What Oncology and Hematology Fellows Can Do to Reduce Their Loan Debt

While debt from medical school loans is inevitable for most oncology and hematology fellows, there are strategies they can consider to lessen that burden. Moreover, recent announcements from the Obama administration would cut loan debt for some medical school borrowers.

Nevertheless, many fellows and young physicians still face substantial debt when they complete their schooling. Matthew Shick, senior legislative analyst for the Association of American Medical Colleges (AAMC), told Oncology Fellows , “Medical school tuition and fees continue to rise. The amount medical students borrow to pay for medical school has averaged around $160,000 for the past 3 years (as reported by medical students graduating in 2009, 2010, and 2011).”

Similarly, the American Medical Association (AMA) estimated the average educational debt of indebted graduates of the class of 2010 at $157,944.

However, some good news has emerged to brighten the financial outlook for borrowing students. The Obama administration announced in late October that it will reduce the maximum required payment on student loans from 15% of discretionary income annually to 10%. Obama said the plan would go into effect in 2012, instead of 2014. In addition, the White House says the remaining debt would be forgiven after 20 years, instead of 25. The proposal is expected to affect some 1.6 million borrowers starting in 2012.

In other good news, AAMC’s Shick said that recent statistics indicate that “Since 2008 we’ve started to see a recent trend of medical education debt leveling off.”

Finally, the economic stimulus bill that President Obama got through Congress includes an additional $300 million for students who agree to take public service jobs, including those in medicine.

Still, many observers of healthcare trends contend that the spiraling debt burden has serious consequences for American medicine. For example, Catherine Spina, MD, a PhD candidate at Boston University School of Medicine, and immediate past chair of the Organization of Student Representatives (OSR) of the AAMC, wrote in a newsletter in February 2011: “The grim financial outlook of state-funded schools has translated to an increased burden on the learner. As a result, many matriculating medical students arrive with more debt from their undergraduate educations and are forced into deeper debt as they shoulder the expense of soaring medical school tuition.”¹

One possible consequence of the crushing weight of debt, according to some observers, is to steer young physicians into the higher-earning specialties rather than lower-paying primary care medicine. S. Ryan Greysen, MD, assistant clinical professor of medicine for the Division of Hospital Medicine at University of California San Francisco, who has written on the subject for The New York Times , said that “My sense is that the rising cost of medical education may be part of a cultural shift where the practice of medicine is more of an investment than a calling. I make the argument in my [New York Times ] article that medical education is seen now as a personal investment and I hear colleagues refer to their debt as a ‘mortgage,’” especially since “obtaining medical education in the United States has become a loandependent, individual investment.”

Greysen is quick to point out that the data on how school loans affect the kind of medicine young physicians choose to take up are ambiguous, with some studies showing that it has minimal effect.

“The studies here are often conflicting—some show that students with higher debt are less likely to practice primary care or work with underserved populations but others show there is no relationship with debt,” Greysen said. “Several recent studies have shown correlations between debt and stress or burnout—and these may affect students’ decisions about which specialty they enter,” he added.

Shick said of this issue: “In the 2011 AAMC Graduate Questionnaire, students reported personality fit, specialty content, work/life balance, role model influence, future family plans, fellowship training options, income expectations, length of residency, competitiveness of specialty, and expectations of family as having a higher influence on specialty choice than student debt.”

However, he added: “That being said, the cost of medical education weighs more heavily on certain cohorts of students. With the high price tag and expected debt burden, the decision to attend medical school can be daunting for socioeconomically disadvantaged and minority students who are typically more averse to taking out high loan volumes.”

Nonetheless, oncology and hematology fellows do have choices that can substantially reduce their debt.

Public Service

One of those choices is public service medicine that makes young physicians eligible to receive loan repayment programs (LRPs). Applicants for these programs must agree to commit to practicing for a specified time in a medically underserved region of the United States or in research at an approved institution.

The National Institutes of Health (NIH) is the largest provider of LRPs, recruiting physicians to practice in areas designated by the US Health Resources and Services Administration either as a Health Professional Shortage Area or a Medically Underserved Area. To qualify for this program, applicants must be willing to work full-time serving patients in the designated areas.

Editor’s note:

For example, the American Society of Clinical Oncology LRP, funded by Susan G. Komen for the Cure, provides repayment of qualifying educational debt to oncologists or oncology fellows who, after completing their training, commit to practicing oncology in a medically underserved region of the United States. The LRP will repay up to $35,000 per year for 2 years (up to $70,000 total) of qualifying education loans. For questions, contact grants@ asco.org or call 571-483-1662. [ For more on loan repayment programs, see Finance for Fellows in the October 2011 issue of Oncology Fellows .]

Increased Funding for Public Service Medicine.

The LRPs get funding through the National Health Service Corps (NHSC), which has been given a financial boost from Congress and the Obama Administration. The American Recovery and Reinvestment Act of 2009 (the so-called stimulus package) provides an additional $300 million in funding for NHSC, including $168 million for LRPs, to increase the physician workforce in medically underserved areas.

According to AAMC’s Shick, the expanded funding means that NHSC practice locations will increase significantly, to include urban and rural areas not previously designated as health professional shortage areas. He predicted that the program, which is already strong, is going to be even stronger, providing many more opportunities in urban areas than there were in the past.

Editor’s note:

An option for oncology and hematology fellows is military service. The Armed Forces, through the Health Professionals Loan Repayment Program (HPLRP), offer up to $40,000 per year to physicians who commit either to active duty service or to service in the National Guard or Reserves, or to the Veterans Health Administration. [ For more on HPLRP, see Finance for Fellows in the October 2011 issue of Oncology Fellows .]

Ideas for Reducing Student Debt The AAMC, Shick said, has advocated strongly for the following proposals:

• Reduce the amount of interest paid on federal Stafford loans through the Department of Education. At the current 6.8% rate for graduate and professional students, medical students can expect to repay between $300,000 and $450,000 on the average $160,000 medical education debt (between $140,000 and $290,000 in interest).
• Increase funding for the NHSC, the federal program that provides scholarships and loan forgiveness in exchange for primary care practice in underserved areas. Additionally, Shick said, the AAMC sponsors Financial Information Resources Services and Tools (FIRST) for medical education. He said this program “offers a full range of resources for medical school applicants, students, and residents to help expand their financial literacy, make smart decisions about student loans, and manage their student debt wisely.” Students and fellows can learn more about this program online at www.aamc.org/first.

REFERENCE 1. Spina C. Viewpoint: Drowning in debt: innovate or else. AAMC Reporter. https://www.aamc.org/newsroom/reporter/ feb11/174772/viewpoint.html. February 2011. Accessed November 30, 2011.