Ok suppose that owning a home is a very important thing for your family (i.e. “You can go to med school as long as we’re living in our own house.”) So you buy a place and end up with a monthly payment of say $2500 including taxes. This is all fine and dandy while you’re both working. Now suppose that the primary wage earner decides to go to med school and that the other partner brings in maybe $2000/mo total after taxes. What happens in a case like this? Can you take out loans to cover the rest of the mortgage plus living expenses? How about if the difference were bigger? How about if you need to borrow about 1500 a month just to cover the mortgage alone? Are you ok as long as the maximum loan amount can cover everything you need it to (mortgage as well as tuition and living expenses)?
Or would this family have to sell their beloved house in order for the student to go to med school?
Thanks!
That's a great question…I should've asked that previously, seeing that I'll be facing the same dilemma.
As far as I know, various types of loans can be taken out to cover living expenses while attending school (depending on credit). Another idea: It's possible to refinance and extract enough from your home to float your payments for several years (providing there's enough equity).
I'm not sure of the best avenue, I myself, need to research that further…as I hope to attend Aug. 2005. Anyhow, I hope it gave you some direction.
Dear friend,
Please proceed with caution when borrowing money from one source to pay another. Unecessary debt is a terrible thing. One of my friends is an attorney that specializes in bankruptcy. Boy do I hear some horror stories. If you can, consider selling and moving into a more modestly priced home. Anyway, just some advice from a person, attorney, and hopefully, god willing, a future doc.
Bill
My mistake…
I did not catch the nuance there. Juggling the spouse, the long road to medical school and the everafter is difficult. (I personally am experiencing the first two.) I do not know what to tell you. You borrow extra to pay for living expenses. Many people do. But borrowing to pay for premed classes seems a bit extreme. How bout trying to take the classes at night or on weekends.
Just some thoughts…not worth more than the time my clients are losing as I write this note. (:
Bill
Honestly, I wouldn’t do it! Getting yourself into that much additional debt for the sake of keeping a house doesn’t seem worth it at all in the long run…Not to mention the fact that applying to med school would mean that you might have to move anyway…and with the residency match process moving is an almost certainty. If you are serious about medicine, you’ll probably have to sacrifice the house…at least for a few years. 
kris
Thanks for all your responses! I really appreciate it as this is one of the major issues surrounding my decision (I'm still undecided at this point). I'm not sure I can go on with it if I don't find a way to make this work.
My husband is trying hard to be supportive, but I know that he's very concerned about our financial picture. When we got married we had set goals for ourselves and home ownership was one of the ones we wanted to achieve in the coming years. I've been out of school and working (in a job I pretty much hate) for 7 years now and the only way I will feel ok about having wasted my time here is if we at least have something to show for it (a house). Maybe this sounds kind of dumb but it would really help me forgive myself for my mistakes regarding my career.
We live in the NYC area and there are enough programs around here that I have no expectations of needing to need to at any point during my training or afterwards. This is the area I intend to be at for the long haul. Unfortunately, the real estate market here is absolutely ludicrous and will only continue to rise, so I really feel pressured to get into it now. If I wait until I'm done with all my training I may no longer be able to afford anything. Subjecting my husband and future children to living in an uncomfortable apartment will add to the feelings of guilt I will more than likely have. Knowing that they are comfortable at home, while I leave them alone for long periods of time, is my biggest reason to get the house now. I've lived in an apartment all my life and I really want to be able to offer more to my family, seeing as I probably won't have the kind of time I'd like for them.
Another thing is that this area is expensive regardless. Even if we were just renting we'd probably still need to borrow money for stuff that maybe people in cheaper areas don't need to borrow for.
P.S. In terms of the pre-reqs, my husband works for Columbia, and that's where I went undergrad, so I can use his tuition benefits to take the courses. But I think eventually I'd have to not work for a year in order to do Orgo, Bio, labs, and MCAT. sigh
Good luck with your dreams! Apartments are not so bad. And, to be candid, kids do not care what you live in. They just want and need love. My father is a general surgeon. Growing up, we moved all over the place for medical school and his residency. We lived in apartments and rental houses. I never felt different or inadequate b/c of our abode. The only thing I do remember is that I did not see my father enough!
So, focus on what counts!
I wish you much happiness!
Bill 
I am in a somewhat similar situation and am thinking of selling my house. I am an at-home-mom and quit my job 5 yrs ago (I have a very small business now but I bring in very little for that). We can afford our house just fine but not if we have to pay for daycare for my kids. Soooo, we are thinking about moving to a cheaper area. At first I thought that would be awful but I lived most of my life in a house half the size of this to be able to get the chance to go back to school.
My only thought is do whatever you have to to acheive your goals. A nice house is great, but I figure it will be there for me again one day.
Best Wishes!
Christy
Well, what about not losing the house, but not LIVING in it? like renting it out, or renting out PART of it.
I’m able to not work for the next year, mostly because we’ve rented out our basement, and that’s covering a larger part of the mortgage than we ever thought it would. I got to live in my ‘own’ apartment all through undergrad, but renting out the ‘den’ and paying just over half of the cost of the apartment… If you’re clear to the person you rent to that they’re NOT sharing the house with you, but that you’re RENTING them a room, the problems of who has a right to do what can be mostly avoided… I had great credit, had the lease, and the other person had a nice place to live, and no worries about not having credit (as many students don’t ) And the good ones got a great rental reference from me – so everyone won. I’m thinking of relocating to WV soon, since my husband has ties there, and if I do, I’ll be renting out part of the home I am in, and living as cheap or cheaper and definitely more comfortably than if I had a tiny apartment.
Just a few thoughts… Don’t give up on the house yet, but don’t be wedded to doing it just one way… As some wise folks have been telling me when the academic progress isn’t going ‘according to plan’, “you can do it, you just have to do it DIFFERENTLY” from others…
hang in there…
I hate to tell you this, but mortgages, car payments, credit card debt & all those lovely elements of adult life are not even considered when calculating your loan eligibility. Depending upon your school, it's endowment and your Fin Aid officer's savvy - there is a small amount of wiggle room for certain circumstances: new child, for example - but I emphazise that this is small. My wife & I were considering having a child during my second year…the FA guy could only muster up $1000 ~ 1200 for the entire year…not even close to that amount for every month!
Every post-secondary school determines its annual cost of attendance, thru some Federal formula voodoo. That figure includes everything it should take for an individual to pay tuition, books, fees and cover living expenses – living expenses that are calculated for age-appropriate people. The numbers are a bit different for an independent student vs dependent and again, adjustments are made for married folks…but nothing is allowed or added for bills, including mortgages.
Your FA eligibility is the annual cost of attendance minus the EFC (expected family contribution - another voodoo derived figure based on income, assets & liabilities). As a med student, the most Fed aid you can obtain is 38,500/year. You can only get that much if the annual cost minus the EFC equals or exceeds that amount. Meaning that you'd have to go to one of the private or more expensive public schools to get up to that figure…then again, if you're in one of those institutions, a lot of your aid dollars are consumed paying tuition.
If you are determined to be eligible for more aid than the Fed max, a pretty common occurence, you must obtain those amounts thru private loans - very easy to do if you have good credit. Even had I taken the max, after tuition & fees, I had about $10k/year left over to live on & buy books, food & what-not. Thank God my wife is a nurse and made decent money & we lived in an extremely inexpensive community - Kirksville, MO & Saginaw, MI during those years.
Long story made short, no, you cannot request additional $$ to cover mortgages & the like. Your best bet to avert a fiscal disaster is to come as close to being debt-free as is feasible. In many aspects, you will have to revert to living like a student…if you are willing to max-out your loans, you can most like live a bit higher level of lifestyle, but very unlikely to be anything like what you have become accostomed to w/ to adult income earners.
This is why we frequently speak to the sacrifices that we & our families' must make to travel this path. Unless you are indepenently wealthy, you cannot insulate your family from the lifestyle & monetary sacrifices that you must make. Even if you do have that kindof money, it will still be impossible to insulate them from the massive lifestyle changes, time commitments and study regimen that you will have to adopt.
You need to think long & hard and very very much include your family in any decisions to proceed…in my humble opinion.
Although I would carefully consider any unnecessary borrowing, a $2,500 mortgage may be average in your area. Thankfully, it is not in my locale. You may want to run some numbers on how much debt will pile up while your education is in progress, but especially while you are in a multi year residency, typically unable to make payments on the loans due to low pay (~$32K - $40K). The interest really piles up in a landslide. It also depends on what type of medicine you intend to practice, i.e. specialties pay more than family practice, hence the shortage of family doc’s.
Personally, I ran the numbers and found that I was better off within 3-4 years post-residency than if I continued working as an engineer with a decent paycheck, even after paying off the loans over a three year period. However, I do not intend to be a family doc (no offense, just not my interests).
I think you can borrow as much money as you would need given the numbers that you posted. I would seriously consider whether it was wise to saddle yourself with this much debt load. Med school is tough enough without putting yourself under financial strain on top of everything else.
I intend to purchase a home prior to starting school, while I can qualify, then pay for it by my wifes income and my loans. We are looking at $150K - $190K homes, but we also have a nice tidy down payment from previous home equity. My personal limit is probably about $1,500 to $1,600 per month for mortgage & insurance.
Dont forget PMI if you have less than 20% equity in whatever home you buy.
I believe Wendy’s post is a little misleading due to the federal vs. private loan issue:
| QUOTE |
| Long story made short, no, you cannot request additional $$ to cover mortgages & the like. |
which you contradicted with:
| QUOTE |
| If you are determined to be eligible for more aid than the Fed max, a pretty common occurence, you must obtain those amounts thru private loans - very easy to do if you have good credit. |
The money is there if you want it, assuming good credit. Again, one must consider whether financial choices are wise and what the ramifications are long term. I think you should balance debt undertaken with your ability to repay and YOUR personal comfort level on how you are willing to live. I for one will not return to my level of existence during undergrad.
Then again, I will be debt free when starting med school except for my home. No car notes, no credit card payments. Just MY personal comfort level and how I wish to direct my available funds during those years. You will have to sacrifice unless you or your parents are wealthy. I will have no outside supplements. At 36 years old, I refuse to ask family for loans. Besides, no one has an extra $120K to send me over 4 years.
I recently developed a spreadsheet to determine my indebtedness during my 9 year education and residency, taking into account deferments for the federal portion of the loans. Although, I thought the fed limit was $8,500 per year. Email me if you would like a copy.
Regardless, you will be shocked how much interest racks up while you are in residency. My best hope is to pay the yearly interest by moonlighting a few hours a week. I may reconsider if my family time suffers too much. You always have vacation that can be used to work for additional money as well. Specialty doc’s easily pull down $80 - $125 per hour. More by the time we are capable of fulfilling that role.
Good luck, many choices await you.
Bryan
The AAMC web site has a bunch of slide shows, Word docs and PDF files about medical school finances. In particular, you might find this information for pre-med students to be useful, particularly the PDF file for non-traditional students listed as Section III - Critical Issues for Non-traditional Applicants.
AAMC Financial Information for Premeds
Hope this helps.
Susan - Chicago/Minneapolis
Actually, that post above was made by me, OMD, & not Wendy - I neglected to note that she was logged in & not me.
To clarify the apparent misunderstanding…
| QUOTE |
| Long story made short, no, you cannot request additional $$ to cover mortgages & the like. |
This means precisely what it says…no, your loan eligibility is not influenced, raised or otherwise by your level of endebtedness, be that for a mortgage, credit card or auto loan. Taken out of context, the statement is unclear; however, the magnitude of your loan eligibility is determined via a Fed formula that utilizes the data you provide via the FAFSA form (Fed student aid app). You will note that on this form, there are no places to provide mortgage, car or credit debt on this application – this is due to the fact that your debt/lack-of-debt situation does not factor into your net eligibility.
| QUOTE |
| If you are determined to be eligible for more aid than the Fed max, a pretty common occurence, you must obtain those amounts thru private loans - very easy to do if you have good credit. |
This statement is not even necessarily applicable to the first quote. As I said above, your net eligibility is determined by the FAFSA app. That net amount may very well exceed the Fed loan max of 38,500 per annum. For example, my last tuition at KCOM was ~$28k; but the annual cost of attendance exceeded $50k. My net loan eligibility was around $46k, which exceeds the $38,500 Fed loan max. Had I chosen to take all the loan money that I was eligible for, then I would have had to seek private loans in addition to the Federally guaranteed loans (Stafford loans). Meaning: I take $45k in loans, the first $38,500 of them would be through the Stafford program & the remaining $6500 would have to come from private lender(s).
Stafford loans do not require good credit. Private loan approvals are, just like in real life, based on your credit worthiness.
Is this a little more clear? Fed loans are a very complicated venture. The only reason I understand them is that I invested some time with my FA officer to learn. I too erroneously figured that I might be able to get extra for having a mortgage, a chjild or any of the other rumored justifications that float around. For the most part, those are only rumors.
Thanks for the info OMD…My goof & misinterpretation.
You have raised some excellent points that I would like to pursue. I followed the link to the AAMC web site information (a good resource BTW). I also saw the statement of no additional funds for family status (whether married a/o kids). This has caused some confusion on my part.
I have collected info from a texas school website (UTSW I think) and that showed varied budget amounts for family status. Am I to understand that this is a school only issue? That the Fed guidelines are unchanged, therefore the amount I am capable of borrowing would be the lesser of the Stafford program max of $38,500 or the Fed net eligibility from the formula you mentioned (irregardless of family status, etc.)?
Further, what happens if your calculated eligibility is under the $38,500 cap but less than you have a desire to borrow (i.e. the schools formula is higher need than the Fed formula in this case)? Does that flip you into private loans also?
These issues may change my course of action. I appreciate the input from one who has been down the road.
Bryan
The school, through some Fed formulas, actually calculate the annual cost of attendance…which, I believe has a small allotment added onto things for families & such, but don't quote me on that.
Essentially, this all focuses on 3 separate figures:
1 - Annual cost of Attendance: the amount is costs to pay tuition, buy books and a room/board allotment allegedly sensitive ot he cost of living index of the school's immediate community
2 - Expected Family Contribution: derived from the FAFSA & represents allegedly how much you shouldbe able to pay out of pocket
3 - Loan Eligibility: Basically, Annual Cost - EFC…you will find that the Annual cost so far exceeds the EFC that quantity of loans is usually not an issue. However, the amount of Stafford Laons is capped at $38,500 - any amount in excess of this must be through private lenders.
Now…you can ONLY borrow as much as your FAFSA determines you are eligible to borrow. So, you can't just go borrow added funds, as student loans, w/ student loan-like terms (interest rates, grace period, deferment of payments).
I inquired about borrowing beyond the school-certified cost of attendance some time ago. I was anticipating our new baby and both of us being out of work because of school or maternity leave, and found out that at the most, schools might increase the cost of attendance in order to pay for child care when the non-student parent returns to work, but that was it.
The closest thing I’ve found that falls between an educational loan and a personal loan was this:
http://www.educationone.com/foryou/graduate.html
A co-signer is most likely required, and the interest rate is assuredly higher than the Federal rates, but there is a four-to-five year deferral of principal and interest payments during school, and a six month grace period. So, at best, you will enter into repayment of this loan while in residency. Not great, but if you need the extra money …
I applied for it, and was approved for $10K, but since I was laid off from work, I received an unexpected severance package in the amount of - you guessed it - $10K. It’s a windfall for me, as I was about to give notice before the baby was due. So, I won’t need the extra loan.
- Tae