Episode 24: What Dental, Medical, Veterinary and Pharmacy Residency Programs Are Worth It?

If you’re heading into a career in dentistry, medicine or pharmacy, is a residency worth it? What are the differences in requirements, and how do those affect your salary and student loan repayment? Here’s what the economic value of a residency could look like for you, and how it varies by profession.

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In today’s episode, you'll find out:

• Why residency programs have proliferated
• What the various programs are — and why some cost you and some don’t
• How residency for medicine differs from other fields like dentistry and pharmacy
• How medical residency programs are funded by Medicare
• Why programs got the name “residency”
• Travis’s thoughts on how hospitals could pay for residency programs
• How pharmacy residency is a special case
• How hospitals have adapted to the massive influx of pharmacists
• The value of residency in veterinary medicine
• The economic value of residencies as far as what they’re designed for
• Reasons behind residencies (e.g., anti-competition measures, training)
• Ultimately, is a residency worth it for doctors? For dentists? Veterinarians? Pharmacists?
• What the Student Loan Planner® investing course is all about

Links mentioned:

• Mint.com
• YNAB.com (You Need a Budget)

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Episode 24 Transcript

Travis Hornsby [00:00:00]Before we get into today's show, I want to let you know that the Six-Figure Debt to Six-Figure Net Worth investing course from Student Loan Planner® is available starting today, and it's only going to be available for the next seven days. If you want to transform your life and learn so much about investing in an extremely small amount of time with a money-back guarantee, go over to StudentLoanPlanner.com forward slash investing so that you can get your own copy of the Student Loan Planner® investing course, and you can start working your own way to financial freedom.

Travis [00:00:30] Welcome to another episode of the Student Loan Planner® Podcast. This is Travis Hornsby, founder of StudentLoanPlanner.com. Today we're going to talk about different kinds of residency programs in dentistry, medicine and pharmacy. We're going to talk about whether or not they're worth it. We might talk a little bit about veterinary medicine as well.

How residency programs have proliferated

Travis [00:00:50] I have to say the residency programs out there have proliferated like nothing else. It's like an uncontrollable thing that just grows and grows and grows. I'm talking a lot about residency programs outside of medicine because medicine has always generally had residency requirements or at least for a very long time. It's different based on a different field. So we're going to talk about different fields. We're going to go back and forth between them. So, sorry if you get whiplash, but I thought it'd be cool to just talk about residency programs in general and talk about them specifically in each different field so you get a flavor of what kind of residency programs and loan strategies might work for your residency program but also what other people are having to deal with.

What the various programs are — and why some cost you and some don’t

Travis [00:01:26] Let's just start off talking about the different programs. Dentistry has different kinds of residencies. Dentistry, you can do a one-year residency program, which is called a GPR (General Practice Residency) or AEGD (Advanced Education in General Dentistry Program). And these one-year programs are often for folks going into general dentistry. So you might do this because you want to hone your skills, or you get into a program you think is really good. Or sometimes states require you to do these programs. Like New York, for example, requires you to do some form of a one-year residency program to practice, I believe.

Travis [00:01:58] Now besides these one-year residency programs where you get $50 or $60k and then become a full-earning general dentist, you can do other residency programs, which are really specialist residencies. Examples for this is you might go to a three-year orthodontics program. You might have to pay tuition instead of getting paid. You have to pay. So a lot of these residencies for specialty programs might give you some sort of small stipend, but a lot of them require you to pay money in order to get this training.

Travis [00:02:25] That is super different from medicine, from the physicians out there that are listening. Physicians that go into residency programs, they get paid, and they pay no tuition. But a lot of people might not know this. But if you're a dentist that wants to become an endodontist or an orthodontist or periodontist, there's all these different specialty programs, just like there are a bunch of different specialists within medicine. You have to pay money is the default setup for a lot of these programs, and that is very, very expensive. In fact, you know, some of the orthodontics programs out there require $100k of borrowing and up to attend per year, and that's for a three-year program. So you're going to borrow — On top of your dental school, you'll borrow another $300k to go to some of these specialty programs, which is really kind of nuts if you think about it.

Travis [00:03:11] There's also a couple programs out there that are in the dental world like pediatric dentistry, where, you know, you might have a hospital-based residency program, and you might get paid. And there are some of these programs even within some of the ones that usually charge you money that, you know, you can do and get some sort of stipend and not have to have it be a tuition-based program. But the ones that are growing and usually have all the seats available are the ones that want you to pay them money.

How residency for medicine differs from other fields like dentistry and pharmacy

Travis [00:03:38] So medicine is a little different. You know, you have programs for residency programs that are funded by the U.S. government for medicine, which is really fascinating. Basically Medicare got really involved in residency funding in the '60s, and ever since about 1996, the Graduate Medical Education (GME), or that division basically within Medicare, funds about $10 billion dollars a year to fund 100,000 residency slots. And this is capped. They've not grown this number over the past couple decades, which is really kind of amazing that that cap has lasted for as long as it has.

Travis [00:04:16] That's one reason why we have not seen pressure on physician salaries as much as we've seen pressure in other salaries in different fields because you have a cap on residencies. And you really cannot become a physician without going to a residency program. And there are more residencies than the spots funded by the government in medicine, but not that many more because the institutions are frankly addicted to this free money. And they have this expectation from decades of training that the government should be the one to pay for all of their residents, which is really an interesting philosophy.

Travis [00:04:50] And before, the funding for residency — The reason why they were called residents in the first place is because at the elite institutions, like your Johns Hopkins of the world, and those — they were called residents because they were paid so little that they had to live in the hospital. So the hospital paid for the malpractice insurance for the place to live. They paid for food and a little bit of money outside of that. But if you think about it, that was pretty much it.

Travis [00:05:15] So you can kind of think of your residents, they were residents of the hospital. That's why they were called residents. So you can think of them as almost like scholarship athletes for hospitals. Right. Except they could give you a little bit of spending money on the side. So that proposal where they give NCAA athletes, you know, a few thousand bucks of spending money on top of living expenses and tuition and everything, that's kind of what it used to be like for residency programs before Medicare got involved for medicine specifically.

Travis [00:05:40] So you've got these residency programs in medicine that can be a hugely varying number of years. And you have fellowship programs on top of that. So residency programs generally last, you know, three to six, seven years depending on what specialty. Right. So family medicine might be three years. Brain surgery might be on the longer end of that. And then programs in the middle, like urology, that are five years. So you have these different number of years of residency where you're making $50k to $70k a year. And that's the requirement to become an attending.

Travis [00:06:10] So we use that language a lot for physicians because an attending is when you're already finished with your training. You're making that full $150k to $300k type physician's salary. Then on top of that residency program, you can go get a fellowship. My wife did a fellowship. So she went and got her OB-GYN residency, and then she got a fellowship in urogynecology. So that's how she's able to practice as an attendant or a gynecologist is because she had to go through a four-year residency for OB-GYN and then a three-year fellowship to become trained in that subspecialty.

Travis [00:06:40] You can go easily to training after medical school from three years all the way up to probably 10 years, if you're doing super specialized brain surgery. What's interesting with medicine is the medical residencies and fellowships are heavily subsidized, not just the fact that residents get salaries and other residents in a lot of other fields get much lower salaries or even have to pay money, like the poor dental specialists of the world. But they're also subsidized with PSLF (Public Service Loan Forgiveness). So PSLF allows you to have qualifying credit while you're doing your training in residency, which is really quite amazing if you think about it because you're getting paid. You're not having to pay tuition. You're working for a hospital a crazy number of hours a week.

Travis [00:07:25] So I'm not going to say that, you know, you have it easy or anything, but you're working your tail off, getting paid, getting PSLF credit for your entire length of your training for the most part. What are the exceptions to that? Remember those 100,000 residency slots that the GME, that Medicare pays for. There are 110,000 residents, so who are those remaining 10,000 residents? Who are they?

Travis’ thoughts on how hospitals could pay for residency programs

Travis [00:07:48] So you can work for a for-profit hospital as a resident. It's not super common, but it does happen. And some for-profit hospitals have said, ‘You know what? We can actually make money on having residency programs, so we're going to self-fund a resident program.' Which is kind of interesting because the hospitals always cry bloody murder whenever somebody talks about reducing funding for residents. But I do think that most of the hospitals nowadays are so incredibly wealthy that they could easily pay for residents themselves.

Travis [00:08:17] In fact, I went to this investment conference with the local people in my area, and I met this one person that manages an endowment for a hospital. I was like, “OK, that's interesting. So you might manage maybe $50 million dollars or something like that?” He's like, “Oh no. No, I manage a trust for the hospital of about $4 billion dollars.” And I almost spit my drink out. I was like, “Four billion dollars for a nonprofit hospital that has that sitting in investable assets. Are you kidding?” That's ridiculous. Why is that the case? And this is not even the most prestigious hospital in town. This is, like, the second-tier hospital in town that has this endowment.

Travis [00:08:55] Why do they have that? It's because they don't have to pay for their residents. They get paid massive amounts of money for all the different medical procedures that they do. They're funded through different health insurances, right. They're very much run as for-profit enterprises, and their CEOs make millions of dollars a year in a lot of cases. So the idea that the hospitals can't fund their own residency programs and that's capped and they could not possibly increase the number to me, that's just a load of malarkey. And I think that a lot of the hospitals have decided kind of almost as an oligopoly to not increase residency funding themselves because if you're a not-for-profit hospital, you want to try to show Medicare and the government that you have to continue to receive this funding which is making your life so profitable anyhow. That's a little bit of a tangent.

Travis [00:09:40] So the thing that you would know is that residency and fellowship programs in medicine are really advantageous because of the fact that they qualify for PSLF in almost 90% of cases. That's really valuable that you can leave those residency programs with the option to do, you know, three to five years as an attending at a not-for-profit hospital where you might not have that big of a pay cut compared to private practice anyway and get your loans forgiven tax-free. That's widespread available in the physician world.

Travis [00:10:09] Compare that to dental, pharmacists, veterinarians and others where that's not widely available. Like physicians, almost the majority of attending physicians should really qualify for PSLF. And that's really kind of amazing because physicians actually make more money than all three of those fields that I mentioned to compare them to, yet they're the ones getting the lion's share of the loan forgiveness benefit from the government. And I'm not saying that that's something you shouldn't take advantage of. From a public policy standpoint, probably would make more sense to target that money at creating more primary-care physicians rather than subsidizing the training of the higher-paying specialties. Right.

Travis [00:10:45] That said, my job is to look after your interests, you know, as a student loan consultant, so I'm definitely going to focus on just maximizing your situation regardless of what that means. You know, I just think that the reason why we know that PSLF is going away at some point for future borrowers, not for borrowers that are currently borrowing — People who are currently going for Public Service Loan Forgiveness are very, very likely to get it simply because we know that the idea that, you know, a physician making $300,000 could get a huge amount of their loans forgiven. Meanwhile, like, there's all these really difficult programs for primary care that are hard to navigate, and people aren't getting forgiveness as easily. It's a mess, right.

Travis [00:11:25] You have to admit, I think, that our loan forgiveness program in this country is an absolute disaster and was designed extremely poorly and incentivizes all the wrong things, if you're a progressive. And if you're a conservative, allows colleges to overcharge drastically. So I think either way, you know, the system is messed up, no matter what side of the political spectrum you're on.

How pharmacy residencies are a special case

Travis [00:11:47] We've talked a lot about medical residencies and dental residencies. Let's talk about pharmacy residencies. So this is a little bit of an interesting phenomenon because pharmacists used to graduate, and the vast majority of pharmacists would just go straight into practicing and making a six-figure salary. A very low six-figure salary, but still, you know, making over $100,000 a year. Now we're seeing this proliferation with PGY1 (Postgraduate Year One) and PGY2 (Postgraduate Year Two) programs. And this is almost becoming a requirement in the hospital world. From what I understand, a lot of the people that I talk to that want to work in certain kind of specialties where you're going to be working through a big hospital system, you're almost needing to do one of these programs to be able to get your foot in the door. It didn't used to be like that.

Travis [00:12:30] My theories of why that is because we have this system that basically allowed the hospitals to create a lot lower-paid labor force because we overproduced the number of pharmacists. So the number of pharmacists — I've written a lot about this in the blog — the number of pharmacists has gone from — well, the number of pharmacy schools, rather — has gone from 40 something to over 130 in a period of a little bit more than 10 years. That's just absurd to have the number of pharmacy schools tripling. And the acceptance rate went from 32%; I think it's now over 85%. So if you have a pulse, you can get accepted to pharmacy school. That's just the reality. That's not to say that there's not competitive programs, and that you don't have to work hard to get through.

Travis [00:13:15] But the reality is, is that basically all these pharmacy programs are producing too many graduates. And so what's happened is not everybody can be absorbed in the labor market making $120,000 a year. It's just not practical to do that, right. So what we've had happen is as the supply of — sorry, the demand for pharmacy jobs has not grown as much as they were projecting, compared to the growth in the supply of pharmacy grads. You're seeing these programs that have been designed so that the quantity of pharmacists that are hired can increase. Think about your economics 101, right. If you have a lower price for something, more people are going to demand it.

How hospitals have adapted to the massive influx of pharmacists

Travis [00:13:57] So one of the ways that the hospital market and other markets have adapted to the massive influx in pharmacists that have graduated is by creating residency programs. And these, from my understanding, are not funded by massive government infusions. This is really funding that's coming from institutions themselves, I think in a lot of cases. So that's interesting because it shows you what I think medicine would be if you had no GME funding, if you had no Medicare funding for residency slots with a cap in the number of slots available.

Travis [00:14:29] So pharmacy residencies, what you do is you basically say, “OK, if I can pay — Instead of paying $100,000 to a pharmacist where I would give them on-the-job training as in years past, let's instead create these residency slots where I'm going to pay $40,000 to $60,000 a year.” Which is less than physician residents make, by and large. “So I'm going to pay $40k to $60k. So instead of hiring one pharmacist that's young, I can hire two and a half pharmacists that are very young and don't know a lot. But I can work them really, really hard and tell them it's a residency.” And oh, you know, really long work hours are kind of expected, so you can learn a lot, right. And you don't have to pay tuition, thank goodness, like dental residents do for specialty programs.

Travis [00:15:12] But it's just one of those things where, for pharmacy residents, you're kind of getting taken advantage of by the system. I think. So, hospitals are basically adapting and saying, “Well, we're happy to absorb the increase in pharmacists that are graduating, but we're not going to do it at full-price because we don't need to.” So it's simple laws of economics at play here. So if you have to go to a PGY1 or PGY2 to do your specialty that you want to do in pharmacy, I think it's OK to do that. We'll talk more about that a little bit later.

Travis [00:15:42] But the cold hard truth is just, this is hospitals and other employers that are just adapting to the reality of the job market in pharmacy. And they're just saying, “Yeah, we'll hire people.” And I wouldn't be surprised if we started seeing PGY3 and PGY4 for pharmacy residencies if we keep this trend of 130-something schools that keep churning out grads. Because again, I think the market will adapt, and they'll say, “We want to make sure that we keep everybody employed or keep a lot of people employed. So we're going to create extra jobs through this lower-paying kind of setup and requiring ever more increasing number of years of training for the income that people use to just make without having to do that training.”

The value of residency in veterinary medicine

Travis [00:16:23] So this is just — I think residency programs are just by and large just a classic example of the over-proliferation of credentials and job requirements that are out there in the world today. Let's talk about the value of residency in maybe other fields like veterinary medicine. So these are a little different. You might do a one-year intern year. A lot of veterinarians will do that. That might be state-specific as well, but a lot of people will do that just to learn more skills before they become a full -earning veterinarian. And then veterinary residencies, you often will do that before you have a board certification. So you might become a board-certified veterinary surgeon in some specific field like oncology or ophthalmology or something, and you, instead of making, you know, $80,000 to $120,000, you might make as much as $200,000 or maybe a little more. And you also need to do a residency to be able to work as a professor at a vet school in a lot of cases.

Travis [00:17:17] So similarly to residency programs that are at not-for-profit institutions in the medical — human medicine world, veterinarians — We've seen some veterinary professors be eligible for PSLF because they went back to get a residency, and they paid, you know, under the REPAYE (Revised Pay As You Earn) or the PAYE (Pay As You Earn) plans based on their income while they were at that program. And they would pay based on these REPAYE or PAYE or IBR (Income-Based Repayment) type programs. They would do it for their intern year and for their three or four years of residency. And then as a veterinarian professor as well. And then you would qualify for PSLF under that situation.

Travis [00:17:51] So residency programs in veterinary medicine actually kind of interestingly have a pretty high ROI (return on investment) from the difference in the general earning salaries and these specialist salaries. I have seen some really interesting numbers there. So it does seem like a lot of the people who are board-certified veterinary specialists will make, you know, as much as double a general veterinarian, which is really kind of a large difference in terms of order of magnitude compared to some other fields. You know, you can earn tons of money as a general dentist working in a rural location and owning your own practice. And if you're a specialist, you might be able to live in a bigger city and make a similar income. Or maybe you'll make 50% more than a general dentist. It's not always as obvious in terms of the order of magnitude difference like you see in veterinary medicine.

Travis [00:18:36] There's a lot of different residency programs. You can think of a residency program — I mean, there's, you know, if you want to think of law, like, law is kind of like a clerkship. It's not a residency, obviously, but a whole bunch of lawyers that go into prestigious corporate law jobs will do one- or two-year clerkship with a federal judge, kind of hone their skills and burnish their resume. Or they'll do the clerkship as a means to getting into some other prestigious government job.

Travis [00:19:00] So a lot of these degree fields have had various forms of on-the-job training and having pay that's a lot lower to reflect that for a long time. I just think that the way that residency programs in particular in the health world have been structured over the past decade has changed radically in a very large part due to the influence of the way loans are funded in this country.

The economic value of residencies as far as what they’re designed for

Travis [00:19:22] So let's talk about the economic value of a residency program in terms of the different things that residency programs are designed to do. One realistic reason to have a residency requirement is to create an anti-competitive force that helps preserve much higher earnings. So hear me out on this because it's interesting. So why do you think that residencies are required in a state like New York for dental medicine? Why do you think that a residency like a GPR would be required for practicing in a state like Delaware? I had somebody tell me recently even that Delaware, you have to get a dentist that's already in Delaware to vouch for you for you to even be allowed to practice. Which is just really unbelievable because if you think about it, if somebody is going to be too good of a competitor, none of the dentists in the whole state would want to vouch for you, right.

Travis [00:20:15] So that's a fantastic anti-competitive strategy to prevent people from coming in with services and lowering the cost of services provided. That's kind of interesting. Imagine if New York had no residency requirement for dentistry. The number of people that would join the market would be even higher. And salaries would be pushed down even further. Because I know of several people that are like,” Well I'd like to go to New York, but I really don't want to do the one-year residency requirement that they have. And I'm not sure I'm going to stay there, so I'm just going to go locate somewhere else. And then maybe I won't come back because I've got barriers to entry.” That's exactly what that residency program, in my view, is designed to do, which is to create a tougher market for competitors to enter the space for the people who are already established.

Travis [00:21:04] So that's certainly one reason for residency. If you think about why would medicine want to cap the number of residencies, right. Like have the big players like the American Medical Association and the various hospital systems and other private physician lobbies, why have they been cool with a capped number of residency slots? It's because they don't want competition, right. If you had to fund more slots, you would have the shortage be filled. That shortage creates higher earnings, and that's good for people who are already established.

Travis [00:21:34] Another interesting thing is — this is kind of me talking off the cuff, so forgive me if I'm off on this — but it seems like there was this huge wave of immigration for physicians that were trained in India, Pakistan and other places. But that immigration flow got shut down heavily in the early 2000s. Seemingly, that's also a restriction, right?

Travis [00:21:54] I remember we went to my wife's fellowship graduation, and there were some people that were announced as new residents. One resident was an attending physician from Poland, and she was being offered a residency slot in America to basically become trained in America. But we can fix our physician shortage overnight if we simply allowed immigration, right. If you simply allowed immigration, had some — people just have to take some tasks to prove competency and made the test not unrealistically, ridiculously hard. Like, trying-to-prevent-people-from-practicing-level hard. You know, made it just literally a competency test, then you could fix the physician shortage totally.

Travis [00:22:35] Because there's a lot of good data that suggests that people of foreign birth that come to America, they tend to locate in out-of-the-way rural places where there is a great need because it's maybe part of their requirements for coming. That would be wonderful to fix the physician shortage overnight, if you allowed immigration. But we don't do that because we want to as a society and the interests that predominate, that control this policy from a political standpoint don't want that to change because that would affect their earnings.

Travis [00:23:01] And that's nothing to — that's not necessarily saying somebody is bad or anything. It's just reality. Politics is reality, and people express their preferences. And whoever has the loudest preferences with the most power behind those preferences is the one who gets to set the law basically in terms of legislation.

Travis [00:23:18] So let's talk about other reasons besides anti-competitive behavior for having residencies. There's cheaper labor for institutions, like we talked about for pharmacists. If you have a situation where you have this big kind of glut of new grads for pharmacists, one way to adapt is to offer more jobs and lower the value that you'll pay. Lower the salaries you'll pay, and create these, like, career-pathing kind of ways. It's just a strategy for institutions to hold onto people and make as much profit you can. Career path somebody with residency programs. Hire program directors. Tell people it's, you know, for their own good. And in reality, it's just because you're adapting to the market.

Travis [00:23:58] So other reasons, you know, I mean, residency programs are for training, right. You can certainly learn a lot from going to a residency program, and you can certainly become a more effective practitioner. So I don't want to say that it's all bad. The reasons why you have residency programs proliferating like this: people probably are, you know, a lot better trained in some regards because you have longer periods of training. But I just question the level to which they're proliferating.

Ultimately, is residency worth it? Breakdown by profession

Travis [00:24:23] So let's talk more by profession. So for medicine, the question is, is a residency or fellowship program worth it? You know, from a student loan and financial perspective for medicine, I would have to say it's very worth it depending on the specialty. So you have to do a residency really in medicine. So yes, you should definitely do a residency. That's very, very important. We know somebody who decided to not do a residency program because they didn't want to do clinical medicine, and they're struggling to get paid anywhere close to what an M.D. should be worth because they're not getting the job offers for somebody with an M.D. They're getting job offers for somebody with a master's degree, and that's basically what you have if you don't have the potential to go off and be a practicing attending physician, which you have to do residency to do.

Travis [00:25:06] So you can do a three-year residency for family medicine. Should you go more than that? The answer is pretty much yes because PSLF subsidizes residencies by counting those years of services credit. Then realistically, you should try to do some sort of specialty that pays at least $200,000 or above, you know, if you're employed at an academic facility. So certainly, you should do at least a four-year residency.

Travis [00:25:30] The question mark for whether or not a residency is worth it starts to become – once your residency starts to last more than four or five years, it just — The answer is, it depends. You know, there are some specialties and fellowship programs where you're going to make $150k a year after finishing working at an academic facility, but you're going to have a better lifestyle. So there's something to that. It might literally be worth doing a fellowship not for financial reasons, but it might be worth it to have a predictable eight-to-six kind of life instead of a life where you'll always be on-call.

Travis [00:26:03] Like, one example of this. My wife did not want to do OB-GYN as her career because she did not want to do any OB work because the schedule is really rough. You could get called in at all hours of the night. You have to do very long haul, and you're — it's just really intense, you know, because people can deliver a baby at any time. Right. So instead, you know, as her specialty, doesn't necessarily pay a ton more than you can make as an OB-GYN. But it does allow her a very predictable, fixed schedule since her surgeries are generally always elective.

Travis [00:26:31] So that's one example of a residency program not being a financial decision. But at the other end, it could be a financial decision if you want to be a urologist and make $300k-plus a year with a five-year residency with no fellowship. That seems to me to be a really good decision to not do a fellowship and just hurry up and get practicing. So there are some specific specialties that are very high — surgery very high, procedure-based, like dermatology. Things like that where I do kind of question if a fellowship is really worth it. You know, you'd have to spend a really long period of time recuperating that extra income that you would make from that lost one-year of earnings.

Travis [00:27:07] So if you want to be a, you know, urologist, dermatologist, you know, orthopedic surgeon, something like that, you know, again, you might do it for intellectual reasons to try to gain more skill. Like you want to do hands stuff, or you want to do spine work. Or maybe you wanted to do some sort of specialty with joints. And orthopedic surgeons, I apologize if you're listening to this. I don't know your field, but you get what I'm trying to say. You look at the additional earnings you could get, especially in private practice if your goal is maximizing income. And for folks that are going to earn a very high income, as just general urologists, that might make sense not to do a residency, right, to do a fellowship program.

Travis [00:27:43] So that's the real optionality that I see people having to decide between is fellowship programs and medicine. So if that's you, if you're a medical doctor, then — and you want to pay your debt off eventually — then being in the REPAYE program is really good in residency and fellowship so you get the interest subsidies. And then the Pay As You Earn program can be good for forgiveness because of the flexibility and the ability to file income taxes separately. So that's one way to help make the decision to go to a fellowship or a longer residency program and not take as big of a bite out of your life and your finances.

Residencies for dentists

Travis [00:28:13] So for dentistry, I get this question probably the most — is going to a residency program worth it as a dentist? I'll say this: I don't think it's worth it if your goal is to make the most money. If your goal is to make the most money, go get your dental degree from a public in-state, low-cost place. Try to keep your total costs below $300k, and then right out of school, move to the area that needs dentists the very most. I got a request for an associate that would make $250k a year, but they'd literally be living, like, two hours away from Tulsa, Oklahoma near a Native American reservation. So yeah, your social life is going to be nil. You know, you're going to be working a lot, making a lot of money, but that's it. Because you don't have anywhere to go. So that's an example of a place that really needs dentists.

Travis [00:28:56] I've got a lot of people with two, three, four kids because I think it just kind of happens that way when you go to one of these rural places is — one of the things you can do is have a larger family and kind of entertain yourself, I guess. I don't know. But I see people make a ton of money in places like northern Minnesota. Well, you know, far away from Minneapolis. See people make a ton of money in rural Texas places that need dentists, far out of the way from your normal competitive L.A., New York kind of areas.

Travis [00:29:22] If you want to live in a larger city, that might be a legitimate way to make a living and be a little bit more stable than being a general dentist if you go to a residency program. So those people that I mentioned in rural Minnesota, Texas, you can make $400k a year and more. I've got a lot of clients that have made that level, and they're asking me mostly on the interest subsidy piece. How do you maximize that, get the best refinancing deal?

Travis [00:29:42] So for people who are definitely wanting to live in New York or L.A., you know, again, how many of you are there? What is the supply of your field in New York? You know, there are a ton of orthodontists in New York. So take this with a grain of salt. I will say that I would rather be a high-earning — well, I would rather be an orthodontist in New York than a general dentist in New York if I had to be in New York. Simply because I'm going to have debt that's not really able to be paid off anyway, so I might as well be a specialist earning as much as I can. Given that I'm going to have a massive amount of debt that I'm going to have to use forgiveness for anyway.

Travis [00:30:19] So this is specifically for those really high-cost-of-living areas. A lot of people are like, is it worth it to go back for the residency program? The general answer is yes because it's going to give you more flexibility. You're going to go from $400k or $500k in debt because a lot of these people that are in these areas already went to the private schools there that have really high tuition costs. So you're going to add $200,000 or $300,000 of debt on top of what you already have. Your payment is a percentage of your income on PAYE, REPAYE or IBR. So your payment is still the same percentage of your income except you're just making a lot more. And if you can do a two- or three-year program, you also lose out on that income.

Travis [00:30:56] But again, I think that it's just the value of having fewer people competing with you. You know, you're still going to be struggling and not having a massive income compared to if you get out of a high-cost holding area that's saturated and moved to a place that's less saturated. But you'll still do pretty well.

Travis [00:31:12] A residency program is not a financial decision in dentistry for the most part. It's generally a, like, ‘where do you want to live?' kind of question. If you want to live in a rural area, you know, you don't need to know all these different things. The residency programs have all those credentials. You know, you could probably go to a lot of these courses and training seminars and learn a lot. And then, just by virtue of you being the only person in town, you're going to get to do a lot of surgery. You're going to get to do maybe even some endo or ortho procedures or some perio procedures just because you're the only game in town. And I have a lot of people that do that. They tell me that they do a lot of specialist work just by virtue of them not having anybody else that could do that work where they live. So that's what I would recommend to people who are wanting to make the most money and don't care about their location.

Residencies for veterinary medicine

Travis [00:31:56] And so, you know, obviously, if your focus is more on, like, ‘Where do I live? I want to live in this big metro area where all my family is.' Then that could be a real reason to go and specialize in dentistry. For veterinary medicine, it seems like the most common reason for residency is just, ‘I want to be a professor.' I see that reason the most. But I do sometimes see people that are like, ‘Well, I want to maximize earnings.' Or ‘I want to go make more money.' Or ‘I just find, you know, the oncology surgery way more interesting than just general practice.' So if that's you, that's fine.

Travis [00:32:28] You know, I think that it's okay to do residency. I think that it's a little difficult because you can go out and earn money right away as a veterinarian, which is helpful. The good news is you can make any of these things work out from a loan perspective if you have federal or even some private debt. I've never seen a case where you can't optimize some resident's finances to make it really fit up exactly with what they want to do in terms of training and post-residency career plans.

Residencies for pharmacists

Travis [00:32:51] I will say this, pharmacy residency is — that's the last one I want to talk about. Residency programs: it's almost positioning yourself to be in a more-protected setting. And I say protected setting because a lot of people who go to residency programs in pharmacy end up at hospitals. So you're doing, you know, a hospital residency or hospital-based pharmacy residency or something. You become a pharmacist in a hospital system, so you're probably going to qualify for PSLF. You're going to have more job security than if you're in retail because hospital systems don't make as aggressive layoff decisions and don't push your work standards as badly as a for-profit retail pharmacy will, I think.

Travis [00:33:28] I get a lot of complaints with our email — Podcast@StudentLoanPlanner.com — about people that don't get any lunch breaks. You know, they work all through lunch at retail pharmacies. They don't even have time to go to the bathroom. I'm just thinking, holy cow, man. Is this like the 1800s, like, industrial England or something? Some of these stories are just like, it's terrible working conditions in retail.

Travis [00:33:51] And I'm not going to say that the hospitals have it off great or anything. I'm just saying that I think that the residency programs in pharmacy, if you're talking about the pro case, it might be, like, to just get a little bit better lifestyle than doing retail. Because I talked to a lot of pharmacists, and I think that the retail ones by and large are, like, probably the least satisfied, even though the retail pharmacists can often make some more money. I think that the lifestyle can be pretty difficult sometimes.

Travis [00:34:15] One time I was at CVS or Walgreens, like, in my neighborhood, and I saw some lady, like, get out of her car to the drive-thru window of the pharmacy. And she just unloaded. She just started screaming at the top of her lungs and banging on the window, and they had to call the police. I was like, “Does that kind of thing happen, like, a lot? It seems, like, really terrible and unusual.” And she's like, “Oh, this happens, like, four or five times a day.” I was just like, oh my gosh. Like, man. Like, you talk about, like, people's issues with addiction. Or like, they don't — prescription that they need. Or they, you know, it's more expensive than they thought with their insurance. They're mad. Golly. Retail pharmacies out there are — you're angels.

Travis [00:34:52] So I think that residency programs, I would look at them more as a lifestyle investment versus a financial decision. I think it's probably a bad financial decision compared to just going straight up and trying to make $110k to $130k in a retail environment that needs you. So an out-of-the-way kind of a place. But I think that it can make some sense if you're looking for that better quality of life.

What the Student Loan Planner® investing course is all about

Travis [00:35:12] So that's some talk about residency programs. Just wanted to say that we've got this course coming out. And the investment course, it's going to be live shortly after this podcast airs. You're going to know about this course if you're on our email list. So if you're on our email list, which you can sign up for at the bottom of StudentLoanPlanner.com, then you're going to get notification when our investing course goes live.

Travis [00:35:35] The reason why this investing course is so important is we did a survey of our readership and listenership, and we found that only 12% — 12% — of people knew what a brokerage account was. If you don't know what a brokerage account is, you have zero chance of retiring before your 60s. Zero. Because retirement accounts can be maximized, you know, a $19,000 a year contribution if you have an employer plan.

Travis [00:36:03] But if you want to contribute more money than that to your future and buying your time back, then you need to have a brokerage account, which is an account that you would have that you could put mutual funds or ETFs in it or individual stocks or bonds. You can have one of these accounts with a place like Vanguard or Betterment or someplace like that — TD, Ameritrade, Schwab. Like, these are accounts that are not set up by your employer. They're set up by you to put in extra money besides what you're putting away for retirement.

Travis [00:36:31] So this brokerage account is what you use for the tax bomb if you're going for 20- to 25-year loan forgiveness. It's also what you put excess funds in to give you the freedom to retire before your 60s because retirement money can't be touched until your 60s whereas brokerage account money can be touched whenever you want. So if you have aspirations of retiring in your 40s or 50s, a brokerage account is an absolute must.

Travis [00:36:51] And we also saw some things in the survey that people just really don't know how to invest. And compared to the typical adviser out there, I think you can actually do a better job than most financial advisers because most financial advisers charge super high fees to work with them, and you're just giving away more of your money unnecessarily.

Travis [00:37:09] So I think that this course is going to be very attractively priced, and it's going to be game changing. We're only going to open it for a week, and then we're going to shut it down. So you're not going to be able to use this course later on. We're going to basically open it up, I think, at certain intervals throughout the year because I want to make sure it's super relevant for the environment that we're currently in. Go to StudenLoanPlanner.com forward slash investing to sign up for the course today.

Travis [00:37:33] Finally, that investment course is going to give you a lot of calculators too that we've never released to the public, so I'm really excited about it. So if you like our content, you're going to love this investing course because it's going to show you how to retire in as little as 10 to 15 years instead of the 30 to 35 that most people do.

Travis [00:37:49] The last little bit I mentioned, just to finish off the residency topic, being a resident means you're making less money than you'll eventually make. So it is a fantastic time to learn about budgeting, and if you are not already budgeting, you need to. And there's two ways you can do this. You can look at a tracking app that will track your expenses. That's going to be something like that would be like Mint.com that'll track your expenses after they've already happened. Or you can plan ahead of time and there's something called YNAB.com — Y-N-A-B dot com — that I use personally that I like. Neither one of these companies are advertisers, actually. This is just me going and riffing and just kind of sharing something I find useful with you.

Travis [00:38:27] But if you're a resident, track your expenses because if you can track your expenses, and then get into good habits now, which will pay huge dividends when you have this big increase in your pay later. So track your money. And also, when you're in residency, you know, invest at least 10% of your income in retirement plans, and put a hundred dollars a month into a brokerage account. Doing those two things is going to help you learn what a brokerage account is, how to invest with automatic contributions. And it's going to teach you how to watch your money go up and down, so you don't panic-sell when markets crash. And that'll help you do that with a lot lower dollar amounts, which will save you money long-term.

Travis [00:39:00] So look out for the investing course. And if you're a resident, too, that — I know that, you know, a $300 to $600 expense for making a student loan plan with us — it can hurt when you're a resident. You're not making a ton of money. That said, I think it's where your priorities lie that, you know, in terms of whether or not you want to prioritize it. So I know that we don't give discounts, but I think that that amount of money that we charge for a plan is affordable to every resident. The only question is, are you going to prioritize that in your spending? Or are you going to spend the money on something else?

Travis [00:39:31] And so I think that if you get the plan in residency, generally speaking, the savings that we see compared to people who wait to get to play until after residency, you know, it's usually a five-figure expense. Like, if we can get to somebody as early as possible, we can save them usually projected five-figure amount or more just by making sure that all those things that we need to have in place are put in place way ahead of time. Instead of when somebody finally has, you know, $200k or $100k income and they can more easily afford to pay that consult.

Travis [00:39:57] So if you're a resident and you're kind of on the fence, please get a plan sooner rather than later if you do want to invest in one. And if you don't, that's fine. Use our free stuff, like the podcast or the blog to help out.

Travis [00:40:08] Thanks so much for listening and hope you found our discussions of ‘what about a residency program is worth it?' useful.