High medical school debt steers life choices for young doctors

The cost of medical education is rising as physician incomes remain relatively flat.

By Myrle Croasdale — Posted May 17, 2004

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Susan Miller is 25 years old and finishing her first year at Yale School of Medicine. She'd like to get married, but she won't anytime soon now that she's discovered she would lose $80,000 in financial aid over the next three years. She is figuring she'll already have to borrow $200,000 by the time she graduates and doesn't want to add to that figure.

David Rosman, the medical student trustee on the AMA board, also found debt an issue when he was helping a friend hunt for an apartment in Boston. "The landlord couldn't understand how we had so much debt coming out of college," he said.

Once they explained they were medical students, the landlord relaxed, but Rosman still finds six-figure debt intimidating.

"It affects how you sign a lease and what kind of life you lead going forward," Rosman said. "It's like having a mortgage before you earn your first dollar of income."

Pediatrician Jennifer Shu, MD, chair of the AMA's young physician section, consolidated her school loans to keep the monthly payments within reach, but she'll end up paying more over the long run. She's 40 and has yet to own her first home -- partially because of debt, but also because she lives in San Diego, where housing costs are especially high.

More and more, medical students and young physicians are being stymied by debt. According to a new report issued by the Assn. of American Medical Colleges, medical school graduates in 2003 carried 4.5 times more debt than grads did in 1984, when the median debt was $22,000 for public school graduates and $26,500 for private school graduates. By 2003, the median debt was $100,000 and $135,000 for public school and private school graduates, respectively.

Miller has chosen to live with her parents' disappointment and her own sense of loss as she postpones marriage, moving in with her boyfriend instead. She asked that her real name not be used because she was fearful officials at the Connecticut university would consider cohabitation the equivalent of marriage and cut her aid accordingly.

Working on the issue

Rosman said the AMA is looking for ways to address the student debt issue.

"We recognize the challenge that medical students are under and that the debt can be a tremendous burden," he said. "We are constantly looking at ways to alleviate the debt."

This could come in the form of extending residents' ability to defer repayment or eliminating some of the laws that make debt difficult to manage, Rosman said. For example, the single-holder rule prohibits students whose loans are through one lender from consolidating with any other lender. Generally the rate offered in this case is less favorable than if multiple lenders are competing.

In response to such pressures, the AAMC is pulling together a task force, the Working Group on Student Educational Costs and Debt, to analyze data from AAMC's report, "Medical School Tuition and Young Physician Indebtedness," and explore ways to reduce medical education costs and improve the ability of graduates to repay debts.

Financial aid calculations are likely to be one topic. Miller, who supported herself for two years before entering med school, is considered, by Yale, to be a dependent of her parents, who are expected to provide about $15,000 a year toward her education. They don't, and Miller takes out additional loans to cover the gap. If she were to marry, her husband's income would be counted as well as her parents' income.

She said Yale won't consider her an independent adult until she is 29, and by then she hopes to be finished with school.

Jordan Cohen, MD, president of the AAMC, said that while physician incomes have not kept pace with the increases in med school debt, one positive finding from the report was that incomes are still high enough to make repaying school debt manageable. Even though the cost of medical school has risen faster than physician salaries, physicians still earn a decent return on their investment, roughly 6% for the $1.2 million a physician bears for the assorted costs of a public education and the wages lost while in school. Also, becoming a doctor is typically a higher paying investment when comparing average educational costs and salaries of business and law school graduates.

However, Dr. Cohen isn't confident this situation will last.

"The concern is, as the debt burden rises and physician income does not keep pace, it will be more difficult to repay debt, and undoubtedly this will have an adverse effect on those interested in becoming physicians," Dr. Cohen said.

He is also concerned that the escalating costs of a medical education could limit the profession to the very wealthy. As it is, 60% of medical students are from families with incomes of $74,000 and higher.

This concern is shared by family physician Cynthia Romero, MD, past new-physician board member of the American Academy of Family Physicians. Third- and fourth-year medical students rotate through her practice, and the pressures of paying off their debt is already on their minds.

"I can sense their struggle," she said. "They enjoy their rotation in primary care, but they're leaning toward emergency medicine or radiology, where payments are higher and the schedule is more predictable."

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A steady climb

The price tag for becoming a doctor has risen sharply over the last 20 years. In 2003, students graduated with 4.5 times more debt than they did in 1984. At this rate, the tab for 2007 graduates will jump another $22,000. Median medical student debt:

Public school Private school
1984 $22,000 $26,500
1985 $25,000 $32,000
1986 $25,000 $38,000
1987 $27,000 $40,000
1988 $30,000 $45,000
1989 $33,000 $50,000
1990 $37,000 $55,000
1991 no data no data
1992 $45,000 $68,000
1993 $50,000 $75,000
1994 $53,000 $77,000
1995 $58,000 $85,000
1996 $65,000 $92,000
1997 $70,507 $100,000
1998 $76,000 $100,000
1999 $80,000 $110,000
2000 $81,500 $120,000
2001 $86,000 $120,000
2002 $92,000 $127,000
2003 $100,000 $135,000
2007 $122,000 $158,000

Source: Assn. of American Medical Colleges

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