In recent years, the cost of undergraduate medical education has been rising at more than twice the rate of inflation. Judging by recent data1 (annual increases of 7% and 4% for public and private medical schools, respectively), a leveling off is unlikely to be realized any time soon. If anything, current economic circumstances are likely to further increase the upward pressure on medical schools seeking to correct budgetary shortfalls. The median student debt burden, $160,000 in 2009, represents an increase of more than 50% over inflation-corrected 1998 figures.1 Not only is this debt consuming an expanding slice of a physician's after-tax income, but we anticipate, as others have stated, that debt will have a negative impact on the size of the national applicant pool, the diversity of the physician workforce, and choice of specialty.
As challenging as the indebtedness issue may be, it could be relieved by increasing financial assistance, reducing the cost of attendance (COA), or a combination of both. While welcome, increasing financial assistance is beyond the reach of most medical schools. Consequently, measures to reduce the COA are likely to prove more productive. With most of the current legislative attention focused on graduate medical education, a meaningful federal remedy to the cost challenges of undergraduate medical education is unlikely in the foreseeable future, so the medical education community must take corrective action.
The Financing of Medical Education: Just the Facts
The 2008 movie 21 chronicles the travails of Ben Campbell, an MIT undergraduate accepted by Harvard Medical School. We are told that Ben cannot afford the COA (estimated at $300,000), a dilemma he plans to address at the blackjack table of a Las Vegas casino. The downstream plot notwithstanding, this loose adaptation of Ben Mezrich's Bringing Down the House illustrates the harsh reality of financing a medical education that is confronting so many students.
The arithmetic is simple. The COA at an accredited, North American medical school includes tuition, fees (e.g., health insurance), living expenses, and sundry expenditures (e.g., books). Heterogeneous by dint of school status (public versus private), legal residence (in-state versus out-of-state), and geography, COA figures vary widely. The median figures for first-year, in-state medical students for the 2008–2009 academic year (AY) varied from $44,000 (public medical school) to $62,000 (private medical school).1 Perhaps more important, the compound annual growth rate for tuition and fees has been consistently outpacing the consumer price index for the past five years,2 thereby resulting in an inexorable relative increase in the cost of medical education.
Defraying the COA is a patchwork of payer elements including self-pay, parental contribution (often assumed by the student), work-study income, scholarships, private student loans, and unsubsidized as well as subsidized federal loans. Federal Stafford loans (offering a 6.8% fixed interest rate for 2009–2010, up from 2.8% during 2004–2005) provide an aggregate limit of $40,500 per student per year of which up to $8,500 may be subsidized (i.e., interest-free prior to repayment or during deferment). Residual financial needs are most often addressed by unsubsidized federal Graduate PLUS student loans (currently offering a fixed 8.5% interest rate) or through less favorable private loans. Besides the different loan options, a limited amount of COA can be supplemented by a number of programs administered by the Health Resources and Services Administration (HRSA). These programs are designed to increase the capacity, diversity, and distribution of health professions under Title VII of the Public Health Service Act.
In general, medical schools provide scholarship aid based on need. At most medical schools, scholarship support is applied after students have borrowed to a designated, fixed level (referred to as the “base loan” amount). While institutions often award the equivalent of “merit aid” (funding aimed at specific individuals on a basis other than need), most medical schools are unable to offer scholarship support at a level that relieves students of substantial educational debt.
The Financing of Medical Education: An Unsustainable Paradigm
As a consequence of the present model, 87% of graduates in 2008 emerged indebted.1 More than a quarter of graduates were saddled with an educational “mortgage” exceeding $200,000.1 Retiring this educational debt will likely consume 9% to 12% of a physician's after-tax income if handled over the default 10-year repayment period. Repayment across 25 years, more workable for some, will result in graduates repaying loans well into their 50s.
This state of affairs is a result of several independent developments. First is the gradual disappearance of the public, in-state tuition advantage, a consequence of the current financial crisis that is exemplified by the recent events in California that saw a one-year tuition increase in excess of 30%. Second is the legislated elimination of the option of deferring repayments for residents in training (beyond the customary six-month grace period) for up to three years without accruing interest on subsidized loans. Third is the fallout from the credit crisis, which may include a declining contingent of private lending companies and federally backed loan providers, elimination of monetary advantages for on-time repayments, and discontinuation of waived loan origination fees.
The factors currently affecting graduate indebtedness do not bode well for prospective medical students. In addition to the rise in the COA and the declining availability of affordable loan options, institutional and external scholarships have been compromised by shrinking endowments and constrained charitable giving. If there is a silver lining, it is that the American Recovery and Reinvestment Act of 2009 (PL 111-5) provided for $500 million in one-time funding for HRSA-administered health professional education of which $200 million was designated to the Title VII programs and $300 million to the National Health Service Corps (NHSC). In addition, the president's FY 2010 budget requested a 15% to 19% increase for the former and a 25% overall increase for the NHSC budget.
Is the Cost of Medical Education Still Consonant With Free Market Principles?
Viewed through an economic lens, is the rapidly growing cost of medical education still consonant with the principle of supply and demand? Are we witnessing a bubble in the making wherein medical education is overvalued? If so, one would expect the number of applicants to U.S. medical schools to be declining. However, until the 2008–2009 AY, the national applicant pool grew for five consecutive years. Even in the face of a 0.2% decrease from 2007 to 2008, the applicant/matriculant ratio remains flush at 2.3:1.0. This indicates that medical education remains highly valued and that the size of the applicant pool is not rate limiting.
The cost of medical education may deter applicants from pursuing a medical career despite an inadequate workforce. This will only be amplified by any reforms to the health care system that limit physician compensation. Without changes in the physician compensation system, a rising COA may favor the choice of highly compensated medical disciplines over less-well-compensated counterparts, including primary care.3
With regard to diversity, equity of opportunity may be eroding. A recent Association of American Medical Colleges analysis for the 2005–2006 AY4 documented that 55% of entrants hailed from families in the highest national income quintile. Moreover, the percent of matriculants whose parental income is in the highest national quintile has been on the increase. The percent of African American matriculants did not change between the 2001–2002 AY and 2008–2009 AY. This is particularly disturbing because the ethnic and racial fabric of the U.S. medical student body is inconsonant with the nation's multicultural human capital. We find these observations concerning at a time marked by the rolling back of affirmative action/race-conscious admission programs.
Increasing Financial Assistance Versus Reducing the COA
As challenging as the high indebtedness issue may be, it is not insolvable. Viewed systematically, the current trends could be reversed by increasing financial assistance, reducing the COA, or a combination of both. Medical schools and their benefactor communities have consistently worked to lighten the indebtedness burden through institutional scholarships. Most recently, Harvard and Yale medical schools stepped in to eliminate the parental contribution of families earning less than $120,000 and $100,000, respectively. Other medical schools (Cleveland Clinic Lerner College of Medicine of Case Western Reserve University and the University of Central Florida College of Medicine) have announced tuition-free programs. The Mayo Medical School is not far behind, providing a $25,000 scholarship to all of its matriculants. While welcome, these interventions are beyond the reach of many less-well-endowed and/or larger medical schools.
Is it time then to consider measures to reduce the COA? Options include (1) limiting tuition increases (e.g., implementing a fixed tuition across the multiyear course of study), (2) improving the lending environment (e.g., rendering the interest on educational debt fully deductible or increasing the Stafford loan limit), and (3) promoting public service (e.g., greater use of NHSC scholarships and loan forgiveness programs). The latter steps represent potential components of heath care reform aimed specifically at increasing the primary care workforce.
We would also welcome consideration of a foreshortened course of study toward the medical degree, an approach consistent with the conclusion reached at the 2009 Josiah Macy, Jr. Foundation conference, “Revisiting the Medical School Educational Mission at a Time of Expansion.”5 Specifically, the foundation recommended “organizing the curriculum to allow students the option of meeting graduation requirements in three rather than four years.” Such is compatible with recent calls to substitute science course work with attainment of competencies and with the general perception that the fourth year of medical education (otherwise spent on selecting a residency program and course electives) may only deliver limited educational returns. If nothing else, such a move would reduce the attendant financial burden for future physicians by $160,000 to $230,000,6 an outcome attributable not to the incidental tuition savings but, rather, to the additional year of income-generating practice.
We would consider three potential constructs to shorten the curriculum. The first option would be the aforementioned three-year course of study toward the MD degree. At the time of this writing, only a few schools (e.g., the University of Calgary Faculty of Medicine and McMaster University Faculty of Health Sciences) offer a Liaison Committee on Medical Education-accredited, three-year curriculum to all students. Earlier U.S. initiatives were discontinued for unknown reasons despite some success. A second option would be compressing and combining the undergraduate and medical education courses of study into a six- or seven-year BS/MD program. Operational in a number of U.S. medical schools, this approach is akin to the long-standing European educational model. A third option, previously piloted, is the accelerated residency model in which the fourth year of medical school is incorporated into an internal medicine or a family practice residency training program. An assessment of the combined six-year approach observed “no statistically significant differences between the two groups in mean scores on the Internal Clinical Evaluation Exercise, standardized in-service exam, monthly attending evaluations, or in Board pass rates.”7 A review of the accelerated family residency program of the University of Tennessee for the 1992–2002 interval resolved that “accelerated residents have performed as well as or better than nonaccelerated residents on standardized testing.”8
A Time for Action
With most of the current legislative attention focused on graduate medical education, a meaningful federal remedy to the cost challenges of undergraduate medical education is not likely in the foreseeable future. A foreshortened course of study is not the only solution. In fact, it can hardly be considered a solution until such time that its educational credibility has been vetted. However, it is an option that should be considered along with other promising possibilities. Above all, one must uphold the principles of inclusiveness and pluralism and of a primary care-rooted health care system. After all, it is the universal mission of every medical school to ensure a graduating student body of unassailable excellence and representative diversity, exposed to a balanced choice of disciplines.
Drs. Adashi and Gruppuso declare no conflicts of interest. Dr. Adashi is a member of the Scientific Advisory Board of SeventhSense Biosystems, Inc. and a member of the Board of Directors of Inverness Medical Innovations, Inc.
The opinions expressed in this article are those of the authors alone.