So a reader (disclaimer: and personal friend whom I’ve known since elementary school) asked on another post, “Is sending your husband to medical school a good financial plan? I’m starting to wonder…” As with all financial advice its personal. Personal means that outside advice is probably going to be invasive. That’s why I’m going to address the greater question of education rather than try to stay completely narrowed down to just this one question. However, once we look at what the options are and their consequences we’ll dig into this one particular case to evaluate its potential.
We’ll start from my personal favorite of the options: paid in full schooling.
Higher Education and No Debt (Pay as You Go)
Higher education without debt is not as common as would be good for the economy and the world’s population. This would be my personal first choice. It is probably unlikely because this approach will either require a well paying first job (or dual incomes that are still high) or taking classes at a much slower pace. Since we’re talking about a medical degree I’m going to assume that the student would be on medicare before finishing school. The slowly taking classes approach would mean that there would be no debt, but certainly medical technology would be updated faster than the student could take classes. You’d possibly get a degree, but you’d have to learn about the newfangled devices if you took the slow, but paid route.
The paid, but quicker route could also come from other areas like a family gift from a well-off relative. This isn’t likely, but could be a possibility. I can humbly and thankfully say that my parents paid for all of my higher education and I have no debt due to education. When I took a class at my local community college to get some continued education I paid for it myself with no debt being accrued.
This method will lead to a larger chance of making money as a medical professional down the road. Read the last section of this post about costs of medical businesses/practices to consider some of those issues.
Higher Education and Student Loans
Higher education and student loans are just assumed in many cases. A student loan is often described as having ‘low interest’ because the interest for the loan is lower than credit cards (which are often in the high teens when it comes to interest). These student loans are for huge amounts of money though. Some students end up with student loans that are much higher than their actual house loan which can be very, very stressful.
Assuming a medical degree will get you six figures of income per year you will need to chunk away a large part of that upon finishing school just to pay student loans off. Student loans are one way to fund an education but they are expensive over time due to their longer term loan terms. It is also important to remember that student loans cannot be bankrupted – you will pay them off, even if you defer their payment until after finishing school or defer them due to hardship.
This option is common but you have to determine the cheapest way to possibly go to school for this to be plausible long term. The alternative is just paying for school until you retire.
Higher Education and Private Loans
Private loans may possibly have low, low interest rates or could have high interest rates. If you were to get a loan from a family member you may run into political issues where every time you see them you feel guilt or awkwardness takes place. It is possible that you don’t personally have any issues like that, but if you are in any way concerned about it: don’t do it.
If your motives are humanitarian you may want to choose something else that is humanitarian and not so darn expensive.
Higher Education with a Family
Families are important. Very important. More important than actually having money. If you’re going to school you need to make sure that your schooling, while you have a family, doesn’t kill off precious time with young children that you’ll never get back. My dad was working a full time job (with overtime) and taking classes at night while I was a younger child. This cost him time with his family and he later apologized for it. Don’t let higher education, the call of more money, or the call to serve others at the expense of your own family fool you! It may be that the higher education is a good thing for you to go after, you just need to make sure that it doesn’t own your life and destroy your family-life.
Mr. M.D. with a Family
Depending on the type of doctor you’re going to become you need to consider what time restraints that will put on your family choices. Single doctor offices have to shut down when a doctor takes a vacation. This can cost business. Doctors can be on call for various times of the day that non-doctors are not. If you are responsible for responding to emergency calls due to children who are sick, or just swallowed a gallon of bleach, or did something else in an attempt to merit a Darwin Award then you have to be the one to respond to the emergency. You signed up for it and your children’s soccer game is second in priority. This shouldn’t make you think twice about being a doctor, it should make you think five or more times about being a doctor. Busy doctors with families are usually spread thin. Wives get lonely, children feel neglected and dogs miss being loved.
Future Expenses to Consider
Clinics
If a doctor wants to work at a clinic or group practice there is often a low barrier to entry and the cost of working goes down. This also reduces the potential for revenue. If you’re getting a degree to be a doctor for higher, more morally motivated reasons then kudos to you, but in the end as a person with a family (at least in this case) you need to make sure that you are providing for them. Starting your own practice or buying out a retiring doctor’s practice can be a significant expense. I heard of one person who paid millions to buy into what would potentially be a lucrative practice. Potentially. As in not for sure. Consider your risks when you consider buying into or buying out a practice. If you have to borrow half of a million dollars to buy into a practice on top of student loans of a quarter million dollars you are giving away future earnings for much of your career if not all of your career.
Licenses
Medical professionals have to be licensed, they need to have continued education, and they need to continue to be licensed over time. If you try to run an office there are licenses that are required by the local or state governments. Taxes are everywhere so the entrepreneur has to work hard to maintain all of the legal requirements while attempting to minimize them. If licenses, continued education and malpractice insurance are a constant cost that will probably go up, you need to consider this expense for after school.
Cost of Business
The cost of business in medical equipment, supplies, staffing, technological investments like computer networks and such can be huge. Small offices can operate with little overhead in staffing, but equipment is almost always going to be a running expense as well as supplies for hygienic waste. Rubber gloves are cheap per glove, but at the rate that they are used in a medical office the cost can become a nagging and constant expense.
Computer technology doesn’t have to be replaced every year, but software that is used needs to be upgraded and updated, especially when federal, state or local laws require new things that you could automate with a computer application rather than hiring a full-time staff member.
On top of all of this taxes for employees are a real cost. A paid employee with benefits and social security taxes is on top of the salary of the employee. An employee making $45,000.00 a year will cost you more with taxes, they become a (theoretical) $60,000.00 expense.
Insurance
Insurance companies don’t want to pay doctors. In fact some companies exist to help insurance companies pay less.
Those companies will actually search out other medical practices that charge less than your office and then split the difference of the ‘savings’ of the insurance company so that the parasitical company make money and the insurance company (that others would argue is also a parasite) spends less on doctor’s fees. Doctor’s offices often have a part time or full time employee in charge of wrestling with insurance companies. The cost of doing business in the modern medical world in the US is complicated in part because the insurance companies preemptively limit doctors from practicing medicine. A doctor’s office will have to either take in more patients to increase volume to make more or the same amount of money, thus sacrificing service and patient relationships, or count the loss of revenue as worth while to offer higher quality service.
Conclusion
I wouldn’t be a doctor because I’m lazy. I’ll own up to that. I don’t want to go through all of that training and I don’t want all of the stress of people’s lives being risked at my call. I don’t want the burden on my family. I think this post is quite clear about that. However, the personal nature of livelihood, the personal nature of careers, and the personal nature of motive make this post only a tiny bit of the whole equation. Do you get the higher education and become a doctor? Maybe. Do you become a doctor and become a millionaire? Maybe. Whatever it is you do you need to think about the short term, the long term and the mid-term risks. You need to evaluate the financial, the physical, the emotional and the spiritual costs of your choice.
I’m very glad that some people feel called to medicine because they’ve helped me and my family. I would just encourage people to count the costs on every single level, explore the opportunities that are available for both paying for the schooling as well as routes for managing the lifestyle your profession will bring.
