Medical School Tuition And Young Physicians’ Indebtedness

Paul Jolly

Medical school tuition and medical student debt have increased dramatically during the past two decades, but loans are available on favorable terms, which makes it possible for students without personal or family means to get a medical education. As an investment, medical education is an excellent choice; its net present value is more than a million dollars. Cost is nevertheless a strong deterrent to potential applicants, especially minority applicants. If tuition and indebtedness continue to increase while physician incomes do not, there may come a time when only the wealthy can finance a medical education, and medical schools may have increasing difficulty recruiting qualified students.

Recent increases in medical school tuition and high levels of indebtedness among graduates are matters of concern to the medical education community. Although concern about rapidly increasing costs is seen throughout higher education, the situation in medicine seems especially troubling in view of the much higher levels of indebtedness there and the lengthy training required before the graduate can begin earning a professional income. The purpose of this paper is to report the facts about tuition and indebtedness and to assess the burdens on medical students, residents, and physicians.1 It is based largely on data from the Association of American Medical Colleges (AAMC), collected on graduation questionnaires among member institutions each year.

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How much has tuition increased? In 2003 median tuition and fees for state residents in public schools was $16,322; for private schools the median was $34,550. In the two decades since 1984, median tuition and fees increased 165 percent in private medical schools and by 312 percent in public medical schools, growing far more rapidly than the Consumer Price Index (Exhibit 1).2 In constant-dollar terms, the increases were 50 percent and 133 percent, respectively. A medical education is far less affordable to students and their families today than it was two decades ago.

View larger version (21K): [in this window] [in a new window] EXHIBIT 1 Medical School Tuition In Current Dollars And Constant 2004 Dollars, 1984–2004

For public medical schools, increases have accelerated in recent years, presumably in response to tight state government budgets. In a single year, from academic year 2001–02 to 2002–03, median tuition and fees increased 4.4 percent in private schools (2.8 percent in constant dollars) and 11.9 percent in public schools (10.2 percent in constant dollars). The increases from academic year 2002–03 to 2003–04 were even greater: 5.7 percent in private schools (3.4 percent in constant dollars) and 17.7 percent in public schools (15.1 percent in constant dollars). In six public medical schools, the increases in tuition and fees exceeded 45 percent.

How much has indebtedness increased? In 1984, 87 percent of public medical school students graduated with medical school debt, and the median amount for those who had debt was $22,000.3 For private medical schools, 90 percent had debt, and the median amount was $27,000 (Exhibit 2). Although the fraction of 2003 medical graduates with debt has declined to 85 percent of public and 81 percent of private graduates, the median amounts for those who have debt have risen to $100,000 and $135,000, respectively. Inflation contributes to these increases, of course, but even after adjustment to constant dollars, the debt levels have risen more than 150 percent.

View larger version (29K): [in this window] [in a new window] EXHIBIT 2 Median Educational Debt Of Indebted Medical School Graduates, 1984–2004

The amount of debt reported by medical school graduates varies from none to more than $350,000. Among 2003 graduates, 17 percent reported no educational debt, while 15 percent reported debt of less than $50,000. Almost 5 percent of 2003 graduates reported educational debt of more than $200,000 (Exhibit 3).

View larger version (17K): [in this window] [in a new window] EXHIBIT 3 Educational Debt Of Medical School Graduates In 2003

Approximately 37 percent of 2003 medical school graduates entered medical school with debt incurred for undergraduate education, with a median amount for those in debt of $16,000 for public and $17,000 for private medical school graduates. Although these debts are significant for some students, for the majority they are either absent or relatively unimportant compared with medical school debt.

How can students finance these costs? Fortunately, there is ample financial aid available to medical students. Grants provide 12 percent of the total cost in public medical schools and 18 percent in private medical schools. Loans are readily available on favorable terms. Students can borrow up to $8,500 per year under the federally subsidized Stafford loan program, and they can increase the amount to $38,500 per year on an unsubsidized basis. The current interest rate on the unsubsidized Stafford loans is 2.82 percent—at or near historic lows. When combined with undergraduate Stafford indebtedness, the total borrowing limit for Stafford loans is $189,125, and students have ten years to repay. Loan consolidation can stretch out repayment of these federal loans to thirty years. Additional borrowing is available under alternative loan programs at 4 percent, with up to twenty years to repay.

In 1987, the earliest year for which data are available, students reported that they planned to finance 34.2 percent of their medical education from personal and family sources. By 2003, this percentage had shrunk to 18.0 percent, as rapidly increasing costs outstripped growth in personal and family resources.

Do minority students incur more debt? U.S. medical schools try to enroll diverse classes of students. Although diversity may be sought by geographic origin and social class as well as by other characteristics, schools seek to enroll a critical mass of people who are members of racial and ethnic minority groups that are underrepresented in medicine. It is well known that African Americans, Latinos, and Native Americans typically come from families with lower incomes than whites, and it is widely believed that such students are particularly concerned about incurring debt.4 AAMC data show that minority students who become medical students do incur debt, at about the same rate as white students (Exhibit 4).