Career and Life Planning Guidebook for Medical Residents

THE REASON #3: THE REWARDS/INCENTIVES TO CHARGE ON CREDIT THAN TO ASK UNCLE SAM (by Amanda Liu) Now, let’s talk about borrowing negative interest money from credit cards to fund your education rather than paying a 4.3% loan origination fee with 6.8% interest accrual on what you borrowed plus the origination fee. In medical school when I charged my trimester tuition of $15k every four months, I make anywhere between $150-300 cash back. I could make even more if I redeemed the points for gift cards or flight mileage rather than cold cash. If I were to borrow from Uncle Sam the same $15k for four months of medical school education, I would have been charged a $600 origination fee, and have a debt principle of $15,600 snowballing at 6.8% interest rate the minute the loan disburses. In comparison, it is a few days later when I get the check and cash it with cards. What would you choose? REASON #4: BANKS COMPETE, YOUWIN Discover Card, Bank of America, Wells Fargo, Chase, Citibank, and American Express, were competing for my debt. Theywere hoping to bait and switch on me (i.e. bait me with introductory promotional interest rate of 0% then switch to 17% after the promotion. But when banks compete, borrowers win. Do you know how many competitors Uncle Sam has? Nada, zero, zilch. As Uncle Sam monopolizes the federal student loans market, they charge whatever they like. While private banks can borrow 0% interest rate (prime rate for a while as you recall) from feds & taxpayer dollars from you and me. THE REASON #5: WHAT TO DOWHEN LIFE GOES DOWN THE TOILET When things go really, really bad, student loans stay. You can’t get rid of them. Yet credit card debt is discharged in bankruptcy. What’s the message here? Don’t mess with Uncle Sam. I paid back every penny I owe (principle + interest) to Uncle Sam and private banks. What happens if a PGY3 gets disabled and no longer can finish residency or practice medicine at all, yet he/she has $400k of student loans at 7% interest from the feds? He/she would indeed have been better off to have these debts on credit cards and file bankruptcy. SECTION III: T MINUS ONE YEAR CAREER AND LIFE PLANNING GUIDEBOOK FOR MEDICAL RESIDENTS 382