The True Cost of Medical School
So you want to make your parents proud, you want to make some serious cash, and most importantly you want to be a hot item on the marriage market.
So what do you do?
Naturally, you decide to become a doctor.
In this article, I want to highlight the true cost of medical school so you can make an educated decision about whether it’s worth it for you or not.
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The obvious cost of medical school is the tuition. However, there is also a high opportunity cost to pursue a medical degree.
The Opportunity Cost of Pursuing a Degree in Medicine
By opportunity cost, I am referring to the income that you could have been earning if you had not chosen to pursue a degree in medicine.
So what is the opportunity cost of medical school?
According to the Bureau of Labor Statistics, the average weekly earnings of an American with a bachelor’s degree is around $60,000 annually.
Medical school takes 4 years. So that’s $60,000*4 = $240,000 in income that a medical student could have been earning during their 4 years of medical school.
This is assuming a medical school student would earn the average wage doing something else. If we consider that medical school students tend to be among the brightest and most capable students, it’s likely they would earn above the average wage doing something else. For now, we’ll keep our estimates based on the average just to be on the conservative side.
The median medical school debt, not including loans from premedical education, was around $200,000 among 2018 graduates. (1)
Assuming the average interest rate on medical school loans is 7%, during the minimum 3-year residency program, if student loans are placed in deferment which they often are, students are looking at racking up an additional $200,000 X (1.07)^3 = ~$45,000 in interest during residency.
So residents will have an average of $245,000 in debt upon completion of their residency if they only do the minimum 3-year residency.
Add this to the opportunity cost we calculated earlier and the total becomes $245,000 (debt) + $240,000 (lost wages) = $485,000 on average which medical school graduates are financially behind where they would have been having they decided to simply work with their 4-year bachelor’s degree.
We’re not done…
During these 7 years (4 years of med school + 3 years of residency), you can conservatively expect a medical school student to either be studying, training, or working at an average rate of 60 hours/week particularly once long residency shifts are included.
Residents can work up to 80 hours a week. (2)
A worker working the normal 40 hours per week would need 11 years to work an equal number of hours that medical students work in 7.
This means the medical student is missing out on an added 4 years of lost wages and at a rate of $60,000 annually, another $240,000.
Add this $240,000 to the balance of $485,000 we calculated earlier and you get a conservative grand total for the real cost of medical school in 7 years of about $725,000.
Put differently, graduates would likely have been $725,000 richer in their early thirties if they started working with their bachelor’s degree the same number of hours rather than pursuing a degree in medicine.
How long will it take to make up for $725,000 on a doctor’s salary?
The answer to this question varies with different specialties, how long residency actually takes, what state the doctor works in etc.
Let’s examine the case of Primary Care Physicians.
According to the Medscape Physician Compensation Report, in 2018, Primary Care Physicians in the United States earned an average of ~$240,000. (3)
Let’s assume this physician decided to live on a bachelor’s degree salary of $60,000/year until they recovered the total cost of medical school which we’ve calculated at 725k.
This means they would make up for the cost at a rate of $240,000 – $60,000 = $180,000/year.
To get to $725,000 they would need $725K/$180K = ~ 4 years.
When you take into account the higher tax bracket of the physician along with the interest on their loans, it’s very likely that the physician is going to be pushing 40 before they’ve made up for the cost of medical school assuming they decide to live on a bachelor’s degree salary post-residency for at least 4 to 5 years.
As we mentioned, this calculation changes depending on the specialization of the physician and the number of extra years of school they decide to pursue among other factors.
It’s worth noting here that our previous calculation has been strictly financial and hasn’t taken into consideration the stress of carrying large amounts of debt for years on end and the naturally stressful nature of a physician’s work.
A recent report on American Medical News notes that nearly 90% of physicians feel moderately stressed, severely stressed, or burned out on a daily basis. (4)
Don’t get me wrong, you’d be hard-pressed to find any other profession that is nobler than that of a doctor.
There are a few other professions that give you the direct opportunity to save the entirety of humanity as part of your day job.
The reason why I mentioned all of what I have in this article is simply so you understand the true cost of medical school and that while the upside may be undeniable and significant, like most good things in life, it does come at a substantial cost financially, physically and in other ways.
Is a Medical Degree Worth It?
I would argue that it’s worth it for you if you enjoy the work. If you are motivated by the prospect of helping others with their health. If your mind naturally gravitates toward medical topics. If it’s your passion and you think you can excel in the field and leave a mark.
If you are solely in it for the money and prestige, you may indeed end up with both but you have to ask yourself: at what cost? If you don’t like work, money and prestige are not enough to make you happy.
How to Reduce Stress as a Doctor?
If you are already a doctor, and you want to reduce the financial stress of carrying a large debt balance for years on end, I would suggest checking out fundmebff.com
The reason why it may be a good option for you is that it is income-based repayment which involves 0 interest.
The way it works is you commit a fixed percentage of whatever you earn for a fixed period of time at the outset of the funding and your obligations never change or increase with time after that.
This means you don’t have the pressure to burn yourself out working extra hours in order to pay off your debt as soon as possible because your obligations are fixed and don’t increase with time. You can work the number of hours that optimizes your level of happiness and have no pressure to work beyond that.
Our funding is also a good option if you are starting residency. If you’re like the average resident and have a debt load of 200k at an average interest rate of 7%, and you place your loans in deferment, you’re looking at an increase in the amount of indebtedness of around $45,000 during your residency.
This can be completely avoided with an income-based repayment plan such as what BFF offers.
If you’re interested in learning more about BFF’s income-based funding, visit Fundmebff.com and apply: it’s free and won’t affect your credit score.