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Author: xraymd Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 308722  
Subject: Re: Keeping CC debt! Date: 4/16/2001 1:15 AM
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Can you be a bit more specific about what you know now that you didn't know then? [re: student loan obligations] I'm presuming that you underestimated the impact that accumulating interest would have on the balance that would need to be repaid.

Greetings, you are right on - what I know now is the speed at which accrued interest turns into principal. In retrospect, I COULD have known it then but I will only offer the lame excuse that I was waaaay too busy in medical school to pay sufficient attention to the acceleration - mainly because the bulk of the acceleration took place when my grace period was up. The interest during in-school and grace periods was lower than afterwards.

Also, you say you would have paid off the interest charges as they accrued. This implies that you had choices that you could have made to avoid accumulating these additional charges. I'm presuming that you are saying that you might have either worked more to bring in additional income or lived more frugally to economize and avoid additional debt.

Hindsight is 20-20! In medical school there was simply put NO WAY to earn extra money - for the first two years, I was in class daily from 8am to 4pm and spent the bulk of my evening studying. For the second two years, I was on clinical rotations in the hospital, on call overnight every 4th night - or else I was off-campus doing electives in hospitals far away which required expenditures for living accomodations. Then there were interviewing expenses of 4th year which required me to fly around the country, sometimes at short notice, over a 3 month period. It really is like trying to take a drink of water from a fire hose! I knew of a very, very few students who did try to do some kind of work study or part-time job but still marvel that they were able to try at all. Perhaps there are some who are gifted enough at (or exposed enough to) the study of medicine but that was not me. Could I have lived more frugally? Certainly I think so now! But I don't truly regret how I did live - I was careful in my spending but still think the few small luxuries I allowed myself kept me sane and focused.

Can you describe more clearly the choices that would have been worthwhile to reduce the student debt and interest charges that you accumulated?

What I would have done differently would have been to start earlier at making even token payments towards my student loan debts - even if they only covered a fraction of the interest - because during the in-school and grace period status, every dollar paid goes further to defray the costs: interest accrues at a lower rate and the ultimate amount of capitalized interest would have been held down. Most people who take out student loans are likely to need them for tuition, books and living expenses so there truly are not many extra dollars to fling back at the loans while a student, but I think now that even if I could have paid back on average $10 to $25 a week in school, I would have knocked off AT LEAST a couple of thousand dollars from my ultimate principal. Even if my payments would not have touched the original principal balance, the interest generated becomes principal at some point anyway, so truly every dollar paid back towards the loans does help. I don't regret taking out the student loans - they allowed me to reach my goal of training as a physician - but what would have helped me most of all would have been a black and white illustration of where I would be debtwise 5 years hence if I had chosen to pay part or all of the accruing interest earlier than later. I needed the original loan of $74K to fund medical school but surely I did not need to allow it to balloon up to $86K strictly from capitalized interest before commencing repayments. And at least with medical school which runs at a furious pace, I would have been better off to have thought this through before I began, while I could still think clearly! What I would try to do differently is put an equal amount of time into understanding student loan mechanics as I did into completing a multitude of medical school applications and preparing a cogent personal statement, BEFORE the firestorm of a medical student's schedule could overtake me. And now that I am a medical resident, I have gotten far smarter and am living on a strict budget (allowing for a scattering of tiny luxuries - can you say "ice cream" :-) ?) while putting at least one entire biweekly (modest) paycheck towards debt retirement. I am happy that I have no hankering for a fancy lifestyle and it is no hardship to me now to pay down debt. I LOVE to make payments! It is such a kick to see those balances go down, down, down. It would have helped to develop this kind of attitude during medical school but frankly it would have been tougher to reckon with watching the balances inevitably go up because I would have to borrow biannually to cover tuition and living expenses. Still, though, it would have helped to see penny-pinching then in the positive light I see it in now. I might have eaten sushi a few times less often and ramen noodles a few times more often - and liked it.

I see a pattern of people underestimating the impact of student loan debt on their lives. And I see people regretting some of the decisions they made and seeing better choices that they might have made. This might help others avoid problems and make better choices.

Thanks for asking for specifics. I hope this helped a little bit!

xraymd







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