The rising cost of a medical degree is a growing concern in the healthcare industry according to a report by the American Medical Association (AMA).
The average student debt for all majors in 2011 was $26,500. But the amount of debt that burdens medical professionals can reach into the hundreds of thousands. According to the AMA, of those students who graduate with student loan debt, the average debt is $166,750. Furthermore, one-third of medical graduates have over $200,000 in debt.
This mounting debt causes some physicians to turn to more lucrative practices and ignore other areas that are still needed in the industry. Areas of practice such as family medicine, geriatrics or other primary care positions are less preferred when the graduate must repay their large debts.
Dr. James Madara, executive vice president and CEO of the AMA, wrote an open letter to the Consumer Financial Protection Bureau (CFPB) requesting more initiative for resolving the growing debt problem for medical graduates. The letter explained the negative impact that growing student loan debts have on medical professions and the potential future of the medical industry.
The Association of American Medical Colleges (AAMC) predicts that significant physician shortages will occur in the near future. In 2015, the United States will face a physician shortage of 62,900. This number will spike to a shortage of 130,000, across all specialties, by 2025.
A large physician shortage will have a major impact on healthcare access both in the United States and abroad, according to Madara.
“Reducing medical student indebtedness promotes diversity within medicine and may contribute to a reduction in the shortage of physicians in primary care as well as other undersupplied specialties,” he said in the letter. “Borrowers with less debt burden are more likely to start careers in medical education and research, practice medicine in medically underserved areas, or enter careers in public health service.”
To reduce the impact of debt, the AMA recommends five different items. First, variable interest rates on student loans should have a cap set at five percent. Secondly, income tax exceptions should be made for medical student scholarships. Thirdly, medical student loan interest should be fully tax deductable for borrowers. Fourthly, more opportunities should be created for debt relief and loan forgiveness programs. Lastly, there should be sufficient funding for the National Health Service Corps (NHSC) and other federally supported medical student loan repayment programs that provide car in underserved areas.
“Fair, low interest rates, tax relief, tuition assistance, loan forgiveness and repayment programs, and the availability of affordable payment plans lower barriers to medical education for disadvantages students,” Madara wrote.