Advice from Nashville's Financial Guru Dave Ramsey

Dave Says
By Dave Ramsey
Author of Financial Peace and The Total Money Makeover
1/11/2005

"Should I use student loans to get through med school?"

Dear Dave,

I'm 25 years old. My wife and I have decided that I should go back to school full-time. I'll be going into medicine and it will be quite an investment. It will take six years of schooling before I even get into residency. We have a loan for about $10,000 and around $4,000 in credit card debt. We'll be able to pay off the credit cards soon. I'm working two jobs, soon to be three, to try to help pay off this debt before I actually start school.

You've said before that school loans are not a good idea. My situation is that I'm working to get out of debt so I can then turn around and get right back into debt for hundreds of thousands of dollars. I've been studying this for a while and talked with several doctors I know. Our plan is to pay for my education with a student loan, then continue living on a minimum budget after I complete the program and use the extra income I would make as a doctor to pay off the debt. We would be debt free in about two years after that. What do you think of this plan?

Tim in Grand Rapids, MI



Dear Tim,

What you're describing is a typical scenario. You're way ahead of the game mentally because you're already questioning what is "normal". That's good. Plus you're already doing amazing things just in preparation for this.

While I don't think your plan is out of control, I don't ever recommend going into debt of any kind. I lighten up a little bit on mortgages, but I don't even recommend those. I tell people to save up and pay cash. However, I don't beat them up for getting a mortgage and I'm not going to beat you up and tell you this plan is totally stupid. If you were to write me and say you were going to lease a BMW; that would be a different matter.

There are two issues on which I would challenge you. First, continue to question the "normal" way people complete this process. Search for any other way to do this rather than borrowing money. When I really want something - and I'm not denied much - I'll search until I find another way to do it than with debt. It may take me a while to achieve, but I'll find a way to do it. I know this can be done without debt. You could go into the army and they'd pay for your training. It's just a question of how much you're willing to put up with to accomplish your goal.

Secondly, really talk to people you know in the medical industry and do research to find out if there are scholarships for people entering medical school later in life. I think there are probably scholarships from companies like HCA and Pfizer that encourage seasoned people to become doctors. You're older than the average medical student and you have a better-than-average chance of completing the program. It might cost you some time working for the hospital or drug company for a while after graduation to qualify, but it would be worth it to avoid debt. If you'll invest the effort into looking for money for school that you put into these part-time jobs you work, I'll bet you can find a way to pay for your education.

In either case, I would make sure you're completely out of debt before going back to school.

-Dave

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