Part Two of this series on physician compensation and my personal bottom-line addresses where all the difficulties begin: with medical school debt. Let's walk through the process of accumulating educational debt and estimate whether the published averages tell the whole story.
First, a few elements of my educational history that need to be mentioned up front:
- I entered medical school with no undergraduate debt.
- I was lucky enough to go to a public medical school--the University of California, San Francisco--which means my education debt is much less than it would have been if I had gone to a private medical school.
- I extended medical school from 4 to 5 years in order to spend an extra year taking electives in advanced pediatrics, obstetrics, rural medicine, and inpatient medicine as a test of my vocation for family practice. Most people will not choose to extend medical school in this way, but I have no regrets at having done so.
- Until I turned 30, I was required to submit financial information from both my parents in order to be eligible for grants/scholarships. I decided not to pursue this information from one of my parents for a number complex personal reasons. Once I turned 30, I was eligible for grants on the basis of my own financial information alone, so my last two years of school were funded more favorably than the first three years.
- There was one year in which I was not eligible for subsidized Stafford loans, which was the only source of funding I qualified for until I turned 30. Therefore, the relative ratio of subsidized to unsubsidized funds in my loan portfolio was less favorable than it would be for most medical students. (A discussion of subsidized versus unsubsidized Stafford loans follows.)
- Subsidized: Interest rate on the money borrowed is forgiven during the time the borrower is in school and for a 6-month grace period after graduation.
- Unsubsidized: Interest accrues on this portion of the debt during the time the borrower is in school and during the 6-month grace period after graduation, during which time no payments are due.
LOAN COSTS OF MEDICAL SCHOOL DEBT
- Loans: $93,500.00
- Accrued interest $14,280.00
- Private loans/interest $22,120.00
- Credit Card debt $17,900.00
- GRAND TOTAL $147,800.00
Just to put this total in perspective:
- It is far less than it would have been if I had gone to a private medical school. My friends who did left school with $200,000-$250,000 in debt.
- It is also far more than UCSF's estimated indebtedness for a medical student, which was closer to $50,000 in the literature they disseminated. I have already described the reasons why my indebtedness was greater (5th year, grant eligibility, parking tickets), but I would argue that the average medical student rarely achieved the estimated indebtedness published in UCSF's literature.
- It is enough to buy a house in some small towns, and enough for a 20% downpayment on a decent condo in most cities.
Money is one cost of medical education, opportunity is another.
- Total educational indebtedness after med school: $147,800
- Interest accrual during residency @ 5% (3 yr): $20,812
- Average annual salary during med school (5 yr) $0
- Average annual salary during residency (3 yr) $43,333
- Combined average salary over med training (8 yr) $16,250
- Total indebtedness after residency: $168,612
- Total educational indebtedness after 4 yrs $0
- Interest accrual $0
- Beginning salary out of college $25,000
- Ending salary after 8 years $39,000
- Average annual salary over 8 years $32,000
- Total educational indebtedness after 8 years $0
- $32,000-$16,250 = $15,750
- Eight-year difference = $126,000
- Medical school is expensive, even if you get a great deal at a public school.
- Cost of living during medical school may exceed financial aid estimates.
- Financial aid estimates fail to include private loans needed to cover excess costs in #2.
- Accrued interest during medical school AND residency is a significant source of medical debt.
- Opportunity cost of medical education--simplified here as salary/debt differential--is significant and should be addressed openly before deciding to attend medical school.