Financial Considerations for Medical Education & Thoughts for Early Career Physicians
When I started medical school in 1996, we seldom ever talked about money, particularly the cost of medical education or how to manage finances after medical school. As the Dean of the nation’s newest medical school (that happens to be private), the cost of medical education is a topic of frequent conversations.
One thing that has been new over the several years is for philanthropists to put up sizable endowments to provide free tuition for a few select medical schools. These charitable donations are noble and done with the intent to do good. Unfortunately, they have not had the outcomes one had hoped for. An article in The Atlantic in October 2024 showed that this free tuition model for medical students actually correlated with wealthier entering medical students, decreased matriculants from underrepresented minorities, and had no impact on interest in primary care nor the location where they entered supervised practice.
I had a recent conversation with a successful individual regarding medical school philanthropy and he made a great point. With the average salary of physicians in the United States being $363,000, it is hard to justify blindly giving a gift of $220,000 to each medical student to cover their tuition with no likelihood that they would be more likely to positively impact the world without the gift. He is not wrong.
As with many things, I feel that for medical school scholarships, the Goldilocks Principle is probably right with the answer being somewhere in the middle. There are some accepted medical students with poor credit who have a hard time getting a cosigner for student loans. Those folks would benefit with some degree of philanthropy. Some folks in our community have worked to help stand up a foundation that is aimed to help with that. Also, there are situations where philanthropy can dramatically improve medical education to benefit so many students (e.g., facilities, events) without negatively affecting/raising tuition.
There is a strong likelihood that the majority of US physicians will continue to graduate with hundreds of thousands in debt for the foreseeable future. The good news is that the DO degree, as far as I can tell, has the highest job placement rate (e.g. residency by July 1st of the year they graduate) of any degree in America with about 99% of DOs having a job the summer after they graduate.
I think the key for early career physicians is to be thoughtful with their finances, especially when they begin their career.
Around graduating from my residency program, I read The Millionaire Next Door and it had a profound impact on me. One takeaway from that book is that personal wealth is grown from living a life relatively modest to your income. Ben Franklin spoke of the combination of Industry and Frugality (making good money and not spending as much as you make). From this, I have learned that it is important for early career physicians to not be tempted to buy the expensive car and home and to focus on paying off debt and saving for the future. A cardiologist friend of mine advises his fellows of the “Rule of One” - one spouse, one car, and one house. That strategy has worked for him.
My mother strongly believes in the power of saving and to have money that you earn to work for you. She has bought copies of The Richest Man in Babylon for everyone in my family and I have read it several times. It taught me the importance of compound interest and to make the money that you worked hard to earn work for you. Coupling that theory with investing in low-cost, broad-market index funds (such as VTSAX) is a long-term strategy that I have seen work successfully for many physicians.
