Student Debt: About the Mortgage Weighing You Down

So, I feel bad that all of my posts seem to do nothing but poke holes in the bubble that protects medical students from the “real world.”  I started with the threats to GME, and then brought home the government shutdown…and now I’m about to do the same with student debt.  But talk about it or not, this hulking Goliath is going to catch up with many of you one way or another, so I figure best to be prepared.

Let’s get the numbers out of the way first:

  • 86%– the amount of graduates from 2012 who had debt
  • $166,750– the average amount of debt for these graduates from medical school ONLY.  Let’s note that there is actually a bimodal peak here, with over 1/3 of these students having debt > $200,000 (meaning that the average is skewed down thanks to those scholarship recipients).
  • $49,651– the average salary of a 2012 intern. This equates to under $13/hr as residents work 40-80 hours per week.
  • 36%– the amount of these graduates who also have undergraduate debt


Briefly I want to talk to you about a cushion we used to have called “federal loan subsidies”.  There were loans called subsidized Stafford loans that did not begin accruing interest until 6 months after the student graduated medical school.  But then Section 502 of the Budget Control Act of 2011 eliminated this program, so now all Stafford loans begin accruing interest as soon as they are taken.  Oh, and the rate on these loans is 6.8% APR.  With a little help from the AMA, let’s see what this really means:

save gme josh lesko student debt

That’s a difference of just over $5,000 indebtedness from just $8500 a year.  Now extrapolate to your entire cost of medical school.

So where does that leave us?  Alone and adrift, forever doomed to wallow in debt? …Not exactly.  Despite the ridiculous interest rate we get to pay, the default rate on medical student loans is less than 1%.  It turns out we’re a safe investment because in the end, we tend to be alright.  But to help recent grads better land on their feet, and to attract much needed doctors, several alternatives have been developed.  There are 91 state and federal loan forgiveness programs that assume the debt in return for a given amount of time spent treating underserved populations.  These tend to be restricted by specialty and the requirements differ by program, but physicians who take this route tend to be more satisfied with their work and remain longer than non-indentured physicians.  You can read more about one of the biggest, the National Health Service Corps, which expanded under the ACA, here.

Finally, you’re not in this fight alone.  Disclosure: I’m a member of the American Medical Society Medical Student Section Committee on Legislation and Advocacy (AMA-MSS COLA), but our organization is fighting the good fight.  They’re pushing for student loans to be capped at 5% (because it’s just ridiculous that mortgage rates are around 2%, and look how many people default on those).  On the tax front, we’re pushing for income exemptions for medical student scholarships (that’s right, currently some of that money is taxable) and making student loan interest fully deductible.  Finally, the AMA is looking at ways to extend the debt relief programs available.  I’ll be honest, it’s not an easy battle because most people quickly turn a deaf ear to doctors or medical students talking about debt.   But this issue (as studies have shown) turns students away from primary care—the hardest hit of the looming physician shortage, and cost of attendance is the number one factor discouraging minority students from applying to medical students.  When we put it that way, people start listening.


Featured image from Flickr | Kevin Cortopassi
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Josh Lesko, MD

Josh Lesko is a flight surgeon based in San Diego, California, writing about health policy, organized medicine, and whatever else comes across his news desk.



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