When Will My Financial Situation Improve?

Geoffrey A. Talmon, MD

Disclosures

November 13, 2009

Question

As a student, I find myself worrying all the time about coming up with the money to pay bills. When can I expect things to get better?

Response from Geoffrey A. Talmon, MD
Assistant Professor, University of Nebraska Medical Center, Omaha, Nebraska

If training to be a physician is about delayed gratification, at no time is this fact more clear than when a medical student pays monthly bills. Unless his or her significant other is employed, chances are that a student has no positive income because medical school time commitments make holding an outside job difficult. Although "cost of living" loans are helpful, they often do not completely meet one's needs, especially if this is the sole monetary support for a family.

If you are like me, you may have turned to credit cards for supplementation out of necessity. It was not uncommon for people in my class to have in excess of $30,000 in credit card debt after 4 years. When this is coupled with the student loan burden that many student doctors have accrued (estimated by a 2007 American Medical Association survey to be $139,517 on average), reviewing one's financial situation may seem depressing.

Good news, though: When senior medical students magically transform into first-year residents, they begin having a real salary, and the financial stress begins to decrease dramatically. Resident salaries are typically based on year of training, with all specialties at a given institution paid equally. According to a survey by the Association of American Medical Colleges, the mean pretax stipend for a first-year house officer was $46,000, and that of a third year was $50,000.[1] This is a fairly consistent figure that may differ slightly from program to program (typically by about $3000-$4000 per year).

Although the dollar amounts between programs are similar, it is necessary to remember that actual spending power may vary dramatically depending on the location of your training program. A first-year resident's salary of $46,000 in an area with a high cost of living like San Francisco would be the equivalent of making about $23,500 in a Midwestern city like Omaha.[2] (Although residencies in larger cities may offer slightly higher salaries to offset this, the added income is often insufficient to compensate for these differences.)

Many residents supplement their income by moonlighting. Although state laws and program requirements may differ, most senior residents have the opportunity to practice outside of their institution during their downtime. Several of my primary care colleagues were able to increase their monthly income by 50% via moonlighting.

There are other benefits for residents that help make monetary manners easier to handle. Most institutions offer excellent insurance plans, typically including low-cost family policies for medical, dental, optical, prescription, and life insurance coverage. Furthermore, professional costs such as malpractice insurance, licensure expenses, and educational/book funds often are covered or subsidized.

For me, budgeting became much simpler as a resident. My monthly take-home pay was more than double that provided by my student "cost of living" loans. I was even able to comfortably buy a house and replace a decrepit vehicle while in my first year of residency, as did many of those in my class. Credit card debt was my challenge, although this eased as time went on and principals were paid down. Fortunately, student loans were not a major issue because nearly all lenders offer deferment or mandatory forbearance for those still in medical training.

In the end, although resident salaries are substantially lower than those of attending physicians, resident budgets are much easier to manage than student budgets. Paying monthly bills may still be psychologically painful, but it is usually not as financially traumatic.

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