Is medical school worth the financial cost?

[larryboy]

hello all,

recently a family member asked me if i though that medical school/residency etc was worth all of the time and money that i had to put into it to get where i am. many of you probably have the same question.

i found myself telling him that for most people taking out loans, it's probably not a very good financial decision unless you are mentally prepared to have a significant debt burden for a large portion of your career.

most people now from my understanding are coming out with 250k-300k in debt - if not more. you don't realize what kind of crushing debt this is until you've put you start paying it off and see how much it really is.

i'm still torn and don't know what the right answer is. if you are doing medicine because you really love it and don't mind paying the price for doing it, then i think it's still worth it. if you're doing it because you like the money/stability and think you'll live a wealthy lifestyle, you may be disappointed.

frankly i'm kind of disgusted that education costs so much. in a world of declining reimbursement, that should worry all of us. don't be so foolish to think that salaries will always be high - nothing in this world is guaranteed!

i'm going to post more on this on my blog in the near future and break down the math a bit more, so stay tuned.

as always, i'm more than happy to answer any questions and help out in any way i can.

cheers.

---

Members don't see this ad.

 

[Morsetlis]

American education costs so much.

 

[crazyasian]

If the debt is really such a big deal then there are options like HPSP scholarship...either way doctors will always probably live a cushy lifestyle. Look at other countries where doctors make significantly less...France, UK. They still make good money relative to others in society.

 

[bucks2010]

Run the numbers for yourself. Make a spreadsheet of the costs involved (school loans plus capitalization during residency) to see what the payments would be. Compare that to a very conservative estimate of physician salary (think 200k for a specialist, 100-150k primary care) and you will be able to make a somewhat informed decision about if medicine will be worth the investment to you or not.

 

[IMSingular]

Financial aspect is simple to answer.

Let us say your debt burden from MD education is about 300,000 at the end of the residency.
Let us say interest rate is 7%.(Stafford Unsubsidized is 6.8%)
Let us say your working years are 35.

Then if you make about $24,000/year more than your best alternative career it is financialy justified. You, of course, can scale the debt burden.

 

[SJD24]

Yeah, the debt is crushing and I'm cautiously optimistic about being able to pay off my loans when the time comes. I think the biggest mistake young doctors make when they finish training is that they splurge and buy a house, car, or whatever. If you continue to live like you make $50,000 for a few years, debt is much more easily managed. Hell, if you can slap down 75K a year (or more) for a few years you'll be sitting pretty. Obviously, this won't work for everyone due to family situations, etc. And interest is your worst enemy -- pay them off as soon as humanly possible.

 

[cinfid12]

Make sure you really want to do it because your are entirely interested in medicine. I don't know what year you are in school, but I majored in biology and I am in my last year. I chose biology because I wanted to go to medical school not because I liked biology. I finally came to terms with myself that I was going in for the money. I am now going into investment banking which was ridiculously hard to break into with a biology background. I will now graduate with a 150k piece of paper in which I will use very little if any of the knowledge I have gained. Don't do what I did, although I will eventually get where I want to be I wasted a lot of my time. Medicine is for people with a passion for it, not for people who want to make a lot of money. You can make way more money in other fields.

I just wanted to share my experience, hope it can provide some insight.

 

[Rocher]

$150k for a biology degree?!

Make sure you really want to do it because your are entirely interested in medicine. I don't know what year you are in school, but I majored in biology and I am in my last year. I chose biology because I wanted to go to medical school not because I liked biology. I finally came to terms with myself that I was going in for the money. I am now going into investment banking which was ridiculously hard to break into with a biology background. I will now graduate with a 150k piece of paper in which I will use very little if any of the knowledge I have gained. Don't do what I did, although I will eventually get where I want to be I wasted a lot of my time. Medicine is for people with a passion for it, not for people who want to make a lot of money. You can make way more money in other fields.

I just wanted to share my experience, hope it can provide some insight.

 

[MT Headed]

Somebody should create a biology-to-banking bridge program. They would make a fortune.

 

[dr zaius]

If the debt is really such a big deal then there are options like HPSP scholarship...either way doctors will always probably live a cushy lifestyle. Look at other countries where doctors make significantly less...France, UK. They still make good money relative to others in society.

They don't have crushing undergrad and medical school debt, either.

Comparison of US, Canada, and France

We are already seeing that many bachelor's degrees are not yielding a good return on investment. With rising tuition costs for medical school it's only a matter of time until the MD catches up.

 

[SunsFun]

I just want to add that in some other countries not only MD is free but you also do it as an undergrad degree. Being honest with ourselves would require us to include the time we spend doing all those things to get into med school which has some value. The tests preparation, volunteering, shadowing, time spent doing research could theoretically have been spent working. Also, I am just unsure about the time and energy commitment the 4 years of U.S. med school require versus what is required by schools in other countries. Now, I am not even talking about fellowship and residency when the students are clearly being used as cheap labor for hours at a time. Dividing 50k into 80 hour work weeks gives us salary that a high school student can be making. The truth is, American students pay huge dues and incur large costs mostly as young people in order to become physicians. This whole process justifies higher salary in my mind.

 

[otggwmfs]

.

 

[Law2Doc]

Financial aspect is simple to answer.

Let us say your debt burden from MD education is about 300,000 at the end of the residency.
Let us say interest rate is 7%.(Stafford Unsubsidized is 6.8%)
Let us say your working years are 35.

Then if you make about $24,000/year more than your best alternative career it is financialy justified. You, of course, can scale the debt burden.

You left out an important component, the "time value of money." Earning $200,000 a year starting ten years from now is worth a lot less than earning it starting next year. This is the basis of finance, and not understanding this guarantees you will be fleeced countless times by business people in your life. It's the reason annuities work, and why lottery payments pay out differently if you want it over time or in a lump sum. So finance teaches us that you have to apply a discount rate to the physician salary when doing calculations.

I think if you are someone who can get a good job out of college and stay on track in terms of raises and promotions over the course of your career, you probably usually can come out ahead as compared to an after debt, after time value adjusted MD salary. And that's not even taking into account declining reimbursements and other things around the bend that may threaten MD incomes.

But the truth of the matter is that money is not the primary reason you go down this path. You are going to be spending the majority of your awake life at your job if you choose an intense profession like doctor. If you don't like it, it's a prison sentence, no matter what your bank book looks like. It's not a 9-5 job you can just phone in and live for the weekend. In many specialties you will be working 80-100 hours per week some weeks with no semblance of a weekend. So you really have to enjoy whay you are doing, not what you are earning. Take it from a career changer who is taking a salary cut to do this job. At the end, the money is not the primary driving force in terms of whether you have a good life or a sucky one.

 

[SunsFun]

You left out an important component, the "time value of money." Earning $200,000 a year starting ten years from now is worth a lot less than earning it starting next year. This is the basis of finance, and not understanding this guarantees you will be fleeced countless times by business people in your life. It's the reason annuities work, and why lottery payments pay out differently if you want it over time or in a lump sum. So finance teaches us that you have to apply a discount rate to the physician salary when doing calculations.

I think if you are someone who can get a good job out of college and stay on track in terms of raises and promotions over the course of your career, you probably usually can come out ahead as compared to an after debt, after time value adjusted MD salary. And that's not even taking into account declining reimbursements and other things around the bend that may threaten MD incomes.

But the truth of the matter is that money is not the primary reason you go down this path. You are going to be spending the majority of your awake life at your job if you choose an intense profession like doctor. If you don't like it, it's a prison sentence, no matter what your bank book looks like. It's not a 9-5 job you can just phone in and live for the weekend. In many specialties you will be working 80-100 hours per week some weeks with no semblance of a weekend. So you really have to enjoy whay you are doing, not what you are earning. Take it from a career changer who is taking a salary cut to do this job. At the end, the money is not the primary driving force in terms of whether you have a good life or a sucky one.

I agree with everything you're saying but just wanted to point out that you would actually apply a different discount rate to your projected earnings in medical field versus other fields depending on the risk associated with receiving these cash flows. Relative stability of medical career is more likely to translate into a lower discount rate which may actually make career of a physician a smarter decision from strictly financial perspective. However, everything aside, money should never be #1 reason to go into medicine.

 

[USCTrojan11]

American education costs so much.

Isn't SGU triple the cost of a US Med School?

 

[Dei gratia]

For anyone interested I can give a Canadian perspective on this topic.

If I were to go to the University of Calgary for my MD, which is only a three year program. It would cost me ~$56,000.00 for all my tuition and books, plus ~$60,000.00 for living expenses. So ~$116,000.00 for three years of medical education.

However, here is the gross annual salary for Alberta Medical Residents:
PGY-1 = $54,587.00
PGY-2 = $60,828.00
PGY-3 = $65,592.00
PGY-4 = $70,360.00
PGY-5 = $76,325.00
PGY-6 = $81,093.00
PGY-7 = $87,694.00
PGY-8 = $94,835.00
http://www.carms.ca/eng/r1_program_salaries_e.shtml#AL

So, if I theoretical got into a Orthopaedic Surgery residency, which at the UofC is a five year program. I would have grossed ~$327,692.00 by the end of my residency; subtract taxes and I would be left ~$311,307.00. The average gross income as a lisenced orthopaedic surgeon in Alberta is $421,208.00; if I guess my overhead will be 30% plus taxes, I'll be left with $273,785.20 at the end of the year.
http://medical-residency.ca/files/canadian-medical-residency-guide.pdf on p.169
*I'll note that opthalmologists make the most in Alberta with an average gross annual salary of $779,997.00, followed by Dermatology with $708,052.00

If I pay 25% of my net salary to loans, until they're paid off. It'd take all of my residency ($77,826.75), plus one year of practice ($66,446.30). I believe this would cover any interest accumulated as well, because the total is ~$28,273.05 more than the original debt. I would be thirty-two (starting medical school at twenty-three) before my medical school loans would be paid off. This would obviously be worsened if there were any undergraduate loans or multiple other factors. From twenty-six to thirty-one, I would only be taking home a range of $38,210.90 to $53,427.50 per year. 🙁

This is in first person, but the scenario is theoretical. Hopefully, any Canadian students who read this have some idea of what they're getting into, and will calculate their own financial plans.
I assumed undergraduate will take five years instead of four.

 

[Law2Doc]

I agree with everything you're saying but just wanted to point out that you would actually apply a different discount rate to your projected earnings in medical field versus other fields depending on the risk associated with receiving these cash flows. Relative stability of medical career is more likely to translate into a lower discount rate which may actually make career of a physician a smarter decision from strictly financial perspective. However, everything aside, money should never be #1 reason to go into medicine.

I don't think I actually said what discount rate to apply. However I don't know that I agree that stability is going to be a huge change in numbers here. The big ticket item is still number of years in medicine from college until a good paying job. We are talking a decade or more for many specialties. That's a decade of not saving, not investing, of not getting raises or promotions. It means the salary you get in year 10 isn't really worth the face amount. And in any financial analysis you have to adjust for Tht. That's the point.

As for stability, I think you get a different picture in the preallo board than in the real world. Truth of the matter is that a lot of people in certain specialties (pathology, radiology, even cardiology) are coming out of fellowship and having much longer job searches than in prior years. Old timers are staying in jobs longer due to the economy, and that creates a job crunch in certain specialties. At the same tine there was a recent article in a national publication about doctors unable to meet payroll obligations due to recent economic changes. Ive personally known doctors who were out of jobs due to practice bankruptcy. Most people are still doing fine, but the notion of a guaranteed job and never looking for work in this field are notions that really only exist in the optimistic minds of youngsters on preallo. A lot is changing in medicine, and nothing is guaranteed anymore.

 

[SunsFun]

I don't think I actually said what discount rate to apply. However I don't know that I agree that stability is going to be a huge change in numbers here. The big ticket item is still number of years in medicine from college until a good paying job. We are talking a decade or more for many specialties. That's a decade of not saving, not investing, of not getting raises or promotions. It means the salary you get in year 10 isn't really worth the face amount. And in any financial analysis you have to adjust for Tht. That's the point.

As for stability, I think you get a different picture in the preallo board than in the real world. Truth of the matter is that a lot of people in certain specialties (pathology, radiology, even cardiology) are coming out of fellowship and having much longer job searches than in prior years. Old timers are staying in jobs longer due to the economy, and that creates a job crunch in certain specialties. At the same tine there was a recent article in a national publication about doctors unable to meet payroll obligations due to recent economic changes. Ive personally known doctors who were out of jobs due to practice bankruptcy. Most people are still doing fine, but the notion of a guaranteed job and never looking for work in this field are notions that really only exist in the optimistic minds of youngsters on preallo. A lot is changing in medicine, and nothing is guaranteed anymore.

I see what you're saying and definitely agree. Although, to make a judgement call on whether career of a physician is a smart financial move we would have to actually put numerical values of subjective factors such as job stability. And we would also have to define an alternative and do an analysis there. In the end of the day, there are just too many subjective assumptions made in the financial analysis to say conclusively which choice is a smarter financial option. Besides nobody can predict the future, so the whole discussion should be a personal judgement call for each individual.

 

[Law2Doc]

... And we would also have to define an alternative and do an analysis there. In the end of the day, there are just too many subjective assumptions made in the financial analysis to say conclusively which choice is a smarter financial option. Besides nobody can predict the future, so the whole discussion should be a personal judgement call for each individual.

I can certainly tell you that in my case, I will never catch up to the income I would have accumulated if I stayed at my prior job, even making very conservative discount estimates. But I can say with certainty that for me it was worth it. Just not in a financial analysis sense. But that's really not as important when you get further down this road. Job satisfaction is the key.

 

[DCBFan]

I almost just typed out the sentence, "what was your prior job, Law2Doc?" Feeling pretty dumb right now.

I think it's good to crunch numbers and whatnot, but really it would be foolish to enter into a profession for primarily financial reasons when you don't know what reimbursement will look like 8 or so years from now. Uncertainty exists for a lot of careers, but if you combine the medical career's high likelihood of significant change with the enormous commitment it requires... well, I don't think it's wise.

 

[Law2Doc]

...Uncertainty exists for a lot of careers, but if you combine the medical career's high likelihood of significant change with the enormous commitment it requires... well, I don't think it's wise.

agreed. You can crunch the numbers, but that really shouldn't drive this train.

 

[cleothecat]

If becoming a doctor is a financial decision, please consider other professions, preferably commerce.

When you deal with human lives your decision should be based on what is best for your patient, not how much of your portfolio will be enhanced, or whether your loans will be repaid.

Medicine to some of us old timers is still a calling, for which thankfully we are reasonably remunerated.

The angst about alternative heath care coverage is best focussed on how to provide better needed care for our patients, including those who are uninsured. Threads like this tend to z the uglier side of medicine, like ROI's.

MD-MBA

 

[Law2Doc]

If becoming a doctor is a financial decision, please consider other professions, preferably commerce.

When you deal with human lives your decision should be based on what is best for your patient, not how much of your portfolio will be enhanced, or whether your loans will be repaid.

Medicine to some of us old timers is still a calling, for which thankfully we are reasonably remunerated.

The angst about alternative heath care coverage is best focussed on how to provide better needed care for our patients, including those who are uninsured. Threads like this tend to z the uglier side of medicine, like ROI's.

MD-MBA

I agree thar ROI is the absolute wrong approach, but you should really make career decisions based on what you enjoy doing -- what you think will keep you intellectually stimulated and interested for the majority of your career. "best for the patients" and "helping people" and "having a calling" are great, but some of the best doctors are the ones that come in to work excited every day because they really enjoy it, not because they are mother Theresa tring to heal the world. I think this latter view is actually as shallow as doing it for the money, and it rarely sustains people in the face of external pressures. Having a genuine interest will, however.

 

[cleothecat]

yeah I find it amazing how puppies without experience pontificate and minimize the experience of others with 30+ years experience in the trenches.

How you made the jump that the expression "medicine to being a calling" to an assumption that it negates waking up in the morning keen to treat and help people using skills and technology that we still find invigorating, and emotionally and intellectually stimulating is beyond me.
I guess that some members of the younger generation with no experience except for surfing the internet feels that Mother Theresa had no satisfaction from her work because her 401(k) was too small and her material accumulations were meager.

 

[dr zaius]

 

[Law2Doc]

yeah I find it amazing how puppies without experience pontificate and minimize the experience of others with 30+ years experience in the trenches.

How you made the jump that the expression "medicine to being a calling" to an assumption that it negates waking up in the morning keen to treat and help people using skills and technology that we still find invigorating, and emotionally and intellectually stimulating is beyond me.
I guess that some members of the younger generation with no experience except for surfing the internet feels that Mother Theresa had no satisfaction from her work because her 401(k) was too small and her material accumulations were meager.

Dude, I'm a nontrad with a prior career, hardly a puppy. But mother Theresa did her work because of a religious compulsion, not the notion that " this is a fun enjoyable career that I could see doing the next forty years". Much like she gave up a lot of the other joys in life to be a nun. Nobody expects their doctor to go that road, nor do they really want it. It doesn't serve the patients better, although it certainly breeds a holier than though attitude among some who claim that their right to be a doctor is superior because they have "a calling". I'm saying you don't need a calling, nor should financial interest be the driving force. Both are incredibly superficial. You do need the invigorating and emotionally stimulating interest in the work, but it needn't distill out to "helping people" as the only and primary goal. Personal satisfaction with your work, not just in medicine but any field, where as a happy byproduct it also happens to help people is great. The surgeon that really enjoys the craft of surgery is still going to be a good doctor to his patients even if his real interest is the craft. But more importantly, he's going to still enjoy what he's doing twenty years later, while someone with a more superficial interest might not.

 

[Chrome19]

I'm frankly bothered by the potential cost of medical school. I expect to be $150K-$200K in debt when I'm done. It's quite scary.

I have also began wondering about the cost of other educational programs and I feel slightly disillusioned by the current model of education. I wonder what will happen when the student loan bubble finally bursts.

 

[MT Headed]

I have also began wondering about the cost of other educational programs and I feel slightly disillusioned by the current model of education. I wonder what will happen when the student loan bubble finally bursts.

I imagine one generation will be caught with their pants down, in a situation of high loans and low salary, surrounded by cohorts that either have high loan / high salary or low loan / low salary (after the bubble bursts). This unsustainable current bubble probably has about 10 more years of life in it.

 

[Chrome19]

I imagine one generation will be caught with their pants down, in a situation of high loans and low salary, surrounded by cohorts that either have high loan / high salary or low loan / low salary (after the bubble bursts). This unsustainable current bubble probably has about 10 more years of life in it.

Indeed it's definitely unsustainable. 10 years looks plausible from a cursory examination, but it could be longer.

 

[SunsFun]

Indeed it's definitely unsustainable. 10 years looks plausible from a cursory examination, but it could be longer.

It will hit lawyers and business schools first before doctors, IMO. Also, don't forget about IBR. You only pay 10% of your salary for about 25 years if I am not mistaken and it gets discharged. The only problem is that there is a tax bomb in the end but I believe there is legislature on the agenda to prevent people from getting owned by it.

 

[MT Headed]

It will hit lawyers and business schools first before doctors, IMO. Also, don't forget about IBR. You only pay 10% of your salary for about 25 years if I am not mistaken and it gets discharged. The only problem is that there is a tax bomb in the end but I believe there is legislature on the agenda to prevent people from getting owned by it.

You can unload a tax debt in bankruptcy, but you can't unload student debt. So if the tax debt from loan payoff is insurmountable, you can get out of it.

 

[Joe the Plumber]

yeah I find it amazing how puppies without experience pontificate and minimize the experience of others with 30+ years experience in the trenches.

How you made the jump that the expression "medicine to being a calling" to an assumption that it negates waking up in the morning keen to treat and help people using skills and technology that we still find invigorating, and emotionally and intellectually stimulating is beyond me.
I guess that some members of the younger generation with no experience except for surfing the internet feels that Mother Theresa had no satisfaction from her work because her 401(k) was too small and her material accumulations were meager.

Wait, really? Mother Theresa and her pyramid sche... I mean, organization have been WIDELY criticized for questionable financial practices and an appalling lack of ethical and medical standards. There are far better examples of altruistic individuals.

 

[otggwmfs]

.

 

[stationroad]

yeah I find it amazing how puppies without experience pontificate and minimize the experience of others with 30+ years experience in the trenches.

How you made the jump that the expression "medicine to being a calling" to an assumption that it negates waking up in the morning keen to treat and help people using skills and technology that we still find invigorating, and emotionally and intellectually stimulating is beyond me.
I guess that some members of the younger generation with no experience except for surfing the internet feels that Mother Theresa had no satisfaction from her work because her 401(k) was too small and her material accumulations were meager.

Not a good analogy.


A career in medicine is not not satisfying for not only the remuneration that is not commensurate with the efforts but the complete loss of control of your schedule, your financial future, the uncertainty, the marginalization of the field by every entity, the decreased re imbursement.
In addition, the regulation of medicine has developed into a horrendously complex web of education, testing, subjective behavioral standards, investigations, verifications, attestations, political affiliations, guidelines, best practices, peer review, mandated care and political correctness which all claim to be salutary to ensuring the provision of high quality providers and high quality medicine, yet which in fact do little or none of either while requiring the allocation of enormous resources to meet their demands.

 

[Morsetlis]

Isn't SGU triple the cost of a US Med School?

Why yes it is 😉

 

[EBTrailRunner]

Not a good analogy.


A career in medicine is not not satisfying for not only the remuneration that is not commensurate with the efforts but the complete loss of control of your schedule, your financial future, the uncertainty, the marginalization of the field by every entity, the decreased re imbursement.
In addition, the regulation of medicine has developed into a horrendously complex web of education, testing, subjective behavioral standards, investigations, verifications, attestations, political affiliations, guidelines, best practices, peer review, mandated care and political correctness which all claim to be salutary to ensuring the provision of high quality providers and high quality medicine, yet which in fact do little or none of either while requiring the allocation of enormous resources to meet their demands.

 

[SunsFun]

Just as I'm unsure about what physician compensation/salaries will look like in the future, I'm not sure I can count on programs like IBR lasting for another 35 years. They might exist, I just don't think students should walk into a situation where they believe they won't have to pay off their debt in full, or at least making payments under normal (not IBR) terms. I suppose that's having a somewhat cynical outlook, but I would rather be prepared than think everything will be rosy financially-speaking, and find out later it was not. I'm going into medicine realizing I will probably never be rich, because it's what I want to do. So I'm willing to take the risk financially, because 300K in debt is risky no matter how you slice it. If it turns out I make a lot of money later anyway, well that's just icing on the cake.

Many people make their decision to pursue graduate education counting on IBR. Otherwise you wouldn't have public service and social workers with graduate degrees. I really doubt IBR will not last but who knows.

 

[EBTrailRunner]

Many people make their decision to pursue graduate education counting on IBR. Otherwise you wouldn't have public service and social workers with graduate degrees. I really doubt IBR will not last but who knows.

IBR will be around, but not necessarily the Public Service Loan Forgiveness Program.

 

[iqe2010]

While we're on the subject, do residents keep deferring their loans for 3-4 years until they're an attending or do they actually start to pay during residency?

 

[otggwmfs]

.

 

[ppfizenm]

While we're on the subject, do residents keep deferring their loans for 3-4 years until they're an attending or do they actually start to pay during residency?

you pay but at that point it is only to keep the interest from being capitalized.

 

[iqe2010]

you pay but at that point it is only to keep the interest from being capitalized.

Oh ok..that makes sense. Thanks.

 

[MrCheetah]

Make sure you really want to do it because your are entirely interested in medicine. I don't know what year you are in school, but I majored in biology and I am in my last year. I chose biology because I wanted to go to medical school not because I liked biology. I finally came to terms with myself that I was going in for the money. I am now going into investment banking which was ridiculously hard to break into with a biology background. I will now graduate with a 150k piece of paper in which I will use very little if any of the knowledge I have gained. Don't do what I did, although I will eventually get where I want to be I wasted a lot of my time. Medicine is for people with a passion for it, not for people who want to make a lot of money. You can make way more money in other fields.

I just wanted to share my experience, hope it can provide some insight.

If you want to do investment banking then why are you wasting your time perusing the SDN forms?

 

[MT Headed]

Somebody should create a biology-to-banking bridge program. They would make a fortune.

Hmm, it would be a year long undergraduate sequence with a few upper level stats classes, some calculus, macro and micro economics, and presentation skills.

I think I'll call it a 'post-banc' program!