Is Med School still a good financial investment?

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zebrafish
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Re: Is Med School still a good financial investment?

Post by zebrafish »

FordBiggs wrote:I also like the idea of wshang that it's better to be making lower and continuous salary at a lower tax rate than a large income/large tax rate for a shorter period of time after accumulating a suitable amount of debt.
I can't really believe I'm reading this.

Making more money kind of trumps making less money. The amount of debt relative to salary post-training isn't that significant. Consider the salary differential over 30-40 years
mac808
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Re: Is Med School still a good financial investment?

Post by mac808 »

zebrafish wrote:
FordBiggs wrote:I also like the idea of wshang that it's better to be making lower and continuous salary at a lower tax rate than a large income/large tax rate for a shorter period of time after accumulating a suitable amount of debt.
I can't really believe I'm reading this.

Making more money kind of trumps making less money. The amount of debt relative to salary post-training isn't that significant. Consider the salary differential over 30-40 years
I think his point was that under progressive enough tax rates, it's better to work for 30 years @ $150k/year than spend 10 years in school (taking on loans) and then 20 years in the work force @ $300k/year. I haven't done the exact math but there's merit to that argument. Personally speaking, I would love to retire and work part-time, earning just enough income that I kept 100% of whatever I made and didn't owe federal income taxes. I imagine it would be a good feeling. :sharebeer
Jack
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Re: Is Med School still a good financial investment?

Post by Jack »

mac808 wrote:it's better to work for 30 years @ $150k/year than spend 10 years in school (taking on loans) and then 20 years in the work force @ $300k/year. I haven't done the exact math but there's merit to that argument.
I think you need to do the math.
TroutMD
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Re: Is Med School still a good financial investment?

Post by TroutMD »

Another Emergency Physician putting in my 0.02.

As has been said, DO NOT decide to go or not go to medical school based on a financial decision. If that is what is motivating you, then GET OUT now and dont go down the path. I would agree that you can tend to work hard in something else, that you do love, and do as well or better (or maybe slightly worse), than medicine... but you will be HAPPY.

Some more specifics you are asking about...

Loans wise... I was fortunate to have went to an in-state school in Texas which has great tuition rates. I also had some fortunate help and was able to leave medical school with about 60K in loans. My grandfather had several rentals in my hometown, and he bought a home needing work in my med school town. I lived there for taxes/insurance plus I had to redo the home. It was fun, and in the end we made a good chunk when he sold it and he split that profit with me. That saved me probably 30K....

Anyways, I 'moonlit' much during my last year of residency and put much of that towards my loans and left residency debt free.

I am out of residency for 18 months; have a wife, a child, work 120 hours per month, travel a fair amount, have money in the bank, a great start on retirement... I could not imagine doing anything else and I am excited that I am 'rewarded' this well for it.

A few misconceptions... There are some PCPs who do VERY well. Much of their pay is supply and demand; a Family Doctor on the Wharf in San Fran probably does not do well. One in Marfa, TX could have a home in Vail CO plus a twin engine plane to fly to it.

Some residencies are more competitive than others, but MOST every student gets 'what they want'. There will always be some that don't. Essentially, if you are DEDICATED (again see my first paragraph) then chances are you will do well and can match into whatever you want. Lifestyle and pay tends to drive to competition up. Derm works 9-4, 4 days a week; they do minor surgical procedures and thus are paid well...therefore competitive. Radiology is NOT what it once was and is falling on the competition scale. Rads is now being demanded to be avaliable 24 hours a day, 7 days a week.. plus much is outsourced, and its reimbursement is under fire to be cut. Many of the surgical subspecialties are paid well because they work all the time... we are talking 200+ hours or more a month, plus procedures reimburse better than 'thinking'...

IF medicine is indeed your calling, be aware of the financial issues, but do not let that bog you down. America CANNOT cut physician pay drastically, regardless of what the news says. We have a physician shortage as it is, if pay goes down, more will quit/retire early/etc and that causes collapse of the system. I think our pay is rather well protected. I have asked myself, at what point would I 'stop' if pay dropped. Truthfully, I am not certain I would ever stop, even if it was almost free. Of course, I would have to find something else to pay the bills... but I enjoy going to work and saving peoples lives...
mac808
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Re: Is Med School still a good financial investment?

Post by mac808 »

Jack wrote:
mac808 wrote:it's better to work for 30 years @ $150k/year than spend 10 years in school (taking on loans) and then 20 years in the work force @ $300k/year. I haven't done the exact math but there's merit to that argument.
I think you need to do the math.
Programmer starts working at 22, while Med Student heads off to Medical School. Programmer makes $100k/year, $75k/year after taxes (25% tax rate), spends $50k/year, and invests the $25k/year remaining into an account that we'll assume earns a 5.5% real return. Med Student spends 4 years in school taking on debt of $50k/year, then 4 years in residency earning $25k/year but spending $50k/year, so continuing to go into debt at a rate of -$25k/year. At 30, Programmer has $250k invested and Med Student is -$300k in debt, but finishes residency and joins the working world earning $200k/year. Unfortunately $200k is only $125k after taxes (37.5% tax rate). Med Student lives on the same $50k/year as Programmer, allowing him/her to save $75k/year, which initially goes to pay back debt until debt hits 0 at 33. From then on, Med Student adds to their investment account which earns the same return as Programmer. Their investment account balances intersect 15 years later when they are both 48, having saved up approx $1.37m each. If they keep working until 60, Med Student ends up with $3.8m while Programmer has just over $3m.

Obviously you can skew the variables to lend support to whatever outcome you want but the point is progressive taxes do make a difference, and more importantly, time is money especially early on in your career, especially for Bogleheads. :twisted:
Jack
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Re: Is Med School still a good financial investment?

Post by Jack »

mac808 wrote:Obviously you can skew the variables ...
Obviously!
2comma
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Re: Is Med School still a good financial investment?

Post by 2comma »

mac808 wrote:We see a lot of outsourcing in software, but the prices have risen to close the gap with what domestic programmers charge. Good offshore development is $30-$40/hour now. We would pay a premium for a native English speaker who understands context and works in the same time zone, up to $50-$60/hour. I did consulting jobs to work my way through college at about that rate, 10 years ago. If you are a good programmer and are making less than $100k per year anywhere then you're doing something wrong. Like medicine, it's a very entrepreneurial field, not just in terms of starting your own company, but also in terms of being "street smart" and aware of where the money is and how to get it. In medicine, the guys who have done the best are the ones who understand how to organize their practices, bill effectively, and negotiate with the hospitals. If you want to maximize earnings, it's more important to be a good businessman than a good doctor. Maybe that's the real lesson.
Mac,

Not to be argumentative, we should start a new career thread, but this has not been my experience. It is hard for me to believe that other Fortune 500 companies are not doing the same thing I have seen at my company - they do all tend to play follow the leader and offshore sw consulting companies have been growing exponentially. Anecdotally of course, on our campus of some 2500, probably 30-50% are actually developers, and for several years now a small fraction of new hires are US citizens; new collage grads do seem to stick out. We also have campuses in three other locations, all larger cities and our senior IT people are almost all making 10-20% less than 100k. This is a well known company that pays industry standard wages and is quite profitable and they are choosing to replace people with contract workers from overseas. Management has been incredibly adept at making small corse corrections early to avoid large problems later. They are also replacing our US based contractors with the same; the stated reason is lower cost and I believe them.

In any case, I have had a good long career, 25 years at this employer and will be getting a decent traditional pension plan (frozen a few years ago), a small portable pension and a very good but voluntary buyout offer - I have no complaints and no political ax to grind - these new people are good and i think cheaper to employ - but I do question the ability of others in my field or other fields that lend themselves to offshoring, to have as stable a ride as i have in the next few decades. I hope I am wrong!

To bring this back to the current thread, I have heard of pharmaceutical companies doing offshore trials for 1/3 the cost and many medical test evaluations are being done by offshore specialists. My only advice is that students choosing their career fields not ignore the winds of change - my incredible career security seeking self has served me well but being passive would not have worked out so well.
If I am stupid I will pay.
am
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Re: Is Med School still a good financial investment?

Post by am »

Trout md, radiology is "outsourced" to non local US board certified radiologists. Since radiology is the practice of medicine, we are held to the same licensing standards as ER doctors. There is no such thing as legal outsourcing of radiology to outside countries or even local unlicensed individuals.

Our salaries are being cut because CMS feels our services are overvalued. When they are done with us, your specialty will be next. And since we do not get inflation adjustments, in 10 years we will be making half as much in real terms in the best of cases. I think that medicine in the future will not be as desirable a career given the loans and dropping salaries.
lovenox11
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Re: Is Med School still a good financial investment?

Post by lovenox11 »

I think medicine is a great career that is dynamic and very interesting and pays well than most fields. You are basically guaranteed a starting six figure salary (at least 120k) after you finish residency. Also, residency is not bad as you get at least 50k with full benefits.

In the real world yes you will be working by 22yo as a new grad. But getting to a position in your company with $100+k salary is quite a challenge, especially with all the senior people up top. Also the higher earning individuals (mid-level managers and higher) are likely to get the ax. An example is the recent job cuts in Westinghouse Nuclear after demand for work went down following japan accident (http://nuclearstreet.com/nuclear_power_ ... 21402.aspx). I had a little bit of experience in engineering as a new grad and heard mostly about people getting laid off every 4-5yrs and constantly switching jobs. Also, many professional jobs involve being in cubicle land, sitting in front of a computer. I remember doing this and cannot bring myself to do that ever again. In medicine every patient is different and a new challenge, you are always dealing with new problems, different environments and your mind stays active.

Also, american students are not going into programming these days, actually there has been a decline in comp sci graduates (http://brucefwebster.com/2008/03/05/the ... -students/)
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wshang
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Re: Is Med School still a good financial investment?

Post by wshang »

lovenox11 wrote:I think medicine is a great career that is dynamic and very interesting and pays well than most fields. You are basically guaranteed a starting six figure salary (at least 120k) after you finish residency. Also, residency is not bad as you get at least 50k with full benefits.
Very buoyant and uplifting considering you have not finished residency and looking at a half million loan repayment. I'm always wondering if we naturally pass through phases in our careers or that some are so suited to their chosen profession than they never have regrets. Please keep us informed as you finish residency, look for a job and continue in your medical career. Well wishes.
lovenox11
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Re: Is Med School still a good financial investment?

Post by lovenox11 »

There is a tone on this thread that only physicians take out large student loans. More importantly perception of student loan burden that is disproportional to income. That is simply not the case.
How much do you think your engineering or comp sci or polit sci undergrads take out? I know plenty of those with 50-100k in student loans and they are looking at starting careers of 40k. Those are the ones that we need to be discussing and worrying about. Not the resident/young attending who are starting at 120k (and thats a low range) and are having loan repayment as part of their job offer.
hicabob
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Re: Is Med School still a good financial investment?

Post by hicabob »

I have a BIL who is an anethesiologist - he was able to have his numerous loans forgiven by agreeing to work (for a decent salary) in an underserved part of the US (W VA in his case) for a period of time. I was under the assumption that this was quite readily available to those who were willing?
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wbond
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Re: Is Med School still a good financial investment?

Post by wbond »

lovenox11 wrote:There is a tone on this thread that only physicians take out large student loans. More importantly perception of student loan burden that is disproportional to income. That is simply not the case.
How much do you think your engineering or comp sci or polit sci undergrads take out? I know plenty of those with 50-100k in student loans and they are looking at starting careers of 40k. Those are the ones that we need to be discussing and worrying about. Not the resident/young attending who are starting at 120k (and thats a low range) and are having loan repayment as part of their job offer.
Lovenox 11? Were one through 10 taken?

Presumably with an anti-coagulant pen name you're an MD? Aren't we forgetting that medical school debt is on top of any undergraduate debt?

Cheers, wbond
p_qrs_t
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Re: Is Med School still a good financial investment?

Post by p_qrs_t »

1) My work doesn't feel like work-- I love the vast majority of time I am at work and can't imagine doing anything else
2) I am on call between every second and third night, which means I go into the hospital in the middle of the night once a week
3) Even when I am not on call, I still work; many patients have my cell phone number, and I read 2-3 hours a day for work related scientific papers; I do this because I teach fellows, and because I like knowing the latest in my field
4) I work for a state university; I work on salary, and never, ever worry about whether my patient has insurance or not-- they are all MY patients, regardless of what they pay or whether they pay
5) Although I do not have the ability to work more hours than I currently work (my secondary narcolepsy is getting in the way!), I will eventually find a way to be more efficient...
6) I had the incredible fortune of not having debt, but we paid my SO's college and medical school debt with persistence...

Don't go to medical school if you don't think yo won't love what you do...

As stated many times above, if you love what you do, it will never feel like work...

p_qrs_t
travellight
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Re: Is Med School still a good financial investment?

Post by travellight »

My son asked me this question out of the blue when he was 10: "mom, how did you choose your career?"

I immediately recognized this was one of those big life questions and thought quickly and carefully. After a few seconds pause, I answered...."well, son, there were 3 factors that went into my decision making:

1) first and foremost, I wanted to do something I thought was really important and would make a big difference in people's live. (he nodded along sagely, clearly the altruistic motive)

2) but #2, that wasn't good enough for me (I am no Mother Theresa), I wanted to make a really good living while doing it. (he nods, knowing me)

3) but #3, even that wasn't enough for me. The third factor was that it had to be really fun, for me.

After #3, his response was "wow, Mom, you really hit it out of the ball park!".

It was nice and gratifying that his observation of my work life was that I had hit all 3.
I am an MD. If you can hit numbers 1 and 3 and do decent on #2, I think you'll do great.
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lostInFinance
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Re: Is Med School still a good financial investment?

Post by lostInFinance »

mac808 wrote: Most middle of the pack SV software companies (think Oracle, Yahoo...not Google and Facebook) will start a new college grad at $90k-$100k and bump them 25% after 12 months.

You can argue that there's a bubble going on although the fundamentals of the hiring companies are strong (profitable). Whenever I travel to other parts of the country it's painfully apparent how divergent some of these micro-economies are becoming. I guess medicine is one of the best ways to exploit this, as a doctor in rural Alabama doesn't make much less (and in a lot of cases, makes more) than a counterpart in San Francisco, with a cost of living that is so much less.
According to this survey, http://www.forbes.com/sites/susanadams/ ... alaries-2/, the average starting salary for a CS major is $64k. According to this, http://www.bls.gov/ooh/computer-and-inf ... lopers.htm, the median income for all software developers, is $90k, barely what you claim for a new grad. If you don't go to a top 10 CS school or don't live on the West Coast, the salaries of programmers plummet. However, if you're a doctor, you can go to some no name school, graduate at the bottom of your class, set up a private practice in podunk Alabama, and still pull in $200k.
am
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Re: Is Med School still a good financial investment?

Post by am »

Yes but that 200k comes after many more years of training and higher loans. The 200k comes with a worse lifestyle and more hours, weekends, holiday work. High liability. Having to live in podunk is not desirable for most.
AnesBH
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Re: Is Med School still a good financial investment?

Post by AnesBH »

travellight wrote:My son asked me this question out of the blue when he was 10: "mom, how did you choose your career?"

I immediately recognized this was one of those big life questions and thought quickly and carefully. After a few seconds pause, I answered...."well, son, there were 3 factors that went into my decision making:

1) first and foremost, I wanted to do something I thought was really important and would make a big difference in people's live. (he nodded along sagely, clearly the altruistic motive)

2) but #2, that wasn't good enough for me (I am no Mother Theresa), I wanted to make a really good living while doing it. (he nods, knowing me)

3) but #3, even that wasn't enough for me. The third factor was that it had to be really fun, for me.

After #3, his response was "wow, Mom, you really hit it out of the ball park!".

It was nice and gratifying that his observation of my work life was that I had hit all 3.
I am an MD. If you can hit numbers 1 and 3 and do decent on #2, I think you'll do great.
These were my thoughts exactly. I look forward to going to work every day.
lostInFinance
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Re: Is Med School still a good financial investment?

Post by lostInFinance »

am wrote:Yes but that 200k comes after many more years of training and higher loans. The 200k comes with a worse lifestyle and more hours, weekends, holiday work. High liability. Having to live in podunk is not desirable for most.
If you don't live on the West Coast, then a physician will almost always have higher lifetime earnings than a programmer, even after paying back their student loans. Whether the pain of med school and residency is worth the benefit is subjective, but the physician will almost certainly come out richer. As to liability, I think I read a well known asset protection lawyer state that physicians were far more likely to lose their shirts in a messy divorce or in bad (non-boglehead) investments than in a medical malpractice suit.
gkaplan
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Re: Is Med School still a good financial investment?

Post by gkaplan »

travellight wrote:My son asked me this question out of the blue when he was 10: "mom, how did you choose your career?"

I immediately recognized this was one of those big life questions and thought quickly and carefully. After a few seconds pause, I answered...."well, son, there were 3 factors that went into my decision making:

1) first and foremost, I wanted to do something I thought was really important and would make a big difference in people's live. (he nodded along sagely, clearly the altruistic motive)

2) but #2, that wasn't good enough for me (I am no Mother Theresa), I wanted to make a really good living while doing it. (he nods, knowing me)

3) but #3, even that wasn't enough for me. The third factor was that it had to be really fun, for me.

After #3, his response was "wow, Mom, you really hit it out of the ball park!".

It was nice and gratifying that his observation of my work life was that I had hit all 3.
I am an MD. If you can hit numbers 1 and 3 and do decent on #2, I think you'll do great.
Nice story. Your kid seems great, and you and he seem to have a great relationship.

(How old is he now, and does he want to be a doctor?)
Gordon
travellight
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Re: Is Med School still a good financial investment?

Post by travellight »

thanks Gordon.... he is almost 16 now, and he has never wanted to be a doctor. He is thinking of majoring in engineering although he has a strong creative side as well (writing skills are great but he does not enjoy it). He is the builder for the Robotics team at school. I am pleased that he still, in the height of teenhood!, says "the mother is always right", lol.
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am
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Re: Is Med School still a good financial investment?

Post by am »

"As to liability, I think I read a well known asset protection lawyer state that physicians were far more likely to lose their shirts in a messy divorce or in bad (non-boglehead) investments than in a medical malpractice suit."

True. It is unlikely that a settlement will be above policy limits.

But, being sued as a physician is a very stressful and painful process that lasts for a long time. Any claims follow you around for the rest of your career often delaying licensing and getting hospital privileges. Successful claims get reported to a national database and the state board can investigate you and issue a reprimand or worse. And often, claims are not because a physician is incompetent or made a bad mistake, but because of a bad outcome. Someone has to pay. This is the background under which physicians have to practice and make decisions.

Do not think computer programers have this stress to deal with?
afan
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Re: Is Med School still a good financial investment?

Post by afan »

Avoiding political comments, but it is worth noting that physician incomes are likely to come down, and the relative incomes of different specialities may change in unpredictable ways.

You mention that you could attend SUNY Downstate, and based your calculations on tuition there. But remember that medical schools have admission rates in the single digits. You cannot count on getting into SUNY, or even into any NY med school. Once you are in med school you have to consider the challenge of ending up high enough in the class to get the residency you want.

Meanwhile, if you have the academic talent to do well enough in your premed courses to get into medical school, then you high GPA in CS would also get you into a masters program in CS. With that credential from a good school you could well be on the track for competitive jobs in that field. And with far less time out of the workforce.

Medicine may be a good option for the standard BA student without a marketable skill. But for someone who can do CS, even only with a foreign undergraduate degree, there are lots of better financial moves.

Remember that plenty of people take premedical courses or post bac programs, spend a lot of money, take the MCATs, but never get into medical school. They don't rack up the enormous debt of medical school, but they do blow a lot of cash and end up with nothing to show for it.
We don't know how to beat the market on a risk-adjusted basis, and we don't know anyone that does know either | --Swedroe | We assume that markets are efficient, that prices are right | --Fama
lostInFinance
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Re: Is Med School still a good financial investment?

Post by lostInFinance »

mac808 wrote:We see a lot of outsourcing in software, but the prices have risen to close the gap with what domestic programmers charge. Good offshore development is $30-$40/hour now. We would pay a premium for a native English speaker who understands context and works in the same time zone, up to $50-$60/hour. I did consulting jobs to work my way through college at about that rate, 10 years ago. If you are a good programmer and are making less than $100k per year anywhere then you're doing something wrong. Like medicine, it's a very entrepreneurial field, not just in terms of starting your own company, but also in terms of being "street smart" and aware of where the money is and how to get it. In medicine, the guys who have done the best are the ones who understand how to organize their practices, bill effectively, and negotiate with the hospitals. If you want to maximize earnings, it's more important to be a good businessman than a good doctor. Maybe that's the real lesson.
I'm in a different field now, but when I used to do software development, five years ago, I pulled in $20-$30/hr working in the South.
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