Need for transparency in financial aid?

[pv515]

---

Members do not see this ad.

How does everyone else feel about how financial aid offers have been explained this year? It seems that every school allegedly has an average debt of well under $200,000, and yet no one ever explains that it's because of MD-PhDs, help from parents, full tuition merit aid for extremely high MCAT scores, etc.

It just seems wrong that med schools publish information citing med school to be some kind of bargain (what the MSAR says, Stanford being a good example), when most schools solely offer loans on a cost of attendance of $250,000+. Seems like it would be more useful to put the median debt, rather than the average, but no one wants to admit that their school is truly more expensive than another.

Maybe SDN could create a REAL financial aid spreadsheet or google doc, that would outline the costs for the normal student there. "Normal," meaning no help from parents, and MCAT score at the mean for the school's incoming classes, and not MD-PhD. It seems like that would be extremely useful for everyone on this website for comparing and contrasting their choices.

I mean really, my state school will cost in the neighborhood of $220,000 in loans. I know the figures for average debt are 4 years behind, but that seems like too large a difference to be made up for by higher interest rates and tuiton...

It's like George Carlin says I suppose, "Everything is getting worse."

 

[sazerac]

Be sure to differentiate between median and mean.

Many schools report only the debt of students that carry debt, so full scholarships and MDPhD won't throw off the figures.

Until recently it was possible for rich students to take out interest free subsidized loans so they took the free $6000 dollars or so every year. This really threw off the stats. This loophole is closed now, so expect the averages to rise quickly.

Ideally we probably want to know the median med school debt of students who carry more than $150K in medical school generated debt.

 

[pv515]

Be sure to differentiate between median and mean.

Many schools report only the debt of students that carry debt, so full scholarships and MDPhD won't throw off the figures.

Until recently it was possible for rich students to take out interest free subsidized loans so they took the free $6000 dollars or so every year. This really threw off the stats. This loophole is closed now, so expect the averages to rise quickly.

Ideally we probably want to know the median med school debt of students who carry more than $150K in medical school generated debt.

I did differentiate between median and mean. No one will ever report the median, unfortunately 🙁

I hear these things cited often as well, but I have my doubts that any schools only report students that carry debt. Why would one school do it but another school wouldn't? I can imagine the meeting, "Look at us, our school is more expensive at first glance!" Seems like bad marketing to me.

Also, that "free" $6000 only makes about a $4,300 difference in total debt burden after the end of four years, assuming you replace it each year with the 6.8% loans instead. Honestly, I expect the averages to stay pretty much the same, with schools never admitting that their numbers crest $150,000. It doesn't seem prudent to tell the truth in this situation, as there doesn't seem to be any accountability for fudging the numbers however you want.

 

[Gauss44]

I like your spreadsheet idea. You might want to word it as "our estimate is" or "below are numbers reported by students."

As an aside:
-They should also publish a list of awards available and what determines the amount a student receives, even if it's subjective, first come first serve, etc.

-And the standard assumptions they make when creating a student's budget, such as living with parents, family size, cost of books, rent, medical bills, childcare, etc. (These can often be adjusted if the assumption isn't accurate.)

It could be in the school's best interest to be more transparent in general. When they aren't it can seem like certain students or types of students are being favored or discriminated against by the financial aid office, regardless of whether or not they really are. Transparency also allows students to double check accuracy.

US News and World Report (hopefully I got the name right) supplies a lot of information about how much they award undergrads. I don't know why this information seems unavailable for medical schools.

Maybe some time in the future a political or activist group will write a bill about this and it will pass into law.

 

[mcloaf]

Yeah, I always found it amusingly depressing looking at schools where they estimate overall COA around 250-300k, have no merit aid programs, little need-based aid, and then brag that average debt at graduation is like 100k. There's obviously some info they're choosing not to share.

 

[sazerac]

Also, that "free" $6000 only makes about a $4,300 difference in total debt burden after the end of four years, assuming you replace it each year with the 6.8% loans instead. Honestly, I expect the averages to stay pretty much the same, with schools never admitting that their numbers crest $150,000.

You are missing my point entirely.

Look, when I was interviewing at Tufts, they explained that their debt statistics (average student debt, median student debt) only included students that actually took on debt in medical school. But up until a few years ago the government was literally handing out free money to go to medical school. You would have to be a blithering idiot to NOT take the maximum subsidized stafford student loans in medical school - it was interest free after all - so you could invest the money for four years and as soon as you graduate just pay the loan off in full. Thanks, Uncle Sam!

Well subsidized stafford student loans for medical school no longer exist. So that typical 15% of medical students that do not need any debt whatsoever are suddenly going from roughly $25K-$30K of medical school "debt" (which brings the "indebted" student averages WAAAYYY down unrealistically) to zero medical school debt (which allows the indebted-only student debt average to shoot up to a more realistic level).

Give it a couple more years, and the "average debt of indebted medical students" statistic so commonly reported by medical schools will go from an unrealistic artificially low fantasy value manipulated by the rich and financially savvy medical students, into a realistic portrayal of how much debt medical students actually take on (the ones that need to take on debt, that is).

 

[calvnandhobbs68]

I like your spreadsheet idea. You might want to word it as "our estimate is" or "below are numbers reported by students."

As an aside:
-They should also publish a list of awards available and what determines the amount a student receives, even if it's subjective, first come first serve, etc.

-And the standard assumptions they make when creating a student's budget, such as living with parents, family size, cost of books, rent, medical bills, childcare, etc. (These can often be adjusted if the assumption isn't accurate.)

It could be in the school's best interest to be more transparent in general. When they aren't it can seem like certain students or types of students are being favored or discriminated against by the financial aid office, regardless of whether or not they really are. Transparency also allows students to double check accuracy.

US News and World Report (hopefully I got the name right) supplies a lot of information about how much they award undergrads. I don't know why this information seems unavailable for medical schools.

Maybe some time in the future a political or activist group will write a bill about this and it will pass into law.

lol yeah the schools should provide you with detailed information about what they do with their scholarship money every year and the exact criteria they use to determine that. Because you're definitely entitled to know the inside goings-on of what every medical school in the country does with their money just because you want to.

The standard assumptions for budgets are laid out for all to see for basically every school. Go to their financial aid website and they'll break it down line by line. Of course they're not going to assume people are living with their parents...that's why there's allocated living expenses every year.

 

[nysegop]

Ben Bernanke's son had over $400,000 in debt.

 

[DrSolus]

Until recently it was possible for rich students to take out interest free subsidized loans so they took the free $6000 dollars or so every year. This really threw off the stats. This loophole is closed now, so expect the averages to rise quickly.

Ideally we probably want to know the median med school debt of students who carry more than $150K in medical school generated debt.

If what you're saying is true - the sad part is that as a result of a bunch of rich people taking advantage of said loophole, people who actually need that help will no longer qualify for subsidized federal loans either. You do realize that the federally subsidized stafford loans were a MAJOR boon to lower income and middle income students, (such as like myself) right? So now I know who to blame for having to take the entireity of my debt through unsubsidized staffords and be hit with interest for the next 7 years - when it could have been 0.

Do you know how big of a difference that is? THAT IS HUGE. 😡 Though I have a feeling you're absolutely wrong, and it's just our congressmen being absolute pricks and not being able to manage the debt without gouging and dismantling every possible safety net while refusing to spend a penny towards investing in the country's future. God bless America.

Edit: To bring it back to the opening topic: I agree, but not so much more transparency in the inner workings of financial aid as :
1) Publish financial aid stats in the same way undergraduate colleges do on usnews : % of students receiving need-based aid, % of students receiving merit based aid, AVERAGE % of NEED MET, so as to allow for an easier time at determining which schools are REALLY the ones that graduate students with the greatest debt. The way things are now, schools that are actually insanely more expensive than the others are able to hide behind these tricks and publish misleading numbers based on variable and unstandardized methodologies.
2) Greater transparency in tuition costs

 

[calvnandhobbs68]

If what you're saying is true - the sad part is that as a result of a bunch of rich people taking advantage of said loophole, people who actually need that help will no longer qualify for subsidized federal loans either. You do realize that the federally subsidized stafford loans were a MAJOR boon to lower income and middle income students, (such as like myself) right? So now I know who to blame for having to take the entireity of my debt through unsubsidized staffords and be hit with interest for the next 7 years - when it could have been 0.

Do you know how big of a difference that is? THAT IS HUGE. 😡 Though I have a feeling you're absolutely wrong, and it's just our congressmen being absolute pricks and not being able to manage the debt without gouging and dismantling every possible safety net while refusing to spend a penny towards investing in the country's future. God bless America.

Edit: To bring it back to the opening topic: I agree, but not so much more transparency in the inner workings of financial aid as :
1) Publish financial aid stats in the same way undergraduate colleges do on usnews : % of students receiving need-based aid, % of students receiving merit based aid, AVERAGE % of NEED MET, so as to allow for an easier time at determining which schools are REALLY the ones that graduate students with the greatest debt. The way things are now, schools that are actually insanely more expensive than the others are able to hide behind these tricks and publish misleading numbers based on variable and unstandardized methodologies.
2) Greater transparency in tuition costs

God people really don't know how subsidized staffords worked.

You could never take the entirety of your debt out subsidized. They were capped at $8500 and accrued 3.4% interest after you graduated (half of unsubsidized interest rate). It wasn't like they could cover your entire COA and with most people taking out upwards of $30K a year for loans in med school it wasn't quite the huge hit most sources made it out to be. Interest accrued during residency too since you're technically in repayment but in forbearance.

They didn't get rid of subsidized staffords as a result of "rich kids" taking them out either. They did it because graduate students tend to need subsidized stafford loans a lot less than undergrads do. Yeah will it suck that you have to pay that extra few grand over the loan lifetime? Sure but you'll be able to pay it off, unlike all the unemployed college kids. It's not a "safety net", you're not going to be homeless because they got rid of subsidized stafford loans. Drama much?

 

[notbobtrustme]

Medical school debt is bi-modal. You have the rich kids (which are quite numerous actually since the average family income of students is >100k) who have some or all of their tuition paid for by their parents and then you have everyone else, who basically take out the full COA. Never look at a school's COA/average indebtedness to determine their debt load, look at your own contributions to tuition and work from there.

 

[DrSolus]

God people really don't know how subsidized staffords worked.

You could never take the entirety of your debt out subsidized. They were capped at $8500 and accrued 3.4% interest after you graduated (half of unsubsidized interest rate). It wasn't like they could cover your entire COA and with most people taking out upwards of $30K a year for loans in med school it wasn't quite the huge hit most sources made it out to be. Interest accrued during residency too since you're technically in repayment but in forbearance.

They didn't get rid of subsidized staffords as a result of "rich kids" taking them out either. They did it because graduate students tend to need subsidized stafford loans a lot less than undergrads do. Yeah will it suck that you have to pay that extra few grand over the loan lifetime? Sure but you'll be able to pay it off, unlike all the unemployed college kids. It's not a "safety net", you're not going to be homeless because they got rid of subsidized stafford loans. Drama much?

Obviously if I'm ranting about not having them, I know how subsidized stafford loans work. I know it doesnt cover the entire COA. I'm saying even if just a PORTION of my loans were to be converted from unsubsidized to subsidized, it would save me an enormous amount of money in the long run. The difference between $8500 in 6.8% interest rate unsubsidized loans and $8500 a 3.4% interest rate subsidized loans over 4+ years of school and residency cannot be understated for people who don't have money. Speak for yourself when you say that it "won't be quite the huge hit" 10 years from now, when I'm planning on going into primary care (and I don't wanna hear any bs about how it's a bad idea and it's my fault - it's what i'm passionate about and it's what I wanna do). I can't afford to pay any amount for the COA for med school. Thankfully, my school was able to cut the COA in half with need-based aid, but I'm still I'm taking a substantial amount in loans and it's very disconcerting.

When I'm speaking of safety-nets, I'm not referring to graduate school loans. I'm referring to ALL of the programs that congress is defunding. The removal of federal stafford subsidized loans from all med students' financial aid packages is just one symptom of the greater collapse of common-sense in current american social and economic policy.

Taking help away from people who need it, cutting rather than increasing investment in critical areas, like education, and letting the top 1% run away with all the wealth. The country needs more doctors working in underserved areas and in primary care - why make it harder by removing these loans? Why else than what I've stated above?

 

[235009]

They were capped at $8500 and accrued 3.4% interest after you graduated (half of unsubsidized interest rate).

this is incorrect. during repayment interest on subsidized loans that were taken out during grad school are the same as unsubsidized loans (6.8%)

also the current academic year (2012-2013) is the first year subsidized loans were not available to graduate students

for the person looking for someone to blame....look no further than the american politicians and obama who do not value education. at least med students have excellent job prospects so taking on more unsubsidized debt isn't as big of a deal...this policy is going to hurt students in other industries way more.

 

[calvnandhobbs68]

this is incorrect. during repayment interest on subsidized loans that were taken out during grad school are the same as unsubsidized loans (6.8%)

also the current academic year (2012-2013) is the first year subsidized loans were not available to graduate students

for the person looking for someone to blame....look no further than the american politicians and obama who do not value education. at least med students have excellent job prospects so taking on more unsubsidized debt isn't as big of a deal...this policy is going to hurt students in other industries way more.

Ah you're right...don't know why I mixed up the undergrad and grad rates.

 

[sazerac]

Obviously if I'm ranting about not having them, I know how subsidized stafford loans work. I know it doesnt cover the entire COA. I'm saying even if just a PORTION of my loans were to be converted from unsubsidized to subsidized, it would save me an enormous amount of money in the long run. The difference between $8500 in 6.8% interest rate unsubsidized loans and $8500 a 3.4% interest rate subsidized loans over 4+ years of school and residency cannot be understated for people who don't have money.

Good lord man, get a grip. You are talking about the interest on a $34,000 loan. The additional interest is like one month's pay when you are an attending. In an era of $300K plus loan packages, the microscopic amount of interest on a microscopic portion of your total loan package is a rounding error.

There are plenty of things in medical school finances worth worrying about. The loss of the subsidized interest on the equivalent of the first six months tuition of an 8 year training program is not one of them.

 

[DrSolus]

sazerac, two words for you:

Compound Interest

Look, I'm not going to argue with you here since it clearly isnt adding to the conversation anymore, is derailing the topic, and you clearly don't care. So let's get back to the OP's question.

Edit: To bring it back to the opening topic: I agree, but not so much more transparency in the inner workings of financial aid as :
1) Publish financial aid stats in the same way undergraduate colleges do on usnews : % of students receiving need-based aid, % of students receiving merit based aid, AVERAGE % of NEED MET, so as to allow for an easier time at determining which schools are REALLY the ones that graduate students with the greatest debt. The way things are now, schools that are actually insanely more expensive than the others are able to hide behind these tricks and publish misleading numbers based on variable and unstandardized methodologies.
2) Greater transparency in tuition costs

 

[WildWing]

This thread has some great ideas.

We will look at the possibility of having SDN putting something like the spreadsheet described put together - it's been added to our "potential projects" list.

 

[Pons Asinorum]

sazerac, two words for you:

Compound Interest

Look, I'm not going to argue with you here since it clearly isnt adding to the conversation anymore, is derailing the topic, and you clearly don't care. So let's get back to the OP's question.

Lets consider a four year residency. Four years of compounded interest on your $34k nut adds about $10k to the principal. At end of residency, $44k. You can pay that off in 3-4 months of attending-level salary pretty damn easy, if for the first few months of being an attending you continue to live your resident lifestyle. But whatever. The OP is dreaming if he believes that the veil is ever going to fall from the process that awards financial aid.

 

[IlDestriero]

The subsidized loans were great. Everyone, and I mean everyone took out the $8,500 a year. There was no reason not to take it out. The best part was that you could get a deferment during your residency by just requesting one. A 7-10 year interest free loan on your Uncle Sam. You just paid it off asap when you finally got a bill.
It's a shame that they're gone.

 

[235009]

The best part was that you could get a deferment during your residency by just requesting one. A 7-10 year interest free loan on your Uncle Sam. You just paid it off asap when you finally got a bill.

This is incorrect. If you defer payment of your loans in residency interest continues to accrue on subsidized loans. It is not paid off by the government.

With IBR and PAYE however the government pays off whatever subsidized loan interest accrues that is not covered by your payments.

 

[Bangersandmash]

Ben Bernanke's son had over $400,000 in debt.

Well thank the lord that his dad could just print more money to pay it off!

 

[nysegop]

Well thank the lord that his dad could just print more money to pay it off!