It was two weeks before graduation, and Kemi Ajayi ’03 was feeling the pressure. It makes me anxious and worried. "I think about it all the time." These are words you might expect to hear from a medical school student on the verge of taking the Hippocratic oath. After all, it will soon be time to start a demanding career as a physician, beginning with a rigorous period of training in a residency program. Making a diagnosis will no longer be an academic exercise supervised by professors. It will be a professional judgment directly affecting the well-being of patients. Their patients.

But the anxiety Ajayi is experiencing is not related to her new responsibilities as a physician. Her medical education at Maryland has prepared her well. What worries Ajayi is how she will pay for that education an education that has left her with a staggering student loan debt totaling more than $150 thousand.

Ajayi is not alone. According to the American Medical Association (AMA), the average debt for medical school graduates nationwide in 2002 was almost $104 thousand, a five percent increase over 2001. Nearly 21 percent of students carry a debt burden of over $150 thousand. For incoming medical students at Maryland, the average projected debt is $97 thousand.

Kerri Ajayi '03

"When I give prospective medical students the bottom line, I see jaws drop around the room", says Jeffrey Edgerton, a Maryland financial aid counselor. "They know it’s expensive, but they have never seen the cold hard numbers laid out for them before." Edgerton counsels incoming medical students on how to obtain federal student loans, scholarships and grants.

The numbers can be overwhelming, especially for out-of-state students who are required to pay higher tuition. In the spring of 2003, annual out-of-state tuition for MD candidates at the medical school was $28,869. In-state tuition was $15,085. Those figures reflect a state-mandated five percent tuition increase that took effect in the middle of the school year. Due to an enormous state budget deficit, another dramatic rise is possible in 2003-04. Since 1995, out-of-state tuition has risen 38 percent from $20,851. The rate of increase is even more remarkable when you consider that out-of-state tuition in 1983 was only $7,322. In-state tuition in 1983 was a mere $1,800.

As tuition continues to spiral upward, so too will the average debt. But tuition is only one part of the debt picture. Students must pay for books, diagnostic tools, licensing exams, administration fees, and computer technology—not to mention health insurance, room and board, and transportation. "We tell out-of-state students that they will need a minimum of $50 thousand per year to get through medical school and pay their basic living expenses," says Jack Gladstein, MD, associate dean for student affairs.

After graduation, rookie physicians usually enter a residency program to begin another three- to seven-year period of intense on-the-job training. The hours are long, and the pay is limited to a range of $30-45,000 a year. At the same time, many young physicians are trying to support a family, buy a new home, and make a car payment. In short, they have all the expenses of any young professional and a student loan debt that’s often the size of a mortgage. According to the AMA, loan payments now account for about 20 percent of average net income for primary care physicians.

Apart from the financial burden, skyrocketing student debt raises a question with important ramifications for the delivery of health care in America. Are medical students choosing to go into higher paying specialties in order to pay off their student loans more quickly, and with less personal sacrifice?

The AMA is concerned that rising loan debt is influencing the career choices of graduates and contributing to the shortage of primary care physicians, including family practitioners, internists, and pediatricians. In addition, the AMA believes high loan debt may discourage new physicians from practicing in public hospitals or in geographic areas where earning potential is limited. In its annual report on medical education in the United States, the AMA also warned that the increasing debt burden "may negatively impact the tendency of underrepresented minority medical students to return to underserved areas and provide care for patients of similar ethnic background."

Jack Gladstein, MD

There can be little doubt that a physician working in a higher paying specialty area such as surgery will have an easier time paying off their loan than a physician in a lower paying primary care specialty. It’s simple economics. But Dr. Gladstein does not believe students are choosing higher paying specialties because of the debt. "While there may be anecdotal evidence to that effect, there is no hard statistical data to indicate that students are basing their career choices on money alone."

As for the anecdotal evidence, Edgerton says he hears plenty of it. Based on his counseling experience with medical students, he believes the burden of paying off debt is steering graduates away from lower paying specialties. "Some students feel that unless they select a higher paying specialty, they won’t see the financial light of day until they’re in their 40s," says Edgerton.

Ajayi chose to specialize in neurology because that’s where her interests lie. But Ajayi also felt compelled to rule out primary care because the lower salary would require too much financial sacrifice. That troubles Ajayi, a Nigerian immigrant who is helping to support her sister. "A student should pick a specialty because they have excelled in that area of medicine and can see themselves working in that field for the rest of their lives."

Because of such concerns, the AMA has made debt relief for medical students one of its top priorities. The AMA has lobbied Congress to limit interest rates and make deferments easier to obtain by broadening the definition of economic hardship. The AMA is also working with the American Association of Medical Colleges (AAMC) to help young physicians manage their debt. The AAMC’s MEDLOANS program provides advice to students, while the DEBTHELP program provides financial planning advice to residents.

For Ajayi, debt management began in her first year of medical school. As an out-of-state student with higher tuition expenses, Ajayi knew she would have to seek the maximum loan amount allowed under the federally subsidized Direct Stafford Loan Program. Under the Stafford program, medical students can borrow up to $38,500 a year. But with living and educational expenses, it was not nearly enough. To limit her debt, Ajayi worked part-time and took advantage of all available scholarships and financial aid provided through the University of Maryland. Like most medical school borrowers, Ajayi has received a deferment on her loan until the end of her residency. Then she will begin repaying the principal and interest at the rate of $1,600 dollars a month for the next 10 years.

To ensure that the best and brightest students are admitted to the medical school, a student’s ability to pay is not considered during the application process. However, once a student is admitted, need becomes the driving force in the financial aid process. And the need is great. Last year alone, school of medicine students received more than $15 million dollars in financial aid, including $12.3 million in student loans. The office of financial aid also administered $2.7 million dollars in grants and scholarships, primarily from university sources.

At Maryland, about 17 percent of the students are able to pay tuition costs without help. Another small percentage of students will graduate with a relatively light debt load. "I was very fortunate that my parents were able to pay a large portion of the tuition costs. I didn’t have to worry about the debt accruing and that was a great relief. I was able to focus on my classes," says Sarah Kremen ’03.

As the cost of providing a medical education continues to rise, alumni supported endowments, scholarships and grants have become even more vitally important. "There is a perception that because we are a public institution, the state will pick up the slack," says Dr. Gladstein. Nothing could be further from the truth. Tuition accounts for less than three percent of our total revenue, and state appropriations account for only eight percent.

Even if money is tight, it is possible to earn a medical degree without incurring debt. After graduating from the University of Virginia with a liberal arts degree, Erica Johnson ’03 did not feel comfortable asking her parents to help pay for medical school. "My younger sister was starting college at the same time, and she needed the family’s help." For Johnson, the solution turned out to be the Armed Forces Health Profession Scholarship Program (HPSP).
Under HPSP, the government pays for medical school in return for four years of military service to begin after residency. HPSP pays for tuition, books, diagnostic equipment, student health insurance and board fees. It even provides a monthly stipend for living expenses. "I have always had an interest in the military; so HPSP was perfect for me," says Johnson, who will be doing her residency at Walter Reed Army Medical Center in Washington, D.C. "If you have an adventurous spirit, and are flexible about where you will live, HPSP is a very good deal."

As she begins a new chapter in her medical career, Johnson is looking forward to buying a new home, a new car, and planning for a secure financial future. "I knew that if I started my career with a large debt, it would have made it more difficult to accomplish my goals. In essence, I would have had to put my life on hold from a financial perspective. Through the HPSP program, I am able to serve my country and graduate debt free."

Johnson chose internal medicine as her specialty because she liked the fact that it integrates all aspects of patient care. Because of HPSP, future income did not influence her decision. "I didn’t want money to be a factor in my choice of specialty. I wanted to choose the specialty that would make me the happiest, and give me the opportunity to do my best."

Sarah Kremen also based her specialty choice on passion, rather than the potential paycheck. After earning an undergraduate degree in psychology, Kremen worked for a behavioral neurologist and studied how the brain processes information and memories. Kremen had discovered her niche and decided to pursue a medical degree herself. "I am sure that other students have taken income into account," says Kremen. "It’s hard not to. But I think most students choose their specialty on the basis of their interests. In the end, you have to like what you do."
Dr. Gladstein hopes that most students will view their career choices in a similar light, and keep their options open. "We tell students that you will be able to pay back your loans no matter what specialty you choose, and we remind students that doctors - regardless of specialty - still make a good living." It should also be noted that the default rate on loans to medical students is phenomenally low. At the University of Maryland, it’s less than one percent.
As for the rising cost of a medical education in the 21st century, students, residents and young physicians should consider the value of their contribution to society and to the noble profession of medicine. And as they write the monthly check to pay off their student loan, it might also help to remember a variation of those well-worn Mastercard commercials: No matter what the bottom line, a medical education is priceless.