At some point in your life, you probably had a member of your extended family tell you to forgo college and just be a plumber. Apparently, there’s good reason. I thought it would be fun to run some numbers and compare being a doctor or a plumber. We’re analyzing the two occupations solely on how financially rewarding they are. First, we’ll take a look if the doctor pays back all his student loans as fast as possible. Next, we’ll adjust the simulation for the Public Service Loan Forgiveness program (PSLF) and see if this popular federal student loan program tips the scales in this debate.
How Do You Become a Plumber and How Much Do They Make?
The big upside of being a plumber is how fast you can start working and making money. In most cases, plumbers start out as apprentices making around $12 an hour. They work under a licensed plumber for a few years and eventually make it to the journeyman plumber level, where they’re getting about $18 an hour.
After several years of training, you can sit for the master plumber exam in many states and increase your pay commensurately. Master plumbers might get $30 an hour depending on the state. According to my research for this article, plumbers frequently have to work more than 40 hours a week, so I’m assuming they’re going to be eligible for overtime for 10-20 hours a week.
If you annualized these hourly wage numbers, a plumber might start out around $30,000 as an apprentice, move up to $60,000 as a journeyman with a little overtime, then top out around $100,000 as a master plumber. The whole process takes about 6-10 years to reach the top rank of the profession.
How Do You Become a Doctor and How Much Do They Make?
Becoming a doctor takes a long, long time. You have to go to four years of college and take a lot of science and math classes and knock the MCAT out of the park. Then you apply to a bunch of med schools and spend four years of your life there. Following that you have to complete a residency of three to seven years in length. Finally, if you want to be a specialist you need to add an additional two to three years for fellowship.
During the residency, you make something between $50,000-$70,000 a year. Fellowship might be a little more than that, but not much more. Once you’re at the end of your training, you can expect a big salary increase depending on what kind of job you take and where you work.
If it’s in academic medicine, you’re going to earn a lot less than private practice. Outside of the big money specialties like derm, neuro, ortho, and cardio, you would probably start out somewhere between $200,000 to $300,000 as long as you specialized.
But Doctors Have to Take Out Student Debt
There’s one complication to this that we need to address. Doctors have to take out student debt, and a lot of it. If you factor in the loan origination fees, the long training period during which interest continues to accrue, yearly tuition increases, and undergrad student loan burdens on top of medical school loan burdens, docs have a lot of debt once they finish their training.
How much debt do they have? The latest stat I could find on the web showed a median debt of $180,000, but that was a couple years ago. Realistically, I think that number will be closer to $200,000 for the class of 2017. While many students get financial assistance from their family, its important to note that many of the ones who don’t have a lot more debt than the median. So assume that med school costs about $50,000 a year in total over four years.
First Round: Doctor vs Plumber During Med School, Residency, and Fellowship
Here are the assumptions. The doctor spends $20,000 a year on undergrad and $50,000 a year on med school. The plumber’s income steadily increases from $12 to $18 to $30 an hour as they climb the apprentice, journeyman, master plumber career ladder. Both put 50% of their pay to either investments or debt. The doctor’s debt has a 4% interest rate because he uses the Revised Pay As You Earn plan to get an interest subsidy, perhaps because he hired me as a student loan consultant to optimize his debt (haha). I’m trying to give the doctor every advantage here folks. The investment return assumption is 6%.
Let’s say the doctor is a urologist. After all, the plumber handles leaky pipes where people relieve themselves and urologists take care of the internal bodily pipes, so I think it’s a nice comparison. Urologists have five year residency programs. Let’s also say our doc, let’s call him Brad, decides to go to a two year fellowship after residency. At the age of 32, our plumber, let’s call him Joe, has been a master plumber for several years. Our urologist doc Brad is about to start making real money at the end of his fellowship and transition into an attending position.
Second Round: Doctor vs Plumber After Training is All Done
Private practice urologists make a lot of money. They are among the top paid specialties in medicine, and they should be because they have to deal with leaky bladders all day. Anyhow, one estimate puts men’s earnings in private practice urology at around $380,000. I don’t think our doc Brad would start at that level but let’s give him the benefit of the doubt. Both salaries increase with inflation long term.
At age 41, Brad finally overtakes Joe. Consider that Brad has been out of college for almost 20 years. That’s a long time to wait for a break even period. What if our plumber Joe (I’m trying to be really careful not to call him Joe the Plumber) built a plumbing business with his expertise and hired a bunch of workers? It’s clear that Joe would leave Brad in the dust.
I’m even assuming that Brad refinances with one of the companies I list in my sidebar and gets his interest rate down to a 4% after he no longer qualifies for REPAYE interest subsidies. So what if Brad goes the not for profit hospital route as an employee? Then we need to look at the PSLF program.
Third Round: What if Our Urologist Uses PSLF for His Student Loans?
If we assume that Brad decides to go work at a not for profit hospital, then he’ll get a lower salary but also the ability to use the PSLF program to pay a fraction of what he owes on his med school debt. Brad’s total payments are about $119,000 before all the debt gets wiped away courtesy of the US taxpayer. At his peak indebtedness, Brad owed about $310,000. Since he’s working at a hospital, he’ll make a lower salary of $300,000.
Interestingly, the break even period is almost identical. Brad the urologist starts winning at about age 41. Even with PSLF, Brad has to wait a long time before he’s finally getting a great return on his investment.
What Did I Leave Out?
If you wanted to scroll back up and take a look at my numbers again, you’ll notice I’m assuming a 50% rate of savings towards debt and investments. That’s really, really high. Very few doctors or plumbers would be able to maintain that level of savings in the face of family, kids, marriage, mortgage, car payments, etc.
However, consider that the doctor is in a higher tax bracket than the plumber. The doctor also probably has lifestyle expenses that the plumber doesn’t have. Do you expect your plumber to show up in anything but ratty jeans, a t shirt, and maybe some kind of utility / construction overalls when they’re doing a job for you? Exactly. Society has much lower expectations for everything from the car they drive to the house they live in.
Some folks will say that the higher income positions the doctor to live on more than the plumber and have an easier time saving. Others will say that I’m not taking into account the higher quality of life the doctor enjoys with the leftover income available for living expenses after saving and investing. Perhaps that’s right, but I made sure to weight the scales in favor of the doctor over the plumber. I made Brad the doctor a urologist instead of a pediatrician for example.
The Two Things You Need to Make ‘Being a Doctor’ Win Over ‘Being a Plumber’
The first is you need to pick a higher paying specialty if you ever hope to take full advantage of your medical education. The second is you need a strategy to pay back your student loans. In the scenario above, I modeled Brad the urologist doing everything perfectly, and that could’ve easily not been the case.
So in short, if you want to make your decision to become a doctor make financial sense over the guy that fixes your pipes, get ready to work a long time and make smart decisions with your debt.
I Can Help You With Med School Loans
I’ve helped dozens of doctors make a plan, and I can likely help you save thousands of dollars too. If you have a six figure student loan burden from medical school, contact me to see what I can do for you. I help physicians conquer huge student loan balances with flat fee consultations.
I perform a holistic loan analysis with my proprietary simulation tool to see what your best available repayment options are (government, private refinancing, etc). I’ve saved the average client tens of thousands of dollars.