Being pre-med in college, I consistently heard horror stories about the crippling debt medical school put its students in. And, to be completely honest, this really scared me.
Do you know how long it takes to become a doctor? At least seven years after college. That’s at least seven years until you will start receiving actual doctor paychecks that will make a significant dent in paying back those loans.
Let’s assume a student starts medical school when he is 24 years old. And, let’s also assume that after four years of school, he will rack up the average amount of medical school debt, $190,000.
I estimated that the interest rate for this loan will probably be around 6.6%, the current federal direct unsubsidized loan interest rate for graduate students.
To determine how much this doctor’s income will be taxed, I used a tax calculator for Missouri residents. I assumed residency will pay $68,000/year, and that an internal medicine physician will make $260,000 a year after residency.
After accounting for taxes, the resident will take home $52,000 a year, and the internal medicine physician will make $171,000 a year after taxes are paid.
After graduating from medical school, the physician has a good amount of debt to pay off. For each stage of the physician’s career, I calculated how much he could contribute towards his debt.
Here’s the equation I used:income after taxes – cost of living = available cashFor the three years of residency following medical school, the resident will have $52,000 – $25,000 = $27,000 to throw at his loan.