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It’s been a while – but oh my a lot has happened!

It has been a couple of months since I have last blogged.  Sorry, it has been a very busy time.   A lot has happened in those two months.  The fourth year medical students found out where they matched in March and have been busily getting their pieces in place to graduate and make their transition to their residency positions that begin July 1 (for most).   Some of the fourth years who have matched in east coast cities like Providence, Boston, New York, Washington DC and Vermont are quickly finding out that their choice of residency location is an expensive one.  Even the ones going to California are having similar strains financially.  Unfortunately, the resident salaries do not adjust to the cost of living either, so some are needing to look at sustaining a very frugal lifestyle and the prospects of putting on hold any ideas of saving money, especially if they hope to also consider the Income Based Repayment (IBR) Plan in their future plans with hopes of capitalizing on the Public Service Loan Forgiveness (PSLF) option.

I have met individually with over 80 graduates over the last two months going over their student loan portfolios and strategically looking at how to manage the student loan debt during residency.  Some are facing the reality of what it takes to live in places like New York City, Chicago, Washington, DC and Boston while only taking home a monthly spendable income of $2,800 or less and also not getting their first paycheck until August 1.  The good thing is that having the Relocation Loans through the various lenders is becoming a godsend for some.  For others, it is working out with the help of family and other resources.  The lessons learned could include making sure to have a conversation with residents during the residency interview on what it takes to live in high cost areas.

Many who matched in the Midwest, especially in Indiana, are relishing the idea of purchasing a home utilizing one of the 100% financing programs available for medical residents and still having money left to save and make an Income Based Repayment on their student loans.  A few are looking at marriage or adding to an existing family.  Yet others are taking a long-awaited vacation with friends or family.   All the while, some of those heading to the high cost areas are wishing now that they had been a little more strategic in their ranking of residency programs.

Our current second year medical students are getting anxious about taking the National Board Medical Examination (NBME) Step 1 and at the same time getting excited about leaving behind the basic sciences curriculum and looking forward to the glorious clinical years, especially the start of third year orientation on June 10, 2011.  The first years are running on fumes as they finish the year and can’t wait for the summer where many will be doing research, experiential programs, international programs and some will be taking advantage of their last summer free for the rest of their lives simply being with family and relaxing.   A few who did not plan well are finding it hard to think that their only job opportunity for the summer is working at a restaurant or a non-medically related opportunity.

You have the accepted students finding out what campuses they will be assigned to and finding out their financial aid packages.  Some are very disappointed that scholarships are not part of their packages.  Some have made their decisions on where they will attend medical school using scholarships as a decion maker and others will be making their final decision in absence of that variable in the next couple of weeks or by the May 15 AAMC Decision Date.  The reality is sinking in really fast on the incoming first year medical students.  The prospects of borrowing for the very first time $40,500 or more is a mental adjustment.  Many have had undergraduate paid for through lucrative undergraduate scholarships or family.  The prospects of amassing $180,000 or more in loans over the next four years is hard to swallow, but a reality.  Unfortunately, this is the expectation and not the exception for 90% of those entering the first year of medical school nation-wide.  The fourth years are exiting with an average of $162,000 in student loans this year with another $20,000 in interest accrual.  The prospects of adding between $10-12,000 in additional interest cost on their student loans for each year in residency training is frightening to say the least, but an unavoidable fact.

Meanwhile, the current rising second, third and fourth year medical students look forward to the next year of medical school and the satisfaction of one less year to go toward graduation.  Not to mention, it is one more year of borrowing large amounts of money.

The cycle continues.

The views expressed in this content represent the perspective and opinions of the author and may or may not represent the position of Indiana University School of Medicine.

Jose Espada

Jose Rivera Espada is the director of financial aid at IU School of Medicine, a nine-campus allopathic medical school in Indiana. Jose’s experience includes working as an assistant director of financial aid at Butler University and a financial aid coun...