Making Sense of the Rising Cost of Medical School

July 26, 2021 · 6 minute read

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Making Sense of the Rising Cost of Medical School

The costs of medical school are rising at an alarming rate. According to US News, in the past decade, the cost of attending medical school has risen 3% to 4% annually.

Thirty-five years ago, medical students graduated with an average of $32,000 in student loan debt . In 2019, the median medical school debt for graduates was $200,000 , according to the Association of American Medical Colleges (AAMC) with 73% 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 relatively low-paying fields like general practice (as compared to say anesthesiology).

While it might be relatively easy to pay down student loan debt for those entering a higher-paying specialty like orthopedics or anesthesiology, a doctor going into general practice might take years (even decades!) to pay off their private 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.

Recommended: 6 Strategies to Pay off Student Loans Quickly

How Much Does Medical School Cost?

The average medical school tuition varies depending on factors like on whether the student is attending a public or private university.

The average annual cost of in-state tuition, fees, and health insurance for the first year of medical school for a student at a public university was about $41,438 in the 2020 to 2021 academic year. At a private school, the average annual cost was about $61,490.

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 $250,222 for public medical schools and $330,180 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 cost of college tuition and fees at private nonprofit four-year institutions in America grew at a rate of just over 2% from the 2019-2020 to 2020-2021 school years.

So what is driving the price increase? In general, college tuition has increased dramatically in the past 30 years or so, while wages have grown at a much slower rate. 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 paid by students also rises. 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 the student and the career path they take and the payments they 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.

Related: Smart Medical School Loan Repayment Strategies

Let’s say, hypothetically, a borrower has federal Direct Loans, such as Stafford, PLUS, or a Direct Consolidation Loan. 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, the monthly repayment would be capped at 10% to 15% of the borrower’s monthly discretionary income, for a period of up to 25 years. And, after 25 years, whatever hasn’t been repaid is forgiven (although that amount may be taxable).

However, if after residency, the borrower in question gets a position with an income that removes them from the PFH tier, they could switch to the Standard Repayment Plan for federal student loans, and potentially pay off the loan more quickly.

Is It Possible to Shorten the Medical Debt Payment Timeline?

Here are some tips for those interested and able to shorten their repayment timeline, which can lower the amount of student loan interest paid over the life of the loan.

Repaying Loans During Residency

It is possible to start paying down 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 the bill.

Instead, consider an income-driven repayment plan to start paying back federal loans with an affordable payment. Another option is to look into SoFi’s medical residency refinance options to compare.

Making Extra Payments

Another tactic to help pay off student loans faster is via simple budgeting. After getting your first position post-residency, consider committing to living on a relatively tight budget for just a few more years. Putting as much salary toward extra student loan payments as possible, could potentially help cut time—and interest payments—off the repayment timeline.

Speeding Up Med School Debt Repayment With Refinancing Student Loans

Depending on a borrower’s personal financial profile and credit score, among other factors, it may be possible to secure a lower interest rate or a lower required monthly payment, depending on the terms you choose if you refinance your student loan.

A lower monthly payment could help improve cash flow in the present or a lower interest could help reduce how much money is paid over the life of the loan. Keep in mind that lowering a monthly payment through refinancing generally is the result of extending the loan term, which can make the loan more expensive in the long run.

While refinancing could help borrowers save money over the life of the loan, it does mean giving up the benefits that come with federal student loans like income-driven repayment, deferment, forbearance, and student loan forgiveness specific to physicians.

But for borrowers who don’t foresee needing these services, refinancing might be a viable option.

Recommended: Guide to Refinancing Medical School Loans

The Takeaway

The cost of medical school has risen in the past 30 years, and so has the amount of debt med students take on to pursue a career as an MD. But a career in the medical field can potentially be both lucrative and rewarding, so for some, medical school can be worth the time, effort, and cost.

Borrowers who are repaying student loans from medical school may consider strategies like income-driven repayment plans, making overpayments, or student loan refinancing to help them tackle their student loan debt.

Wondering how much you could lower your monthly payments by refinancing your student loans? Check out SoFi and see your rate in minutes.

SoFi Student Loan Refinance
If you are looking to refinance federal student loans, please be aware that the White House has announced up to $20,000 of student loan forgiveness for Pell Grant recipients and $10,000 for qualifying borrowers whose student loans are federally held. Additionally, the federal student loan payment pause and interest holiday has been extended beyond December 31, 2022. Please carefully consider these changes before refinancing federally held loans with SoFi, since the amount or portion of your federal student debt that you refinance will no longer qualify for the federal loan payment suspension, interest waiver, or any other current or future benefits applicable to federal loans. If you qualify for federal student loan forgiveness and still wish to refinance, leave unrefinanced the amount you expect to be forgiven to receive your federal benefit.

CLICK HERE for more information.

Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income-Driven Repayment plans, including Income-Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.

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