Ask anyone who has seriously considered becoming a doctor and they’ll all agree on one thing:
medical school is expensive.
But where is all of that tuition money going?
Is it actually going towards your education?
Or is it just financing the dean’s second Lamborghini?
Let’s find out.
Dr. Jubbal, MedSchoolInsiders.com.
The average medical student graduates with around $242,000 of student loan debt with
the vast majority of that coming from medical school tuition.
That’s a lot of money no matter who you’re talking to.
But what makes medical school so expensive?
Has it always been like this?
Not quite and here’s why.
If you were a first-year medical student in 2000, you could expect to pay around $17,000
per year in tuition.
When adjusted for inflation, this comes out to about $26,000 per year.
This is by no means cheap; however, it’s significantly less than the numbers we’re
about to get into.
Let’s fast forward to today.
If you’re a first-year medical student starting this year, you can expect to pay around $55,000
per year in tuition – more than double what you would have paid just 20 years ago.
Of course, this number is just an average and there are some medical schools that charge
less and others that charge more.
Regardless, that is around $220,000 just in tuition for four years of medical school.
This doesn’t take into account living expenses, transportation, and all of the other expenses
that will come up during your time in medical school.
Unfortunately, it’s only getting more expensive as well.
It’s estimated that the average cost of medical school rises by approximately $1500
each year.
Now that we know how much medical school in the US costs, where do these numbers come
from?
Do medical schools just throw darts at a dartboard to decide how much to charge students?
Or is there a method to the madness?
To start, running a medical school is expensive.
It takes tens of millions of dollars, if not more, just to keep things running each year.
These costs can be broken down into two main categories: instructional costs and educational
resources.
Instructional costs include any expenses that are directly related to teaching.
Professor salaries, simulation equipment, lab supplies, and actors for standardized
patients would all fall into this category.
Another instructional expense that we don’t often consider is that medical schools generally
have to pay hospitals and clinics to allow their students to rotate at their facilities.
Although this is a necessary part of the training to become a physician, the reality is that
having medical students decreases productivity.
Teaching a student takes time away from clinical care and is an added responsibility for residents
and attending physicians.
As such, medical schools often need to pay for the opportunity to have their students
rotate at these facilities.
Educational resources are all of the other costs that don’t directly contribute to
a student’s education but are still related to it.
This includes administrator salaries, research activities, scholarships, access to databases,
and maintenance of facilities, to name a few.
Although these don’t always directly impact a student’s ability to learn, they are still
necessary to keep the medical school or university up and running.
It’s estimated that instructional costs range from around $48,000 to $51,000 per student
per year and the cost of educational resources ranges from approximately $80,000 to $105,000
per student per year.
Combined, this is significantly higher than the tuition that most medical students pay
each year.
Naturally, your next question is probably, how do medical schools afford all of this
if not just tuition?
The answer is that medical schools receive income primarily from four sources: tuition,
endowments, government funds, and medical services.
The one you are probably most familiar with is tuition - the money that medical schools
receive from their students.
Next, there are endowments, which are charitable donations from individuals or organizations.
These may be physicians who graduated from the school or other members of the community
that want to contribute to that school’s medical education.
These charitable donations can vary from hundreds of dollars to tens of millions of dollars;
therefore, some schools rely on large numbers of small donations whereas others rely more
on large individual donations.
Most schools fall somewhere in the middle.
After that, there’s government funding.
This is taxpayer money that is allocated to medical schools for purposes of education
or research.
Lastly, many academic medical institutions own hospitals and clinics and therefore generate
revenue from seeing and treating patients.
How much a school charges for tuition will depend on how much money they receive from
the government, endowments, and medical services.
A school that receives more money from these sources will be able to charge less in tuition,
and vice versa.
Allopathic medical schools tend to be affiliated with state universities and large academic
institutions.
As such, they tend to receive more funding from the government and generate more money
from medical services, both of which decrease tuition costs for students.
In contrast, osteopathic schools tend to be private institutions.
They often receive little, if any, funding from the government and are often not associated
with large medical institutions.
This is why osteopathic schools tend to charge their students higher tuition.
As an example, tuition may account for 10%, or less, of an allopathic medical school’s
revenue, whereas it may account for as much as 15-50% of an osteopathic medical school’s
revenue.
This is one explanation for the rapid increase that we are seeing in the cost of medical
education.
In recent years, there have been many budget cuts that have affected the state’s appropriations
for medical education.
In short, government funding is decreasing.
As a result, these expenses are being passed onto students in the form of increased tuition.
If budget cuts continue to occur, we can expect tuition to continue to increase in the coming
years.
In addition to rising costs and decreasing funds, many people believe that there is another
factor at play that is driving up the price of medical school tuition – one that has
to do with supply and demand.
That being said, this is more theoretical than the previous two points, so take it with
a grain of salt.
Medical school isn’t just expensive, it’s also highly competitive.
Each year, tens of thousands of high achieving students apply to US medical schools, and
less than half of them get in.
It’s only getting more competitive too as more students apply to medical school each
year.
If we take the most recent 2021-2022 medical school application cycle, for instance, there
were approximately 10,000 more applicants to US MD schools compared to just the previous
year despite their being relatively the same number of medical school spots.
That’s an increase in applicants of approximately 18% in just one year.
Whether this past year is an outlier as a result of the global pandemic or a glimpse
into what we can expect from here on out, nobody can say for certain; however, the general
trend has been that the number of applicants is increasing at a faster rate than the number
of new medical school spots.
This creates a mismatch between supply and demand as there are many students that want
to become doctors, but not enough medical school spots to accommodate them.
As such, some theorize that, in addition to driving up competitiveness, this is also driving
up tuition costs.
As medical school admissions become increasingly competitive, fewer and fewer students have
the luxury of choice.
Getting into medical school anywhere is an accomplishment, so students will often pay
whatever it costs to attend that school.
After all, what’s another $50,000 when you’re already taking out $300,000+ in loans?
Medical students don’t usually have to worry about paying for school either as the government
is happy to provide loans.
Investing in a medical students education is a pretty low risk investment for the government
as medicine is a relatively guaranteed path to a high salary and most physicians will
have the financial resources to pay back their loans.
In addition, even if a physician goes bankrupt, student loans are more difficult to discharge
than other types of loans which means that there is a high likelihood that they will
recoup their investment – plus interest of course.
As such, there is very little incentive for the government to intervene with the rising
costs of medical education.
After all, medical schools still have fewer spots than there are applicants, so the rising
cost of education is not affecting the number of physicians that are entering the workforce.
This leads many to believe that medical schools are charging more for tuition simply because
they can.
It doesn’t matter what price they set, because there will be thousands of premeds who are
willing to pay it and a government that’s ready to provide the loans to allow them to.
It all comes down to competition.
When you have multiple options, you can choose the one that is the best value.
When you only have one option, you’re forced to take what you can get.
For example, let’s say there are a hundred premeds and each one gets into two medical
schools, one state school and one private school, each with 100 spots.
If the state medical school charges $30,000 per year in tuition and the private medical
school charges $50,000 per year in tuition, the student has the power to decide whether
or not the extra $20,000 per year to attend the private school is worth it to them.
If it isn’t, they’ll choose the state school over the private school.
If every student chooses the state school over the private school, the private school
will eventually have to lower its tuition if it wants to compete.
Now, let’s say there are 300 students.
Now there are enough premeds for both medical schools to fill all of their seats and then
some.
In this second scenario, the power of choice is in the medical school’s hands so there’s
no incentive to decrease costs.
There are enough students that they can fill their classes completely.
In fact, they may even be able to increase costs if the only options are to go to their
school or wait another year to apply.
This is another hypothesis for how the cost of medical education has been able to increase
to the extent that it has.
In reality, the rising cost of medical education is the product of multiple factors.
As with most things in life, it’s not so black and white that we can point to a singular
cause.
Regardless, the reality is that medical school is expensive, and it’s only going to get
more expensive in the years to come.
Although many of the points we’ve discussed in this video are beyond your control, that
doesn’t mean you are doomed to be hundreds of thousands of dollars in debt that you’ll
never be able to pay back.
Instead, you should focus on the things that you can control – like becoming a highly
competitive applicant that medical schools are willing to pay to go to their schools.
That’s right, if you’re a highly competitive and sought after applicant, medical schools
will try to win you over to attend their medical school by throwing money your way, which is
how I got my entire medical school tuition and most of my living expenses covered.
There are multiple other advisors on MedSchoolInsiders.com that have also earned sizable scholarships
or even full rides to medical school and have helped several of our clients earn them too.
This obviously can’t be guaranteed, but by working with these elite physicians, it’s
the best shot an applicant can have.
These are real doctors who were top performers that can show you exactly how they did it.
You’re not going to find this level of expertise and value anywhere else, because, simply put,
other advising companies weren’t built by and comprised of elite performers.
You can’t learn how to become a top performer and get a full ride merit-based scholarship
from a doctor who wasn’t able to do that themself.
If you want to be a stellar applicant and receive one-on-one advising, tutoring, interview
preparation, personal statement or secondary editing, mentorship, and more to become the
strongest applicant you can be, visit MedSchoolInsiders.com.
Our services can help elevate you to become the kind of applicant that medical schools
pay to attend their school.
Thank you all so much for watching.
If you enjoyed this video, be sure to check out our videos on How to Afford Medical School
as well as our video on Student Loans 101.
Much love and I’ll see you there.