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OCR for page 198
Chapter ~
HOW THE MEDICAL STUDENT FINANCES EDUCATIONAL EXPENSES
Mary A. Fruen
Introduction
Most medical schools are increasing tuition because their costs
have been escalating very rapidly, federal funding is dropping, and
the ability to draw on new resources is becoming limited. Scholarship
assistance to students is declining; the National Health Service Corps
~ NHSC ~ scholarship program with service-payback provisions is be ing
phased out, and low-interes t loans are being curtailed. Thus, it is
projected that the amount medical students borrow will dramatically
increase and will be at substantially higher interest rates over the
next few years.
Aspiring medical students could be discouraged by the prospect of
large debts and a less certain future, and thus the entry of
economically disadvantaged applicants, including minorities, could
decline. Financial concerns could affect medical school performance,
the medical graduate with higher debts may need to select a more
lucrative career field, and the practicing physician may adopt a
practice style that assures sufficient income.
This chapter explores these issues. The first section discusses
trends in institutional support, with emphasis on the role of
tuition. The next section presents data on medical students' sources
of support and summarizes changes in sources of support as a result of
shif ts in public policy. Next, current loan and scholarship programs
are described, as well as difficulties anticipated with high-cost
programs. The final section examines the likely effects of increasing
s tudent indebtedness .
Medical School Revenues
1980 Revenues
In 1980/81, medical schools ' revenues totaled $6.4 billion (Table
1~. Of this, $1.9 billion (29.3 percent) was derived from the federal
government, the largest single source of support. State and local
governments contributed $1.3 billion (20.9 percent); medical service
funds, $1.0 billion (15.6 percent); and tuition and fees, $0.3 billion
(5.4 percent).
Revenue Source Trends
Proportional contributions to medical school revenues by various
sources have changed considerably over time. Table 1 shows the
sources of support for selected years between 1960/61 and 1980/81.
198
OCR for page 199
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During the 1950s and early 1960s the federal share of medical support
gradually increased to a high of S4 percent in 1965; thereafter, the
share contributed by the federal government has generally been
declining. Coincident with the decline in federal share, the share
provided by state and local sources rose from 15 to 20 percent, and
the share contributed by medical services income increased from 3 to
15 percent.
Two major trends in sources of support since the late 1960s have
been summarized as follows:
The first change is the diminished role of the federal
government in the financial structure of U.S. medical
schools. . . . Grants and contracts for research, teaching
and training, and public service have all decreased in
relative importance during this time period. The other major
change is the expanded role the medical schools and
universities have assumed in providing for their financing. .
Nearly all of this increase represents revenues for providing
health care services, either through formal, organized
medical practice plans or via agreements with school-owned
hospitals or affiliated hospitals. The prospect of federal
government budget cutting, should it continue to constrain
funding for biomedical research, strongly suggests that the
patterns just described will continue for the foreseeable
future.1
Federal institutional support for undergraduate medical
education provided both institutional and special project grants
during the late 1960s.2 In the early 1970s capitation payments
to medical schools were introduced to further encourage
enrollment expansions and to provide a stable base of support.
These contributions to institutional support allowed smaller
tuition raises. The direct institutional support for medical
education generally increased until 1974, but it has subsequently
been declining. Capitation has been phased out, so that other
funding sources will have to make up for the loss of these funds.
Trends in Tuitions
Medical students' tuition and fee payments have been repaying
only a small proportion of the costs of their medical
education.* Educational costs are subsidized by payments for
medical services, research, etc. However, because of financial
pressures on the institutions and declining direct federal
support of medical education, students' tuition and fees have
*Current Association of American Medical Colleges (AAMC)
estimates suggest an average cost of educating a medical student
at $20,000 per year.3 However, this is only a rough
approximation, because no recent study has undertaken the complex
process of attempting to allocate medical education costs
separately from research or patient-care costs.4
200
· ~
OCR for page 201
been increasing more rapidly. In the past decade tuition and fee
income has increased more than five-fold' rising from $56 million in
1969/70 to $308 million in 1979/80 (Table I). It more than doubled in
constant dollars. * This represents an increase in revenue share from
3.6 percent to 5.4 percent. It is anticipated that many medical
schools will be forced to make especially high tuition raises as other
funding diminishes.
Individual Student's Tuition Costs,
Indebtedness, and Sources of Support
Tuition
Tuitions vary widely across medical schools.5 Private schools,
with a median tuition in 1981/82 of $9,337, are substantially more
expensive than are state-supported public schools with a median
tuition of $2, 458 for residents (Table 2 ~ . In 1981/82, 11 schools
charged entering tuition of $10, 000 or more, the two most expensive
being Georgetown and George Washington Universities, at Ill, 950 and
$15,000, respectively.
Table 2 shows trends in median tuition since 1960/61. Private
school tuition increased nine times, rising from $1,050 to .9,337.
Public school tuition showed a fivefold increase from $498 to $2,458
for residents. Inflation-adjusted figures show a nearly threefold
constant-dollar increase in private school tuition and an increase of
1.6 times in public school tuition for residents. This overall trend
in medical school tuition is reflected in rising indebtedness of
graduating medical students.
Indebtedness
A greater proportion of medical students have been incurring debts
by graduation, and the amounts of indebtedness are rising. AAMC
surveys show that the percentage of medical students reporting
indebtedness rose from 72 percent in 1971 to 83 percent in 1982 (Table
3~. Among those reporting debts, the average indebtedness increased
from $5,500 to $21,100. This represents a rise of about 1.6 times in
constant dollars. Indebtedness is expected to exceed $25,000 for 1982
graduates.6
Obviously, these aggregate data obscure individual variation. It
is uncertain how much of the increase in proportion with debts and
average indebtedness reflects Guaranteed Student Loan (GSL) borrowing
for discretionary purchases. Cheap, subsidized GSL loans likely
*Most of this increase can be attributed to a 67 percent rise in
entering class enrollments during that period (Table 10~.
201
OCR for page 202
TABLE 2 United States Medical Schools Median Tuition and Fees, First-year Students,
1960-1981
Consumer Private Schools Public Schools
School Price Resident Nonresident
Year Index Actual AdjustedC Actual AdjustedC Actual AdjustedC
1960/61 88.7 $1,050 31,050 $ 498 $ 498 $ 830 $ 830
1965/66 94.5 1,440 1,352 600 563 1,000 939
1970/71 116.3
1973/74 133.1
1975/76 161.2
1976/77a
170.5
181.5
1,440 1,352
2,000 1,525
2,500 1,667
3,075 1,692
3,450 1,795 1,025
1977/78 181.5 4,150 2,028 1,200
1978/79b 195.4 5,994 2, 721 1,473
1979/80b 217.4 6,725 2,744 1,750
1980/81b 246.8 7,910 2,844 2,079
1981/82b 272.4 9,337 3,041 2,458
a Tuition only.
b Data obtained in the fall, after school year had begun. Figures for other years
obtained prior to the start of the school year.
c Ad justment for the academic year was made using the CPI for the first calendar
year of which the academic year is a part; although the CPI f igures used had 1967
as a base year, the data were adjusted to constant 1960 dollars.
SOURCES: Data provided by Association of American Medical Colleges staff;
calculated from Medical School Admission Requirements, and Economic Report of
the President for CPI figures.
600
683
850
960
563
521
567
528
533
586
669
714
747
800
1 ~ 300 991
1 ~ 846 1 ~ 231
2~060 1~134
2~160
2 ~ 343
3~400
3~761
4~118
5~108
1~124
1~145
1~543
1~535
1~481
1 ~ 663
202
OCR for page 203
TABLE 3 Indebtedness of Graduating Medical Students Reporting Debt,
Selected Years, 1971-1982
Seniors Reporting
Year Indebtedness
Ac tual Ad Justeda
Average Average
Indebtedness Indebtedness
-
1971 72: ~ 5~500 $ 4~000
1975 71 9~000 5~000
1978 76 13~800 6~300
1979 76
1980 77
1981 76
1982 83
15,800 6,400
17,200 6,200
19, 700 6, 400
21,100 NA
aAdjustment for the academic year was made using the CPI for the
first calendar year of which the academic year is a part; although
the CPI figures used had 1967 as a base year, the data were adjusted
to constant 1960 dollars.
SOURCE: Association of American Medical Colleges, Unpublished
survey data.
attracted some who would not have borrowed in the absence of such a
program. Also, it would be useful to have further breakdowns of
indebtedness figures to determine the numbers of students with debts in
several ranges above the median (e . g ., $40 , 000 to $50 , 000 ~ .
Sources of Support
Over the past two decades, there have been major changes in how
medical students f inance their education. Until the 1960s, medical
students and their families paid most of their educational expenses,
negotiating private loans if necessary.7~8 Since that time medical
education costs have escalated rapidly, and medical students have
increasingly relied upon loans and scholarships from outside sources.
Table 4 summarizes results from surveys of how the individual
medical students financed their education between 1963/64 and 1977/78.
The average proportion of income derived from the student's own or family
resources declined from 78 percent in 1963/64 to 69 percent in 1967/68
and remained at that level in 1974. By 1977/78, the most recent survey
year, the average share contributed by medical students and their
f amities had fallen to about 59 percent.9 Unfortunately, no more
recent data are available. It is particularly important to collect new
data on both indebtedness and sources of support now that medical
students' indebtedness is sharply increasing and some shortage of
financial aid may occur.
203
OCR for page 204
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National Loan and Scholarship Programs
Historical Overview of Programs
Financial assistance for medical students has grown markedly and
has changed in nature over three decades. During the 1950s, some loan
and scholarship funds were available from states, medical school
funds, and private sources.7 In 1962, the first national program of
financial support for medical students was instituted by the American
Medical Associationt s Education and Research Foundation (AMA-ERF) .
This program guaranteed loans made by private lenders, with funds
obtained mainly from practicing physicians.
The Health Professions Educational Assistance Act of 1963 (P. . L.
88-129) authorized the first direct federal funding of medical
education, under the impetus of perceived physician shortages. This
funding included a student loan program to improve access to the
profession by students from lower socioeconomic backgrounds. By the
mid-1960s, these health professions loans constituted more than half
of all loan and scholarship funds for medical students (Table 5~.
Subsequent renewals expanded this program and instituted an option to
have loans forgiven for service in a physician-shortage area.2 In
addition, a scholarship program was established for students with
extreme financial need.
The evolution of the medical student's financial assistance
ref. lects changing public policy during the 1960s and 1970s. In the
early 1970s loan repayment and forgiveness provisions were revised. A
ma jor shif t in the philosophy of student assistance programs
recognized concern that physicians were maldistributed geographically
and by specialty despite growing physician supply.1O Therefore,
provisions of student loans and scholarship programs were geared
toward improving access to physicians' services. Public Health
Service and National Health Service Corps (NHSC) scholarships were
established, with awards contingent upon an agreement to practice in a
physician-shortage area . Similarly, recipients of Armed Forces Health
Professions scholarships incurred a military service obligation.
These service-conditional scholarships were the first large-scale
federal grants to be awarded medical students without regard to need
(Table 6~. These programs, however, proved inadequate to encourage
sufficient numbers of medical students to commit themselves to less
lucrative, underserved-area practices.
Consequently, the Health Professions Educational Assistance Act of
1976 (P.L. 94-484) greatly expanded the NHSC scholarship program and
increased its awards. Recipients agreed to serve in a designated
physician-shortage area for one year in exchange for each year of
support. In addition, this legislation created a new program of
nonrepayable grants for freshman medical students of "exceptional
financial need," in amounts equivalent to the NHSC scholarships.
When the Health Education Assistance Loan (HEAL) Program was
instituted, federally insured HEALs, at market interest rates, began
to replace the subsidized Health Professions Student Loans (HPSLs).
205
OCR for page 206
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TABLE 6 Amounts of Loans and Scholarship Punds, 1975/76, by Source
Not administered by schools
Scholarships
Armed Forces HPSb $ 21,012,672 14.1
Public Health Service/ lIPSb 16,624,949 11.2
Physician Shortage Area 2,051,522 1.4
National Medical Fellowships 1,700,134 1.1
Other 5 ~ 707,077 3.8
Subtotal ~ 47,096,354 31.1
Loans
AMA-EREC ~ 5,926,143 3.9
Guaranteed loans 36,529,783 24.6
Other loans 5,253,652 3.5
Subtotal $ 47,709,578 32.1
To tal S 94,805,932 63.7
Administered by schools
Scholarships
Health Professions Scholarships $, ],863,373 1.3
Robe rt Wood Johnson Scholarships I ,314,417 .9
School funds 15,068,178 10.1
Other scholarships 2,161,529 1.5
Subtotal 3 20,407.497 13.7
Loans
Health Professions Loans $ 20,077,418 13.5
Robert Wood Johnson Loans 1,006,213 e 7
Guaranteed loans 4,069,035 2.7
School funds 6,373,045 4.3
Other funds 2,046,739 1.4
Subtotal S 33,572,450 22.6
Total ~ 53,979,947 36.3
Grand total
148 ~
'879 lOOeO
all3 schools reported.
bHPS indicates Health Prof essions Scholarship .
CAmerican Medical Association-Education and Research Foundation.
SOURCE: Medical education in the U. S. JAMA, 1976.
207
OCR for page 208
Though some HPSLs remained available, eligibility was limited to
students in exceptional need.
Overall, the loan and scholarship provisions had the effect of
increasing the proportion of medical education costs borne by the
s tudent ,10 Federal f inancial assistance programs were being scaled
down. The cost of borrowing money rose for all but the most needy
medical s tudents, so that NHSC scholarships with service commitments
looked relatively attractive to many.
Over the past couple of years federal priorities have again been
changing, so that student assistance programs are being reappraised.
Currently, health care costs comprise nearly 10 percent of GNP, a near
doubling of its share in two decades. Some policymakers forecast an
overall surplus of physicians, and postulate that one contributor to
health care cost inflation is the rapid growth in physician supply
relative to population. 11 The shrinking number of people per
physician is also beginning to alleviate physician availability
problems in less-populated areas .12 Thus, federal programs to
subsidize medical education are being cut back as a result of changing
priorities, general economic problems and budgetary constraints, and
reluctance to support medical students whose pro jec ted incomes are so
high.l3
Aggregate Loan and Scholarship Data
The total amount of loans and scholarships paid medical students
has risen from $15 million in 1963/64 to $402 million in 1980/81
(Tables 5, 7~. This represents more than a ten-fold increase in
inf lation-adjusted consent dollars. This substantial increase can be
explained by rising tuitions and other expenses and by the expanding
availability of financial assistance from federal sources.
In 1980/81, loans totaled $264 million, which represents 65.7
percent of all combined loans and scholarships. Those scholarships
with service commitments amounted to $99 million (24.8 percent); other
scholarships $37 million (9.2 percent); and work-study $1.4 million
(0.4 percent).
The Guaranteed Student Loans (GSLs) in 1980/81 totaled $189
million, 71.7 percent of all loan funds. National Direct Student
Loans ~ NDSLs ~ and HPSLs contributed 6. 0 and 8. 6 percent, respectively.
HEALs comprised 5.8 percent, and other sources made up the remaining
7.9 percent (Table 7 ~ .
Current Status of Federal Loan and Scholarship Programs
Former . Secre tary of Health and H''n'~ n Services Schweiker sort rized
the administration's position on financial aid for medical students as
follows:
208
OCR for page 213
Effects of Changes in the Availability
of Financial Assistance Programs
Entering Class Characteristics
Federal financial aid for medical students has been
predominantly aimed at achieving specif ic policy goals--expanding
physician supply or ameliorating maldistr~bution. Only programs
for the exceptionally needy were intended specifically to meet
financial needs; even those programs have the social purpose of
increasing access to the medical profession for the economically
disadvantaged, including minorities. Policymakers have offered a
further underlying rationale for these programs--that recipients
are more likely to practice among medically underserved
populations in rural and inner-city areas.
Past efforts to increase the number of medical school
graduates, including the stimulus of financial incentives, were
successful. First-year medical school enrollments doubled over
the past two decades, rising from 8,298 in 1960/61 to 17,204 in
1980/81 (Table 10~. For the past few years, annual growth in
entering class size, however, has slowed to less than 1 percent,
and this year entering class size dropped.22
During this period the composition of medical school classes
changed, with increases in minorities, women, and those from less
affluent backgrounds. Increased minority enrollments resulted
f ram attempts to broaden the socioeconomic diversity of entering
medical classes and to expand educational opportunities for
racial ethnic groups underrepresented in medicine.23 Special
programs were instituted for minorities and other disadvantaged
applicants, to recruit them, to provide exposure to medical
careers, and to address educational deficiencies.24 Financial
aid was also very important in eliminating financial barriers to
medical school entry for minorities and others from less affluent
families. The number of underrepresented minorities enrolled in
first-year classes increased more than five times, rising from
292 in 1968 to 1,548 in 1980 (Table 10~. This represented a
tripling of the proportion of minority students from 3.0 percent
to 9.0 percent, and the proportion of women more than tripled
from 9.0 to 28.9 percent.
Koleda and Craig8 reported some increases in medical
students from low-income families* between 1963 and 1975, but the
gains were "not as substantial as is perhaps commonly assumed."
The "very disadvantaged" (lowest one-fifth of families)
progressed greatly from 4.8 to 8.5 percent. The proportion of
medical students from the lowest two-fifths of American families
*They caution that these data suffer from three weakness:
(1) the relativity of any definition of "low income," (2) the
infrequency with which family income data are collected, and
(3) the questionable reliability of reported income data.
213
OCR for page 214
Table 10 Medical School Firat-year Enrollment Data, ~ 960/61 Through
1980/81
First-Year First-Year Underrepresenteda
Class Enrollment Minorities Women
1960/61 8,298
1961/62 8,483
1962/63 8,642
1 o4 8,772
1 ~~65 8,856
1965/66 8,759
1966/67 8,964
19~7/68 9,479
1968/79 9,863 292
1969/70 10,401 501
1970/71 11,348 808
1971/72 12,361 1,063
1972/73 13,726 1,172
1973/74 14,185 1,301
1974/75 14,963 1,473
1975/76 15,351 1,391
1976/77 15,667 1,400
1977/78 16,134 1,450
1978/79 16,620 1,443
1979/80 17,014 1,547
1980/81 17,204 1,548
1981/82 17,268 1,671
1982/83 17,254 1,626
(3.0)
(4.8)
(7.1)
(8.6)
(8.5)
(9.2)
(9.8)
(9 1)
(8.9)
(9.0)
(8.9)
(9 1)
(9.0)
(9.7)
(9.4)
887
948
1~256
1~693
2~315
2~743
3~260
3~656
3~876
4,149
4,184
4~748
4~970
5~317
5 ~ 462
.
(9 eO)
( 9 e 1 )
(11 ~ 1 )
(13.7)
( 16 e 9 )
(19 e 6)
( 2 2 e 3 )
(23.8)
(24 e 7 )
(25 a 7 )
(25e 2)
(27 e 9 )
( 28 e 9 )
(30 e 8 )
(31.7)
aIncludes blacks, American Indians, Mexican Americans, and mainland
Puerto Ricans; includes 11 to 15 percent repeating firat-year class.
SOURCES: Medical education in the United States. Journal of the
American Medical Association. Annual Reporta--1978 and 1981;
Association of American Medical Colleges, Office of Minority Affairs.
214
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in income only increased from 16 to 19 percent (Table 11~.
Comparable recent data are needed.
Ef fects of Higher Medical Education Costs on Admissions
Hadley25 reviewed the available research on the ef fects on
medical school application rates of the rate of return to investment . *
TABLE 11 Family Income Distribution Among Students in Medical School;
1963 and 1975
Family Income Quintile
Lowest Second Lowest Highest
Fifth Lowest Fifth Two-Fifths Fifth
.
1963
Income
Dis tribut ion
$0-$3,096 $3,096-65,200 $0-~5, 200 $9,969+
All families 20.0X 20.0:
Medical student
families
1975
4.8X 11.6X
40 ~ 0% 20.0:
16.4% 49.0%
Income $0-36500 $6500-610,722 $0-610,722 $20,445+
Distribution
All families 20.0X 20.0Z
Medical student
forties
40. ON 20.0:
8 Z 10.8%
19.3% 50.0%
SOURCE: Reference is, p. 5
*In determining the anticipated rate of return, a phy~ician's
expected lifetime net earnings and the number of working years
would be estimated. Costs incurred in training and possible
practice time given up during the training period are deducted in
estimating present values of expected earnings.
215
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The conclusions reported were as follows: "Studies of medical school
application rates show a positive and statistically significant
relationship between physicians' incomes (or the rate of return to
becoming a physician) and the number of applicants." This suggests
that the applicant pool will diminish as medical students'
indebtedness rl seq.
Ayers and colleagues studied the impact of very high tuition at
Georgetown University School of Medicine on applicants and enrolled
medical students.26 The quality of applicants and enrollees, as
evidenced by science grade point averages and Medical College
Admission Test scores, remained stable despite tuition increases much
more rapid than those at most other medical schools. Overall, the
sudden rise in tuition and corresponding financial aid requirements
caused little change in socioeconomic diversity of matriculants.
However, the impact may be greater as the major support for their
students, scholarships with service commitments, is curtailed.
In the future, potential applicants from lower-income families may
be discouraged by the prospects of high costs and large debts. They
would be entering medical school anticipating a four-year program
followed by residency averaging nearly four years, with a less certain
future in practice. Currently, the postulated effects of these
financial factors on application and entry into medical school are
somewhat speculative; admissions officers have expressed concern about
maintenance of socioeconomic diversity in entering classes. More data
are needed on this question.
Financial considerations are beginning to intrude into medical
school admissions from the selection committee 's perspective as well.
Traditionally, admissions committees have considered applicants on the
basis of academic and personal potential to complete medical school
successfully and become a good physician. A third factor--the ability
to finance medical education--has been added to the admissions process
in at least some of the more expensive medical schools. Many medical
schools are no longer able to provide financially for their students;
those without substantial personal resources are pro jected to incur
increasingly larger debts at higher interest rates, and some may face
cash-flow problems in residency and starting practice. Therefore,
these admissions committees are concerned that the students have plans
for securing appropriate f inancial aid, and a realistic understanding
of their pro jected debts and payback requirements .
Ef feces on Medical Students
Medical schools facing serious financial problems increase tuition
concurrent with declining f inancial aid and cutbacks in low-interest
loans. Thu';, it in pro jected that medical students will dramatically
increase the amount borrowed, at substantially higher interest rates,
with serious payback problems.
Curtailment of the NHSC scholarship program will affect minority
medical students disproportionately. As Table 12 shows, 35.3 percent
of NHSC scholarship recipience in 1980/81 were minorities as compared
216
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TABLE 12 Comparison of National Bealth Service Corps Scholarship Recipients and
Total Medical Student Population, l9BO/81
Nat ive Asian
White Black Hispanic American American Women
Scholarship
recipients
(4,815 medical) 62.7: 22.02 9.9: 1.0: 2.4X 32.9X
U. S. medical
school population
(65 189) 85.0: 5.7Z 4.2: 0.3: 3.0: 26.5%
,
SOURCE: Fifth Annual Report to the Congress on the National Health Service Corps
Scholarship Program for Fiscal Year 1981. Health Services Administration, 1982.
with 13.2 percent minority enrollment. Some medical schools will be
particularly hard hit, including predominantly black Heharry Medical
College with 159 scholarship recipients and Howard University with 95
recipients (Table 13~.
Financial difficulties could have indirect effects on medical
students' performance and retention. For example, a student with
financial problems may work, worry, skip meals, or have an unpleasant
environment, which could have spillover effects on academic
performance. Some medical school administrators are concerned about
the repercussions of students' financial difficulties, but only
isolated instances of this problem have been reported to date.
Indebtedness and Career Plans
Physicians' incomes vary widely across specialties.27 Yet,
existing studies show that the impact of income on specialty choice,
if any, has been weak.28 (See Chapter 9.) However, anticipated
earnings could be more influential in specialty selection by future
medical graduates with significantly higher debts. One might
hypothesize that those with particularly high debts may select a more
remunerative specialty in order to afford debt repayments. Thus far,
available data do not support this hypothesis.
A study of the relationship of indebtedness to specialty of
graduates has recently been completed at George Washington University
School of Medicine, where tuition is highest nationally.29
Indebtedness of sensor students choosing relatively low-paying
specialties (pediatrics, psychiatry, and family practice) differed
only slightly f ram indebtedness of those planning more remunerative
specialties (ophthalmology, radiology, anesthesiology, pathology, and
surgery and its subapecialties). In fact, there was lower
indebtedness for the group pursuing the more lucrative specialties in
three of the four classes studied.
217
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TABLE 13 Medical Schools with the Greatest Number of National Health
Serv ~ ~ ~ _
Medical School
1981/ 82 Ente ring
Awards Class Tut Lion
Meharry Medical College
School of Medicine,
Tennessee
159 $ 6, 500
Georgetown University 107 15,950
School of Medicine,
Washington, D.C.
George Washington University 105 15,000
School of Medicine,
Washington, D.C.
Lo ma Linda University 101 lo, 000
School of Medicine,
California
Tufts University 101 12, 125
School of Medicine,
Massachusetts
Howard University 95 3~000
College of Medicine,
Washington, D. C.
University of Puerto Rico 93 1,500 (resident)
School of Medicine, 8,000 (nonresident)
San Juan .
Jefferson Medical College, 86 9,700
Pennsylvania
Boston University 71 11,100
School of Medicine,
Massachuse tts
SOURCES: NESC Scholarship award data from Fifth Annual Report to
the Congress on ~
~ Services Administration,
1982. Tuition figures from Medical School Admission Requirements,
1983-84, AAMC, 1982.
218
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Among residents at the University of Michigan Hospital, no
significant relationship was found between level of indebtedness and
specialty.30 A national survey of medical residents also found no
significant differences in mean debts between those in less lucrative
specialties and those in more lucrative ones (anesthesiology, surgery,
radiology, and pathology).31
The effects of high indebtedness on career activities should be
monitored as indebtedness rises, borrowing terms worsen, and service
payback options are cut. As medical students assume more substantial
debt burdens, they will have increasing financial pressures to enter
lucrative specialties regardless of preferences.
Effects of High Indebtedness on Practice
Rising indebtedness could also have negative repercussions for the
physician's willingness to serve in underserved-area practice. Income
levels in such areas have traditionally been relatively low. However,
this question is complicated, because market factors related to
growing physician supply may in part counterbalance the relatively low
incomes in undernerved geographic areas.l2 Data are needed on the
relationship of physician location choices to medical education
indebtedness. It would be useful to separate out those who entered
practices in inner cities and less populated, underserved rural areas
in the absence of NESC service commitments or similar loan-forgiveness
programs.
Physician manpower planners have also been concerned about the
decline in physicians entering medical research.32 The trend away
f ram this less remunerative type of medical career could be further
exacerbated by the need for new physicians to repay prodigious debts,
in combination with the uncertainty of federal research funding.
Finally, it is hypothesized that physicians with large medical
school debts may attempt to recoup repayment costs through higher
patient f ees, greater service intensity, or larger patient loads.
Physicians are estimated to control the ma jority of medical care
decisions, because consumers are relatively uninformed about their
medical needs and treatment requirements, and insurance coverage
lessens their immediate concern about medical care costs. With
fee-for-service reimbursement for medical care services, the physician
is rewarded with higher income for providing more intensive and costly
services because of anomalies in the medical marketplace.35
Empirical evidence on the ability of physicians to induce demand
is inconsistente33~35 However, unmanageable debt could provide
additional incentive for the physician to prescribe more
revenue-producing procedures.
Summery
Availability of low-cost student aid and assistance with
service-payback provisions are dwindling at a time when many medical
schools are facing financial difficulties and tuitions are rising
219
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rapidly. The National Health Service Corps scholarship program is
being phased out. The subsidized Guaranteed Student Loans for medical
students have instituted a needs test for those with family incomes
over $30~000e Therefore, it is anticipated that medical students will
rely increasingly on HEAL program loans at market interest rates,
unless a lower cap on these loans insured by the federal government
limits this source of funds further. If so, a signif leant shortage of
loan f unds could result .
Some medical students are projected to have prodigious debts, at
high interest rates, with serious repayment problems. The prospect of
sizable debts could be a major deterrent to medical school entry for
those from less affluent backgrounds. The implications are
particularly great for aspiring minority medical students because of
their frequent economic disadvantage, their recent disproportionate
reliance on NHSC scholarships, the aversion of some to undertaking
large debta' and the attraction of alternative career choices that
offer immediate income. Data on the parental income and occupational
levels of recent entering classes should be analyzed, and these
studies should be repeated periodically as debt burdens increase.
Counneling may be appropriate for some students, to suggest debt
management strategies that will not impair academic performance.
Thus far, no relationship has been shown between indebtedness and
specialty ~election, type of medical career pursued, or location
choice. However, such analyses should be repeated in the future as
medical students' debts increase substantially. The impact on
practice patterns will be more difficult to ascertain, but massive
debts could motivate the physician to maximize income generated. The
combination of substantial debts and tight money could also pose
problems for some new physicians attempting to start practice.
New sources of financial assistance for medical students should be
explored. Alternatives may be needed soon if federal loan and
scholarship programs are curtailed further. If equity of access to
the medical profession is to be maintained, a targeted program with
greater subsidies may be needed.
220
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15. The Student Guide: Five Federal Financial Aid Programs 1982-83,
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. .
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____
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223
Representative terms from entire chapter:
medical education
