Last Updated on April 17, 2022 by Lee Burnett, DO, FAAFP
The following response to Drowning in Student Debt: Young Professionals at the End of Graduate School, recently posted on this website, was received from Gary L. LeRoy, MD, Associate Dean of Student Affairs and Admissions, Wright State University, Dayton, Ohio.
The best advice that I received when I was contemplating a career in medicine was to concentrate my initial efforts on getting into medical school and leave the issue of how to pay for it until another day. They assured me that there would be enough money available in the form of scholarships, grants, and low-interest loans to pay for my medical education.
What they did not educate me about was debt management, the principle of compound interest, and that it could take me the bulk of my professional career to pay off my student loans.
It has been over twenty years since I heard those words of wisdom, and I would continue to provide students with similar advice, but I would qualify my comments with the fact that the trend line for medical student indebtedness has become increasingly steep with each academic year.
Students must arrive at the door of the house of medicine with an enhanced awareness of how they will navigate the rising tide of medical education debt that they will encounter prior to their graduation.
As illustrated in the June 24, 2010 article on “Drowning in Student Debt” this problem is further compounded when two professional students graduate with a combined student debt of nearly $300,000. According to the most recent Association of American Medical Colleges (AAMC) graduate medical student survey, the average educational debt for the class of 2009 was $156,456.
Eighty-seven percent of these graduating medical students had outstanding loans and 58% of graduates had debt of at least $150,000. This is compared to the graduates of the class of 2001 who had a total average debt of $86,000. Within the decade AAMC statistics confirm that public medical school graduate debt has increased at an annual rate of 6.89%, while private medical school graduate debt increased at an average rate of 5.92%.
Trends that are contributing to this rapid increase in the annual public medical education debt, compared to the private medical schools, are the shrinking state budgets and the corresponding decreased state share of instruction dollars to publicly supported medical schools. Public medical schools are thus forced to find additional funding in the form of combinations of increased research dollars, institutional budget cuts, and/or by increasing both the numbers of matriculating medical students and their tuition and fees.
However, if this trend continues at its current rate of increase, the AAMC projects that both the public and private medical schools will have the class of 2033 graduating with an approximate debt of $750,000!
Another disturbing trend cited in the Center for Studying Health System Change article entitled “Losing Ground: Physician Income 1995-2003,” their Community Tracking Study Physician Survey found that physician incomes are not showing similar trends of increase to compensate for medical student indebtedness.
In fact, physician salaries increased annually only at a rate of 1.45% in the early part of the decade prior to the current economic downturn. Other surveys using various physician demographics, methodologies, and populations of physicians demonstrate different salary growth rates but none approach the current nor projected rates of medical student indebtedness.
Until recently, medical residents were able to defer their loan repayments until the completion of their residency program. However, as resident salaries have increased over the years combined with the recent advent of resident work-hour restrictions (the hourly wage has now effectively increased from a sub-minimum wage of ~$5.20 to over $10.41), lenders are no longer willing to accept the argument of financial hardship for the deferment of loan payments throughout residency.
Other sources of increasing medical student debt burdens include the fact that students accrue interest due to prolonged deferments of payment, students are entering medical school with more undergraduate school debt, and there are increasing numbers of non-traditional students entering medical school with children and previous life financial obligations.
This increasing trend of medical school indebtedness results in students seeking medical subspecialties with traditionally higher incomes. This also can result in decreased diversity of the physician workforce as students from lower socioeconomic or minority populations are discouraged from attending medical school.
In the final analysis, medical students will need to take precautions to put on their economic life preservers during the early stages of their journey through medical school. It is imperative that students become more aware of the importance of adjusting their lifestyles to ensure that they do not spend a lifetime paying off an ocean of medical education debt.
I would continue to recommend that potential applicants to medical school first concentrate on getting accepted, but that they prepare themselves soon thereafter for a professional life of fiscal responsibility.
For more information regarding medical student debt readers can review the American Medical Association document from their Task Force on Medical Education Debt.
Gary LeRoy, M.D.
July 15, 2010
For a previous interview on this and related subjects, see: Health Care Policy & The Student Doctor: An Interview with Gary LeRoy, MD.
Response from Perry A. Pugno, MD, MPH, of the American Academy of Family Physicians
Dr. LeRoy’s comments are right on target. In fact, our surveys of both medical students and residents demonstrate a clear unmet need for training in personal financial management. Those surveys have been validated by similar work done at the state level by a number of medical societies.
This is a long-standing problem. So, in an attempt to impact that unmet need, the AAFP is putting forward a new edition of Residency to Reality, our practice management curriculum for residency programs. One of the newest components of that product is the section on personal financial management.
We are hopeful that, armed with a bit more information and some practical recommendations, the family medicine residency graduates of tomorrow will be better prepared to cope with the challenges of personal finance as they advance through their careers.
Response of Charles Q. North, MD, MS, of the University of New Mexico
Dr. LeRoy identifies one of many perverse incentives in our medical education and health care system that has wide-ranging consequences on the health status of the public and the shape of the medical care system. Unless a student has access to family wealth, the stress of indebtedness weighs heavily on a string of decisions.
First, students are much less likely to apply to out-of-state schools either private or public which are even more expensive so their medical education experiences are limited to their state of origin until they go through the match when they have little control over the location of their residency. Many of them end up out of state in residency giving taxpayers little return on their investment. Why is there so much control over where students study in medical school and so little control over where they do a residency?
Second, they are more attracted to the highest-earning specialties in order to pay off the debt and become financially secure after 8-10 years of experiencing only indebtedness. As Dr. LeRoy points out, this system leads to a career of student loan payments while most are also paying a mortgage and their own children’s tuition. There is a greater burden on students from families of low socioeconomic status who are more likely to have no inheritance or even inherit family debt and financial obligations rather than wealth.
The pay gap between specialties has been well documented and remains a glaring inequity begging to be addressed by the Center for Medicare and Medicaid Services. The Affordable Care Act (ACA) has some provisions that at a minimum may prevent further erosion of the lowest compensated specialties. This is a good start but it will not be enough to control excessive compensation for procedural-based medical and dental specialties. It will be difficult to address the high cost of medical education and student indebtedness without also addressing the pay gap.
Health care and education are both considered fundamental rights and are necessary services to maintain a civil society. Economic growth is dependent on both. Many advanced western countries have determined that education should be more heavily subsidized in order to both provide opportunities for learners and a workforce that serves the needs of the population. They have included medical professional training in this educational policy. Further incentives can be built into the system to waive fees and provide incentives to work in underserved geographic areas and specialties to address social needs. In addition to the Uniformed Services where tuition is waived for service to the Country, we in the United States have had such incentives through the National Health Service Corps and Indian Health Service scholarship and loan repayment programs since the 1970s. Both have experienced improved funding in the ACA and will attract new doctors to work in health manpower shortage areas. However, there is still not enough money in the system to make much of a dent in the workforce while we have such a large pay gap.
It is very difficult to nurture the altruism required to serve in shortage areas when medical students are constantly feeling the stress of indebtedness. For underrepresented minority students, rural students, and students from low socioeconomic status the stress is even worse. Therefore the best available option for many is to seek the best residency that will give them an opportunity to pay off the most debt as quickly as possible. This is not a formula for social justice or improved health status of the American people.
I propose that states and private medical schools work to lower tuition as much as possible to attract the best motivated and service-oriented students from communities who most need doctors. Then the students should be trained in settings that foster partnerships with communities and address social determinants and public health goals, not just biomedical model training. Society will gain by improving health status, students will gain by working on the greatest challenges in health care delivery, and institutions will gain by actually serving the needs of society rather than the medical-industrial complex.
Currently, the financial incentives in the US health care economy primarily serve the interests of shareholders and investors in insurance companies, biomedical device manufacturers, pharmaceutical companies, research institutions, and hospitals. More emphasis is placed on medical students to achieve self-fulfillment and wealth than to address the greatest public health and personal health needs of our citizens. Don’t all Americans deserve to have a medical education system where public health and quality patient care are more important than financial incentives to create more highly compensated specialists who contribute very little to address health disparities and social justice?
Charles Q. North, MD, MS
Department of Family and Community Medicine
University of New Mexico