Living Less on Loans

For the majority of medical students, living off of student loans while in medical school is inevitable. Most families in the US can't afford to pay roughly $50k/year in tuition, fees, room & board. Medical students have little opportunity to earn income in the first two classroom years and no opportunities in the last two clinical years. Meanwhile, banks happily approve the loans knowing that US medical students are a good bet.

Some medical students support their entire family (spouse & kids) on loans. For some, this is the best and/or most cost-effective arrangement. However, childless young couples like us live a different way. I work.

It's easy to think of extra expenditures in medical training that require extra loans (such as the additional $11k we're taking out for the residency application process) as simply "drops in the bucket" of the 6-figure student loan debt. However, smaller expenditures add up, particularly when they accrue interest.

The point of this post is not to make our hair turn prematurely grey, but rather to explore the benefits of living less on loans.
In our case, we use my salary to pay for room & board, books, test fees, travel, all discretionary spending, all of my expenses, and away rotation expenses. Focusing on only the necessary medical school related expenses that we've incurred or will incur in years 2-4 (as we were married and merged finances in the summer between years 1 and 2), it breaks down roughly as follows:

Room: $575/month x 36 months = $20,700
Board: $250/month x 36 months = $9,000
Books: $1000/year x 3 years = $3,000
USMLE Test Fees: $2150
Visiting Rotation flights: $300
Visiting Rotation rent: $1600
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Total: $36,750

Now, just to be fair, let's assume that Mr. gets a nice offer right out of residency and pays off his loans within the first 6 months. Not likely, I realize, but at the bare minimum, that means that the loans will accrue interest for 5 years. Mr. has a number of different loans at various rates, but to keep a fair estimate, let's look at what that extra $36,750 would happen with 6% interest rate over 5 years.
Annually compounded over 5 years at 6% interest, that $36,750 would become ~$49,180. That's an additional $12,430 in interest.
Taking the full 20 years compounded annually at 6% interest, that extra $36,750 becomes ~$117,860, or an additional $81,110 in interest.

Now, I imagine there are a number of factors I'm missing. Perhaps you can get a better rate, pay more effectively, etc. The point is, paying for the little stuff now helps a lot in the long term. Few couples can pay for everything out of pocket, and not all additional loans are unavoidable. As I stated above, we're taking out extra loans to pay for the interview process. However, by learning to live less on loans and pay for what we can now, we will save a lot in the long run.