The Effect of Medical Student Debt and Loans

It is a common discussion at medical school events: the debt that each of us

carries through medical school.
We discuss its amount, its effect, and plan our lives according to its burden. Or
do we? Surprisingly, research
has shown little relationship between debt and career choice.

How much debt do medical school graduates have?

Does a student's debt level affect career choice?
How can students manage their debt?
If the country needs more primary care practitioners, what can be done -
financially - to increase the numbers
of students choosing generalist careers?

STUDENT ORGANIZERS GUIDE

Students are eager to discuss the increasing cost of medical school, and to
discuss their personal opinions
and fears about the repayment of loans. Organize a discussion for students to
learn more about the facts of
student debt and its relationship to primary care. The discussion can be part of a
brown bag luncheon series,
or can be held after classes in the afternoon or over dinner. There are a number
of subjects that you can discuss:

Provide your speaker with some of the topics and questions that you would like
them to address during the hour
or two that they will be talking with the group and answering questions. Some
suggestions (depending on who you
invite) include: options for debt repayment, average debt in your school, average
length of years it takes
students to repay their debt, average starting salary and signing bonuses at local
private practices and HMOs.

Call the National Health Service Corps and Armed Forces prior to your meeting and
ask them to mail you
information about their programs. Find out if your state will repay medical school
costs for students who plan
to practice primary care in the state. Your office of financial aid will have
information about these programs
which you can hand out at your meeting.

Finding a Speaker
There are a number of speakers who can facilitate discussion about this topic.
Here are some ideas:

Invite a practicing generalist physician who is knowledgeable about the research

on student debt and who is
interested in discussing policy related to medical school cost. If the physician
has recently graduated from
medical school, you can discuss the way that they are paying off medical school
and its impact on their life.
Invite a member of your Office of Financial Aid to discuss student debt, ways that
students are managing their
debt load, and additional options for students interested in generalist medicine.
Invite professionals who hire generalist physicians to discuss their programs,
applications, and compensation.
Form a panel of representatives from the National Health Service Corps, the Armed
Services, and recruiters from
private practices and health maintenance organizations (HMO).

The Effect of Medical Student Debt & Loans: Does Debt Matter?
Medical school debt is not new news. Medical students, and therefore physicians,
have been shouldering debt
for years, paying off the loans they have used to finance medical school
education.

What is new news is the amount of student debt that our generation of students is
having to carry, and the
possible effect that it may - or may not - have on our career choice.

How much has student debt increased?

Median U.S. Medical Schools Tuition and Fees for First-Year Students in 1972-3:

$2,400 for private schools

$767 for in-state residents at public schools
$1,565 for out-of-state residents at public schools
Median U.S. Medical Schools Tuition and Fees for First-Year Students in 1982-3:

$10,813 for private schools

$3,250 for in-state residents at public schools
$6,383 for out-of-state residents at public schools
Median U.S. Medical Schools Tuition and Fees for First-Year Students in 1992-3:

$20,597 for private schools

$7,544 for in-state residents at public schools
$16, 739 for out-of-state residents at public schools
Mean level of Educational debt of indebted graduates in 1992:

19.5% of medical students had no debt

$47,088 for public schools
$69,479 for private schools
In 1982, 55% of all medical students had debt under $25,000; 25% between $25,000
and 49,999; 2.6% between
50,000 and $74,999; 0.3% over $75,000

Mean level of Educational debt of indebted graduates in 1982 (17% of medical

students had no debt):
$18, 994 for public schools, $24, 156 for private schools

In 1992, 13% of all medical students had debt under $25,000; 25% between $25,000
and$49,999; 22% between
$50,000 and $74,999; 21% over $75,000 (of those over $75,000, half are between
$100,000 and $150,000)

Why are we talking about this now?

Recently, student debt has become a hot issue as policy makers and educators have
tried to determine why
fewer medical students opted for general medical fields during the 1980s, choosing
instead to enter the
tertiary care sub-specialties. It is clear that students enter sub-specialties
because they are attracted
to the higher-pay and greater prestige, as well as the ability to perform more
procedures. And, while
research has not identified debt as a factor, popular opinion has held onto the
belief that debt also
influences career choice; indeed, between 1987 and 1992 median student debt
increased from $30,000 to $50,000,
and the percentage of medical students selecting the primary care careers of
family practice, general
internal medicine and general pediatrics decreased from 26% to 14.6%. Yet, much to
the surprise of many
medical students, only recently has the literature shown any influence of debt on
specialty choice, and
that relationship influences only a minority of students' specialty choices.

What does the literature show? Which students are effected by debt?
Numerous studies through the early 1980's demonstrated that student debt was - at
most - a weak factor in
determining specialty choice. Research in the 1990's has continued to assess the
relationship.

A study of 1992 medical school graduates showed that debt played little role in
determining career choice.
Eighty-one percent of seniors graduated with debt, the median value of which was
$50,000. Students who
chose the careers of family practice, general internal medicine, or the internal
medicine subspecialties
carried similar levels of debt as those who chose orthopedic surgery,
otolaryngology, thoracic surgery,
anethesiology, emergency medicine and urology. Students entering Ob/Gyn,
neurologic surgery, psychiatry,
and general surgery had slightly higher median debts ranging from $55,000 to
$60,000, and students entering
general pediatrics and radiology had slightly lower median debt of approximately
$47,000. However, within
the 21% of students with debt over $75,000, debt was shown to have a strong or
major influence on those
students choosing surgical (14%) or support (20%) specialties.

[Kassebaum DG, Szenas PL. "Relationship between indebtedness and the specialty
choices of graduating medical
students." Acad. Med. 67(1992): 700-7.]

The percentage of medical students with debt over $75,000 has increased from 0.3%
in 1982 to 21% of students
with debt in 1992. However, in the 1980's when student interest shifted to
specialty careers, the vast majority
of students had debt below $75,000.

A 1993 follow-up by Kassebaum and Szenas showed that, coincident with a 10%
increase in median medical
student debt (from $50,000 in 1992 to $55,000 in 1993), the percentage of 1993
graduates citing on the
AAMC Graduate Questionnaire that debt played a major role in their career decision
doubled from 6.2% in
1992 to 11.9% in 1993. However, during this same period, the number choosing to
enter generalist medical
fields increased, for the first time during the fifteen year history of the
Graduate Questionnaire. The
percentage of students interested in generalism increased from 14.6% in 1992 to
19.3% in 1993.
[Kassebaum DG, Szenas PL."Relationship between Indebtedness and the Specialty
Choices of Graduating
Medical Students: 1993 Update." Acad. Med. 68 (1993) 934-937.]

A survey of 688 fourth-year medical students in the 1993 graduating class examined
the factors that would
induce non-primary care practitioners into primary care fields. In the study, 27%
students had already chosen
the primary care specialties of family practice, general internal medicine, and
general pediatrics. Of the
73% choosing non-primary care fields, 10% indicated that they would switch to
primary care if there was a
higher income (averaging $180,000 per year); 11% would switch for better hours
worked (50 hours per week);
and 4% for loan repayment. Students planning Internal Medicine or pediatrics
subspecialties were more likely
to change for a greater income; students choosing "Other, non-surgical
specialties"(i.e. radiology,
anesthesiology) were more likely to choose for improved working hours. All of the
students who selected
loan repayment had loan burdens above $50,000. Of all students with loans greater
than $50,000, seven percent
said that they would switch for loan repayment.

[Rosenthal MP, Diamond JJ, Rabinowitz HK, et al. "Influence of Income, Hours
Worked, and Loan Repayment on
Medical Students' Decision to Pursue a Primary Care Career." JAMA. 271(1994): 914-
917.]

A 1992 survey of 102 graduating medical students indicated that those students
choosing non-primary care
fields were most influenced by income and the opportunity to work with new
technology, while those selecting
primary care fields were influenced by interactions with faculty advisors.
[Osborn, EHS. "Factors Influencing
Students' Choices of Primary Care and Other Specialties." Acad. Med. 68(1993):
572-574.]

How can medical students interested in generalist medicine pay off their debt?
There are a number of ways that medical students can pay off their debt. In
addition, as generalist physicians
become more essential to our medical system, it is possible that generalists will
be able to pay off loans
over a shorter period of time, because they will be receiving higher salaries.

1) Private Practice and HMOs: All of the generalist medical fields are highly
recruited. A 1994 Physician
Recruiting Survey of 41 medical specialties in 35 states showed that the eight
most frequently recruited
specialties are family practice, internal medicine, obstetrics/gynecology,
pediatrics, general surgery,
orthopedic surgery, cardiology, and psychiatry. What does this mean for you? The
recruiting survey showed
that these heavily recruited specialties receive:

Signing bonuses in 26% of searches, averaging $11,000

Salaries offered in 41% of the searches, up 45% from a year earlier
Income subsidies offered in 59% of searches (these subsidies must be repaid, but
often have a forgiveness clause)
Travel reimbursement in 99% of searches
Funds for continuing medical education in 84% of the searches
Currently, the average monetary offers for the general medical specialties: Family
Practice $131,000;
Internal Medicine $135,000; Obstetrics-Gynecology, $191,000; Pediatrics, $110,000;
General Surgery $165,000;
Psychiatry, $141,000.2

2) The federal government has two programs for students interested in primary
care: the National Health Service
Corps and the Armed Forces Health Professions Scholarships. For both programs,
students are obliged to give
one year of service for each year of medical school that the federal government
supports.

Number of Armed Forces Health Professions Scholarships in 1991-2: 2,880

Average Amount for each Armed Forces Professions Scholarship in 1991: $19,336
Number of National Health Service Corps Scholarships in 1991-2: 238
Average Amount for each National Health Service Corps Scholarship in 1991: $19,148
3) Many states offer reimbursement packages to students who are willing to spend
their practicing careers
in that state. Georgia, Idaho, Indiana, Michigan, New Jersey, Ohio, Pennsylvania,
Texas, and several other
states have loan forgiveness programs for residents who agree to serve in shortage
areas. Ask a member of
your Office of Financial Aid if this opportunity is available in the state where
you go to school or from
your home state.

Number of other non-Federal scholarships (with service commitments) in 1991: 203

Average Amount of these scholarships: $10,631
4) Residents and physicians have developed some additional tactics to pay off
loans:

Work in an emergency room - some residents work nights and weekends; some take off
years during their
residency to pay off their loans before continuing.
Locum tenens - Occasionally, community physicians need vacations or need to take a
medical leave. In these
cases, the private practice or community hospital will pay for a traveling
physician to come practice for
a few weeks to a few months. In addition to receiving higher pay than normal, it
as also a good way to see
the country and determine where you might like to practice.

Why do we have to deal with debt? Can't medical school be free?

In order to confront two of the greatest problems in medical access and education,
some leaders in the medical
field have suggested that a national service plan be instituted. Such a plan would
reduce educational debt
and, more importantly, immediately address the greatest problem in health care
delivery - placing health care
providers in underserved areas of the country. The following are two proposals.

" I would ... ask all young physicians to give two years of service to society, in
return for which tuitions
would be virtually eliminated and the medical schools would receive major
subsidies from government in lieu
of tuition payments by students....

.... To some, that plan may seem too expensive. But it is hardly that. In 1990-1,
tuitions and fees totaled
$242 million for state medical schools and $464 for private schools. In a country
that spends nearly a
trillion dollars annually on health care, this amount is by no means prohibitive."

- Robert J. Petersdorf, MD, former president of the AAMC

[Petersdorf, RG,"It's Report Card Time Again," Acad. Med. 69 (1994):171-179. and
Petersdorf, RG,"Financing
Medical Education: A Universal 'Berry Plan' for Medical Students." NEJM, vol
328(9), p. 651-4.]

"After four years of medical school, followed by the normal one year of internship
in general medicine,
family practice, general pediatrics, or general surgery, the path of the young
physician would divide into 1)
those pursuing generalist training and 2) those pursuing specialist training. For
the first group, the
internship year would be followed immediately by two years of advanced generalist
residency training. On
completing this residency training, these board certified or board eligible
physicians would serve two years
in the National Health Service at their earned, advanced level of rank or pay. At
the end of their service,
they would receive a stipend equivalent to three years of the cost of medical
school.

For medical school graduates pursuing specialist training, after their internship
year, their advanced training
would be delayed. They would go directly into two years of national health
service, during which their pay
would be at the comparable level of a public health officer. After these two years
of service, members of this
group would be permitted to apply for, and to pursue, advanced specialist
training. This group also would
receive a stipend at the end of their service, but equivalent to only two years of
the cost of medical school...

The financing of this plan is workable. The cost of paying 16,000 physicians per
year in an expanded national
health service would amount to only about .1% of the $1 trillion that economists
predict will be the annual
cost of health care within the next two to three years (assuming an average salary
of $40,000 per year).

-- Michael M.E. Johns, MD

[Johns, MME. "Mandatory National Health Service: An Idea Whose Time Has Come."
JAMA, June 23/30, 1993.
Vol 269, No 24.]

Resources for Students

State and Other Loan Repayment/ Forgiveness and Scholarship Programs and Financial
Planning and Management
Manual for U.S. Medical Students, both compiled by the AAMC, 2450 N Street, N.W.
Washington, D.C. 20037-1126.

The Debt Management Workbook: A Five-Step Plan for Successfully repaying Your
Loans. Prepared for the
Division of Student Assistance, U.S. Department of Health and Human Services by
National Medical
Fellowships, Inc., and Ruth Beer Bletzinger, consultant.

Informed Decision Making, Part I: Admissions Strategies and Financial Planning for
Premedical and Medical
Students, and Part II: Sources of Financial Assistance for Medical Students.
National Medical
Fellowships, Inc., 254 West Street, New York, NY 10001.

For information about the National Health Service Corps loan-forgiveness program,
call 800-221-9393.
For information about the Armed Forces Health Professions Scholarship Program:
Air Force: Call (800)531-5980
Army: Call (703)756-8105 [collect calls accepted]
Navy: Call (703)696-4584
For information about the Indian Health Professions: Call (301)443-6197.
For information about Locum Tenens programs, call EmCare at (800)527-2145;
Emergency Consultants, Inc.
at (800)253-1795; Locum Medical Group at (800)752-5515; and/or RePlace Med at
(800)736-8236.
References

AAMC Data Book, 1994.

Incentive Packages key part of physician recruiting, AMA News, July 11, 1994.
Jon Marcus, Debt: New Rules, New Challenges, On Call, the Magazine for residents
and fellows,
Vol 1, No.4, Winter 1994.

Copyright �2006 American Medical Student Association

(800) 767-2266 � amsa@amsa.org

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