The costs of medical school are rising at an alarming rate. Thirty years ago, medical students graduated with an average of $32,000 in student loan debt —that’s about $70,000 in today’s dollars if you adjust for inflation.
In 2017, the median medical school debt for graduates was $200,000 , according to the Association of American Medical Colleges (AAMC) with 76% of students graduating with debt.
The rising cost of medical school, plus the daunting number of years of education and training is making some prospective medical students ask: Is an MD really worth it? That’s ultimately up to you.
But it’s worth noting that while medical school has traditionally been a path to a lucrative career, the steep up-front costs might be starting to make the endgame look less appealing.
This can be particularly true for would-be doctors interested in working in lower-paying fields like community medicine or general practice.
While it might be relatively easy to pay down student loan debt for those entering a higher-paying specialties like orthopedics or anesthesiology, a doctor going into general practice might take years (even decades!) to pay off their student loans.
To gain a better understanding of how much medical school actually costs, we’ll take a look at the costs of an MD, and some ways young doctors can get out of medical school debt faster after graduation.
How Much Does Medical School Cost?
The average medical school tuition varies greatly depending on whether you choose a public or private university.
The average annual cost of in-state tuition, fees, and health insurance for the first year of medical school at a public university was about $37,500 in the 2019 to 2020 academic year. At a private school, the average annual cost was about $60,650.
But that’s only the cost of tuition, fees, and insurance—there’s also living costs to consider which is why it’s also useful to consider the entire cost of attendance (COA).
Each school publishes the estimated costs of attendance for their program, which typically not only include tuition and fees, but also costs like room and board, textbooks and supplies, and travel.
The AAMC calculated that the median cost of attendance for four years of medical school amounted to around $232,800 for public medical schools and $306,200 for private medical schools. But these costs can vary a lot depending on whether you’re attending school in Kansas City or San Francisco.
Why is Medical School More Expensive Than Ever?
The rising cost of medical school tuition is part of a larger trend. It is estimated that the overall cost of college tuition and fees in America grew at a rate of just under 4% from the 2018-19 to 2019-20 school years. Keep in mind, this is larger than the annual inflation rate of 2%, making this price increase even more dramatic to students and graduates.
So what is driving the price increase? College tuition has increased eight times faster than wages over the last 30 years or so, and the cost of living has increased dramatically as well. But what’s behind the dramatic uptick in college prices? The potential answer is two-fold. One factor is the demand for a college education has also dramatically risen over the last three decades.
Another factor more pertinent to public universities: a decline in state funding. It’s been observed in multiple states that as the education budget gets stripped, tuition costs to students rises in turn. And while lawmakers likely understand such a correlation exists, as long as federal financial aid is so freely available for students, there is likely little incentive to digress from such cuts.
How Long Does Paying for Med School Take?
So why do med students often go into so much debt?
It’s partly because the grueling requirements of their programs don’t often allow for part-time work. As a result, many students apply for financial aid to cover their college price tag, which means they graduate with significant amounts of student loan debt.
So how long does it take to pay back the debt? A lot of this depends on you and the career path you take and the payments you make. However, the relatively low salaries young doctors earn during their residencies don’t typically allow for much opportunity to pay back loans until their first position after residency.
Let’s say, hypothetically, you have federal Direct Loans, such as Stafford, PLUS, Consolidation, or Perkins (if consolidation). And let’s also say you can prove you have partial financial hardship (PFH), and qualify for an income-driven repayment plan.
In that situation, your monthly repayment would be capped at 10% to 15% of your monthly discretionary income, for a period of up to 25 years. And, after 25 years, whatever you haven’t paid back will be forgiven (although that amount will be taxable).
However, if after your residency, you get a position with an income that takes you out of the PFH tier, you could move to the Standard Repayment Plan for federal student loans, and potentially pay off your loan sooner.
Can You Shorten the Medical Debt Payment Timeline?
Here are some tips if you’re interested and able to shorten your repayment timeline, which can lower the amount of student loan interest you pay over time.
Repaying Your Loans During Your Residency
It is possible to start paying down your medical school debt in residency. While some students may be tempted to put their loans in student loan forbearance in their residency years, doing so can add quite a bit in compounding interest to your bill.
Instead, you could consider an income-driven repayment plan to start paying back your federal loans with a payment you can afford. You could also look into SoFi’s medical residency refinance options to compare.
Making Extra Payments
Another tactic to help pay your student loans faster is via simple budgeting. When you get your first position post-residency, you could commit to living on a budget for just a few more years. By putting as much of your salary toward extra student loan payments as you can afford to, you can help cut years—and interest payments—off your repayment timeline.
Refinancing Your Student Loans
When you refinance your student loans with a private lender, you use a new loan with a new rate and terms to pay off your existing student loans.
Depending on your financial profile and credit score, among other factors, you might be able to get a lower interest rate or a lower required monthly payment, depending on the terms you choose if you refinance. A lower monthly payment can help you improve your cash flow in the present—and lower interest can help reduce how much you pay over the life of your loan.
While refinancing can save you money, it does mean you’ll have to give up the benefits that come with federal student loans like income-driven repayment, deferment, forbearance, and student loan forgiveness specific to physicians.
But if you don’t foresee needing these services, refinancing might be a viable option and could potentially save you a fair amount.
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