Physician Debt and Net Worth: Moving in the Right Direction?

Dennis G. Murray, MA


April 20, 2016

In This Article

Where Does the Money Go?

Medical School Debt Is a Large Factor

Not surprisingly, given the increasing cost of becoming a doctor, medical school debt makes up a sizable chunk of many physicians' budgets. According to the Association of American Medical Colleges, 4 of 5 medical school graduates had education debt in 2015, to the tune of $180,723 per student.[1]

According to our survey, about one third of female physicians and one quarter of male physicians are still in hock to their schools. Among this group of indebted doctors, the following specialties have the highest percentages of physicians still paying off school loans:

  1. Emergency medicine (33%)

  2. Family medicine (33%)

  3. General surgery (31%)

  4. Dermatology (31%)

  5. Critical care (30%)

At the bottom of the list, only about 1 in 6 (16%) rheumatologists and gastroenterologists are still paying off student loans. (The average number among all specialties is around 25%.)

If you figured it was mostly younger doctors who have outstanding balances on their school loans, you'd be correct. More than three quarters of doctors under 28 years of age have balances, with two thirds of those aged 28-34 years still in debt.

It's not until age 45 years that the percentages reach more reasonable levels: Only 24% of doctors aged 45-49 years have outstanding loan balances, vs 11% of those aged 50-54 years and 7% between the ages of 55 and 59 years. Remarkably, 2% of doctors aged 60 years or older said they have medical school loans still to pay, but that may be because they changed careers to pursue medicine or a different specialty later in life.

In addition to school debt, respondents to our survey listed a mortgage on their primary residence, car loan or lease payments, and college tuition for their children among their biggest regularly recurring bills. Roughly equal percentages of male and female doctors reported having these expenses.

"The biggest debt, as with most consumers, continues to be mortgage-related—but creeping in as a close second, not surprisingly for younger physicians, is the student loan," says Pran Tiku, CFP, principle with Peak Financial Management, Waltham, Massachusetts. "Mortgage debt, thanks to low interest rates, is reasonably managed in most cases and is generally not as onerous as student loan debt. Student loan debt is sometimes accompanied by sky-high interest rates, and in some cases with little opportunity to refinance. These loans have been, and will continue to be, a crushing burden on many physicians' budgets. Some will end up paying back hundreds of thousands in interest to financial institutions."

On the whole, though, the news about doctors and their debt levels is very encouraging. A full 60% of physicians said they live below their means, adding that people would be surprised at how much money they really have. Another 10% reported living within their means, with little debt.

Of the 26% of doctors who said they spend too much and carry credit card balances, that may reflect their age and career stage rather than true financial recklessness, Doran says. "If a doctor has been in business for less than 10 years, with kids, a mortgage, and a private practice, he may have no choice but to live beyond his means, at least initially."

Good News on the Investment Front

Almost three quarters (73%) of the doctors who responded to our survey did not experience any significant financial loss in the past year.

"Even though the markets were relatively flat to slightly negative last year, investors who were patient and well-diversified didn't take a big hit. A lot of people who recall the sharp downturn of 2008-2009 are better able, on the basis of their experience, to control their emotions of fear and greed and better manage the risk in their portfolio," Doran says.

Tiku agrees, adding, "It's not surprising that many investors today have turned more cautious."

Not everyone was so lucky in 2015, of course. Doctors who reported losing large amounts of money or assets did so because of bad investments or stock market losses (12%), issues involving their practice (10%), or divorce (3%).

These percentages extended to men and women more or less equally, with male physicians experiencing a slightly higher rate of investment losses (13% vs 9% for female doctors).

Roughly two thirds of neurologists (69%), endocrinologists (67%), and critical care specialists (66%) said they have not made an investment mistake in 2015, compared with less than one half of orthopedists (44%) and urologists (43%).

Taking a closer look at practice issues, the highest percentages of doctors who said they took a big loss in this area were nephrologists and plastic surgeons (18% each). On the other end of the spectrum, with the smallest percentage of doctors claiming large practice-related losses, were psychiatrists (7%) and emergency medicine specialists, pathologists, and HIV/infectious disease specialists (5% each).

Much to Be Proud Of

As our survey results clearly indicate, doctors can hold their heads high, having done a good job of building wealth while at the same time avoiding significant losses.

"Many doctors were savvy enough to take advantage of the recovery in the stock market over the past few years, buying more shares when prices were down," Doran says. "Likewise, many of them took advantage of the pullback in real estate prices to purchase a new office or a primary or second home."

"Crisis," he reminds investors, "can lead to opportunity."


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