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AAMC Reporter: May 2005
A Word from the President:
"Getting Real About Student Debt"
When residency is over and the time has finally come
to start one's practice, the typical young physician faces many financial challenges. For most, those challenges include careful budgeting to accommodate repayment
of medical school loans.
For more than a few graduates, paying off accumulated educational debt remains a burden well into mid-career,
or even beyond. And the prospect for future graduates looks worse still. Paul Jolly, Ph.D.,
wrote an AAMC report, Medical School Tuition and Young Physician Indebtedness,
that lays out in stark detail the bleak reality in store for future graduates if something isn't
done about mounting medical student debt. Here are a few of those realities:
- Medical school tuition is increasing at a rate that far exceeds the rate of inflation
- Over 80 percent of medical school graduates leave school with educational debt
- Since 1984, the median debt level has increased fivefold to $100,000 for public medical school graduates and
to $135,000 for graduates of private schools
- Physician incomes have remained flat in recent years and are slated to increase only modestly, if at all
- If present trends were to continue, in six short years, loan payments would consume fully 10 percent of after-tax income for the typical young physician; in 25 years,
that figure would rise to an astonishing—and clearly unacceptable—50 percent
As things currently stand, even with debt levels as high
as they are, hardboiled economic analysis shows that the M.D. degree is still a good investment. The anticipated lifetime earnings of a physician provide a better return
on educational investments than just about any other career choice a student could make. But try to convince prospective medical school applicants from lower socio-economic groups of that. Understandably wary of taking on any debt, let alone debt of these magnitudes, academically accomplished, but economically challenged students (especially those from underrepresented racial and ethnic groups) list the cost of medical education as the principal reason for NOT considering a career as a physician.
How many of you are aware that over 60 percent of
medical students come from families with incomes
in the rarefied top 20 percent bracket? Although that skewed income distribution among future physician
is not new, it is not, in my view, a feature for which we should be particularly proud. And I fear the imbalance will only worsen unless more students from financially disadvantaged backgrounds can be reasonably assured that they can clear the financial hurdles on the way to an M.D. degree. Indeed, unless something gives, even well-to-do students may begin to wonder if a career in medicine is such a good investment.
Financial considerations not only dissuade those college graduates who might otherwise aspire to a career in
medicine. They also likely dissuade many medical school graduates who might otherwise aspire to a generalist career. Although many other factors are undoubtedly
at play, debt load is one reason commonly cited as contributing to the declining interest in family medicine and to the growing interest in higher paid specialties such as dermatology, orthopedic surgery and general surgery.
The issue of medical student debt has, of course, been of longstanding concern to medical schools
and to the AAMC. In an effort to focus still more attention to this persistent problem, the AAMC Executive Committee (prompted by our Organization of Student Representatives) asked Deborah Powell, M.D., dean of the University of Minnesota Medical School, to chair a Working Group on Student Tuition and Debt. That group's report contains a host of valuable recommendations, some directed at easing repayment of accumulated debt and others directed
at limiting the amount that students need to borrow in the first place.
In the former category are suggestions for linking increased government assistance, such as loan forgiveness programs, to helping our country address persistent health care needs. A prime example is the National Health Service Corps (NHSC), which enable students
to retire some or all of their debt in exchange for working in an area of need for a substantial period of time. As attractive as such programs are, they have the potential
to ease only a small fraction of the overall debt burden. Moreover, the prospects are next to nil during these tight budget times that additional governmental assistance will be forthcoming for any program aimed at helping "rich doctors" defray the cost of their education.
In truth, the only real hope for moderating the escalating debt burden we place on our students must come from our own actions. The place to start, as the working group noted, is to ensure greater predictability, accountability and transparency in the tuition setting process. Students are entitled to know how and why tuition levels are set where they are. They are also entitled to receive adequate counseling about debt management to help them minimize their borrowing and to acquaint them with optimal repayment strategies; recent efforts, many supported by the AAMC, have gone a long way toward addressing this need. But most of all, students need access to much larger institutional pools of financial aid.
I am quite aware of how financially challenged most medical schools are these days, and of how increasingly dependent schools are on philanthropic support for
core operations. But despite these financially challenging times, I see no alternative but to place a much higher
priority on raising funds for needs-based scholarships and for low-interest student loans.
No one is coming over the horizon on a white horse to bail us out of this dilemma. Either we find a solution or we continue to watch as the problem gets even worse. I worry that we are already losing countless talented students of just the kind we need because our education is simply too costly for them. Putting aside the ethically questionable practice of saddling current students with so much debt, unless we step up to this serious and growing crisis, we may find ourselves preparing only the sons and daughters of the most economically privileged among us to become our country's doctors. That's not the medical profession our country needs, nor the one our conscience should allow.
Jordan J. Cohen, M.D.
AAMC President
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