The Cost, Price, and Debt of Medical Education

From “The Cost, Price, and Debt of Medical Education” in NEJM.

In the 1960s, 4 years of U.S. medical education could be purchased for about $40,000 (in 2018 dollars). By 2018, the average price had increased by 750%, to about $300,000; approximately 75% of students took on loans, and their average debt at graduation was $200,000. In contrast, U.S. college tuition increased by about 250% over the same period.

…between 2010 and 2018, the percentage of medical students graduating with no debt also increased — a happy result if it arose from lower prices or more scholarships, but its occurrence in the absence of those conditions suggests that medicine is increasingly a profession accessible only to the rich.

What a massive increase.

This last part, borne out by the data, is a serious problem. And a few free medical schools and a handful of scholarships aren’t going to reverse the serious financial headwinds discouraging the nonprivileged.

Of course, loan-repayment programs offer nothing to students who don’t finance their education with debt to begin with. But a more fundamental limitation is that because these programs target debt and not price or cost, they risk exacerbating high education prices for all. In theory, students who expect their loans to be fully or partially forgiven become less sensitive to the price of medical education and the price differences among schools. Anticipated debt relief — even partial or uncertain relief — reduces the already weak incentives for medical schools to compete on price and so effectively transfers money to the schools with higher prices.

Price insensitivity is a huge issue across higher education. The investment in a nebulous professional future paid with borrowed funds means that many students just accept the sticker price of whatever their dream is and only consider the consequences after the fact. For medical school, many students are just happy to be accepted. The cost differential amongst choices often only plays a role for those choosing between acceptances from lower-price home state institutions and higher-price private ones.

People often ask if PSLF will be canceled as Trump has proposed or if the government will start forgiving large swaths of student loans as many candidates proposed during the recent Democratic primaries, but that’s missing a key part of the story. Any changes to the details of loan repayment in the absence of an overhaul of higher education funding will not solve the systemic problem.

The cost of medical school–as in the amount of money it takes to train a medical student–is surely high. But is it really 3 times that of a college? Do medical students, in some situations, not also provide value to help mitigate some of those costs? Before the current regulatory climate, they certainly used to. Keep in mind, too, that much of the high-touch clinical teaching is actually performed by residents and fellows, who are essentially paid for by the federal government and not by the institutions that employ them.

I am reminded by this interview with Robert Grossman, the NYU dean that made medical school free:

I mention that each year, N.Y.U.’s 450 medical students paid a total of $25 million in tuition.

“So where does this money go?” I ask Grossman.

“Well, where do you think?” he asks, smiling, raising his hands and shrugging shoulders. I think I know what he’s about to say, but I’m surprised when he says it so bluntly.

“It supports unproductive faculty,” he states coolly.

Unproductive faculty, Grossman explains, are people who draw a monthly paycheck, but don’t write grants, teach, or see patients. Tuition also funds other expenses, but the vast majority of tuition is not spent educating students.

All three–the cost, the price, and the debt–have run away and created a host of pathology within medicine. But if we are to take at face value that the price of medical school is merely a reflection of its soaring costs, then there is some serious fat to trim throughout every step of the process.


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