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Hi all,

Well, I just found out a month ago that I will be attending one of the most expensive medical schools in the country and although I'm jumping with joy because of getting in, this 25-year-old is becoming a little perturbed with the likely debt. I'd like to ask you Fools for a little advice.

Here's my current financial situation: no credit card debt, about $7,000 in a 401(k) (S&P 500 index fund), around $3,000 in savings, and two undergraduate loans totalling $9,000 (interest rates locked at 5% and 8%, but interest and payment will be deferred while I'm in med school).

And the med school picture: tuition, room, board and expenses will be around $55,000 - $60,000 a year for four years. Almost no scholarships or grants are available; almost all financial aid is in the form of loans. The school estimates that if a student takes out the maximum he/she is allowed to borrow each year, he/she will owe around $225,000 after the four years. Assuming the loans do not have to be repaid during a three-year residency (but interest may accrue on some of the loans during school and residency), and assuming a ten-year repayment plan after residency, the total payoff will be around $450,000.

Loans are divided into three main borrowing plans: subsidized and unsubsidized Stafford loans, capped at 8.25% (subsidized means no interest while in school; unsubsidized means interest accrues during med school and may be capitalized at the end of each year or upon repayment), and private alternative loan, unsubsidized, no reasonable cap (usually the interest is Prime Rate + 1.0%). The maximum that can be borrowed in Staffords is $38,500/yr, so the rest must be from the private loan.

I am expecting to borrow my way through, as having a job during school is almost unthinkable. I am also planning on paying interest that accrues each year, mostly with income from summer jobs the first couple of years when we'll actually have summers off. My girlfriend has also offered to help with actual repayment after my third year in school, as we are expecting her salary to jump substantially then. After a three-year residency, I am expecting that my salary will be around $100,000 (totally uninformed estimate!), and my girlfriend and I are planning on throwing all of that into repayment while we live off her salary, in an attempt to pay everything off as soon as possible.

I'm only asking you for some advice, tips and insights on ways we can minimize the damage. I plan to cut corners everywhere, but perhaps there are some major factors I'm missing? Any doctors or med students out there who might have experience with these matters? Any financial advisors with ideas? Anyone?

Looking forward to your comments,

Erik
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