BY GINA SHAW
    
 IN 1994, THE AVERAGE P&S MEDICAL STUDENT GRADUATED WITH an overall debt load of about $65,000; the highest single amount owed by any one student was $130,000. Ten years later, that debt load had nearly doubled: the class of 2004 graduated with an overall average debt of $114,000, and 29 percent of the class owed more than $150,000. Figures are still being compiled for the class of 2005, but the picture is not likely to get brighter.
     Columbia students and graduates are not alone in this ever-deepening pool of debt. In March 2005, the Association of American Medical Colleges issued “Medical Educational Costs and Student Debt,” a report of a national working group that catalogued the rising debt levels of medical students, residents, and young physicians all across the country. Graduates of private medical schools like Columbia left school in 2003 with an average overall debt load of just below $120,000; graduates of public schools owed, on average, just over $80,000. With no tuition increases — an unlikely scenario — 2007’s graduates can expect average debt of nearly $160,000 (private) or $120,000 (public), the report projects . . . if educational debt continues to rise at current rates and physicians’ incomes continue to barely keep pace with inflation, there is realistic concern for the future affordability of medical education, the report noted.
     Ellen Spilker, Columbia’s director of student financial planning at P&S, uses an example in her exit interviews with students: Even in lower-paying specialties, by the time a student finishes residency and fellowship training, most should be making around $120,000 in gross income and bringing home around $65,000 after taxes. “If you pay $2,000 a month in loans, you can still live like a middle-class person,” she says. “But the higher interest rates go, the more the number jumps exponentially.” And to make matters worse, the more debt a student has, the more likely that a larger percentage of it is at a variable rate, possibly without a cap. “The lower the debt is, the more likely it’s at a fixed rate, because those are better loans. All the alternative loans have variable rates that can increase, and many have no caps.”
    
 What’s more, given that everyone expects historically low interest rates to rise, even “good” loans will likely see rate increases soon. “The people who just finished school, if they consolidated their loans in the last five years, are very lucky: They’ve permanently locked in the majority of their debt at interest rates of 5 percent or below,” says Ms. Spilker. “Now, going forward, they won’t be able to take advantage of those low rates. The rates are variable and change every July 1, and I think we were in a very unusual period of time with such low interest rates.” If, for example, you have a debt load of $150,000 and are paying it back over 30 years at 4.5 percent, your monthly payment is around $750, but that payment climbs by about $100 per month for every percentage point increase in the interest rate.
     “The debt load and the tuition for med students have risen dramatically in recent years, at much higher rates than physician salaries have increased. Physician salaries have been pretty flat for the last five years, and the debt levels are rising by 5 percent to 7 percent a year. It’s out of sync. And it’s starting to have consequences,” says Deborah Powell, M.D., dean of the University of Minnesota medical school, who chaired the AAMC working group. “Now, at this point medicine is still economically a good bargain. On average — although there are extremes on either side — it takes 8 percent of a physician’s after-tax income to pay off educational debt, if they consolidate their loans over 30 years at the present time. That’s something people can manage economically without too much pain. But if we don’t change the paradigm, 20 years from now it will take 50 percent or 60 percent of your after-tax income to pay off your debt. That’s untenable. This is a coming crisis, if it hasn’t reached those dimensions already, and we have to start to address the problem now before it’s much too late.”
     “If you use the formula that lenders have given out in terms of what is a good or manageable debt level versus an
The debt and the tuition for med students have risen dramatically in recent years, at much higher rates than physician salaries have increased. Physician salaries have been pretty flat for the last five years, and the debt levels are rising by 5 percent to 7 percent a year. It’s out of sync. And it’s starting to have consequences.
unmanageable debt level versus an impossible debt level, we’re starting to see more students at the unmanageable toward impossible end of the spectrum, which is something around 15 percent of your adjusted available income. Several years ago, I already had several students at that level and beyond, and it’s increasing,” says Mary Fenton, former assistant dean for student financial planning at St. Louis University School of Medicine, who now consults on medical student tuition and debt issues.

Considering Consequences, Creating Solutions
Ultimately, an untenable medical school debt level could lead to some obvious consequences. First, students without family or personal resources to pay for medical school themselves, or the ability to garner sufficient need-based grants and scholarships, may simply choose another career path — one with lower tuition rates and fewer years of costly education and low-paying specialty training required. Those who do continue to pursue medicine may find themselves boxed into a corner when it comes time to decide where and how to practice.
     Historically, notes Ms. Spilker, debt hasn’t influenced students’ choice of specialty — though that may be changing as the dollar figures become astronomical. But Ms. Spilker, who had been managing student financial planning at P&S since 1979, believes debt is beginning to shape practice decisions. “Up until now, people have chosen their type of practice — academia, research, private practice, and so on — based more on issues of intellectual challenge, lifestyle preferences, and whether it’s a good match for them. But as monthly payments reach around $2,000 and higher for high borrowers, I think you’re going to see debt having an impact, with people feeling forced to make career choices based much more on income.”
     What can be done about this rising tide of debt? The AAMC report makes a number of recommendations. For starters, the report suggests that medical schools explore “creative means of generating monies,” such as alumni fund raising aimed at scholarships and fund-raising efforts directed at local and regional foundations.
     At P&S, anniversary classes are raising funds for scholarships or low interest loans, says Anke Nolting, associate dean and executive director of Alumni Relations and Development. Fund goals range from $250,000 for a “young” class to $1.5 million for some of the older classes that may have matching gifts opportunities. Eight classes have established funds so far, and Ms. Nolting hopes to soon have eight more. “As anniversaries come along over the next five years, this is the responsibility we feel the alumni need to embrace.”
     Scholarship funds are designed to be as general as possible, Ms. Nolting says. “The requirement is only that they must be good students and that they are in need.” The financial aid office provides student profiles, and class committees choose student recipients based on those profiles. “For example, the financial aid office will give me three names of very needy students for the Class of 1954 to consider, and the committee will decide which of those three students should become the Class of ‘54 scholar. If the students continue to achieve, the scholarships are renewed.”
     Some individual alumni have established their own scholarship funds, and classes and individuals are also creating loan funds. Recently, dedicated alumni Clyde Wu’56 and Judith Sulzberger’49 created the Anke Nolting Loan Fund, in honor of Ms. Nolting’s contributions to P&S. The fund has grown to $550,000 and is helping to support 25 students. Alumni also have launched a drive for a Diversity Scholarship Endowment, with a goal of $10 million.
     Some schools are also taking creative approaches to minimizing tuition costs. “Stanford, for example, has a very large endowment, but they also try to provide opportunities for students to spread their education over five years instead of four and get paid for doing research during a year when they might step out of the medical school ‘track’ for awhile,” says Dr. Powell, the chair of the AAMC working group on debt. “They’ve also been creative about providing housing on campus at subsidized rates, helping to cut some of the other costs related to medical education. At the University of Minnesota, we decided that starting with the class that matriculated last year we would tell incoming students that we would not increase their tuition while they’re in medical school. We will increase tuition for incoming classes that start, but once they’re in school, we won’t raise their tuition, so they know what their degree will cost from the beginning.”
     Minnesota also added a promise that students could take up to six years to complete medical school — to spread
Rural and inner-city underserved areas desperately need mental health care, general surgeons, and orthopedic surgeons, not just family physicians. Loan forgiveness programs ought to be broadened to include medical specialists that are badly needed for these populations.
out costs or to pursue additional projects such as research — and the tuition will be the same as if the degree were completed in four years. “We need to find ways to give students more choices and more options, recognizing that the school has to be responsive to this major problem for people graduating with high levels of debt.”
     Ms. Fenton even suggests enlisting the Liaison Committee on Medical Education to underscore the urgency of the problem. “If the LCME came in and said that schools couldn’t have more than a certain percentage of students graduating with debt beyond certain levels, that might get somewhere,” she says. “At any institution, if the LCME comes in and says, ‘You must fix this,’ people listen.”

State and Federal Options
The AAMC report also urges federal and state-based solutions: expanding existing loan forgiveness and repayment programs, such as the National Health Service Corps and the Indian Health Service program, and creating more programs at the state level. The deductibility of educational loan interest could be expanded by changing the formula for income caps. New approaches, such as a Medicare and Medicaid incentive for physicians who agree to devote a certain proportion of their practice to Medicare and Medicaid patients, could be explored.
     “To me, the state and federal loan repayment options are the best ones out there right now, though they’re not for everybody,” says Ms. Spilker. “The one from the NIH is the most generous; you have to be interested in research, but if they fund you for a two-year contract, they repay $35,000 per year in loans in addition to your salary.” She would like to see the NHSC program, which funds primary care physicians in underserved areas and pays $25,000 in loans per year plus salary, expand its definition of “primary care.” “If they added emergency medicine, it would be a big help. So many people in poor areas use the emergency room as their primary care center.” The Indian Health Service, which offers $20,000 per year in loan repayment, is a bit broader, including surgeons and some specialties in its eligibility.
     In states, as well, many loan forgiveness programs are targeted at narrowly defined primary care practice. “I think if we look at underserved areas and populations, they need specialty care too,” says Dr. Powell. “Rural and inner-city underserved areas desperately need mental health care, general surgeons, and orthopedic surgeons, not just family physicians. Loan forgiveness programs ought to be broadened to include medical specialists that are badly needed for these populations. For example, Kansas, when I was there, extended its loan forgiveness program to faculty teaching primary care at the medical school, with the idea that it needed to be able to attract faculty in order to teach the next generation of family physicians.”
      But in states with already shrinking budgets, where would the money for such an expansion of loan forgiveness programs come from? Ms. Fenton suggests one possibility: “One avenue that medical schools haven’t focused a lot of attention on, but maybe they should, is potential partnerships with local and state medical societies,” she says. “A state medical society could underwrite a loan forgiveness program for a graduate to go and practice medicine in an underserved community in that state.” Even individual communities, in need of a particular type of specialist or generalist, could sponsor a medical student who would commit to return to their area to practice for a certain period of time after their training, in a sort of localized version of the National Health Service Corps. Such programs been done sporadically in the past, says Ms. Fenton, but not always on a formal basis—which would make it much more attractive and legitimate for students to consider.
      “Our philosophy is that a Columbia education should be accessible to even those students whose families are unable to help,” says Ms. Spilker. “As costs go up, if our scholarship funds don’t increase, a higher percentage of our aid packages will have to be made up of loans. We had two 10-year periods of time where we were able to hold the loan levels pretty steady and make up the extra need with extra scholarship availability, but that hasn’t been the case recently. There just hasn’t been enough money to go around.”
     Medical schools — and national organizations like the AAMC and the American Medical Association — must pay
One avenue that medical schools haven’t focused a lot of attention on, but maybe they should, is potential partnerships with local and state medical societies.
attention to this issue now. “We don’t want to wait until it’s a crisis situation,” says Ms. Spilker. “We need to change things before we realize that many of the best potential doctors turned away from careers in medicine because of debt. We need to start getting creative in developing solutions to the problem. It’s a problem for medical education nationally but it’s also a way for Columbia to distinguish itself from other schools. Having an attractive financial aid package for students in need will make us more competitive as a medical school.”

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