Borrow or Serve? An Economic Analysis of Options for Financing a Medical School Education

Newswise — Bethesda, Md. - An American medical education is expensive. The median cost of attending a four-year, public medical school is more than $240,000 and the median cost of a private medical school education is more than $314,000. Because few students are wealthy enough to pay cash or fortunate enough to secure a no-strings scholarship, most take out large education loans. As a result more than four out of five medical students graduate in substantial debt.

To help prospective medical students understand the long term fiscal consequences of borrowing versus other major options for financing their education, a team of federal officials and a health economist modeled the 30-year economic impact of self-funding, taking out a federally-insured loan and attending medical school with the support of one of three types of national-service scholarships—the National Health Service Corps, the Armed Forces’ Health Professions Scholarship Programs or attending the Uniformed Services University of the Health Sciences (USU). National service scholarships cover all costs of a student’s medical education in exchange for four or more years of national service after residency training.

The results of this analysis have just been published in the latest web edition of Academic Medicine, the flagship journal of the Association of American Medical Colleges (AAMC).

Key findings include: • Over time, the value of a medical degree offsets its high up-front cost. However, it can take years, even decades for medical students who borrow to catch up with those who avoid taking on debt.

• Debt avoidance, whether through self-financing or a national service scholarship, confers substantial economic benefits. Students who attend medical school with the help of a national service scholarship start their internship and residency training $300,000 to $400,000 ahead of peers who finance their medical education with loans.

• The benefits of debt avoidance last longer than commonly realized. It is widely thought that because doctors who enter private-sector practice earn more than their counterparts who serve in the military or U.S. public health service, students who borrow quickly catching up and soon surpass the earnings of classmates who attended with the help of a national service scholarship. In fact, the length of time it takes to reach economic parity depends a lot on the doctor’s choice of specialty. For example, private-sector orthopedic surgeons are paid much more than military orthopedic surgeons, so economic parity is reached roughly 4 years after completing residency training. However, for most specialties, including general surgeons, ophthalmologists and other comparably paid specialists, economic parity may not be reached for 20 years or longer. • National service scholarships are particularly worthwhile for students interested in primary care (e.g., general internal medicine, family medicine and pediatrics). That’s because military and public health service doctors earn salaries roughly comparable to those paid in the private-sector. As a result, borrowers never catch up with peers who avoid debt by securing a national service scholarship.

Dr. Art Kellermann, dean of the School of Medicine at USU, and a study co-author, notes that the study’s findings affirm that a medical degree is well worth the cost in the long run, but the benefits of debt avoidance in pursuit of that degree are both greater and longer-lasting that commonly realized.

“The Armed Forces Scholarship Programs (Army, Navy and Air Force), the National Health Service Corps or attendance at the F. Edward Hebert School of Medicine at USU is a win-win-win,” Kellermann said. “Medical students win because their tuition is paid and they earn a stipend or salary to help with living expenses. The sponsoring services win by attracting dedicated men and women who are prepared to serve their country or a physician shortage community, and our nation wins because these programs provide a doorway for many students who might not otherwise become doctors.”

For many years, half of America’s medical students have come from the top quintile of household incomes, while only 5.5 percent have come from the bottom quintile. So, Kellermann and his fellow authors believe it’s important for policymakers to consider options to make medical school more affordable. That will help attract a more diverse population of aspiring physicians and, therefore, a more diverse health care workforce.

Economics are only one of many factors that medical students consider when choosing a financing pathway. The authors note that National Health Service Corps scholarships are restricted to students willing to commit to primary care and prepared to practice up to 4 years in a federally-designated health professions shortage area, so students interested in becoming specialists are unlikely to apply. Likewise, students averse to military service are unlikely to consider a military scholarship, regardless of the economic advantage of doing do. Conversely, the authors note, “debt-averse students and those drawn to the ideals of national service may find [National Service Scholarships] attractive.” “Borrow or Serve? An Economic Analysis of Options for Financing a Medical School Education,” was authored by a group of USU faculty members including: Dr. Arthur Kellerman, dean of the F. Edward Hébert School of Medicine and corresponding author; Dr. Jerri Curtis, associate professor and associate dean for Graduate Medical Education; Dr. Charles Rice, president emeritus, and Dr. Gail Wilensky, Board of Regents member. The lead author of the study, Dr. Mircea Marcu, is an economist at the U.S. Office of Personnel management. Dr. Christine Hunter, Chief Medical Officer at OPM and an adjunct assistant professor in Preventive Medicine and Biostatistics at USU, also coauthored the study.

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About the Uniformed Services University of the Health Sciences The Uniformed Services University of the Health Sciences, founded by an act of Congress in 1972, is the nation’s federal health sciences university and the academic heart of the Military Health System. USU students are primarily active duty uniformed officers in the Army, Navy, Air Force and Public Health Service who receive specialized education in tropical and infectious diseases, TBI and PTSD, disaster response and humanitarian assistance, global health, and acute trauma care. A large percentage of the university’s more than 5,500 physician, 798 advanced practice nursing, and nearly 200 advanced practice dental alumni are supporting operations around the world, offering their leadership and expertise. USU’s nearly 1,500 biomedical sciences, public health, clinical psychology and health professions education graduate program alumni are committed to excellence in research, health care and education. The University's research program covers a wide range of basic science and clinical areas important to both the military and public health. For more information about USU and its programs, visit www.usuhs.edu.