- Joined
- Jun 21, 2019
- Messages
- 165
- Reaction score
- 84
I really like the income based repayment plan (particularly REPAYE), as it allows you to only pay 10% of your income over 25 years and have your loan ultimately forgiven, as well as half your interest forgiven (all of it forgiven first 3 years). I really don't mind paying 10% of my income to the government for the government's investment in my education, even if it was over my entire lifetime (less than alimony for most people, and that is until you retire).
However, while I can borrow $300K for medical school, I can also borrow as little as $60K given I have $150K in savings and can live frugally. I also plan on working maybe only 6-8 months a year to avoid high tax rates, keeping my AGI no more than $200k/year. Given this, and using the simple repay program over 10 years without interest forgiven.
If I borrow all $300K over time, my interest after 22 years (end of my repayment) will be about $600K
The first 4 years as a resident, making 50K a year, I only pay $3000 a year (since my disc. income will be about $30K after taxes and cost of living).
Next 16 years, if I'm married, about $15000 a year (AGI of 200k/year-$25K taxes-$25K poverty guideline)
Total repayment
$252000
"Tax Bomb": $348K (I will probably not work this year)
Tax price: $90K
In essence, I will only have paid $342K on a $300K loan over 22 years for the average loan amount, in essence, an excellent 1.3% annual interest rate
Other Pros of this:
If I decide medical school is not for me, fail my USMLE, can't get license, lose my license, or doctors start making a lot less than they do now.
However, while I can borrow $300K for medical school, I can also borrow as little as $60K given I have $150K in savings and can live frugally. I also plan on working maybe only 6-8 months a year to avoid high tax rates, keeping my AGI no more than $200k/year. Given this, and using the simple repay program over 10 years without interest forgiven.
If I borrow all $300K over time, my interest after 22 years (end of my repayment) will be about $600K
The first 4 years as a resident, making 50K a year, I only pay $3000 a year (since my disc. income will be about $30K after taxes and cost of living).
Next 16 years, if I'm married, about $15000 a year (AGI of 200k/year-$25K taxes-$25K poverty guideline)
Total repayment
$252000
"Tax Bomb": $348K (I will probably not work this year)
Tax price: $90K
In essence, I will only have paid $342K on a $300K loan over 22 years for the average loan amount, in essence, an excellent 1.3% annual interest rate
Other Pros of this:
If I decide medical school is not for me, fail my USMLE, can't get license, lose my license, or doctors start making a lot less than they do now.