How do state schools justify the tuition cost?

[Future_Bone_Docta]

I have been looking into the tuition of different schools across the country. I am in a MD state school in the Northeast and my tuition is actually more expensive than ALOT of private schools, DO schools, and even predatory caribbean schools.

I was just curious, does anyone how "nonprofit" state schools (with a mission of nOt MaKiNg PrOfIt) justify charging wild tuition?

Also on another note, how do schools like LECOM manage to make tuition so cheap?

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[throwaway123342]

I mean they justify it because you are willing to pay it. Thats basic market dynamics.

Other angle is cost benefit on the side of the student. Is it worth it to pay 280k now in order to obtain a license which allows you to make 300k a year for the rest of your life? Clearly the cost benefit analysis is there.

From the state's perspective, it is expensive to employee the staff at the medical school. They see tuition as revenue which helps to offset that cost. The more revenue they can collect the lower the cost to the taxpayer.

 

[Goro]

A lot of that tuition goes to other parts of the university system.

LECOM doesn't have research labs, does it? I surmise that the cost of living in Erie is probably a LOT cheaper than other areas. Also, the wage scales for their faculty are probably lower than the national median for med school faculty.

Key question for you: are you an in-state resident? Some state schools are absolutely predatory in tuition for OOS students, like MSU and U ILL.

 

[Future_Bone_Docta]

From the state's perspective, it is expensive to employee the staff at the medical school. They see tuition as revenue which helps to offset that cost. The more revenue they can collect the lower the cost to the taxpayer.

But in 1990, adjusted for inflation, the average medical school debt was $70,000. Today the average medical school debt is $250,000. I doubt in 1990 medical schools were just "eating the bill" and not making profits.

 

[Future_Bone_Docta]

A lot of that tuition goes to other parts of the university system.

LECOM doesn't have research labs, does it? I surmise that the cost of living in Erie is probably a LOT cheaper than other areas. Also, the wage scales for their faculty are probably lower than the national median for med school faculty.

Key question for you: are you an in-state resident? Some state schools are absolutely predatory in tuition for OOS students, like MSU and U ILL.

That is a fair point. Don't phd salaries at a lot of academic institutions rely on grants/research funds/ NIH? Genuine question because I am ignorant to the phd side of things.

to my knowledge COL does not factor into tuition though, those are going to be grad plus on top of the tuition cost.

I am state resident. Tuition for in- state residents is about 45k.

 

[Goro]

That is a fair point. Don't phd salaries at a lot of academic institutions rely on grants/research funds/ NIH? Genuine question because I am ignorant to the phd side of things.

to my knowledge COL does not factor into tuition though, those are going to be grad plus on top of the tuition cost.

I am state resident. Tuition for in- state residents is about 45k.

I meant cost of living for the faculty and staff, not the students. More later, as I have to walk the world's stupidest dog now

 

[Goro]

That is a fair point. Don't phd salaries at a lot of academic institutions rely on grants/research funds/ NIH?

It depends upon the school and how much they require the PI to fund his/her own salary).

Also, nice buildings and grounds are expensive. DO schools tend to look, well, not as nice. Mine's not bad; not bad at all.

 

[aldol16]

Supply and demand. They can charge as much as the market will bear - and the market will bear a lot because there aren't a lot of people who would turn down an MD or DO admission due to the price tag. They know you are perfectly willing to go into debt now for the prospect of rewards later on.

 

[Future_Bone_Docta]

Supply and demand. They can charge as much as the market will bear - and the market will bear a lot because there aren't a lot of people who would turn down an MD or DO admission due to the price tag. They know you are perfectly willing to go into debt now for the prospect of rewards later on.

I wonder how much longer the reward will be worth it.

 

[guytakingboards]

I have been looking into the tuition of different schools across the country. I am in a MD state school in the Northeast and my tuition is actually more expensive than ALOT of private schools, DO schools, and even predatory caribbean schools.

I was just curious, does anyone how "nonprofit" state schools (with a mission of nOt MaKiNg PrOfIt) justify charging wild tuition?

Also on another note, how do schools like LECOM manage to make tuition so cheap?

The actual cost of medical education, to my understanding, isn't that different no matter where you go. e.g. Harvard or the University of Texas. Harvard is way more expensive cuz they're charging you full price. UT's tuition is heavily state-subsidized. Some state schools may not have a significant subsidy on their instate tuition. I think a lot of it depends on how much of the full freight they're dumping on the student.

 

[throwaway123342]

But in 1990, adjusted for inflation, the average medical school debt was $70,000. Today the average medical school debt is $250,000. I doubt in 1990 medical schools were just "eating the bill" and not making profits.

Your premise is assuming that nothing has changed about medical schools in the last 30 years except the inflation rate.

 

[Future_Bone_Docta]

Your premise is assuming that nothing has changed about medical schools in the last 30 years except the inflation rate.

enlighten me on what has changed.

 

[voxveritatisetlucis]

Not sure why but I do know that high tax states (ie. California, New York, Illinois, Connecticut) tend to have higher tuition than low tax states (ie. Texas). Seems somewhat paradoxical but then when you factor in the unionized staffs, pensions etc. in the high tax states, it kind of makes sense

 

[tossaway000999888]

Its really just because they can. They know the government will give you loans for tuition without a credit check, and they know the cost-benefit analysis still works out in your favor to take the loans. Similar issue with college and masters-level tuition except the cost-benefit analysis isn't always there for every program (there was a great article in NYT about the ROI of a masters in film studies a while back). State schools are typically better than private because they have to answer to politicians who want to appease constituents so they are less likely to be thrilled with expensive tuition, but thats not true for every state and every program (especially MD programs, because no one has any sympathy for the future rich, golfing, beamer-driving doctor)

 

[Obnoxious Dad]

Why Doctors Are Drowning in Medical School Debt

A resident physician investigates the causes of skyrocketing tuition

blogs.scientificamerican.com

Medical schools are an oligarchy protected by state licensing regulations. It is not a competitive market and, therefore, hopelessly inefficient. There is no need for tuition to reflect the underlying costs of an efficiently delivered medical education. Tuition is anything they can get away with.

See the link above. Robert Grossman, the Dean of the NYU School of Medicine, ran a thorough cost accounting study of NYU's medical school and discovered that the tuition paid by the students was funneled primarily to unproductive faculty i.e. people who didn't write grants, didn't see patients and didn't teach.

 

[Future_Bone_Docta]

Why Doctors Are Drowning in Medical School Debt

A resident physician investigates the causes of skyrocketing tuition

blogs.scientificamerican.com

Medical schools are an oligarchy protected by state licensing regulations. It is not a competitive market and, therefore, hopelessly inefficient. There is no need for tuition to reflect the underlying costs of an efficiently delivered medical education. Tuition is anything they can get away with.

See the link above. Robert Grossman, the Dean of the NYU School of Medicine, ran a thorough cost accounting study of NYU's medical school and discovered that the tuition paid by the students was funneled primarily to unproductive faculty i.e. people who didn't write grants, didn't see patients and didn't teach.

That is wild

 

[throwaway123342]

Why Doctors Are Drowning in Medical School Debt

A resident physician investigates the causes of skyrocketing tuition

blogs.scientificamerican.com

Medical schools are an oligarchy protected by state licensing regulations. It is not a competitive market and, therefore, hopelessly inefficient. There is no need for tuition to reflect the underlying costs of an efficiently delivered medical education. Tuition is anything they can get away with.

See the link above. Robert Grossman, the Dean of the NYU School of Medicine, ran a thorough cost accounting study of NYU's medical school and discovered that the tuition paid by the students was funneled primarily to unproductive faculty i.e. people who didn't write grants, didn't see patients and didn't teach.

Grossman is a tool who exploits residents. He is the exact prototype of a capitalist.

 

[Future_Bone_Docta]

Grossman is a tool who exploits residents. He is the exact prototype of a capitalist.

Elaborate

 

[rulerkk]

A fun little exercise I’ve learned from a finance course:

NPV Calculator - Calculate Net Present Value

Assumptions: $250k investment, you could make a generous 8% return from alternative investments, you work a 6 year residency + fellowship combo at typical current salaries, you then work 19 more years ($300k for 3 years, $350k for the next 16).


The attached photo basically says in this scenario, from the perspective of a graduating M4 who is looking forward at their PGY 25 self, they should be willing to pay $2M at graduation for that education for a net positive return.

Or in other words, you’d need an extra $2M at graduation that you could invest for 8% real gains per year to make learning/practicing clinical medicine a poor financial choice in the long-run. That’s compared to sitting on the $2M and collecting the 8% interest each year as cash to spend.

Med Ed is like a bet on yourself for earning a ~40%+ return every year from your education in the long-run.

This is that intuition as to why it’s financially worth to do medicine despite the education debt. I will make no claims towards the uncalculafed costs of moral injury, stress, life disruption, and missed social/emotional opportunities one could experience from practicing clinical medicine. Neat tho, huh?

 

[Future_Bone_Docta]

A fun little exercise I’ve learned from a finance course:

NPV Calculator - Calculate Net Present Value

Assumptions: $250k investment, you could make a generous 8% return from alternative investments, you work a 6 year residency + fellowship combo at typical current salaries, you then work 19 more years ($300k for 3 years, $350k for the next 16).


The attached photo basically says in this scenario, from the perspective a graduating M4 who is looking forward at their PGY 25 self, they should be willing to pay $2M for that education for a net positive return. Med Ed is like a bet on yourself for earning a ~40% return every year from your education in the long-run.

This is that intuition as to why it’s financially worth to do medicine despite the education costs. I will make no claims towards the uncalculafed costs of moral injury, stress, life disruption, and missed social/emotional opportunities one could have from not practicing clinical medicine. Neat tho, huh?

Very interesting! Is that accounting for the stratified tax bracket?

You can make 150k per year and only federally lose 24%, but then bump up to 300k per year and you will lose 35%

 

[rulerkk]

Very interesting! Is that accounting for the stratified tax bracket?

You can make 150k per year and only federally lose 24%, but then bump up to 300k per year and you will lose 35%

I didn’t take tax into account. Mostly because it’s complicated (easy for W2 employee wage earners like those working in a hospital, very hard for K-1 distributions from ASCs, S Corp tax deductions from partnership in private practice, etc etc). But you could lop off 25-35% for a realistic effective tax rate on the NPV or Net Cash Flow. That makes the NPV more like $1.4M, which is still a very impressive number

 

[aldol16]

I wonder how much longer the reward will be worth it.

It probably already isn't worth it but will take some time for people to realize it.

 

[aldol16]

This is that intuition as to why it’s financially worth to do medicine despite the education debt. I will make no claims towards the uncalculafed costs of moral injury, stress, life disruption, and missed social/emotional opportunities one could experience from practicing clinical medicine. Neat tho, huh?

The problem with NPV analyses is that they invariably make too many assumptions. Trust me, I'm no stranger to financial modeling. But there are always costs that are not considered. You're comparing medicine to a null when you should be comparing medicine to the next best alternative. People going into medicine are generally smart and could do a lot of other value-generating things with their lives. You need to compare medicine with these alternative paths to see if there is a positive NPV from medicine.

 

[deleted1139416]

But in 1990, adjusted for inflation, the average medical school debt was $70,000. Today the average medical school debt is $250,000. I doubt in 1990 medical schools were just "eating the bill" and not making profits.

It’s not just about what you’re willing to pay, but also access and return on investment. Education is hard to put an “investment” tag on. When buying a house, you can compare interest rate with house appreciation - which is why house prices are going down so fast because the current interest rates are much higher than house appreciation. But with student loans, especially undergrad student loans, you’re not thinking about exactly how much your future earnings will outearn the interest. With med students it’s never an issue because a physician almost always makes more than the interest accumulation on student loans, and not paying loans fast enough in the physician community is mostly an issue of impulse control once making attending level salary. But with undergrad loans, 18 year olds aren’t thinking about how much their degree is really worth compared with the interest on their tuition. In terms of access, the government will always give you loans and there’s no cap on that. With private loans, there’s always a cap, and buying a 4M house will always be harder than buying a 400k in terms of loan approval. But with fed loans being essentially unlimited, getting approved to attend a school for whatever tuition amount is the real problem of the student debt crisis. And the benefits of fed loans such as forgiveness, income based repayment, etc will always make it better than private student loans.

Long story short, unlimited access to student loans combined with not being able to put a value on a degree is what’s allowing tuition to skyrocket.

 

[rulerkk]

The problem with NPV analyses is that they invariably make too many assumptions. Trust me, I'm no stranger to financial modeling. But there are always costs that are not considered. You're comparing medicine to a null when you should be comparing medicine to the next best alternative. People going into medicine are generally smart and could do a lot of other value-generating things with their lives. You need to compare medicine with these alternative paths to see if there is a positive NPV from medicine.

I hear you. If you were to discount any career-oriented NPV by other career paths' RORs, they'd be minuscule compared to medicine too. Look at that 40% ROR. Throw that discount rate into an above-average engineer's NPV (with all of their salary earnings) at the same age as a graduating M4 and the engineering NPV will be small or negative. With the logic that, despite their great earning potential and ability to work from age 22 onwards, the 75%ile engineer could have gone the medical route by age 26.

Broadly speaking, I agree that the analysis would be fairer if you do the NPV for a similar career with the same assumptions made earlier and subtract the differences. Regardless, I'd say some financial QOL factors in medicine's favor are high geographical flexibility, stability, and much higher disposable income than say an average engineer. The overall NPV analysis is still useful despite shifting the final number as one's willingness to pay based on how much one values all the assumptions & alternate-universe career options. You'd just describe it as "for the med students who did not desire any other career path" and use that to inform your willingness to take on the educational debt.

 

[snooper]

My state school receives less funding from the state than in past decades

 

[CrazyHorseLady]

I go to a private “non-profit”- we were able to look up how much the CEO of our school makes a year. Its like over 3 million dollars. It’s infuriating: our tuition is in the top 5 most expensive of all medical schools and I will be graduating with about $420,000 in debt. I really hope things will change in the future. I think at least private institutions should have a tuition cap. At some point I feel like the current system will make the doctor shortage even worse.

 

[IlDestriero]

My state school receives less funding from the state than in past decades

This is correct. State school funding has decreased dramatically over the last 30 or so years. One school I’m familiar with went from ~30% state funding to 3.5%! That money has to come from somewhere. There also may be limits to how much they can increase undergraduate tuition so graduate tuition would be disproportionately affected.

 

[jambro]

I go to a private “non-profit”- we were able to look up how much the CEO of our school makes a year. Its like over 3 million dollars. It’s infuriating: our tuition is in the top 5 most expensive of all medical schools and I will be graduating with about $420,000 in debt. I really hope things will change in the future. I think at least private institutions should have a tuition cap. At some point I feel like the current system will make the doctor shortage even worse.

unfortunately you would need some sort of proof that the shortage is due to a lack of medical school applicants, and specifically those who dont apply for fear of debt. Getting into med school is still hypercompetitive so that nips that conversation in the bud right now.

 

[lign]

A fun little exercise I’ve learned from a finance course:

NPV Calculator - Calculate Net Present Value

Assumptions: $250k investment, you could make a generous 8% return from alternative investments, you work a 6 year residency + fellowship combo at typical current salaries, you then work 19 more years ($300k for 3 years, $350k for the next 16).


The attached photo basically says in this scenario, from the perspective of a graduating M4 who is looking forward at their PGY 25 self, they should be willing to pay $2M at graduation for that education for a net positive return.

Or in other words, you’d need an extra $2M at graduation that you could invest for 8% real gains per year to make learning/practicing clinical medicine a poor financial choice in the long-run. That’s compared to sitting on the $2M and collecting the 8% interest each year as cash to spend.

Med Ed is like a bet on yourself for earning a ~40%+ return every year from your education in the long-run.

This is that intuition as to why it’s financially worth to do medicine despite the education debt. I will make no claims towards the uncalculafed costs of moral injury, stress, life disruption, and missed social/emotional opportunities one could experience from practicing clinical medicine. Neat tho, huh?

Yes it is pretty neat. Probably not very possible to keep in perspective in the middle of it though. Most will probably work longer than 25 years too. And the non-financial costs of career choices change us in unanticipated ways. I recently read a statement from a young-ish retired person who basically said "if you're not doing it now, you probably won't do it when you're retired either." Referring to hobbies and so forth.

 

[Unlucky Asian]

I am state resident. Tuition for in- state residents is about 45k.

damn bro i was expecting like 90k or something when u said high

 

[Mr.Smile12]

This is correct. State school funding has decreased dramatically over the last 30 or so years. One school I’m familiar with went from ~30% state funding to 3.5%! That money has to come from somewhere. There also may be limits to how much they can increase undergraduate tuition so graduate tuition would be disproportionately affected.

This.

And your state legislature probably won't be willing to raise taxes to fund even your local K-12 school district, much less keep public college tuition reasonable. What was left of that safety net left beginning in 2009 with that economic crash, it seems.

 

[Future_Bone_Docta]

damn bro i was expecting like 90k or something when u said high

73k COA. Can you name a school that is 90k tuition? Especially a state school? I have never seen that. Most expensive I have seen is CCOM at 70ish.

 

[Med Ed]

73k COA. Can you name a school that is 90k tuition? Especially a state school? I have never seen that. Most expensive I have seen is CCOM at 70ish.

OOS at Colorado is 83K.

 

[Mad Jack]

Often state medical schools have smaller student bodies and more robust facilities than many of their private counterparts. This requires money, and that money must come from somewhere.

 

[Obnoxious Dad]

OOS at Colorado is 83K.

Illinois is the chart topper for OOS tuition at its medical school.

 

[deleted1065184]

Illinois is the chart topper for OOS tuition at its medical school.

I remember when I was applying and almost submitting an application there...then immediately changing my mind after seeing that OOS tuition was mind blowingly high lol

 

[Goro]

73k COA. Can you name a school that is 90k tuition? Especially a state school? I have never seen that. Most expensive I have seen is CCOM at 70ish.

$78.5 at U ILL, 81.9 at MSU!

 

[Future_Bone_Docta]

$78.5 at U ILL, 81.9 at MSU!

But now that would only be for one year though right? And then they get residency and it would drop to in-state tuition?

Not that it justifies the out of state tuition.

 

[Goro]

But now that would only be for one year though right? And then they get residency and it would drop to in-state tuition?

Not that it justifies the out of state tuition.

I don't know what their policies are

 

[Rapsidy]

But now that would only be for one year though right? And then they get residency and it would drop to in-state tuition?

Not that it justifies the out of state tuition.

No, not at least for Illinois. It must be one year residency outside of being a student.

If you are not a dependent: You must live in Illinois for one full year for non-educational purposes. This means that during that 12-month period, you may not enroll at any institution of higher education more than half-time.

 

[Obnoxious Dad]

You want to know how med school got so expensive? Here's a story about the tightly run Yale Medical School. An administrator bought $40 million of equipment, had it misdelivered and then fenced it. She's going to be wearing orange for a while. If that institution had any sort of rational supply chain management, which you find in a normal profitmaking business, this would not have happened.

Former Yale med school official gets 9 years for $40M fraud

 

[deleted1065184]

You want to know how med school got so expensive? Here's a story about the tightly run Yale Medical School. An administrator bought $40 million of equipment, had it misdelivered and then fenced it. She's going to be wearing orange for a while. If that institution had any sort of rational supply chain management, which you find in a normal profitmaking business, this would not have happened.

Former Yale med school official gets 9 years for $40M fraud

This has absolutely nothing to do with why state med schools are expensive...lol

 

[Obnoxious Dad]

This has absolutely nothing to do with why state med schools are expensive...lol

It has everything to do with it because this sort of thing is emblematic of the inefficiency of not-for-profit institutions.

 

[Big Time Hoosier]

Just be grateful you’re not a dental student at a school like NYU or USC. They’ll be graduating with around $700,000 in loans. And if any of these poor souls decide to go on to do a dental specialty residency, since many residencies charge tuition and have no stipend, they could wind up with $1,000,000 or more in loans.

Big Hoss

 

[Future_Bone_Docta]

Just be grateful you’re not a dental student at a school like NYU or USC. They’ll be graduating with around $700,000 in loans. And if any of these poor souls decide to go on to do a dental specialty residency, since many residencies charge tuition and have no stipend, they could wind up with $1,000,000 or more in loans.

Big Hoss

True, dental school at my state school is more or less identical tuition though. Only difference being my 5-7 year residency will turn my 280k into 400k-ish, whereas the general dentists can start payments immediately (or after their short residency).

 

[deleted1065184]

It has everything to do with it because this sort of thing is emblematic of the inefficiency of not-for-profit institutions.

The inefficiency isn't new, but the rapid tuition increases began in the late 70s/early 80s for both undergraduate and doctoral programs. As more students of all backgrounds began to have access to college, schools realized they could get away with charging more and more money.

This was the case for all sorts of schools...public and private, undergraduate and medical, etc. Mismanagement is NOT why medical school tuition is high, institutional greed is.

 

[voxveritatisetlucis]

True, dental school at my state school is more or less identical tuition though. Only difference being my 5-7 year residency will turn my 280k into 400k-ish, whereas the general dentists can start payments immediately (or after their short residency).

True but it’s not uncommon for a dentist to make 130k. A physician would never make that unless doing academic Peds in NYC

 

[CrazyHorseLady]

unfortunately you would need some sort of proof that the shortage is due to a lack of medical school applicants, and specifically those who dont apply for fear of debt. Getting into med school is still hypercompetitive so that nips that conversation in the bud right now.

I do not believe that this is the case at the moment. I was trying to say that eventually down the line this may become an issue as tuition continues to skyrocket. If I'm already having 400k in medical school debt now, what will it be like for those who apply 10 years from now? Will the debt to pay ratio even make sense at that point to pursue becoming a physician. Hope that makes more sense.

 

[Future_Bone_Docta]

tuition will either be $

I do not believe that this is the case at the moment. I was trying to say that eventually down the line this may become an issue as tuition continues to skyrocket. If I'm already having 400k in medical school debt now, what will it be like for those who apply 10 years from now? Will the debt to pay ratio even make sense at that point to pursue becoming a physician. Hope that makes more sense.

Tuition will either be 600k+ or $0