The economics of medicine: debt

May 1, 2009 at 4:00 am (Economics of medicine)

I’m kicking off a short series on the economics of medicine this week by expounding upon one of the most important—and depressing—aspects of practicing medicine. I first want to address the elephant in the room. Most medical students will receive their education via student loans. Annual tuition prices for medical school can range from less than $10,000 to well above $40,000. Typically, private schools generally cost around $30,000 a year to attend. Next, add on cost of living expenses. In a major urban area, you might well spend over $1000 a month on rent. Once you tack on food, gasoline, car insurance, clothing, and other expenses, your total bill for medical school might run over $50,000 a year—or $200,000 for the whole degree.

Let’s say that you have $200,000 in debt and that the interest rate for your loan is 5%. You can see from the table below that depending on a how long you take to pay off your loan, the total cost of your education will be close to double what you originally expected.

Total payments for student loans

Even if you were to devote a large portion of your salary to paying off your debt, taking the 10 year route will cost more than $25,000 a year. That’s $25,000 more that you have to earn each year after taxes. Since you’ll likely be in one of the higher economic brackets, you will need to make between $35,000-$40,000 beyond your everyday living expenses just to pay off your loans. Instantly you can see why many people pursue subspecialties where the pay is higher. Why become a primary care physician who will spend 20 years paying off debt, when you could become a radiologist and knock it out in five?



  1. Chris said,

    One other item to point out is that interest payments on student loans are tax-deductible only for people who earn under $70K / year.

  2. Visish Srinivasan said,

    Good argument in general, but your numbers may be a bit off (or maybe I’m an exception). I’m starting med school in a few months and my interest rates are more like 6.8% and tuition alone costs me 40k, with living expenses pushing me a little north of 50k (without a car). People often say that there are beneficial programs to have school paid for (HPSP or rural programs), but should it be necessary to do practice in an area you’re not interested in, after 4 years of extra schooling, just to pay that off? There should be easier ways with fewer strings.

    Half M.D.: The numbers I used in this calculation were for my university. As your post demonstrates, the cost of attending medical school in some areas can be even higher.

  3. doforyou said,

    And this is after you have gone to college, paid for the MCAT and completed all of the application and travel expenses. It’s mind blowing.

  4. todd said,

    These are very optimistic numbers. If you’re at a state med school in california (which are ridiculously hard to get into), you’ll pay 50k year including cost of living. If you’re at most private schools, they estimate their budget at anywhere from 65k-80k/year.

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