By Dr. James M. Dahle, WCI Founder
Many of my readers wish they had read my book in med school or even earlier. Well, I had a recent email from a pre-med who is going into this with his eyes wide open. I thought our exchange contained some worthwhile insights.
The High Cost of Medical School Dilemma
Q.
I was just recently accepted to medical school after not getting in my first cycle. I was ecstatic to finally become accepted; I am thrilled to be entering the field of medicine which has been a dream of mine for many years! This brings me to the dilemma: the cost. It is looking more and more likely that the only school I will be accepted to has a total Cost of Attendance (COA) of, on average, $83K per year ($57K in tuition alone). This is staggering to me. And because of how tough admissions is, I have essentially no chance of attending a cheaper school. I should also mention I am very satisfied with the school I was accepted at. In addition, this school is in a low cost of living city. I have $15K in undergrad debt, which I am thankful is not higher.
I was watching some of Dave Ramsey's videos, and saw how he reacted to some of these people with massive medical school loans. He reprimanded them, and I know this will be me in a few years. Yet, I don't even have a choice on the matter. It got me thinking seriously about the finances of all of this. I am going to become a physician, this I am sure of. But what tips would you recommend to someone who is looking at this staggering cost of attendance? I feel like if I were to ask Dave Ramsey, he'd tell me either go to a cheaper school or to give up on becoming a physician because the price is so ridiculous. Both of these options are not possible for me.
I've looked into military medicine, but I have heard time and time again that to join for the financial benefits is a poor decision. I am very hesitant to join the military for purely financial reasons. Moreover, I am not sure which specialty I am interested in; I am drawn towards surgery or a surgical subspecialty but I am not ruling out primary care either. Of course, with this debt load, I believe I would pushed away from primary care, as many medical students today are. Outside of what is mentioned in your book, do you have any other suggestions on what I can do when looking at such a massive COA for attending medical school? If you were looking at the same costs, what would you be thinking? Honestly, the $200K average indebtedness for private medical graduates seems like a myth; most COA at private schools, regardless of location, appear to be $70K+ a year, at the minimum.
A.
First of all, you do have a choice. You can choose to apply again and try to get into a cheaper school. You can also choose a different career. You only have “no choice” if you operate under the assumption that you must go to medical school. I'm not saying it is a bad choice you are making, but don't pretend you have no other choice. In a very real way, you are now making your bed. At some point in the future, you WILL have to lie in it, probably for the next 1–2 decades at a minimum.
Problems with the Graduating Med Student Survey Data
Remember that $200K figure is for people who graduated last year and includes lots of people going to cheaper schools with more family support than you. That is the average for all medical students who borrowed money. That doesn't mean they all borrowed the whole cost of attendance each year. That end of med school survey generally includes quartile data as well which gives you an indication that there are many med students with much larger debts. In addition, your figure will be 5 years further down the road. That means it will include higher tuition than the currently listed tuition and interest accrued during medical school. But wait, there's more. By the time you finish training, the debt will have compounded over 3–7 more years where you won't be able to even cover the interest. To make matters worse, I suspect the data is bad for two reasons. First, it's just a survey. It doesn't require med students to actually prove how much they owe. They're just asked about it, and I suspect many don't know the exactly total and estimate low. Plus, most of them aren't even done with school yet when they take the survey. They still have a few more months to spend borrowed money and let their now huge debt compound.
Debt-Free Medical School?
I've never heard a call like this on the Dave Ramsey show where someone called before taking on med school debt. I'd be very curious to see what he would say. It simply isn't the same as undergraduate. Undergraduate can be done debt-free. The same cannot be said for med school. I do not think borrowing to pay for medical school is some huge sin and I think Dave Ramsey would be a fool to advocate that position. But you are somewhat in control of how much you borrow (by choosing the cheapest school you can get into and living on as little as possible) and very much in control of how much you earn down the road (through specialty and practice choice).
Financial Implications of Military Service
Regarding the military, if you can't figure out a way to get out of debt by 4–5 years out of residency, you'll come out ahead going into the military via HPSP (at least student loan wise) since your time debt will be paid 4 years out of residency. The more expensive your school and the more poorly paid your specialty, the better financial deal it is. That said, you may be very miserable for four years if you do not have at least some desire to be a military doctor. You especially need to understand the military match and how it differs from the civilian one before you sign up. But it's not like it is impossible to be miserable practicing outside of the military, especially if you still owe hundreds of thousands a decade out of residency and can't cut back at all due to having that debt monkey on your back.
You Don't Get a Pass on Math
As far as what to do, there is no magic here (outside of Public Service Loan Forgiveness, which may or may not be there 15–20 years from now when you will need it). The more you borrow, the more you will owe and have to pay back. You can minimize how much you borrow by trying to work as much as possible, tapping family resources, spending as little as possible, taking the loans as late in the school year as possible, etc.
How Long Will You Have to Live Like a Resident?
If your dream is to practice medicine no matter what the financial consequences, you will likely be able to achieve that. As far as practicing medicine AND building wealth, it is really just a matter of how long you will need to live like a resident after residency before you can start to grow into your income. If the average student has to do it for 2–5 years in order to be financially stable, perhaps you will have to do it for 5–8 if you rack up huge debt and choose a poorly paid specialty.
I'm not going to tell you it's okay to just borrow whatever the heck you want and that you'll be able to pay it back while living like an attending no problem because it is a problem for more and more medical school graduates each year. Is medical school still a good investment? I think so as long as you can keep your debt to attending income ratio to less than 2X. At a likely $400K–$500K in debt at the time of your residency completion, you're going to be close to that with many specialties. Tread carefully, do the best you can, and I think you can make it work.
What do you think? What would you tell this student and his classmates? Comment below!
You really need to first ask yourself why you want to become a doctor so badly. Think long and hard about this one. Seriously. Why? How much time have you spent shadowing physicians or working in a hospital? Because I’m pretty sure if you spent more than 5 minutes with any current physician you would see how miserable they are.
If you enjoy doing anything other than work then I STRONGLY recommend you reconsider your decision to go to medical school. You will have no time for family, relationships or hobbies. You will watch life flash by as you do nothing other than work, work, work with less and less control over how to treat patients.
I’m sorry to burst your bubble, but your dream is a nightmare. Don’t do it. By the time you get to this realization, you are too far in debt and have no way out. You’re essentially a slave. You’ve been warned.
I think that’s a little bit of an overstatement. I agree that the path to becoming an attending is arduous and expensive. However, you do have control over how much you want to work. This first comes with specialty choice…I have a typical full time schedule for my specialty and that means working 40 to 45 hours per week with no nights or weekends, and have generous vacation. For others in more demanding specialties, it could be the decision to work part time.
I do wonder what I will someday say to my kids when they start thinking of careers- I don’t want them to be overworked and unhappy, but a lot of other stable, highly paid careers (engineer, CPA, law) are many times making full time what a physician can make working part time
Wow. That’s depressing. I hope you’re reading lots of FIRE blogs (and looking for a different job at the same time) if that’s really the way you feel about your career/job.
I agree with WCI that those average debt reports are misleading – an informal survey of my intern class (this past year) showed that 1/4 of us had no debt at med school graduation. There are the MD-PhDs, military, people with rich parents, people who switched from finance, people with spouses who have high-paying jobs, people who got scholarships (when I was applying I got full ride scholarships to two US med schools, so they do exist! – but much more likely for the student who scores >40 on the MCAT).
In terms of this pre-med student, I think it’s going to have to be a personal decision. How old are you? Do you have a spouse/kids? How long are you willing to live on very little? I was able to live in NYC on a 33k per year stipend (AND managed to max out the Roth IRA every year), but that involved roommates and not buying alcohol. And not having a kid. Now, as a resident with 2 kids, even a combined 100k/year seems not enough. So $400k debt is certainly doable if you’re willing to live like a grad student (yeah, don’t even think about living like a resident), but if you have any doubts about that… maybe reconsider?
My advice:
If you really LOVE medicine AND are completely content living a middle class lifestyle with spending of around $50k/year, then go for it. You can pay off 400K of debt within 10 years on essentially any physician income, even an income of 150K.
Conversely, if you are not sure if you love medicine, then don’t do it. The challenge here is that it is often difficult to determine whether you really love medicine until you’re in your third year of medical school. If you find out you don’t like medicine and you have big loans, you’re going to feel like a slave.
Additionally, if you want to live a luxurious lifestyle with spending over 100K per year, then don’t do it. There’s no guarantee you will end up in a lucrative specialty. If you end up in a lower paying specialty, you will be living on 50K/year for two decades in order to pay off your loans and save for retirement.
Best wishes, and good luck!
the funny thing about this conversation is the premeds don’t have any idea if they love medicine or not.
the only people i meet who live on 50k as attendings are on this forum. almost everyone i meet IRL drives a nice car.
Yes, I agree that most pre-meds do not truly know if they love medicine. If a pre-med followed around (and took call with) a medicine intern every day for a month, that could by a very eye-opening process.
OP, I think my story was pretty similar to yours:
I did not get accepted anywhere for a cycle, then was accepted, by the skin of my teeth, to only one med school, a private institution with tuition ~40K (7 years ago). I probably had a slightly better finances: no undergraduate debt, my parents provided cost of living in a low-cost city – my apartment was (at the time) $615/month for two bedrooms which I shared with a roommate. I also was sure I didn’t want to do military and felt drawn towards a surgical specialty. I made it out with ~210K of loans. You will probably finish closer to 350K.
Be realistic about what specialties you can really match into, and what kind of job opportunities will provide adequate income to dig yourself out of debt in a reasonable time frame. Do not think you’ll be a plastic surgeon in New York/Chicago/LA. Go in with the expectation you will match in a non-competitive specialty, and pay your dues working in a podunk city/town in South Dakota, that will pay you a high salary or offer debt repayment assistance.
Treat medicine like vocational training and not some vague “higher calling” the school will sell you on. You will eventually realize that medical school is a game to set yourself up for the giant crapshoot that is the Match. Once you match into a * categorical * residency, it’s generally smooth sailing – you probably have enough financial wherewithal (being a WCI reader, among other traits) to do well.
You need to avoid, at all cost, the the nightmare scenario: rack up 300K of debt, then fall through the cracks by not matching. Google “not a doctor, just an MD” to get a sense of that.
What was the question in medical school? “What do you call the lowest ranked graduating student? A doctor”
No one cares if you got into one or a hundred medical schools. You may need to be AOA to get into the top residency program at the top institution. Ultimately, none of it matters.
A major lesson that is taught through WCI is that there is more than one way to make money as a physician. Everyone here has some sort of side job. To supplement their income or to become financially independent.
If I had to re-do Med school, I would have learned more about finances, i.e. What certain specialties make. Remember though, that it is cyclical. When I graduated, no one did anesthesia because it was supposed to “die.” The top dogs became Cardiothoracic surgeons. Now, that field is dying.
Go to medical school. Don’t join the military for the money. Take out a spreadsheet and figure out payment plans for your debt.
You will be fine!
Lots of really great comments. I have tremendous sympathy for the emailer and every young college student facing this kind of analysis. It just shouldn’t have to be this way for bright, motivated young people wishing to join a noble profession. I’ll just chime in briefly to add what comes to my mind:
The policy neglect over recent decades regarding medical education in this country has burdened students with a tremendous amount of financial and psychologic anxiety (on top of the stresses that naturally coexist with training and working in medicine). At the same time the internet now includes an abundance of articles, forums, and comment sections effectively giving pre-med students a very real picture of what becoming a physician will demand, so students today would seem to be well-informed market participants. (Some of the awful personal finance stories WCI posts on this site are heartbreaking cautionary tales.) Classical economics generally operates under the assumption that actors behave rationally in their best interest. So what you would expect to follow is some sign of weakening of the market for these expensive training spots.
But there is still a pervasive impression that all doctors are fabulously rich, and educational loans are easy to get and typically well-regarded. And so even as bad as the situation is for young would-be doctors in 2017, there does not seem to be any consequences to the system. The debt burden rises, the pay decreases, the mindless box-checking get more pervasive, and still the line to get in the club is around the corner and down the street. Schools fill their spots no matter the price. It makes you wonder – what more would have to happen before the trainee pipeline were to be noticeably impacted? $600k average debt burdens? 15% interest rates? FPs making $70k a year? Because if there is never any public policy enacted to address these systemic issues, the market is the only determinate in the equation, and the market doesn’t see a problem.
For whatever it’s worth, I’m a current PGY2 resident.
To any pre-med anxious about debt who has worked his or her way down to this point in the comments: if you’ve gotten so far as to get into medical school, and it’s what you really want to do, just go. Really.
If you’re on this site and have read this far, you probably already know the caveats to that statement. You’ll have to work extra hard in medical school. You’ll have to keep future earning potential in mind when you select your specialty. Unlike your more fiscally sound friends, you won’t be able to afford big mistakes with budgeting, taxes, or retirement saving. You probably won’t be able to live in an expensive city, in an expensive house, drive an expensive car, send your kids to private school, pay for their college, or retire early with millions in the bank unless there are some extenuating circumstances. Maybe you won’t be able to do any of those things. But if you’re ok the probability of living a middle-class lifestyle in what others consider to be an undesirable location, I think you’ll be just fine.
With that said, this country and our profession have a big problem. So long as 22 year old college graduates are one e-signature away from taking out loans up to a school’s cost of attendance, medical schools will have very little incentive to control costs. Band-aid measures like PSLF are just that. They help individuals, but in my view seem to increase moral hazard by actually incentivizing students to borrow more. If you knew that your repayment would be tied to your income and taxpayers would foot the rest, why not take every dollar someone would give you? Because they’ll go away, I know, but it’s tough to expect people to assume that.
I predict that medicine will be faced with the same dilemma that law encountered several years ago. At some point, only the top students who match into well-paying specialties will be able to predictably afford the cost of attendance. In law, this happened after a precipitous decline in job prospects. In medicine, the problem is more insidious. Where’s the tipping point? $400k, $500k, $600k in debt? I have a feeling that we’ll find out soon.
Via email:
Great advise doctor. I believe that for most of us practicing medicine/dentistry see it as much as a calling as a profession. As many professionals have learned the hard way, getting a degree does not equal wealth. (thus the popularity of WCI)
Regarding Dave Ramsey, his motivation and debt reduction strategies have changed my life for the better. Therefore, living within your means is always a good idea. If you listen to Dave, he talks about how high income earners aren’t immune from debt, but when they get themselves in to trouble they have a “bigger shovel” to dig themselves out.
Finally, I think the fact you are considering these issues at all during this stage of your career shows your awareness of the financial pitfalls. But just like professional school, awareness that there will be hardwork ahead does not negate the ultimate reward of the end goal. Keep your dream going, but as the doctor recommends, be cautious of the challenges ahead.
Take Care.
Dear Pre-Med student/ Future colleague,
I hope you get to read this, too many comments already.
No matter what you do, life will always be full of dilemmas. Big ones, and small ones. This is just one of those dilemmas – You will always make decisions that will look stupid in the present, or retrospectively. Never let the fear of making a wrong decision stop you.
Some examples-
1. I used to buy/sell individual stocks- lost money, and that loss taught me more than any book could teach me, and I learned about myself. The same books existed before but I wasn’t ready to learn from them.
2. I was going to leave medicine to pursue an administrative career, and then came back, and I have fun working in Medicine now. I lost time in that pursuit but it was so totally worth it. Again, I learned something about myself and it helped me grow.
3. We earned some money on the last home we sold, and this time we are going to lose some. I can’t afford to retrospectively look at these things and feel too smug or too bad about it. Market forces are deciding these things and not me. As long as we are healthy, it’ll all be okay.
If you hit a problem in life, there’s always someone who knows the solution – learn to find that person. Apply the solution with action. Sometimes it will cost you money – I took extra training in many kind of therapies before I felt I could practice well and have fun. Difficult patients? There are people who can teach you how to handle them. Difficult boss? You can learn to manage, or learn to get out before it hurts you. Difficult finances? You can make a short term plan to overcome them. You can always pivot – you are not cement that gets set in one place and then can’t move.
It’s common in the field of Medicine to complain and whine. We have a culture for it and it saps emotional energy. Sermo is such a dark place, I didn’t feel like touching my laptop after about a week of going there. It is common for 4 Doctors to sit and complain about EMR, instead of asking the fifth one who is doing just fine but doesn’t take part in the pity party. You need to learn to find that fifth one and get mentored by that one. Nobody gets anywhere in Medicine without good mentors.
High earners exist in each specialty. You need to learn to find them and learn from them. You won’t likely find them in academia. Be prepared to move. There was a Psychiatrist on one of these posts talking about earning more than half a million per year- I will vouch for it- it’s not at all difficult for a Psychiatrist to earn even more than that. And you can do it too as long as you are willing to find that Psychiatrist and learn from them.
You already sound thoughtful, and searching for solutions – keep up this search.
insightful response. I appreciate it as someone who is about to start school and head out on this long journey.
I will certainly agree that you do have a choice but I am sure all on this forum shared that burning desire to be a doctor. I don’t recommend going to military for money only, lace it with some passion or You’ll wear out quick.
Be strategic, borrow less maybe? Work more if you can. Whatever the case you can always live like a resident for a long time to get out of debt.
I listen to dave a lot too and he has some valid points but I don’t know how else to go to med school without debt unless you have plenty of financial support.
I attended a Carribean medical school and got a scholarship for $1000 per semester for my grades, then worked in the library part time as well. 2 yrs out of residency and recently student debt free. It’s doable if you truly live like a resident after training and get aggressive with your debt.
I don’t agree with people saying the OP should reconsider just because he didn’t get in to med school during the first cycle (note he said first cycle not after years of trying). While it always helps to be a naturally good test taker work ethic is at least almost as important in med school. Also, while he may not do well enough to match into something like Ortho, Internal Med has a high match rate and hospitalist positions are now offering salaries in the same range as EM and Anesthesia.
Where are hospitalists paid the same as EM and anesthesia? Certainly not the case in my neighborhood or in national surveys.
That said, I’ve been far more impressed with intraspecialty income differences than with interspecialty differences.
agree in my neck of the woods hospitalists work their tail off to get close to EM
My husband is a graduating IM resident (doing fellowship not hospitalist) but he gets postcards in the mail and emails almost daily advertising hospitalist positions for >$300k base pay to work 7 on, 7 off, with additional opportunities for moonlighting. Hasn’t looked in to these since he’s doing fellowship but they seem abundant. I’m sure they are all small, midwestern towns/cities.
I wonder what the turnover is in those jobs.
High I’m sure. My impression is that there are lots of grads taking these jobs for a year or two to pay off debt/save/travel for a bit before pursuing fellowship or their long term career. The people I know staying on as hospitalists where we train will be working a lot of nights, but I believe their base pay is around $225k and that’s at an academic hospital in a bigger midwestern city.
I notice some folks are asking about “what’s the breaking point”. i.e. if doctors graduate with 1/2 a million of debt on a 100k salary will that make medicine so undesirable that people will not do it. I think that are enough highly visible folks who are making the 300k+ that make it hard for anyone to emphasize with the plight of the “impoverished” doctor. Maybe when no one does primary care anymore that tune will change?
Seems inevitable to me that primary care will be taken over completely by midlevels in my lifetime.
I understand why it can seem that way to a pre-med. But once you are a working attending and understand the difference between a doc and an APP/APC/Midlevel/NP/PA you worry about that a lot less. There really is a significant interest in education, training, and practice.
1) Might consider NHSC – National Health Service Corps
2) Might want to moonlight in residency to reduce what you borrow
3) Might want to consider working for VA, they offer $120 in loan repayment over 5 years
4) Might want to consider public loan forgiveness if working for county/state/federal hospital or underserved area
5) Read an interesting article about price discriminations for college the other day, food for thought:
https://www.nytimes.com/2017/05/17/upshot/how-colleges-know-what-you-can-afford-and-the-limits-of-that-tactic.html?_r=0
Interesting article. Thanks for sharing. Also good ideas for people to use to pay for med school.
Pay attention to WCI’s comment about intraspecialty variation in salary vs. interspecialty variation. Students and residents focus way too much on “average” salaries of various specialties imo. I was surprised by how much salaries can vary within a specialty. I’ve been a hospitalist for close to 6 years and I’ve seen other hospitalists make $200k on the low end and I’ve seen several who make well over $1M. It all depends on what kind of work-life balance you want as well as where you live. Experience also can pad your income if you seek an employed position.
Although your loan balance will appear daunting I don’t think it’s insurmountable if you’re in a reasonably well-paid specialty. $400k in loans does sound insane but I think what’s more important is your strategy in paying them back. Certainly there are options like PSLF though the existence of such programs seems to be in perennial doubt. I recommend carefully choosing a LCOL area to live with above average pay for your initial job. Commit to settling in for at least a few years. Then attack your loans with a laser focus. Forego a fancy new home and car. Allow yourself the occasional luxury to keep yourself sane. I tore through $250k in loans in 2.5 years while maxing out my retirement accounts and without living like a pauper. What’s another $150k or so in the context of a 30-year high-paid career with unmatched job security? Ultimately it would still be worth it.
Once you overcome your debt you can do whatever you want. Good luck.