Student Debt

[aquablue]

How much debt is too much? Realistically, can you pay off the LOC and government loans during residency? (Let's say 80k in loans)

 

Thanks!

[ellorie]

I'm looking at around 150k, hopefully a bit less, but I'm leaving room for CaRMS expenses and such, which I think is fairly standard for someone outside of Quebec who has no income, no family support, and no prior debt from undergrad.

[rmorelan]

How much debt is too much? Realistically, can you pay off the LOC and government loans during residency? (Let's say 80k in loans)

 

Thanks!

 

You can pay off that much if you really, really try and your residency is a 5 year one (for about 40% it is family medicine) - although to be fair most people don't really try that hard to. I mean the income jump post residency is looming you in the face at come point during residency and the question becomes why bother suffering now etc.

 

Generally is it actually considered to be doing relatively well if you can keep up with the interest payments at least during residency. Now part of that is a lot of people have much higher than 80K in loans.

[rmorelan]

I'm looking at around 150k, hopefully a bit less, but I'm leaving room for CaRMS expenses and such, which I think is fairly standard for someone outside of Quebec who has no income, no family support, and no prior debt from undergrad.

 

That 9K OMA bursary will really help with that

[Pythagora]

How much debt is too much? Realistically, can you pay off the LOC and government loans during residency? (Let's say 80k in loans)

 

Thanks!

 

Generally for the LOC's, you only pay interest on the loan during residency, just as during med school. From what I've read on the other threads, in residency you earn is enough to support yourself but not a whole lot more, so some people actually continue to use the LOC to fund a slightly more "doctorly" lifestyle.

 

Once you're practicing however, its much easier to pay off the debt. When I spoke to a rep. about a LOC, it seemed like paying everything off in about 5 years is pretty reasonable. (This is when people basically pay off their government loans with the LOC because the interest is lower, and then just pay down the LOC).

 

That being said, its also not unheard of for people to use whatever space they have leftover on the LOC even during residency to put towards a down payment on a place to live. It really depends on the person.

[rmorelan]

Generally for the LOC's, you only pay interest on the loan during residency, just as during med school. Government loans are still interest free too. From what I've read on the other threads, in residency you earn is enough to support yourself but not a whole lot more, so some people actually continue to use the LOC to fund a slightly more "doctorly" lifestyle.

 

Once you're practicing however, its much easier to pay off the debt. When I spoke to a rep. about a LOC, it seemed like paying everything off in about 5 years is pretty reasonable. (This is when people basically pay off their government loans with the LOC because the interest is lower, and then just pay down the LOC).

 

That being said, its also not unheard of for people to use whatever space they have leftover on the LOC even during residency to put towards a down payment on a place to live. It really depends on the person.

 

During residency you are not a full time student. Residency is a job.

 

Your Ontario government student loans are due as such and you have to make payments on both principal and interest according to the contract. Not sure if that is exactly the same for all provincial loans though

 

One of the big financial decisions then is to decide at the end of year 4 whether to absorb your government loans into your LOC - as government loans are due at a higher interest rate - or potentially enter into a return on service arrangement to hold the loans in interest free status for agreeing to practise in Ontario for 5 years after residency. Bit of a debate on that as you can imagine.

[rmorelan]

Generally for the LOC's, you only pay interest on the loan during residency, just as during med school. Government loans are still interest free too. From what I've read on the other threads, in residency you earn is enough to support yourself but not a whole lot more, so some people actually continue to use the LOC to fund a slightly more "doctorly" lifestyle.

 

Once you're practicing however, its much easier to pay off the debt. When I spoke to a rep. about a LOC, it seemed like paying everything off in about 5 years is pretty reasonable. (This is when people basically pay off their government loans with the LOC because the interest is lower, and then just pay down the LOC).

 

That being said, its also not unheard of for people to use whatever space they have leftover on the LOC even during residency to put towards a down payment on a place to live. It really depends on the person.

 

I guess I am just starting off in residency so take this with a grain of salt - I think the residency salaries are quite nice actually unless there is some other financial issue going on - effectively you earn about 70K a year which nothing to sneeze at. People may still augment that with their LOC to kind of smooth out their income over time but I think that is already a lot if you are reasonable and live within your means (not that at 70K that is even a hard thing to do).

[future_doc]

Good time to modestly begin paying down the LOC.

[rmorelan]

Good time to modestly begin paying down the LOC.

 

Well I think so, although the couple of people that just bough porsches seem to have a different point of view than me

[Clover_236]

I guess I am just starting off in residency so take this with a grain of salt - I think the residency salaries are quite nice actually unless there is some other financial issue going on - effectively you earn about 70K a year which nothing to sneeze at. People may still augment that with their LOC to kind of smooth out their income over time but I think that is already a lot if you are reasonable and live within your means (not that at 70K that is even a hard thing to do).

 

Just curious, based on CaRMS it seems that as PGY-1 you start at around 51K and don't hit high 60s or 70K till the final two years...are there any add on compensations that make the initial years salaries close to 70K per year?

[rmorelan]

Just curious, based on CaRMS it seems that as PGY-1 you start at around 51K and don't hit high 60s or 70K till the final two years...are there any add on compensations that make the initial years salaries close to 70K per year?

 

Yes - your tuition tax credits are available and must be used - effectively you pay no income tax for the first two years. The equivalent income of someone earning 51-55K a year (those call shifts at 105 a pop add up - using Ontario numbers, other places are even higher) is over 70K.

[aquablue]

Thank you all for replying. I guess I'm just worried because I'm planning a nice vacation and it's a little weird to use money so freely, especially money that I don't technically have yet.

[thetruth]

lol Agreed

[costar]

Yes - your tuition tax credits are available and must be used - effectively you pay no income tax for the first two years. The equivalent income of someone earning 51-55K a year (those call shifts at 105 a pop add up - using Ontario numbers, other places are even higher) is over 70K.

 

How much do you guys figure the average on call compensation would work out to?

[rmorelan]

How much do you guys figure the average on call compensation would work out to?

 

depends on the specialty (in house call vs home call, some are call heavy etc) and province as the rate varies. I know for instance for my program in 2nd year I will do about 40 call shifts, which is about 4K then. Ha - I mean it isn't much but still nothing to sneeze at. Rads is known for around one call shift a week (not bad) but each call shift is actually pretty nasty (if anyone else is doing anything, you are probably not sleeping)

 

Do you have a field in mind you are interested in?

[dagobear]

Is it possible to live off of, and pay for med school tuition with an LoC alone?

 

This is my fallback option.

[rmorelan]

Is it possible to live off of, and pay for med school tuition with an LoC alone?

 

This is my fallback option.

 

More than possible. You would have 250K to play with. Well play is the wrong word, I should stop using that word. Use as a tool and yes it is more than enough.

[dagobear]

So I should go with RBC since their cap is at 250K, all other banks seem to be at 200K

[justthewife]

So I should go with RBC since their cap is at 250K, all other banks seem to be at 200K

 

TD just gave my husband a 250k LOC.

[silvantes]

TD just gave my husband a 250k LOC.

 

I got 250k from TD but they staggered it through the 4 years. I have many expenses with wife and 2 kids who depend on this money as my wife stays at home and with possibly needing a new car I decided recently to switch to RBC who gave me 220k lump sum and will get the last 30k at a later date. I already have a lot of debt from undergrad as well, government loans and 30k line of credit that was rolled into Professional LOC.

[xi88]

I got 250k from TD but they staggered it through the 4 years. I have many expenses with wife and 2 kids who depend on this money as my wife stays at home and with possibly needing a new car I decided recently to switch to RBC who gave me 220k lump sum and will get the last 30k at a later date. I already have a lot of debt from undergrad as well, government loans and 30k line of credit that was rolled into Professional LOC.

 

Most banks will now give the full $250K but only if you ask for it. Royal bank will try to roll it out in installments as you go through the years, but they will cave if you persist. Because they know that National Bank through MD financial will give a full 250K straight out with your acceptance letter on day 1. The only reason I didn't go with National Bank was because they're smaller and don't have branches everywhere and therefore was not as convenient.

[silvantes]

How much does the processing time take for a LoC after you submit the application?

 

After you apply it can take a couple days for you to get approved, it really depends on the bank and how busy they are at that time. After you are approved it will take 24 hours+ for the funds to be released to you. For RBC all in all it was just a couple days, TD took about a week in total.

[rmorelan]

After you apply it can take a couple days for you to get approved, it really depends on the bank and how busy they are at that time. After you are approved it will take 24 hours+ for the funds to be released to you. For RBC all in all it was just a couple days, TD took about a week in total.

 

Yeah that is about right - I hopped around to a few banks over the time period, and always took a few days really.

[WtsupDoc?]

I applied online and heard back that I was approved in two days. The people u have been dealing with have been taking along time to get me the papers, however. Should have the funds in a few days as I just signed my papers yesterday. In total it will probably be three weeks for me from start to finish but I haven't been trying to rush anything along.

[jrmch]

I went in to BMO about a month ago, got all the paperwork started and talked about my options. I didn't want to sign anything that say, but the rep said if I did it would take about 2 days for the funds to become available. I'm going in later this week to finalize everything, now that I have better confirmation and an idea of where I'm headed.