No More Subsidized Loans

This may not apply to many of the attendings who read this blog, but for the pre-med and medical student audience, I hope you didn’t miss this news item a few weeks ago.  One of the consequences of the partisan bickering in Congress this Summer was the bipartisan agreement that graduate and professional students will no longer have access to subsidized student loans.  They’ll still be able to get unsubsidized Stafford loans, but combining this development with rapidly escalating undergraduate and medical school tuition and fees, will have profound consequences for future doctors.


This all begins one year from now, in July 2012.  Consider that a medical student used to be able to get up to $65,000 in subsidized loans at 6.8%.  Let’s assume he was able to defer the interest on those loans throughout medical school and residency, then pay them off over 10 years as an attending.  How much more will his medical school cost him with this change?  Previously, the graduating resident would have $65,000 in loans.  Now, he has $93,590.  Over the next ten years, the total of his payments would have been $89,762.  Now, the total of the payments would be $129,244, a difference of $35,654.  According to the article, this will save our government $18.1 billion.  While I’m in general all for a smaller government (although it turns out the money saved is going to be used for Pell Grants instead, which only some medical students qualify for, and even those who get the full $4K award would be better off with the subsidized loans), I’m not really sure this is where we want to save our money.  When combined with higher amounts of unsubsidized loans already due to skyrocketing tuition, and lower physician reimbursement, this could be a disaster for future access to care as more physicians are forced out of lower-paying specialties and areas of the country due to student loan burdens.