Medical School Debt Is a Common Problem (2)

Medical School Debt Is a Common Problem

Borrowing money to pay for medical school is extremely common. It’s so common that the only way to attend medical school, unless you are incredibly wealthy, is to borrow the money to pay for it. That includes enough money to cover living expenses for the entire four years that you are in school, in addition to borrowing money for tuition.

There is no work-study available because medical school is such an intensive program. As far as getting a part time job– the coursework is too rigorous.

Medical School Debt Is a Common Problem (2)

To become a doctor is essentially a full-time job, no matter how you look at it. Time is short, stress looms large, and focusing on learning what you need to have a job that involves saving lives is not a small endeavor.

Regardless of what school you attend or how good a student you are, while you are in medical school, you will eat, breathe, and live medical school.

If you are finding yourself with a six-figure student loan debt to go along with your medical degree, know that you are not alone. Know, too, that you do not have one reason to be ashamed of this. There are some important reasons why the majority of medical students in the United States graduate with the kind of debt they’ll have to spend the rest of their lives paying back.

Our goal with Financial Residency is to demystify the student loan process, help you take control of your finances, and pay for medical school in a way that will help you create an ideal life. Understanding how and why medical student loan debt is as prevalent as it is is a great first step toward taking back ownership of your finances and moving confidently forward building your financial future.

You’re Not The Only One Figuring Out How to Pay For Medical School Debt

As mentioned above, the only realistic way for most people to afford to attend medical school is to borrow every penny needed to cover tuition and living expenses (including food, rent, clothing, and transportation) for four full years.

The average medical school debt is $190,000. Considering that the average home price in the United States is about the same, you surely see the problem. Newly minted doctors essentially graduate medical school with a mortgage payment to make only they have to pay it back in ten years instead of thirty, and they don’t have a house to show for it.

Why Do People Do It?

There are many reasons why people choose to attend medical school, despite the cost.

If you know that you will graduate from school owing the same amount of money, if not more, than the cost of a house, why go that route at all? Why choose a career where the training is so expensive?

Job Security

You are probably familiar with the expression that there are only two true guarantees in life: death and taxes. What is also true is that we will always need health care, and for that, we will always need doctors. While the demand for certain specialties might change, for example, a greater need for doctors specializing in geriatric medicine as our lifespan continues to increase, the need for doctors will never go away.

So, there is a sense of job security both professionally and personally in medicine because you know going in that you will be employable, be it through a traditional hospital or medical practice, or if you decide to make your own work and start your own practice.

It’s a Calling

For many, becoming a doctor is about more than training for a profession. It’s about realizing your vocation. Healing the sick, helping people stay healthy, and improving quality of life are all very noble reasons to go into the field of medicine, and society is lucky for having people who are so dedicated to this calling that they are willing to put in the work and sacrifice that is necessary to earn the title of medical doctor.

To help make the world a better place

Medical School Debt Is a Common Problem (2)You have probably also heard the adage that it’s important to be the change you want to see in the world. There are lots of ways to do that, across many professions and through volunteer work as well. But, it cannot be denied that as a doctor, you will be able to put your hands on people who truly need your help, and offer them care. You won’t be able to fix all of the problems, surely, but you might mend a broken bone, transplant a heart, remove cataracts, or all sorts of other amazing things.

To helping friends and family

It’s not unusual for people to go into medicine looking forward to being able to guide or advise family members or close friends. While you likely won’t treat people outside of your office, you can offer peace of mind, or be a sounding board for a variety of issues.

To Have a Leadership Role

There are many jobs you can have as a medical doctor other than treating patients in a hospital or private practice setting. Humanitarian work, directing a nonprofit, hospital administration, and teaching are all roles available to someone with a medical degree. These are all positions that provide the opportunity to lead others and to execute one’s own vision for making an impact.

Are There Ways To Earn a Cheaper Medical Degree?

You likely already have the medical degree and the debt to go along with it. But you are also probably someone who wants a better understanding of how borrowing for medical school works. Or maybe you are at the beginning of your education and are trying to decide if medical school is right for you.

We at Financial Residency firmly believe that medicine is a calling, and that regardless of your chosen profession, there is no reason for so many people to graduate so buried in debt with so little financial counseling available.

While with many things in life you get what you pay for, when it comes to medical school, there are some options that can help you earn that degree without the pain of excessive loans.

  • Consider a state school instead of private – We know there is a lot of cache around a “name” school and that those schools are typically private and cost three times as much as a state university. But, you know what your diploma will say when you graduate, right? Doctor. As long as you work hard to earn that degree from an accredited institution, you can drastically minimize your debt by staying in-state.
  • Consider geography – Even as an out-of-state student, in some states, like Texas, your tuition and living costs will be far cheaper than any East Coast private school
  • Consider military service – The military will pay you to go to medical school, though there is a cost in a different sense: the cost of time. Earning your degree through the military means a commitment to spending your medical career serving as a doctor in the military. This is a noble calling for many and can be a great option. Just make sure you do your research before signing up.

Why Does Medical School Cost So Much?

According to the Journal of Biomedical Research, covering the costs of educating doctors costs $100 billion worldwide every year. This is due to in large part to supply and demand. The demand for medical school slots is very high, with limited supply available. It’s not as if schools can go out tomorrow and create twenty more slots. An increase in enrollment has other attendant costs and considerations, such as physical space, faculty availability, staffing, and so forth. An overcrowded medical school does not make a great medical school.

Another reason why medical school costs so much is that schools overinvest in resources to attract the best candidates. There is a competition of sorts to be the best, and to have the newest facilities and the most experience (read highest paid) faculty. Guess who pays for this? You do.

Keeping things shiny and new is also the result of board members feeling motivated to keep costs high to maintain or increase the perceived value of the medical program. The high costs also provide money to fund specific research interests that furthers the agenda of the board of trustees as well as the institution. These things are not necessarily bad. They just are not necessarily making the cost of medical school more affordable for anyone.Medical School Debt Is a Common Problem (2)

Why Does The Debt Mount Up?

So, here you are. You have a medical degree and a large debt to repay. There are probably plenty of people in your life who think that, because you’re a doctor, you can just pay those loans off in one fell swoop and move on to living in a fancy car with a fancy house. Physician lifestyle creep is real.

Don’t judge because because most people don’t know better.

To make attending medical school a reality, you likely didn’t work much, if at all, as an undergraduate because you took a challenging course load and studied for the MCATs.

You didn’t work during medical school because there is barely enough time for sleep let alone a job.

Meanwhile, the interest on those loans kept on compounding, which made the bottom line get bigger and bigger, and farther and farther away. When you borrow for school, you don’t just borrow $25,000 (or more) per year. You borrow $25,000 plus interest, which grows each and every month.

Then, you graduate, and earn around $57,000 a year, which is the average starting salary for a resident. You’ll be a resident for 3-7 years, depending on the specialty you chose. During that time, you work up to 80 hours a week, sometimes with 16-28 hour shifts.

Forget about a second job, forget about putting money toward the principle on your loans, and for that matter, forget about your loans for pretty much the entire time you are a resident. You simply have no choice but live in the now and not in the future. You’ll be lucky if you can get enough sleep and proper nutrition. Forget about paying down those loans.

Which means that for the next 3-7 years, that interest increases every month while you defer payment. Deferral helps you maintain a reasonable lifestyle in the short term, so you can pay rent and buy groceries, but does not allow for the $1000+ a month you would have to pay to try to make a dent in those loans. And so the debt gets bigger.

So, Now What?

Your residency is over and you finally have a decent salary. Only now, your loans have compounded. Every month the numbers grow faster than you can get behind them.

The first thing you should do is also the most important thing: accept that this is not your fault.

Did you borrow money? Yes.

Did you know that medical school would be expensive? Yes.

Did you know you would have to pay the money back some day? Yes.

Did you know just how long it would take, how big the payments would be, or how the compounding interest would affect you? Most likely, you did not.

This is because that American schools do not, at any point in the curriculum, teach financial literacy. There is no time in your education when you would have had a teacher cover concepts like budgeting, compound interest, borrowing money, credit scores, or how to live within your means.

Medical School Debt Is a Common Problem (2)

What we do have is a culture that praises higher education and pushes students toward it. You were probably admired for wanting to go to medical school. You likely worked your tail off all through grade school and especially high school and probably made a lot of sacrifices with your personal and social life while in college while you studied organic chemistry, and microbiology, and prepped for the MCAT so you’d have a shot at competing for a medical school slot. Who had time to stop and learn about keeping a budget?

You were probably also told along the way that borrowing money is easy. You take out a loan, go to school, become a doctor, make lots of money, and pay the money back. Easy peasy, right?

Then, you, and only you, have to live with the consequences of that lack of information. And you discover what those monthly payments actually look like and how hard – even impossible – they are to make while on a resident’s salary. So you defer payment on them due to financial hardship (oh, the irony of having to declare financial hardship while working as a doctor), and meanwhile, the numbers get even bigger.

Then you’re finally done with your training and maybe you have to move to a new location for your new job, and you finally have a bit of financial breathing room, but you need a place to live and might like to buy a house, only your credit is shot because of your loan payments. Or you would like to start a family (or have already started a family) and have your children’s college educations to start thinking about. When does it end?

I don’t tell you all of this to stress you out. You are living with the debt and so already have plenty of stress. I’m painting this particular picture to show you that you are not alone. This is an all-too-familiar story for so many people in your shoes, not just with medical school but with student loans in general.

So, don’t let anyone shame you into thinking you should have known better. Those lenders are the ones who should have known better before lending sums of money like this without providing a crystal clear picture of what will happen next, month over month, year over year, until it was repaid. They should have given you a chart showing how interest will accrue, as well as what you will owe each month, starting when and for how long.

They should have given you a crystal clear picture of exactly what it would take to repay that money.

Yet, they did not do that because if they did, people might realize they can’t afford the loans. That might lead to people making alternate choices so they don’t borrow as much money, causing the lender to lose out on five or six figures’ worth of interest per loan. The student loan industry is not designed to help students earn an education. It’s set up to help lenders capitalize off of students’ backs and ignorance of the system.

The good news is that there is a way forward from here. Just because you have this debt, doesn’t mean you have to let it take over your life and hijack your financial future.


Ryan Inman