Does the High Cost of a Medical School Education Pay Off in the End?

Medical school can cost a student hundreds of thousands of dollars — but may also lead to some of the highest-paid careers available. Hear from Noodle Expert Paul Bodine what kind of ROI you can expect, and how to determine if the investments of time and money are worth it.

For many students, a career in medicine is truly a calling — but the cost of getting there can cause even the most committed to pause.

Given debt loads that will easily run into six figures, is it realistic for med school graduates to come out ahead in their career Return on Investment (ROI)? And how important is such ROI calculus anyway?

Stunning Tuition and Fees

It’s no secret that medical school is expensive. In 2013–14, the annual tuition and fees for public medical schools averaged $31,783 for in-state residents and $55,294 for non-residents. Meanwhile, the average private school tuition came in at $52,093 and $50,476 for residents and non-residents, respectively, according to Association of American Medical Colleges.

At one of the more expensive private schools, The Commonwealth Medical College in Pennsylvania, tuition and fees can reach $62,650, with institutions like Tufts ($61,436) and Tulane ($60,259) in hot pursuit.

Surprisingly, total tuition and fees can be even higher at some public medical schools, such as the $86,000+ that the University of South Carolina charges non-residents.

Overall, these figures are rising 3.1 to 3.4 percent annually.

Still Other Expenses

But wait — did we mention the nonacademic expenses? Housing, food, transportation, and miscellaneous costs further add to students’ financial burden. At a medical school like Saint Louis University, nonacademic expenses typically run $18,500 over the course of ten months of academic programming. At Harvard Medical School, nonacademic expenses may reach $20,500, while at Columbia University, the rent alone for a studio or efficiency apartment in university housing can hit $24,000 per year.

Income Foregone

Finally, there is the opportunity cost from the income you might have earned had you joined the workforce rather than returned to school. This figure will vary greatly depending on the career you would have pursued. Still, the loss of income from each of these potential pathways, whether social work or investment banking, when combined with the cost of medical school, will result in a substantial overall investment. Moreover, when the duration of additional required medical training is factored in — that is, three years following medical school for an internal medicine or family practice residency or three to eight years to become a surgeon, cardiologist, or anesthesiologist — the total cost can be enormous.

The Burden of Loans

If you fund these enormous sums through student loans, as most medical students do, you are assuming significant debt. For the graduating class of 2014, 86 percent of all public medical school graduates had educational debt, with median debt loads of $170,000, as did 82 percent of private school grads, with a median debt burden of $200,000.

There is, of course, at least one exception. Graduates of the Uniformed Services University of the Health Sciences pay no tuition and receive the salaries and benefits of junior military officers, but with an obligation to serve seven years of active duty following graduation.

Medical School: Worth It?

Given these staggering costs, can a medical education possibly justify the financial investment? Although the ultimate answer will depend on factors such as geography, eventual community served, choice of specialty, and other unknowns, from future tax rates to tuition increases, data do show that a medical career pays for itself better than do most professions. According to one study of 22 different career paths by lifetime earnings, net present value, and rate of return on educational investment, only four professions (lawyers, chemical/petroleum/nuclear engineers, pharmacists, and computer scientists) topped medical specialists, who could expect to earn nearly $6 million — the highest lifetime earnings of any profession — over their careers. Even primary-care physicians (who this study grouped as generalist medical practitioners) did exceptionally well, ranking second in lifetime earnings, at $5.25 million, and ninth overall.

Related: Medical Careers: Thinking Outside the M.D.

The Internal Rate of Return

Another researcher, Nicholas Roth of the University of California, Berkeley, has studied the internal rate of return (IRR) of a medical education. The IRR, sometimes also called the economic rate of return, is a measure of how profitable an investment is. Roth used compensation data from Medical Group Management Association (MGMA) to crunch the numbers, including factors like inflation, annual income increases, opportunity costs, financial aid, and loan interest payments. He found that no medical specialty earned less than an 11.4 percent IRR on the student’s educational investment, and that noninvasive radiology in particular boasted an IRR of 38.9 percent and lifetime earnings of $4.3 million. This was followed by radiation oncology at 23.4 percent IRR and lifetime earnings of $3.9 million and orthopedic surgery at 22.2 percent IRR and $3.4 million lifetime earnings. Even the lowest-returning specialty, endocrinology, still came out ahead with $832,600 in lifetime net total earnings.

Promising ROI

These varying ROIs by specialty help to explain the disconnect that exists between the specialties most requested by medical facilities today — family medicine, internal medicine, and hospitalists — and the specialities most coveted by medical students — plastic surgery, orthopedic surgery, general surgery, dermatology, and radiation oncology. Whereas the median family physician earned $175,000 in 2012, the average orthopedist earned $413,000, followed by cardiologists at $351,000, and urologists at $348,000. Medical facilities seek specialties that will serve the greatest number of patients; medical students seek specialties that pay the best.

That said, as Jose Espada, Director of Medical Student Financial Aid at Indiana University School of Medicine (IU), points out in his blog, even primary care doctors who graduate from IU enjoy strong returns on their educational investment: $4.8 million in gross income over 30 years at an annual salary of $160,000 against $369,229 (assuming Indiana residency) in debt, to yield a 43.3 percent ROI annually.

A Final Thought

Of course, ROI isn’t the only or even the most important factor in choosing a medical career. That is, if high income is your primary goal, perhaps you should choose investment banking, management consulting, or entrepreneurship. Those who opt for careers in medicine often have other, non-monetary goals. That said, interestingly, ROI does seem to bear a rough correlation to occupational happiness. When Medscape asked physicians about their overall satisfaction with their specialty and whether they would choose it again, the specialists who claimed the greatest overall satisfaction were also among the highest paid: dermatologists (80 percent overall satisfaction), radiologists (72 percent), and oncologists (70 percent), while some of the lowest-paid specialists were the least satisfied overall, with rates of 54 percent for primary-care physicians and 57 percent for nephrologists. For medical professionals who invested the most in both time and money, ROI does seem to matter.

For further guidance, follow this link to ask experts questions and read more articles about paying for medical school on Noodle.

Sources:

Career Rankings by ROI and Salary. (2008, December 28). Retrieved April 5, 2015, from True Cost.

Cost of Attendance. (n.d.). Retrieved April 2, 2015, from Saint Louis University School of Medicine.

Espada, J. (2012, August 8). From A Financial Standpoint Is A Medical Education Worth the Investment? Retrieved April 5, 2015, from Indiana University Medical School.

Friedman, L. (2014, April 21). Here's How Much Money Doctors Actually Make. Retrieved April 5, 2015, from Business Insider.

Housing Essentials. (n.d.). Retrieved April 3, 2015, from Columbia University.

How Do I...Pay for Medical School? (n.d.). Retrieved April 1, 2015, from Association of American Medical Colleges.

Length of Residencies. (n.d.). Retrieved April 3, 2015, from Washington University School of Medicine.

Medical School Education: Debt, Costs, and Loan Repayment Fact Card. (2014, January 1). Retrieved April 3, 2015, from Association of American Medical Colleges.

Medical School Expenses. (n.d.). Retrieved April 2, 2015, from Harvard Medical School.

Punke, H. (2013, August 28). Top 20 Most-Recruited Physician Specialties. Retrieved April 4, 2015, from Becker’s Hopsital Review.

Rose, A. (2013, November 19). Top Specialties With the Highest Hiring Demand. Retrieved April 5, 2015, from Health E-Careers.

Roth, N. (n.d.). The Costs and Returns to Medical Education. Retrieved April 4, 2015, from University of California — Berkeley.

Surgeon Education Requirements and Career Information. (n.d.). Retrieved April 4, 2015, fromStudy.com.

Top 10 Most Competitive Specialties of 2011. (2011, July 10). Retrieved April 5, 2015, from Web Savvy Med Student.

Tuition and Student Fees Reports. (n.d.). Retrieved April 1, 2015, from Association of American Medical Colleges.

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