Educational Debt of Med School Grads Levels Off: AAMC Report

Ken Terry

October 20, 2020

The median educational debt load of 2019 medical school graduates who carried any debt was about $200,000, including "premedical" debt such as college loans, according to a new report from the American Association of Medical Colleges (AAMC).

This debt level was about the same as in 2018 and has increased at a rate only slightly higher than the Consumer Price Index since 2009, the report said. Medical school graduates reported educational debt of $170,000 in 2012, when the AAMC last published a similar report.

In contrast, the median cost of attending 4 years of medical school has been rising at roughly double the rate of general inflation. This cost has grown faster at public than at private medical schools, but the latter still cost far more. The median cost of public schools was $215,000 in 2019, compared with $330,180 for private schools. The median cost of attendance for in-state students at all schools was $272,429 in 2019.

The compound annual growth rate in the cost of attendance from 2009 to 2019, the AAMC noted, was 3.6% overall, 4.1% at public schools, and 3.2% at private schools.

The information the AAMC used in compiling its report came mainly from its two annual surveys, the Medical School Graduation Questionnaire and the Tuition and Student Fees Questionnaire.

Higher Family Income Levels

Only 73% of medical school graduates reported having educational debt in 2019, a significant drop from 86% in 2012. Besides a slight increase in scholarships and the cessation of a financially advantageous, federally subsidized loan program, the report attributed the change to higher levels of family income.

While debt levels were more or less stable across family incomes, 26% of surveyed medical school graduates in 2019 came from families in the top 5% of incomes ($206,000 per year or greater). By comparison, students from families earning less than $68,000 a year comprised only 21% of the graduates.

The median debt load of indebted graduates from the most affluent families was $189,375, just a bit less than the median debt of all indebted respondents. Half of the graduates in the top 5% — with median family income of $300,000 — got scholarships, and 42% of them took out loans.

There was quite a bit of variation in how graduates of different races and ethnicities financed their education. For example, 91% of Black graduates and 84% of Hispanic graduates said they'd taken out loans, compared with 75% of white graduates. Similarly, 83% of Black graduates and 65% of Hispanic graduates received scholarships, compared with 61% of white graduates.

About the same percentage of medical school graduates said they'd won scholarships in 2012 and 2019, but the amounts were larger. At public medical schools, 88% of those with scholarships got less than $100,000. The median amount for those students was $12,000, and they graduated with a median debt of $200,000. At private schools, 73% of the students received scholarships for less than $100,000, averaging $20,000. Their debt load was $248,816, compared with $230,000 for those who didn't get scholarships.

Economic Factors and Specialty Choice

Surprisingly, economic factors played a fairly minor role in the choice of specialty, the report found. As the AAMC pointed out, this observation runs counter to the widely held belief that high medical school debt impels many students to choose a medical or surgical specialty rather than a primary care field.

The graduates ranked economic factors low on the list of factors that influenced their choice of specialty, as they have every year for more than a decade, the report said. The most important factors, ranked No. 1 or No. 2 by most grads, were personality fit and specialty content, followed by role model influence, work-life balance, and fellowship training options. Income expectations were important for 48% of grads, but education debt was a factor for only 22%.

These preferences were fairly similar for graduates with high, low, and no debt, the report said. It's worth noting, however, that primary care was chosen by only 17% of the graduates with debt of $100,000 or more. Based on what the graduates said motivated them, it appears that they tended to select specialties that they found interesting and that promised them a better work-life balance.

Loan Forgiveness and Repayment

More than half of the 2019 graduates said they had no plans to enter one of the federal, state, or local loan forgiveness programs. However, 34% of the graduates said they planned to pursue the federal Public Service Loan Forgiveness (PSLF) program.

The purpose of the PSLF is to help nonprofits and government agencies recruit employees by promising forgiveness or cancellation of all remaining federal student loan balances after 10 years' worth of payments made while employed by such entities. Doctors' time in residency or fellowship counts toward that time limit if their employer is not-for-profit, as most teaching hospitals are.

The other loan forgiveness programs of interest to medical school graduates, the report said, are hospital programs with a signing bonus and state-level programs that typically offer some forgiveness in return for practicing in a rural or medically underserved area.

In general, graduates with higher levels of debt are more interested in these programs than those who have lower levels of debt.

Graduates who borrowed money from the US Department of Education are eligible for federal repayment plans that adjust payments up or down based on the borrower's income rather than the size of their debt. These plans generally end after 20 to 25 years, and any remaining principal is forgiven by the government.

"The economics of loan repayment indicate that indebted physicians in all specialties should be able to repay their student loans comfortably," the AAMC report said, "although that could take 10-20 years or more, depending on their circumstances."

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