[Editor's Note: This guest post was submitted by Jacob Sorenson who is currently a first-yearmedical student at the University of Arizona, Tucson. He wrote the following in an email to me: “I first found the podcast for The White Coat Investor about a year ago which led me to purchase the book. I’ve always been inclined to know more about finances, but it was always difficult to get a simplified guide. The White Coat Investor book broke finances down for me and taught me how it applied specifically to my profession. I don’t come from a wealthy family, but I worked hard from the start of my academic journey. I earned many scholarships throughout my undergrad, the largest being a national scholarship from the Jack Kent Cooke Foundation that awarded me up to $40,000 a year for my undergraduate degree and then $75,000 for medical school. I am lucky to have a beautiful, hard-working wife that is supportive of my goals. Without her, this article wouldn’t be possible.” Approximately 1/4 of medical students graduate debt-free. Some of those have major commitments (like the military commitment I had) that are pretty much the equivalent of financial debt. Others come from a wealthy family. But I thought this post was worth running because Jacob was in neither of those categories. We have no financial relationship.]
I would like to preface with saying I know I am only a first-year medical student and I know very little when it comes to financial topics and investments. One thing I do know and understand is how to not lose money. I obsess over not losing money in everything that I do. This does not mean I don't spend money on things I want or need, but it means I do everything in my power to use my money wisely and not accrue debt. This tends to be one of the biggest issues a college and medical student can and should focus on. I want to share my story and hopefully, to inspire others to work hard during their undergraduate careers. I figure I can either sacrifice and work hard while I am young, or live a difficult life in the future.
My Two Goals
#1 Graduate Undergraduate School Debt Free
I don’t come from a wealthy family by any means and I married young. I am pretty sure the day we got married, my wife and I had a collective bank account of about $1000. The future was scary and exciting, but I had a vision for where I wanted my life to go. My two main goals once I began college were to graduate debt free and enter medical school. SCHOOL IS EXPENSIVE and I was terrified of debt. I wanted nothing to do with student loans. Despite being told by many people that beginning in community college would basically ruin all chances of entering medical school, I figured going into debt for the same type of education was beyond stupid. I did not have the financial means to enter a university and pay for it without student loans. Beginning with community college ultimately was the best decision I made.
#2 Enter Medical School
Don’t get me wrong, I had to work awfully hard in order to stand out, but every second of volunteering, studying, and participating in extracurricular events set me apart as a scholarship applicant, as well as a medical school applicant. Grades throughout my undergrad were a steady 4.0 GPA. I did not want to give anyone an excuse as to why I was not a qualified student and medical school prospect. This hard work translated to over 35 scholarships totaling over $300,000 that fully paid for my undergraduate degree and living expenses. At a certain dollar amount, I hit a cap and was not allowed to receive any more funding, but the connections I made through these scholarships put me on a new level.
1st-year med student, Jacob Sorenson with his wife Megan.
I am now an allopathic medical school student at my state school. I ultimately chose this school because of the great education and experiences I would receive, and also the attractive in-state tuition was hard to overlook. I had scanned over the match lists from previous years and saw that students went to top residency programs on a yearly basis and that I would not be at a disadvantage going to a school that is ranked in the middle on the U.S. News and World Report. Again, it made no sense to go to a private school or pay out-of-state tuition if I had all the opportunity in the world at my state school. To top it off, my wife was offered a job at the university I will attend and I now am eligible to receive spousal benefits. This knocks down my tuition from nearly $32,000 a year, to only a few hundred dollars in lab fees! I also was offered a graduate scholarship from the Jack Kent Cooke Foundation that grants me $75,000 for the four years (and, granted me $40,000 a year for my undergraduate degree), along with other minor scholarships. If we live and plan correctly, we will come out making a few thousand dollars each year, rather than taking out tens of thousands of dollars each year in student loans. We can potentially graduate DEBT FREE FROM MEDICAL SCHOOL.
How You Can Graduate Med School with Minimal Debt
#1 Anyone Can do This
I am not an outlier. I am an average student who happened to work extremely hard and smart. I honestly believe and know that if you want to graduate debt free, there are vast amounts of resources at your school and online.
#2 Find Scholarships
Research what scholarships are available locally, at your school, and nationally. You can do it!
WCI Scholarship
#3 Community College over a University
Don’t be afraid to begin at a community college if that helps you graduate debt free. The myth that you cannot enter a great medical school is merely a myth. I believe it is also easier to stand out in community college, but it does take work. That leads me to my next point.
#4 Choose the Less Expensive Medical School
I know here at the White Coat Investor it has been pointed out, but it is a true statement. You will not be at a disadvantage going to your state school for in-state tuition. If you are worried about two schools, look up their match list, I can almost guarantee people have matched at phenomenal residency programs in-state.
Cheapest Medical Schools
#5 It Doesn’t Take Much to Stand Out
Another physician mentor of mine told me, “In today’s world, it does not take much to stand out.” The truth to this statement is so blatantly obvious to me now, but I never realized it until he said it. A little work goes a long way and those that put in the time and effort now are guaranteed a reward later.
#6 Thoughtfully Enjoy Your Money
This does not mean saving every penny you ever earn. One of my dear mentors, a highly successful physician who created an entire healthcare company once told me, “Do not live a life that puts a burden on your wife.” At one point, I tried to save everything we had without enjoying the life we were creating. Don’t do what I did, but also don’t spend money on unnecessary items.
#7 Enjoy your life
Have fun! I know, I know, how cliché of a comment can this be? But I have lived a fulfilling and happy life throughout the last four years, even with the hours of work it took to attain what I have today. I played video games, golfed every now and then, won softball championships, hiked on almost a weekly basis with my wife and golden retriever, and frugally traveled to many places in the world. There is a balance in which you can reap the rewards of your hard work and also live life to the fullest.
Future Implications of Having No Student Loan Debt
The future implications of graduating debt free go much farther than the surface level of not stressing about loans to pay off. I now have a worry-free education where I can choose a specialty of my choice not based on average salary. Too many students go into hundreds of thousands of dollars of debt and sometimes choose to go into a specialty that they may not love, but enter in order to make more money. Also, from the day I enter residency, I will be able to finally start saving and investing. Based on the principles and information from The White Coat Investor and other financial resources, I have a solid foundation on how to become financially successful.
My two main goals as a fresh college student were to enter medical school and graduate my undergrad with zero debt. I never imagined I would be able to graduate medical school without a dollar in student loans. You never know what will come of the hard work you put in now! Be smart from the beginning. Have that vision for where you want to go. Then go out there and get it. I hope this post helps students to make the decisions early in life to be financially free from the beginning. You may be in a completely different situation, but I expect that you use this article as an inspiration to graduate debt free in your own way. It is possible no matter where you are from, how much money you have, or what obstacles you face.
What do you think? Do you think it's possible for most docs to graduate from medical school debt free? What advice do you have for finding scholarships? Did you (or others you know) attend a community college before acceptance into medical school? Comment below!
FAQs
Can you get out of medical school debt free? ›
Medical school loan forgiveness is any program that erases some or all of your medical school loan debt after you meet certain criteria. Medical school loan forgiveness may be available through the federal government, your state government or other programs.
How do I pay for medical school white coat investor? ›- Savings. The most obvious, and yet most difficult, way to pay for your education is with savings. ...
- Scholarships and Financial Aid. ...
- Student Loans. ...
- Military Service. ...
- MD/PhD Programs. ...
- Tuition-Free Medical Schools. ...
- Service Programs.
- Refinance your loans.
- Add a cosigner to improve your interest rate.
- Sign up for an income-driven repayment plan.
- Pursue student loan forgiveness.
- Use the debt avalanche or snowball method.
Student loan refinancing is one of the most popular loan repayment tools that physicians use. By refinancing, you can replace high-interest loans with lower interest loans, which can help you pay down your debt faster and save you tens of thousands of dollars in interest over the years.
How fast do doctors pay off medical school debt? ›The average medical school debt is over $200,000, a hefty amount of debt to carry at the start of your career. The expected payoff schedule is over 20 years, and during that time, you'll be paying the equivalent of an extra mortgage payment to make progress on the loan.
Can I buy a house with medical school debt? ›If you work with a lender who specializes in physician mortgage loans, they may be able to qualify you for the loan without taking your student loans into account. This is great news and is the key to being able to afford a home loan at all.
How much should I save white coat investor? ›20% 20% represents my recommended savings rate. A typical high-income professional, like a physician, needs to save about 20% of gross income each year of her career in order to maintain her standard of living in retirement.
How hard is it to pay off med school debt? ›On a standard 10-year plan, monthly payments for the median medical school debt of $200,000 at 7.00% interest are just over $2,300 per month. Meeting this financial obligation could be a stretch for doctors right out of medical school — especially on the small salary of a first-year resident.
Is med school worth the debt? ›But it's certainly “worth it” financially. The debt worries a lot of people, but unlike some high-income professions, medicine is still a “good bet.” As long as you match and don't have a higher-than-average loan burden and a lower-than-average income, you're not going to have trouble paying off those student loans.
How many students have over $100,000 in debt? ›| Percentage of borrowers who owe less than $40,000 | 75% |
|---|---|
| Number of borrowers who owe $100,000 or more | 3.2 million |
| Percentage of all student loan debt held by those who owe $100,000 or more | 37% |
Is $50000 a lot in student debt? ›
With $50,000 in student loan debt, your monthly payments could be quite expensive. Depending on how much debt you have and your interest rate, your payments will likely be about $500 per month or more.
Is $100,000 in student debt a lot? ›If you owe $100,000 or more in student loan debt, you're not alone. Six percent of borrowers owe more than $100,000, according to the College Board. A standard 10-year repayment plan may sound like a quick way to pay down your debt, but your monthly payment could be as high as $1,000 or more.
How much debt does the average doctor have? ›Medical School Debt Statistics
Between medical school and undergraduate study, physicians must pay for 8 years of postsecondary education before they can work as doctors. Medical school graduates owe a median average of $200,000 to $215,000 in total educational debt, premedical debt included.
Attending medical school can be extremely expensive: As of 2021, 76% to 89% of medical school graduates leave school with an average of $203,062 in total education debt, according to the Association of American Medical Colleges.
Why is medical school debt so high? ›Each year, only 41 percent of applicants are accepted into medical school. Because demand outstrips supply, medical schools have the economic upper hand and, because lenders invariably approve loans to cover tuition, schools can effectively set the price of tuition to be whatever they want.
How do people afford med school? ›To become eligible for federal financial aid to help you pay for medical school, you'll need to fill out the Free Application for Federal Student Aid (FAFSA®). The FAFSA could qualify you for the following: Federal Direct Unsubsidized Loans: Medical students can borrow these loans (sometimes called “Stafford Loans”).
Do hospitals pay off medical school loans? ›Some hospitals and other employers will offer student-loan repayment in an effort to recruit physicians. This can be a substantial benefit for a resident with significant residual medical education debt.
Can doctors get loan forgiveness? ›One way to have your student loans forgiven is through the Public Service Loan Forgiveness (PSLF) program. If you work as a physician in the government or non-profit sector for ten years, you may get your loans forgiven thanks to PSLF. The key is to make sure they are Direct loans and make 120 (10 years) payments.
What happens if you don't pay med school loans? ›Unfortunately, there can be many negative consequences of failing to make your student loan payments, including wage garnishment, a drop in your credit score or a suspension of your professional license.
Do residencies pay off med school loans? ›Many of those students wonder, “Do you pay students loans during residency?” The answer is yes. That might seem like a bummer at first. After all, your resident income will likely be much lower than your attending salary. However, that lower resident income could also qualify you for lower payments.
Does student debt affect credit score? ›
Yes, having a student loan will affect your credit score. Your student loan amount and payment history will go on your credit report. Making payments on time can help you maintain a positive credit score. In contrast, failure to make payments will hurt your score.
What is the 4 percent rule white coat investor? ›What Is the 4% Rule? Four percent is the amount you can withdraw from a portfolio each year and expect it to last you through retirement. You get to increase that 4% with inflation each year. That means that to retire, you need a portfolio 25 times bigger than the amount you plan to spend from it each year.
What is the 25% investment rule? ›The 25x Rule is a way to estimate how much money you need to save for retirement. It works by estimating the annual retirement income you expect to provide from your own savings and multiplying that number by 25.
What is the 25% investing rule? ›The first is the rule of 25: You should have 25 times your planned annual spending saved before you retire. That means that if you plan to spend $30,000 during your first year in retirement, you should have $750,000 invested when you walk away from your desk.
Which medical schools have the lowest debt? ›Mayo Clinic School of Medicine
In fact, Mayo Clinic graduates have the lowest levels of any medical school debt in this survey, owing about $95,100 less than the study's average.
Federal student loan forgiveness programs
If you took out federal student loans to pay for medical school, you may qualify for loan forgiveness programs in some cases. These programs allow you to have some or all of your student loan debt forgiven, rather than needing to repay the entire debt to the lender.
For a rough estimate, the overall dropout rate in medical school is about 10%. However, it is pretty hard to find reliable statistics. Alongside dropout rates, it is also necessary to look into graduation rates. Students who entered med school with a solid commitment to complete the program are 81.6% – 84.3%.
Can I become a doctor in my 40s? ›There is no age limit for medical school. You can become a doctor in your 30s, 40s, 50s, and even 60s.
How can I avoid medical school debt? ›- Lowering upfront costs. ...
- Searching for financial aid. ...
- Improving financial literacy. ...
- Entering an income-driven repayment program. ...
- Considering a loan forgiveness program. ...
- Sticking with a plan. ...
- Taking advantage of AAMC resources.
Millions of Americans have student loan debt, amassing to more than $1.6 trillion by the end of last year, according to the Federal Reserve Bank of New York. It's the result of a decades-long explosion in borrowing coupled with soaring education costs.
Do Americans owe $1.75 trillion in student debt? ›
Elizabeth Warren (D-Mass.) and Majority Leader Chuck Schumer argued. According to the Federal Reserve, the level of outstanding student debt in the United States reached $1.75 trillion by the end of 2021.
Who is the largest holder of student debt? ›Most student loans — about 92%, according to a December 2021 report by MeasureOne, an academic data firm — are owned by the U.S. Department of Education.
How much is the monthly payment on a $70,000 student loan? ›The monthly payment on a $70,000 student loan ranges from $742 to $6,285, depending on the APR and how long the loan lasts. For example, if you take out a $70,000 student loan and pay it back in 10 years at an APR of 5%, your monthly payment will be $742.
How many Americans have 10k in student debt? ›As for how much money people owe, 15 million people owe $10,000 or less in federal student loans. Another 21 million people owe $10,001-$50,000 dollars, and about 9 million people owe more than $50,000.
What is the monthly payment on $100000 student loan? ›Assuming a 7% interest rate, you're looking at payments of over $1,000 per month. Monthly payments based off the assumption that the loans have a fixed interest rate of 7% and that the borrower is on a 10-year repayment plan. But don't worry — you have several potential ways to make your student loans more manageable.
Do doctors pay off debt fast? ›The survey also found that, on average, doctors pay off their debt within eight years of graduation. While most doctors have some form of debt, the average amount owed is $170,000. The data shows that there has been a steady increase in the number of doctors paying off their debt within five years.
Who is most likely to have medical debt? ›As we age, we typically use more health care and therefore often have higher health care expenses and out-of-pocket costs. Unsurprisingly, middle-aged adults are more likely than young adults to have significant medical debt.
How long are most doctors in debt? ›- Each year, thousands of medical school students graduate with roughly $3 billion in total student loan debt.
- In 2022, the median medical school debt was $200,000.
- Borrowers with medical school debt may take 20-25 years to repay federal loans in income-driven repayment (IDR) plans.
Government Loan Forgiveness Programs
NHSC Students to Service Loan Repayment Program – Medical students may earn up to $120,000 in their final year of school in exchange for a commitment to serve at least three years at an approved NHSC site in an HPSA of greatest need.
The lender will mark you as withdrawn from school, and your loans enter repayment. Even if you continue taking one course a semester, lenders will change your repayment status, with payments becoming due.
Is medical school worth it financially? ›
But it's certainly “worth it” financially. The debt worries a lot of people, but unlike some high-income professions, medicine is still a “good bet.” As long as you match and don't have a higher-than-average loan burden and a lower-than-average income, you're not going to have trouble paying off those student loans.
Will hospitals pay off medical school loans? ›Some hospitals and other employers will offer student-loan repayment in an effort to recruit physicians. This can be a substantial benefit for a resident with significant residual medical education debt.