Cost of Medical School Is Up
Can You Afford It?

The cost of medical school is up...way up. It is being overlooked by pretty much everyone because of the implications. Well I'm going to tell you the implications because you need to know. This will sound like a very negative article (I'm just giving you a heads up) but I don't want you to think I'm against going to medical school. In fact, just the opposite is true. But I feel obligated to tell as many people as possible that they need to do it intellegently in a way that NO ONE before you has ever had to do.

Cost of Medical School Trends

According to the AAMC, the cost of medical school is up and is increasing at a rate much higher than inflation. The increase in the cost of medical school over the last 20 years has averaged around 6% (4% for private schools and 8% for public schools) a year each year. The average inflation over that same time was 3.6%. But here is the really bad news, average increase in physician salary was about 2%. And that is very conservative. Some data shows that the average physcian salaray has actually decreased in the last 10-15 years.

Here's the other problem. If you ask anyone who is already a doctor about this they will have, at a minimum, an opinion that is at least 7 years old. Meaning that they paid 33% less for their medical education than you will and with interest of 6% a year, that number increases to nearly 40%. So, to sum up, we have finally hit a wall with medical education meaning that it is now very difficult to pay back your debt after you graduate. It is no longer an affordable expense and it will no longer "work out" if you don't plan for it. Don't listen to all of those people who say things like. "Don't worry about debt because years and years of doctors that did it before you did the same thing and they are ok." Or, "It works out for everybody, don't worry about debt." If you don't worry about your debt, and figure out a way to manage it, you will be killing yourself trying to pay it back when that time comes. Specialists that pay over $300K a year can become your only option and even making that money you will be paying your debt aggressively for many years before you are out from under your mountain of debt.

I know that many, maybe most of you will not believe what I am writing here. That is fine, I encourage you to keep reading and then put my words to the test. Go find how much medical school will cost and then compare them to what doctors actually make. I think you'll be as surprised as I am.

How Much Can You Actually Borrow?

You can't pay attention to only the tuition when thinking about cost of medical school. Tuition, room, board, fees, etc. all come into play. By far the lowest interest rate of those who are willing to loan money to medical students is the federal government. And you can only borrow from the federal government up to a maximum of what the school publishes as cost of attendence. Remember that phrase "cost of attendence" or COA. That is the maximum student loans you can get through your school and through the federal government every year. A small percentage will be tax free until you graduate, these are federal stafford subsidized loans. About half is federal stafford unsubsidized loans that grow while you are in school but at a low interest rate (6.8% at the time of writing). And the other half or sometimes a bit more is Grad PLUS loans, which grow while you are studying at a higher interest rate (8% at time of writing).

You can also privately get extra loans between you and private lenders, that usually have interst rates in excess of 10%. If you take my advice on anything take it on this...NEVER get private loans...EVER!!! They will CRUSH you. And they by necessesity only come after you have maxed out your federal loans so you will be in serious trouble if you need to borrow more than the published cost of attendence.

As you review your schools make sure that you plan for the cost of medical school in your research. Make a note of every school's cost of attendence so you have an idea for cost before you go there.

Tips For Lowering Cost of Medical School

Obviously the best tip I can give about lowering cost of medical school is this: Don't Go Into Debt! There are a few remarkable people who don't get scholarships, and don't have rich families, who plan for medical school to the point where they take out very little to no debt. The first person I met like this got a job in Texas for 6-7 years teaching school and working odd jobs. He established residency there, saved money like crazy (he had a large family by the time he went to school and still did this), and when he was ready, he applied to medical school. His debt when coming out of school was less than $50,000. That is manageable debt!!! He could go into any specialty, and do anything he wanted to do and still have the opportunity to retire wealthy.

Let's compare that to if he decided to go to school to a non-state school and with no money saved up. His loan would have been around $425 after residency (take a look at the medical school loan introduction to see how I got that number). His payment would have been $3000 a month, which makes it very difficult to practice as a GP, or other primary care doctor, and his total cost of paying back his loan would be over 1 million dollars! Again, assuming he paid the minimum. What are his options then? He can pay it back faster, but that just makes him have less options of what he wants to do. He could pay the minimum but saving would be a problem for 30 years, and he wouldn't have much of a retirement or ever really be able to enjoy the work he put into becoming a doctor.

So obviously the key to lowering the cost of medical school is to minimize debt...the goal should be to NEVER borrow more than the tuition and fees from your school. Don't borrow for living expenses, room, board etc. If you decide that is impossible for you, then consider scholarships or just try and minimize your loan as much as you possible can. Here is some ideas on how to do that...

- Go to a state school - resident tuition is half of non-resident or private tuition...if you don't life a good state for a state school...MOVE!!
- Get a roommate
- Eat out RARELY - medical school student are terrible at this and it costs them in more ways than just their wallet
- Don't do the starbucks thing - $5-$10 each time...yikes that really adds up 1-3 times a day.
- Be cheap - walmart clothes and wear them out..you will thank yourself I promise.
- NO NEW CARS - we had at least 10 people in my class buy brand new cars in medical school...what are you thinking? get used cars if your car breaks down and don't borrow money for it.

There are many others. Most of you are likely thinking how unrealistic that is or how out of touch I must be. Dave Ramsey, a money educator that despises debt (you should despise it too, it will really bury you) always says you should "live like no one else so you can one day live like no one else." That is what this short list tries to convey.

Make a list of things you could do without during medical school and do without them. Save money now and you will be in such a better place. Take the challenge I described above. I'm confidant you will have the same results that I did.

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