitions and other family events. Beyond that, if it’s not a financial stretch, and this is what you want to do, follow your heart. Not everything should be purely for financial reasons, and even FP/psychiatry might earn more than you currently earn (unfounded assumption, possibly incorrect). Good luck.
Thank you for your thoughts!
I guess my question is, if an MBA could get you where you want to be, why suffer through medical school and residency?
I didn’t explain this well, I am not interested in the MBA I am interested in practicing medicine. To me, the MBA is a “easy” way out in terms of 1 year online, relatively cheap, but really looking at the financial side of healthcare not the patient care, is not so interesting to me. I would honestly rather “kill” myself through hardcore med school….Thanks for your thoughts!
A one year online MBA isn’t a real MBA. If you work for an employer that would consider a one year online MBA sufficient to get to the next level in your career but won’t let you take that next step up without a one year online masters, I’d suggest finding a new employer. You don’t need to go through a U.S. allopathic MD program and a bare minimum three year primary care residency to get the cachet and credentialism of an “I am a Phoenix” MBA.
Cathy Deics–All the best as you decide to pursue medical school. You have a lot to offer and the community where you serve would be so grateful! One advantage now is residency training is capped at 80 hours/week. You mentioned you had ties to a rural area and there are primary care tracks that have developed where a good deal of the training is in a rural environment.
My thoughts as a 39 year old physician (MD):
If you really, really love the idea of being an MD and won’t financially suffer, sure, go for it. That said, the thought of going through those years of education & training again – now – is just daunting. I’m amazed I put up with it at the time and really don’t think I could do it again now if I had to.
My brain just isn’t as sharp as it was in my 20s. At 39 with a family and other interests, I don’t think I could handle the endless hours of brute force memorization, the sleep deprivation, the endless scutwork, the physical & emotional exhaustion, the sucking up to attendings/PIs/grandees, being the lowest person in the hierarchy, the 15 hour days, the 6 day workweek or 3 weeks of vacation per year. I could deal with it in my 20s and I didn’t know any better at the time – I just couldn’t do it again now…
From the outside looking in, everyone thinks you have it made given an MD’s income. But you’ll pay a heavy, heavy price for that income: you will work very, very hard, long hours under constantly high stress. The effect that years of chronic stress / sleep deprivation will take on your physical and mental health should not be underpriced. Take a peek at the incidence of alcoholism, divorce and suicide amongst physicians. They’re all elevated for a reason. Believe me, the job doesn’t have anywhere near the cache it once had. If you’d like an upper middle class income, there are many less stressful ways to accomplish that! My neighbors are pilots, software engineers, CPAs and others. They may make slightly less than I do, but have a much better lifestyle, less stress, a more sustainable career over the long haul, and much more time off with their families. Always consider the trade offs.
On the plus side for Cathy, in many ways med school and residency are less brutal than they were 15-20 years ago. Some forms of scut work have been outlawed, work hours in many fields are down, mandatory mental health days each month, etc.
I find it fascinating that you now have cold feet. I mean, you probably did a few prerequisites, studied for, took, and did well on the MCAT, and have applied to and been accepted into medical school. That all took what, a couple of years and thousands of dollars? But now that you’ve got what you wanted, you’re not so sure. Like the dog that catches the car! It seems like the time to have this introspective look into your own soul to decide what you really want out of life was a couple of years ago.
At any rate, you’re bored at work, you want to keep working, you want to be a doctor enough that you already put two years into the process, and you’re only going to pay 1/4 of the price. Seems pretty close to a no brainer to me. You can always quit in a year or two if something changes.
Fortunately my hospital employer paid for the remaining prerequisites I needed (4) as they also counted toward CEUs to maintain my license but yeah that MCAT prep course work and hard core study sucked! “Cold feet” is a good way to state my presentation, I have had some unfortunate battles no different than we all go through, to which lowered my self esteem and confidence, that’ s all. Thanks for your thoughts!
Hi Alaina, great post I definitely don’t think that student loans are the new mortgage either given the complexity of pslf, refinancing privately, etc. It seems even millennials still talk about mortgages especially if they were one of the lucky ones to have bought a house before the recent interest rate rises and brag just as much as the older generations with a low interest rate mortgage.
I wouldn’t worry about the student loans so much.
Yes, the cost of medical school is very high, but physician incomes are as high as they’ve ever been. As an anesthesiologist, my income increased ~20% year over year just last year. The demand for my services is insatiable, we are in very high demand, and hospitals are quite willing to meet the market. The contract salaries my group is offering new grad associates on a shortened track to partnership has been shocking for me.
Living at double a resident’s income for a few years after graduation will more than wipe out the student loan debt and set the new attending on track for early retirement if they can keep lifestyle bloat in check…
HUGE Dave Ramsey fan here so even though I will have to go against his recommendation by initially taking out the loans, the employer payment and full promise and belief in myself to live on a residents income until the remaining loans are paid off should get me there. Thanks for your thoughts!
I don’t agree that student loans are a depreciating investment. My education has only increased in value over time as compensation for my specialty has risen. Of course there are some maintenance costs, but the same can be said of index funds.
Always love Alaina’s articles. It’s interesting to consider how a degree might be a depreciating investment. I agree with others that maintenance costs (eg licensing, board certification, CME) don’t qualify for the reasons mentioned. However since the value of a medical degree is earning potential, and this potential is used up as time passes through our finite lives, perhaps that is the sense in which the degree depreciates over time. But that seems almost trivial, unless that is precisely the point Alaina is making, albeit subtle and perhaps lost on most initial reads. Certainly it’s not as simple as comparing it to other tangible assets; a degree cannot be sold, so although it has value, any depreciation cannot be thought of as value loss comparable to another sort of capital asset (eg real estate).