We all know medical school is enormously expensive, with the average medical student graduating
with $200,000 in student debt.
But did you know that over a quarter of medical school graduates have no loans at all?
This is the real cost of medical school.
Dr. Jubbal, MedSchoolInsiders.com.
Data from this video comes from the official 2020 AAMC Medical School Graduation Questionnaire
and the AAMC's reports on Economic Diversity.
Links in the description.
Here's a trend that will surprise you — the percentage of newly minted doctors graduating
with medical school student debt is dropping.
In 2014, 82.6% of students had medical school loans, trending down to 70.8% of students
in 2020.
In terms of the debt distribution, approximately 50% of students graduate with debt between
$100,000 and $300,000.
Approximately 12% graduate with $300,000 or more, 12% with less than $100,000, and 25%
with no debt at all.
The median debt for those who need to take out loans is going up, meaning the average
medical student taking out loans is in more debt than the average from just a few years
ago.
But the fraction of students graduating with any debt at all is decreasing.
In the 1980's, rates hovered around 90%, in 2014 it was 82.6%, and in 2020 we're at 72.3%.
So what does this mean?
There doesn't seem to be a simple and clear cut explanation.
This decreasing trend cannot simply be explained by a few medical schools offering free tuition,
namely NYU, Columbia, and Kaiser.
Nor is it likely that this can be accounted for by masses of medical students going to
service contracts, such as the military, to cover their medical tuition.
One possibility is that scholarships are increasing in number and in value, which is part of the
equation, but I don't think this accounts for the whole story.
The number of medical students receiving free money in the form of scholarships, stipends,
or grants has slightly increased from 61% to 63% from 2014 to 2020.
But the median scholarship amount has remained around $20,000 to $25,000.
Or perhaps it's because more students from affluent families have parents who are footing
the bill.
For some time now, more than half of matriculating medical students have parents who are in the
top quintile of income.
Explaining that finding could be a separate video in and of itself, but what's important
to focus on here is the trend, which seems pretty stable.
In the last decade, there doesn't seem to be a shift to explain the larger number of
students graduating without debt.
I'm not quite sure what to make of the data.
What do you think?
Let us know with a comment below.
Another interesting finding is that 2/3 of matriculating medical students have no loans
from their college premed years, which is surprising to say the least.
On a national level, 70% of college graduates take on student loans with a median of $29,000,
yet only 33% of first year medical students have any student debt, similarly with a median
of $28,000.
This is likely due to two main factors.
First, the socioeconomic status of entering medical students is skewed towards more privileged
backgrounds, therefore more medical students have parents who footed their college bills.
And second, those who were successful in getting into medical school were very strong students,
and were therefore more likely to secure merit based grants and scholarships, thus reducing
their loan burden.
So what does this all mean?
The number of graduating medical students without any student debt is increasing.
Maybe you're rejoicing and giving your friends high fives right about now.
Not so fast.
It's important for premeds and medical students alike to keep this data in perspective and
understand the nuances of what it tells us.
First, yes, it's great that close to 30% of freshly minted doctors have no med school
debt.
That's a substantial improvement from just a few years ago, and that's something to celebrate.
But understand that the median medical school debt has been increasing, meaning if you're
not one of the lucky 30% to graduate without any debt, your total loan burden is likely
going up — more specifically, up from $180,000 in 2017 to $200,000 in 2020.
Considering median debt amounts have been steadily rising for the last several years,
it's not unreasonable to expect that trend to continue, meaning if you're graduating
medical school in 2022 or 2025, the median student debt will likely be higher than $200,000.
Second, understand that when we talk about the median, that doesn't mean you'll necessarily
graduate with that amount.
You could be in substantially more or substantially less debt.
In 2020, 11% of graduating medical students had between $300,000 and $400,000 in medical
school debt, nearly 3% had between $400,000 and $500,000, and about 1% had more than half
a million dollars in debt.
Third, understand the math that goes behind student loans and paying them off.
Too often I hear students saying $300k in loans is no big deal, I'll pay that off in
one year as an orthopedic surgeon!
Not quite.
That $300,000 is going to be compounding around 6-7% per year during your residency training.
So while you'll be making minimum payments, the principal will actually be increasing
during that time.
Even as an orthopedic surgeon pulling in $500,000, you have to pay taxes, meaning you'll take
home between $289,000 and $335,000, depending on your state income tax situation.
And out of that amount, you'll need to pay your mortgage, utilities, health insurance,
your kid's daycare, car payments, car insurance, food, travel, Netflix, that new iPhone you
gotta have, a new sim racing rig with VR headset, and of course save for retirement.
And that’s before making a dent in your loans.
Suddenly that $300k doesn't seem like such an insignificant amount, particularly when
you add the reality of the compounding effect working against you with your student loan
interest rates.
And while there are many aspiring orthopedic surgeons, many are unable to match because
it's one of the top 5 most competitive specialties.
If you end up going into sports medicine, internal medicine, emergency medicine, anesthesiology,
or something else, you'll likely be making substantially less than the average orthopod,
meaning it'll take much longer to pay off your loans.
While the default path in the United States is to attend an allopathic medical school,
we cannot exclude the alternate paths from the financial analysis, namely osteopathic
and Caribbean medical schools.
The American Association of Colleges of Osteopathic Medicine publishes similar data in their annual
survey, showing similar trends.
In recent years, the median osteopathic medical school debt has been increasing, from $256,000
to $265,000.
But similar to allopathic medical schools, the percentage that are in debt has been decreasing,
from 85% in 2017 to 83% most recently.
Caribbean medical schools don't have a central organization publishing this data, so it's
more difficult to pin down an exact number.
It's widely accepted, however, that students graduating from Caribbean medical schools
have a greater student loan burden than those from US allopathic or osteopathic medical
schools.
This isn't a surprise, considering these schools generally have substantially more costly tuition
and fees.
Depending on the article and school you're looking at, a 40-50% increase in the median
student loan burden for Caribbean grads, compared to US allopathic graduates, is not out of
the ordinary.
That means close to $300,000.
In terms of stratifying the financial cost of allopathic medical schools, osteopathic
medical schools, and Caribbean medical schools, US MD schools generally have the best financial
outlook, followed by DO schools, with Caribbean medical schools trailing.
We've already discussed on this channel why the finances even for US MD graduates is not
a clear cut win.
But what's concerning here isn't just that DO and Caribbean grads have more debt, but
also the fact that greater proportions of these graduates end up in primary care and
other specialties with lower average compensation.
And while DO graduates have a similar residency match rate to their US MD counterparts, understand
that a significant proportion of Caribbean medical school graduates fail to secure a
residency seat.
And without residency, they cannot practice as a board certified physician, meaning they
won't necessarily be making six figures per year.
And unfortunately, those student loans don't disappear, even if you file bankruptcy.
Imagine being in $300,000 in debt with no residency position, and no easy way to pay
off your loans.
I don't say this to scare you or discourage you, but to be realistic with you.
That's what we're about at Med School Insiders.
I care more about your success than your feelings, and if the numbers are making you uncomfortable,
I prefer you getting comfortable with reality now rather than when you're in six figures
of debt and unable to do anything about it.
While your personal situation is going to vary and I cannot speak for every student
watching this video, I'll provide you with some general guidelines.
First, make sure you truly want to go into medicine, and you understand that it's not
nearly as financially lucrative as pop culture has led you to believe.
Second, try to attend a US MD school with favorable financial aid and scholarship packages
over DO or Caribbean options.
And third, be as competitive of a student as you can be, not only because US MD schools
are more competitive than DO and Caribbean schools, but because if you're in a position
where multiple medical schools want you, you're in a position of power to leverage more favorable
financial aid packages.
If you want to know more, check out my video about how I got my medical school tuition
paid for through merit based scholarship, or my video about medical school prestige.
Much love, and I'll see you guys there.