If you are like most people, you are probably thinking about buying a house, a car, and a vacation. When you have established yourself as a doctor, you’ll pay off your loans.
But if you are not careful, by the time you are ready to pay off your medical school loans, it would already be too late.
With an after-tax residency pay of about $34,000, that leaves $17,000 for living after interest is paid.
It could be possible to survive on $17,000 a year if you are single, don’t have to take care of children, and don’t live in a city.
By then, the loan would have ballooned to almost $300,000.
If you are specializing, then the loan would be even bigger because residency and fellowship are longer.
The IBR program allows you to make smaller payments toward your loan, based upon your income.
But if your payment does not cover the total interest, the difference would be subject to compounding.Don’t go out drinking all the time because you will be paying for it later on.During residency, I would advise you to make the interest payments.Call up the lenders and let them know you want to pay it off in full. If you want to pay more than the stated monthly amount, make sure the lender knows you want to apply it towards the principal (the original amount of the loan).When I had a car loan, I was paying more than the stated amount thinking that the lender will automatically apply the extra towards the principle. Instead, they held onto my money and just delayed the due date of my next payment.So if you have been paying off the interest, the total amount on the loan would be 0,000.