Paying for medical school for son?

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NYC_Guy
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Re: Paying for medical school for son?

Post by NYC_Guy » Sat Oct 21, 2017 8:53 pm

letsgobobby wrote:
Sat Oct 21, 2017 9:16 am
bubbadog wrote:
Sat Oct 21, 2017 9:03 am
If the future of the program, especially for high earning professionals, is uncertain, does it make sense to let them borrow the money and see what happens? If the cost of borrowing is relatively low, we could decide what level of financial assistance is needed at a later date.
I would.
I wouldn’t. Pay the tuition.

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Watty
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Re: Paying for medical school for son?

Post by Watty » Sat Oct 21, 2017 9:11 pm

bubbadog wrote:
Sat Oct 21, 2017 7:45 am
My wife and I are in a position to be able to pay for his expenses out of normal earned income and helping him would not impact our retirement financially in a significant way.
A big question is if you are financially independent and could retire today or not.

There are a lot of trite sayings like "Best laid plans of mice and men." or "Man plans and God laughs" but they have a grain of truth to them in that lots of things can happen that could change your future in ways that you can't predict that could impact your retirement plans.

If you are not already financially independent today then one option would be to help your son pay off the medical school debt later on when you are actually financially independent.

There is not one right answer about if you should treat your kids equally but you should make a conscious choice about if you want to set aside money an equal amount of money for daughter and update your wills to reflect that just in case something happens to you before you give your daughter equal money.

knick17
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Re: Paying for medical school for son?

Post by knick17 » Sat Oct 21, 2017 10:48 pm

If you can avoid touching any loan or even "student loan" pls do it!
I know it can be expensive but try to avoid putting you or your child through a debt as soon as he graduates.
I would push for him to find a job, so you can pay fees and maybe rent, but it's up to him to get money if he wants to go out or buy extra stuff.

investor4life
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Re: Paying for medical school for son?

Post by investor4life » Sat Oct 21, 2017 11:45 pm

We paid for our daughter's medical school. It was not cheap but we were in a position where we could afford it. Our reward was knowing that she would be able to start the tough road to residency, and later a fellowship, without having to worry about student loans. (We also paid for her undergrad.) She is prudent financially and knows the value of money, so we were comfortable with the decision.

letsgobobby
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Re: Paying for medical school for son?

Post by letsgobobby » Sun Oct 22, 2017 12:08 am

bubbadog wrote:
Sat Oct 21, 2017 8:27 pm
Op here

I really appreciate all of the opinions about this topic. My wife and I currently pay for all of his undergraduate costs. For undergrad, we considered having him to take out a loan to have some "skin in the game". After looking into it, we decided it was not worth the hassle. I honestly do not think it has had any impact on his desire to achieve academically at this point (4.0 GPA chemical engineering/pre-med major).

As far as "gaming the system" by potentially using the PSLF program, I really don't see a lot of difference in that compared with utilizing other government financial programs/rules/etc. to my families' advantage. I take advantage of tax deferred accounts, Roth IRAs, tax loss harvesting, efficient placement of funds in certain accounts, and on and on. All of these strategies are essentially for the same purpose. So when I hear the government has a program that allow doctors to have hundreds of thousands of dollars of loans forgiven, it starts to sound like something I might need to look into further.

In all likelihood, we will probably end up paying for the majority of his school one way or another. We have been very lucky as a family and he will be starting a career as I am finishing up mine. If we have plenty of money for our needs, spending some of the excess helping him get started without huge debts seems like a reasonable use of the money.

Thanks again
I agree with you. "Gaming" is not illegal or immoral. Don't hate the player, hate the game, as they say. You should play the game as the rules allow.

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White Coat Investor
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Re: Paying for medical school for son?

Post by White Coat Investor » Sun Oct 22, 2017 12:16 am

me112964 wrote:
Sat Oct 21, 2017 4:32 pm
EvanRude wrote:
Sat Oct 21, 2017 4:16 pm
Our son is in medical school at a prestigious private institution after a full undergrad academic scholarship at an in-state public university. We didn't pay a dime for his undergrad. Our approach has been for him to apply for Perkins and institutional loans that don't start accruing interest and become due until he is practicing (or residency?). We then pay the remainder and living expenses up to the point that we paid for his older sister to go to an out-of-state public university. We later amended that to include the full value of a piano and half value of wedding costs for his sister. Each year we gift his sister $5,500 for her Roth IRA and give him an equal gift (he has no income for a Roth IRA). We are now at the point where we need to define the "deal" going forward. I suspect we will agree upon some loan terms but I need to research this more.

Congratulations and good luck!
Congratulations! You get it. Your son will also get it. Your son will one day appreciate the generous gift of experiencing pride and ownership you have given him. Your daughter as well. :sharebeer
Do you guys worry about the effects of "Economic Outpatient Care" as discussed by Stanley and Danko? I expect I'll be in a position to do something similar (gift a few thousand to my kids each year indefinitely) which would help them financially and help me reduce estate tax concerns, but I worry about the side effects.
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Cantrip
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Re: Paying for medical school for son?

Post by Cantrip » Sun Oct 22, 2017 1:38 am

My story (the debt is not too bad):
I graduated medical school 5 years ago, and family medicine residency 2 years ago. Because I did family medicine, I was eligible for a special kind of loan with a 0% interest rate throughout medical school and residency. The rate increased when I graduated and so I refinanced into one which is variable but currently 3.69%. My current government employer is reimbursing me tax free for my student loan payments up to 24k/year for 5 years(this did influence the job that I chose, and the employer could not have given a sign up bonus in lieu of the tuition repayments). So overall the medical debt burden has been much less than I thought it would be.

However:
While in medical school most students have no earned income and so do not benefit from educational loan tax breaks. Once out of school, a physician's high salary means there are no tax deductions for student loan interest. A physician who does not want to practice in a rural or underserved area (though there are many great areas that you can go to), or work with a governmental organization, or picks certain specialties, may appreciate the prepaid tuition even more than having the cash. So it depends.

Allixi
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Re: Paying for medical school for son?

Post by Allixi » Sun Oct 22, 2017 9:20 am

Massive debt is one of the factors pushing med school graduates towards high-salary specialties. This probably makes healthcare in general more expensive for everybody. It may be that your son would have really enjoyed being a primary care/family doctor, but with 400K of debt is forced to become a spine or orthopedic surgeon. I know that's an exaggeration, but I guarantee that sort of calculation is in the back of the mind of every med school graduate.

I don't understand the "skin in the game" argument. Very few people willingly drop out of med school or residency to become a standup comic or pursue some unrelated career. A few get fired because of severe character flaws or illegal/unethical behavior. Most are forced out of the system when they don't match for a residency spot. Having a 400K loan burden then would not be motivating, it would just add unnecessary stress to a desperate situation, when one might already be having some dark thoughts.

I know because I've been through it.


Getting back to your question, I agree with posters saying that 100-150K of debt is a manageable amount, and could serve to educate your son about refinancing, budgeting, etc. You could help with living expenses and emergencies, which is what my parents did.

NotWhoYouThink
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Re: Paying for medical school for son?

Post by NotWhoYouThink » Sun Oct 22, 2017 10:01 am

It sounds like OP isn't worried about spoiling his son, he's worried about missing out on free money from the government. Different set of concerns.

As of now, OP's son hasn't even applied to med school, so it's early to predict his career path. What is OP telling him about paying?
- I'll pay for you to go to med school?
- I'll pay $XYZK for your schooling, you are on the hook for the rest?
- You are on the hook for all of it?
- Take out loans, try for PSLF. If that doesn't work, I'll pay for it?

Different messages are likely to result in different career paths. Whatever OP wants to do is fine. We're not in a position to pay for med school and keep our retirement savings intact, but if OP is that's okey dokey with me. Just remember that just as the government is trying to drive certain behaviors by offering specific incentives (PSLF), OP will likely be (intends to be?) driving certain behaviors by the incentives he is offering.

My recommendation would be a straightforward offer, without apologies or agendas. Bait and switch offers - telling the kids to take out loans, with a secret plan to pay them back if the kid does well - kind of make my skin crawl, but maybe that's just me.

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Tamarind
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Re: Paying for medical school for son?

Post by Tamarind » Sun Oct 22, 2017 10:52 am

bubbadog wrote:
Sat Oct 21, 2017 8:21 am
I do not know enough about it to really have an opinion at this point. I was just looking for advice from others. What I don't want is to be the only parent to pay for my child's medical school education while everyone else borrows, makes minimum payments, and their loans are "forgiven".
I would advise you not to worry about what others are doing or getting. The kind of jobs that come with loan forgiveness may not be what your children want to or are best suited to do after finishing med school. I've observed several acquaintances who are in these programs, and the hoops one must jump through are formidable. My opinion is that forgiveness programs are best for those borrowers who wanted to go into a low paying field anyway before taking on the debt.

It would be good of you to assist your kids with tuition, but not necessary. Certainly only something you should do if your retirement would stay on track. You could also leave the decision of how to pay for it to them, and offer a gift to speed up loan repayment after they've finished school and found jobs.

Johnsson
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Re: Paying for medical school for son?

Post by Johnsson » Sun Oct 22, 2017 11:25 am

I read many posts but not all.

I understand why people would like to take care of the costs for their child's education. A very honorable thing to do.

One of the things I did not see addressed (maybe I missed it?) was the value of learning to pay back loans.

If a child's education/costs are provided for them they are not truly learning to manage money. There is a BIG lesson to be learned (especially during the Resident years) by having a marginal income and significant loans to repay. How to budget money and pay back loans IS A BIG DEAL. How else will he begin to learn the financial facts of life? Isn't that what most of us have to do?

While a $200,000 loan has many lessons to provide, this is bigger than you may want him to have. I believe you should have him get a loan of some size... $50k?... as a life-learning experience.

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goodenyou
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Re: Paying for medical school for son?

Post by goodenyou » Sun Oct 22, 2017 12:46 pm

Johnsson wrote:
Sun Oct 22, 2017 11:25 am
I read many posts but not all.

I understand why people would like to take care of the costs for their child's education. A very honorable thing to do.

One of the things I did not see addressed (maybe I missed it?) was the value of learning to pay back loans.

If a child's education/costs are provided for them they are not truly learning to manage money. There is a BIG lesson to be learned (especially during the Resident years) by having a marginal income and significant loans to repay. How to budget money and pay back loans IS A BIG DEAL. How else will he begin to learn the financial facts of life? Isn't that what most of us have to do?

While a $200,000 loan has many lessons to provide, this is bigger than you may want him to have. I believe you should have him get a loan of some size... $50k?... as a life-learning experience.
When I was a surgical resident (read:long residency) in downtown Chicago many years ago, I did not have enough for living expenses and to pay back loans at the same time. I think I was making about $20k/yr at that time. I didn't need a BIG lesson. It was right in my face and really unnecessary for me to learn the value of paying back loans. It would have been nice to not have loans with compounding interest during my training. It all worked out though. I chose a place to practice that gave me an opportunity to pay it all back very quickly. It was not my first choice (and it still isn't) of places to live, but it has allowed me the opportunity to retire early and to move to a more desirable (HCOL) place to live.
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letsgobobby
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Re: Paying for medical school for son?

Post by letsgobobby » Sun Oct 22, 2017 1:04 pm

Tamarind wrote:
Sun Oct 22, 2017 10:52 am

The kind of jobs that come with loan forgiveness may not be what your children want to or are best suited to do after finishing med school. I've observed several acquaintances who are in these programs, and the hoops one must jump through are formidable. My opinion is that forgiveness programs are best for those borrowers who wanted to go into a low paying field anyway before taking on the debt.
Like many others in this thread, you are both getting and giving bad information.

By the time many residents/fellows have finished their training at a non-profit institution, they may have only 2-6 years left to work at a non-profit to be eligible for loan forgiveness (under the current rules). A friend of mine had a 9 year residency/fellowship training. He would have had to work only 1 year at a 'non-profit' to be eligible for loan forgiveness. He is a cariothoracic surgeon, by the way. Not low paying. Not working in an underserved area.

They do not have to go into a 'low paying field'.

They do not have to work in an underserved area.

The jobs may not be any different than the jobs they would otherwise take.

There are almost no 'hoops' to jump through.

In my area, every major hospital is a 'non-profit' and employees there are eligible for the loan forgiveness program.

In the event a student ultimately is NOT eligible for loan forgiveness, then the parents (in this case) can pay off the loans. No harm, no foul.

Johnsson
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Re: Paying for medical school for son?

Post by Johnsson » Sun Oct 22, 2017 1:06 pm

goodenyou wrote:
Sun Oct 22, 2017 12:46 pm
Johnsson wrote:
Sun Oct 22, 2017 11:25 am
I read many posts but not all.

I understand why people would like to take care of the costs for their child's education. A very honorable thing to do.

One of the things I did not see addressed (maybe I missed it?) was the value of learning to pay back loans.

If a child's education/costs are provided for them they are not truly learning to manage money. There is a BIG lesson to be learned (especially during the Resident years) by having a marginal income and significant loans to repay. How to budget money and pay back loans IS A BIG DEAL. How else will he begin to learn the financial facts of life? Isn't that what most of us have to do?

While a $200,000 loan has many lessons to provide, this is bigger than you may want him to have. I believe you should have him get a loan of some size... $50k?... as a life-learning experience.
When I was a surgical resident (read:long residency) in downtown Chicago many years ago, I did not have enough for living expenses and to pay back loans at the same time. I think I was making about $20k/yr at that time. I didn't need a BIG lesson. It was right in my face and really unnecessary for me to learn the value of paying back loans. It would have been nice to not have loans with compounding interest during my training. It all worked out though. I chose a place to practice that gave me an opportunity to pay it all back very quickly. It was not my first choice (and it still isn't) of places to live, but it has allowed me the opportunity to retire early and to move to a more desirable (HCOL) place to live.
I'm glad it worked out for you. I have a family member in a very similar situation today. Yes, it was difficult. It also helped make you who you are today. I assume the loans provided you with the opportunity to succeed.... as you did.

bubbadog
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Re: Paying for medical school for son?

Post by bubbadog » Sun Oct 22, 2017 3:18 pm

Thank you letsgobooby. This is exactly my understanding of this topic.

If the government or anyone else wants to pay his loans off, I have no problem with letting them do so.

Worse case scenario is I help him after his training is completed.

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Tamarind
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Re: Paying for medical school for son?

Post by Tamarind » Sun Oct 22, 2017 3:19 pm

letsgobobby wrote:
Sun Oct 22, 2017 1:04 pm
Tamarind wrote:
Sun Oct 22, 2017 10:52 am

The kind of jobs that come with loan forgiveness may not be what your children want to or are best suited to do after finishing med school. I've observed several acquaintances who are in these programs, and the hoops one must jump through are formidable. My opinion is that forgiveness programs are best for those borrowers who wanted to go into a low paying field anyway before taking on the debt.
Like many others in this thread, you are both getting and giving bad information.

By the time many residents/fellows have finished their training at a non-profit institution, they may have only 2-6 years left to work at a non-profit to be eligible for loan forgiveness (under the current rules). A friend of mine had a 9 year residency/fellowship training. He would have had to work only 1 year at a 'non-profit' to be eligible for loan forgiveness. He is a cariothoracic surgeon, by the way. Not low paying. Not working in an underserved area.

They do not have to go into a 'low paying field'.

They do not have to work in an underserved area.

The jobs may not be any different than the jobs they would otherwise take.

There are almost no 'hoops' to jump through.

In my area, every major hospital is a 'non-profit' and employees there are eligible for the loan forgiveness program.

In the event a student ultimately is NOT eligible for loan forgiveness, then the parents (in this case) can pay off the loans. No harm, no foul.
Fair enough. My experience is with folks with graduate education in non-medical fields, and I take your point about the impact of residency on the timeline.

Johnsson
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Re: Paying for medical school for son?

Post by Johnsson » Sun Oct 22, 2017 3:57 pm

bubbadog wrote:
Sun Oct 22, 2017 3:18 pm
Thank you letsgobooby. This is exactly my understanding of this topic.

If the government or anyone else wants to pay his loans off, I have no problem with letting them do so.

Worse case scenario is I help him after his training is completed.
The difficult part is that Uncle Sam lets you pay all the school BILLS for him you want w/o tax issues. Paying off LOANS is limited to gift tax restrictions... ($14k pp/py)

EnjoyIt
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Re: Paying for medical school for son?

Post by EnjoyIt » Sun Oct 22, 2017 4:11 pm

bubbadog wrote:
Sat Oct 21, 2017 10:20 am
My end goal is for our children to finish their medical training with no significant amount of debt. I am OK with a little but not in the hundreds of thousands range like a lot of students.

I am not counting on the loan forgiveness program to remain unchanged for the next 10+ years. (but who really knows)

Just wondering if a wait and see approach would be best in case everything lines up with his future job, loan forgiveness program, etc. as this could be a huge windfall. (esp. X2 children)


My current thoughts are to have him do the following;

1) Borrow all of the "cheap money" available and supplement the rest of his needs.

2) Reassess after he completes his training and see what makes the most sense at that time. If the loan forgiveness program is not a viable option at that time, go ahead and retire most if not all of his loans.

I appreciate all of the advice and feel free to critique my current plan.
I think this is an awesome plan. I am a physician who got no assistance paying for any of my education, but my parents helped me with living expenses and books. I ended up with $300k+ in debt out of residency. The debt initially felt massive but with my income I was able to pay off the higher interest debt very quickly but still have some paying the minimum because of the ability to refinance at a very very low rate. For me, the debt was a serious push to get through training as well as live frugally for the first few years out of residency. I have a friend who had free ride through med school thanks to her parents. She changed residencies 3 times taking up 10 years before finally practicing on her own. She says that if she had debt she would have stuck with her first residency choice.

I honestly believe having some debt while in school is necessary. You can always help pay it off once they are done if you are still capable and interested. I plan to have my kids take out some debt for undergrad and grad school if they choose that option. I plan to help them pay down their school debt once they land their first job and create a budget based on their current income.

navyitaly
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Re: Paying for medical school for son?

Post by navyitaly » Sun Oct 22, 2017 4:24 pm

Military HPSP....let Uncle Sam pay for it and give him a nice bonus and monthly stipend in exchange for serving!

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Toons
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Re: Paying for medical school for son?

Post by Toons » Sun Oct 22, 2017 4:30 pm

Floyd1000 wrote:
Sat Oct 21, 2017 8:01 am
Personally, as somebody who graduated medical school 10 years ago, I would advise against paying your child's entire tuition. Medical school and residency are not so romantic as the general public likes to imagine, and even the most well balanced and determined individual is likely to think about quitting and shifting career paths at some stage. If your child has some skin in the game, it will help him to get through those patches. Too easy to quit if the money is not real to you.

My parents probably could have paid my medical school tuition and did not. I do not blame them. If anything it would have been unfair to my siblings. If you would like to help your son during those years, I would instead help him to build some of the long term wealth that he otherwise cannot build during the 8-10 years of medical school and training. You could help him with the downpayment for a house in the city of his medical training. Perhaps he could even buy a 3-4 unit building and rent out the other units to med school classmates. You could also help him to contribute to his retirement account during those 8-10 year period.

It does all depend to some extent on interest rates for student loans. We still carry almost $400,000 in med school debt between my wife and I, but fortunately the interest rates are below 3%, which makes me feel no inclination to pay it off any faster than the lenders require. I know some on this board are so risk averse that they would pay it off as soon as possible, but that makes no sense to me. If your son is looking at interest rates north of 5%, maybe your initial plan to pay the tuition makes sense. Or, compromise and pay half the tuition so his burden is less but he still has skin in the game.

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Impromptu
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Re: Paying for medical school for son?

Post by Impromptu » Sun Oct 22, 2017 6:46 pm

Once that first loan is taken out, you are somewhat committed to finishing the whole thing, because other jobs will not pay back the loan very easily. It is motivational to see things through. There were many days driving home from Internal Medicine Floors rotation in residency that I considered to not get off at my exit, but continue on to Mexico to live a simpler life.

The most important thing to consider is your son. Is he someone that will do well with a gift of money? Will he see things through to the end? Is financially savvy? Or is he someone that will waste it? Not appreciate what it took to give it to him? Had someone paid for my medical school, I would have still finished it. But that ball and chain of student loan debt certainly helped me to focus on the long term financial situation.
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TroutMD
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Re: Paying for medical school for son?

Post by TroutMD » Sun Oct 22, 2017 7:16 pm

Floyd1000 wrote:
Sat Oct 21, 2017 8:01 am
Personally, as somebody who graduated medical school 10 years ago, I would advise against paying your child's entire tuition. Medical school and residency are not so romantic as the general public likes to imagine, and even the most well balanced and determined individual is likely to think about quitting and shifting career paths at some stage. If your child has some skin in the game, it will help him to get through those patches. Too easy to quit if the money is not real to you.

My parents probably could have paid my medical school tuition and did not. I do not blame them. If anything it would have been unfair to my siblings. If you would like to help your son during those years, I would instead help him to build some of the long term wealth that he otherwise cannot build during the 8-10 years of medical school and training. You could help him with the downpayment for a house in the city of his medical training. Perhaps he could even buy a 3-4 unit building and rent out the other units to med school classmates. You could also help him to contribute to his retirement account during those 8-10 year period.

It does all depend to some extent on interest rates for student loans. We still carry almost $400,000 in med school debt between my wife and I, but fortunately the interest rates are below 3%, which makes me feel no inclination to pay it off any faster than the lenders require. I know some on this board are so risk averse that they would pay it off as soon as possible, but that makes no sense to me. If your son is looking at interest rates north of 5%, maybe your initial plan to pay the tuition makes sense. Or, compromise and pay half the tuition so his burden is less but he still has skin in the game.
Physician also, great advice above. Be helpful, maybe help with transportation, even give them a little vacation after doing well for a year, etc... I graduated with debt, but very minimal debt. Its largely because my grandfather bought a home for me to live in, I just paid expenses (taxes, insurance, etc). That was a HUGE help over 4 years. Look at creative ways of doing things that make you feel good for helping, but without making it feel like there are no financial mishaps to failure to complete.

Also, at least when I did it, some volume of the loans were subsidized so it was essentially a free loan from the government.

Good luck!

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sergeant
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Re: Paying for medical school for son?

Post by sergeant » Sun Oct 22, 2017 7:28 pm

bubbadog wrote:
Sat Oct 21, 2017 8:41 am
I am looking at potentially paying for or at least providing significant financial assistance for two children through medical school. It is a lot of money. These loan forgiveness programs have got me thinking if it would be better to have them borrow more and help less.

Definitely agree with some "skin in the game" but Ideally would like them to not owe hundreds of thousands when just starting out.
Put the funds away in a side account. If all goes well provide it to them as a graduation gift.
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SpaceCowboy
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Re: Paying for medical school for son?

Post by SpaceCowboy » Sun Oct 22, 2017 7:54 pm

I appreciate the education from @letsgobobby. He seems to have give a pretty accurate picture of how this all works.
I'm actually in a very similar situation as OP with oldest planning on going to med school in 2 years. He will have money left in his 529 to probably cover 1.5 years or so.
I think this provides a great learning opportunity in optionality. It sounds like that by taking out the loans, you preserve the option of having them forgiven at a later date with the cost of the option being the interest. Seems like a decent proposition to me. At one point my child said he'd rather borrow from me than the government, but the potential for loan forgiveness may change that calculus.
This whole bit of having skin in the game, I just don't see it for most med students. The commitment they have made to just get admitted and then through med school is enormous. Granted I had to pay my own way through school and think I benefitted from it, but I'm fortunate enough to be able to pay for my kids education. Can't think of a better investment than that.

darrvao777
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Re: Paying for medical school for son?

Post by darrvao777 » Sun Oct 22, 2017 8:01 pm

This was the greatest gift my parents gave me

They paid for most of it, I graduated med school with less than $50000 in loans (they covered the remaining $200000+)

If anything, it drove me to work even harder knowing this was my parent's money and early retirement that I was consuming.

I'm a couple years out from training. Liquidated all my loans with attending paycheck #1, hit the 2 comma club in investable assets before age 35.

The only negative is that I'll feel guilt about how much my parents sacrificed to put me in this position (without question they would be enjoying a wealthier retirement without giving me this gift). All I can do is try to shovel some money back their way and try to pay this forward to my own children.

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Re: Paying for medical school for son?

Post by jhwkr542 » Sun Oct 22, 2017 8:30 pm

Lots of misinformation that I'd like to add clear up (coming from a recent grad whose peds wife is pursuing PSLF about to finish year 6). Here are the general terms of the program:

1. You have to make 10 years' qualified payments. What makes a payment 'qualified'?
2a. The 10 years have to be spent working for a non-profit, which really isn't well-defined but, objectively, for most physicians means working for (not necessarily at) a 501(c)3 hospital. AND
2b. They have to be made using an income-driven repayment plan. People with shorter residencies (primary care, EM, derm, etc.) will end up paying more towards loans because their income will be at attending levels in more years.
3. The physicians who qualify are usually employed by hospitals, so private practice companies like the one I'm with (C-corp, partnership track) do not count.
4. Virtually every residency and fellowship program will qualify, so surgical subspecialties that have long training programs will pay lower amounts overall. Additionally, the person needs to pay during training to really get the benefit.
5. Graduate student loans are somewhat high, 6% for 2017-2018.
6. Unsubsidized loans will accrue interest the entire time in school, post-grad training, and after, although once in repayment, some of that interest can be wiped out.
7. Forgiveness is not taxable.

I doubt the "skin in the game" is going to matter to your son. Free undergrad and he's pulling down a 4.0 in chem e? It sounds like he'll do well. Med. school was a collection of 175 of the most competitive, driven people I've ever been associated with (I was one of them). The inner drive to do well, finish what I started, and be a good physician are enough motivation. I didn't think of my debt while studying since my thoughts were "I'll deal with it after med. school" since my med. school income was $0. Did it affect my career choice? Probably. Paying for your son during school would alleviate that giant debt cloud from hanging over his head, so he'd be free to take a career path that makes him happiest and not the one that can pay off loans.

I'm going to toe the line on political speculation, but I just want to add this: be sure to follow the news if this program will still exist in 2 years since news outlets reported earlier this year that the administration was pondering changes. If you are determined to pay for tuition unless your son will try for PSLF, make sure it's still around when your son starts medical school.

MutualEdge
Posts: 44
Joined: Sun May 28, 2017 6:46 pm

Re: Paying for medical school for son?

Post by MutualEdge » Mon Oct 23, 2017 6:56 am

Hi Op,

I would do it without hesitation. If you're not sacrificing you're retirement, your gift will be extremely appreciated by your child(ren). Getting into medical school is an incredible accomplishment, one no doubt that your child has worked extremely hard to achieve.

I am the wife of a med student. When we married, I decided that I would like to use savings and we decided some of my future earnings to pay for DHs school. The amount of stress that has taken off of him and us does not have a financial price tag. Hearing others talk about their med school debt and how that impacts their day-to-day lives makes me appreciate our sacrifices because I know they're worth it in spades.

When we began this journey, we did look into public loan forgiveness, military options, etc., but decided we didn't want all the strings attached. As DH approaches residency, we are extremely grateful that he can explore all of his options. Again, you can't put a monetary value on this kind of freedom. Med school is stressful enough without having to worry about additional hurdles if you don't have to do so.

One other thing I would mention is to look closely at tuition. It varies from program to program and in-state vs out-of-state. You can realize a significant cost savings there.

bubbadog
Posts: 647
Joined: Wed Mar 26, 2014 9:17 pm

Re: Paying for medical school for son?

Post by bubbadog » Mon Oct 23, 2017 8:01 am

I have been looking into loans currently available for med students and it appears most of the money is unsubsidized (interest starts immediately).

Unsubsidized Stafford loans currently have an interest rate of 6.8%. This is the program that apparently most students borrow the bulk of the funds needed. It looks like they can borrow around $40,000 max per year.

Perkins loans are subsidized but the maximum per year is only $8,000.

Conclusion, not a lot of "cheap money" available.

Dr. Mom
Posts: 16
Joined: Fri Feb 03, 2017 9:53 am

Re: Paying for medical school for son?

Post by Dr. Mom » Mon Oct 23, 2017 8:27 am

bubbadog wrote:
Mon Oct 23, 2017 8:01 am
I have been looking into loans currently available for med students and it appears most of the money is unsubsidized (interest starts immediately).

Unsubsidized Stafford loans currently have an interest rate of 6.8%. This is the program that apparently most students borrow the bulk of the funds needed. It looks like they can borrow around $40,000 max per year.

Perkins loans are subsidized but the maximum per year is only $8,000.

Conclusion, not a lot of "cheap money" available.
We came to same conclusion with our son. Perkins require extreme financial need. The current interest rate on Unsubsidized Federal Direct Loans is 6% with an origination fee of 1.069%, The interest rate changes annually. My son has applied with the FAFSA for his first and second years. He was offered the $40,500 max of Direct Loans and the rest as a PLUS loan with an even higher interest rate and an origination fee of over 4%. So far, he declines the loans, but sees what we are helping him avoid each year. By second semester third year and into fourth year he will start accepting some of the Direct Loans unless I can change his mind and my husband's mind. I personally don't see the value of having him take out loans, but they do.

bubbadog
Posts: 647
Joined: Wed Mar 26, 2014 9:17 pm

Re: Paying for medical school for son?

Post by bubbadog » Mon Oct 23, 2017 6:33 pm

Thanks to everyone for the help. Bogleheads is awesome!

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