Medical students still burdened by high debt loads

The mounting costs of getting a medical education continue to weigh heavily on medical students and graduates, many of whom leave school carrying large, three-figure debt loads.

Eighty-six percent of allopathic medical school graduates and 91% of osteopathic medicine college graduates had educational debt in 2011, according to the latest data from the Assn. of American Medical Colleges and the American Assn. of Colleges of Osteopathic Medicine. The average debt is $205,674 for osteopathic medicine students and $162,000 for allopathic students.

Although the cost of a medical education continues to rise more quickly than inflation, the average debt for allopathic students has leveled off in recent years, the AAMC says. But the idea that there has been a slowdown in student debt levels is misleading, said Elizabeth Wiley, MD, MPH, president of the American Medical Student Assn.

“The issue of debt levels really looms large,” Dr. Wiley said. “We continue to be concerned about the rise. Stabilizing at an average of $162,000 is still extraordinarily high and is just financially out of reach for many applicants to medical school.”

A medical school graduate with $162,000 of debt would have monthly payments ranging from $1,500 to $2,100 after residency training, depending on the repayment plan, according to an AAMC report issued in July.

Several factors have contributed to the leveling off of debt levels, including changes in federal loan programs, said Julie Fresne, AAMC director of student financial services. Most medical students finance part of their medical education with federal Stafford Loans. But in 2006, the interest rates on those loans were changed from low variable rates to a fixed rate of 6.8%.

“People tend to borrow less when interest rates go up,” Fresne said.

Debt levels aren’t expected to remain flat, especially since the federal government stopped a subsidy it offered through the Stafford Loans program to graduate and professional students effective July 1, she said.

Rising costs of medical school

Meanwhile, tuition rates continue to increase dramatically. The median cost of attending a private allopathic medical school has grown at 1.8 times the rate of inflation during the last 13 years. At public schools, it has grown more than twice the rate of inflation, the AAMC said.

Public medical schools have been particularly hard hit, as states have reduced funding in a poor economy, Fresne said. Private schools also are feeling the pinch, receiving less in endowment donations.

The average four-year cost of attending a private allopathic medical school was $263,964 in 2010-11, up from $155,875 in 1998-99. For public allopathic medical schools, costs increased from $96,796 to $187,393 during the same period.

“There is no single one factor that is causing it to go up; rather, it is a confluence of factors,” Fresne said.

The average debts for osteopathic medical students are higher because most (80%) attend private colleges, while the majority of allopathic students attend public schools, said AACOM President and CEO Stephen Shannon, DO, MPH. For osteopathic students at private schools, the average debt was $210,679 compared with $184,565 for those at public schools, he said.

When coupled with uncertainty about physician payments and a limited availability of graduate medical education positions, the high cost of a medical education further compounds the uncertainties that prospective physicians face, Dr. Shannon said.

“I think it is having a real impact on what specialties students are going into,” he said. “We hamstring our graduates.”

But Fresne said there is no research showing that students base their decisions about specialty on educational debt. Instead, evidence shows that other factors have much more significant influence on students’ selection of a specialty, such as an inspiring mentor and clinical training experience, she said.

“There definitely is concern that rather than making decisions on what kind of work they want to do & the concern is [students] will be forced to make a [specialty] choice based on the income that they will earn,” she said.

Dr. Wiley said she thinks debt levels factor into students’ career choices. For example, a student facing $300,000 in school debt might be deciding whether to become an orthopedic surgeon and make $400,000 a year or go into primary care and make $150,000 to $180,000 a year.

“It’s hard to believe it doesn’t have an effect,” she said.

To help alleviate the burden on students, the AAMC is advocating for a decrease in federal student loan interest rates for graduate and professional students, as has been done for undergraduate students, Fresne said. The AAMC and AACOM also would like to see more support for programs that help students repay or forgive educational loans, such as the Obama administration’s Pay-As-You-Earn Repayment option, which would adjust payments based on changes in income.

“It allows them to manage their debt and allows their loan payment to grow as their income grows,” Fresne said.

The AAMC’s Financial Information, Resources, Services and Tools, or FIRST, website offers information and loan calculators for students to help them navigate and manage their financial options.

Reducing medical student debt is a priority for the American Medical Association. The AMA offers services to help medical students and young physicians manage their debt burden. The Association advocates for adequate funding for federal and state programs that provide financial aid to medical students and the provision of financial planning help for students, AMA policy says.

Besides affecting medical students, the high costs of a medical education deter some who might otherwise aspire to be a physician, Dr. Wiley said.

“The American Medical Student Assn. strongly believes that all students should have access to medical education and there shouldn’t be any financial barriers,” she said. “It is an issue that ultimately is about ensuring that the nation has access to the physicians it needs. It’s really difficult when you’re graduating with more than $300,000 worth of debt to figure out how you’re going to pay your bills.”