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  • Ask anyone who has seriously considered becoming a doctor and theyll all agree on one thing:

  • medical school is expensive.

  • But where is all of that tuition money going?

  • Is it actually going towards your education?

  • Or is it just financing the dean’s second Lamborghini?

  • Let’s find out.

  • Dr. Jubbal, MedSchoolInsiders.com.

  • The average medical student graduates with around $242,000 of student loan debt with

  • the vast majority of that coming from medical school tuition.

  • That’s a lot of money no matter who youre talking to.

  • But what makes medical school so expensive?

  • Has it always been like this?

  • Not quite and here’s why.

  • If you were a first-year medical student in 2000, you could expect to pay around $17,000

  • per year in tuition.

  • When adjusted for inflation, this comes out to about $26,000 per year.

  • This is by no means cheap; however, it’s significantly less than the numbers were

  • about to get into.

  • Let’s fast forward to today.

  • If youre a first-year medical student starting this year, you can expect to pay around $55,000

  • per year in tuitionmore than double what you would have paid just 20 years ago.

  • Of course, this number is just an average and there are some medical schools that charge

  • less and others that charge more.

  • Regardless, that is around $220,000 just in tuition for four years of medical school.

  • This doesn’t take into account living expenses, transportation, and all of the other expenses

  • that will come up during your time in medical school.

  • Unfortunately, it’s only getting more expensive as well.

  • It’s estimated that the average cost of medical school rises by approximately $1500

  • each year.

  • Now that we know how much medical school in the US costs, where do these numbers come

  • from?

  • Do medical schools just throw darts at a dartboard to decide how much to charge students?

  • Or is there a method to the madness?

  • To start, running a medical school is expensive.

  • It takes tens of millions of dollars, if not more, just to keep things running each year.

  • These costs can be broken down into two main categories: instructional costs and educational

  • resources.

  • Instructional costs include any expenses that are directly related to teaching.

  • Professor salaries, simulation equipment, lab supplies, and actors for standardized

  • patients would all fall into this category.

  • Another instructional expense that we don’t often consider is that medical schools generally

  • have to pay hospitals and clinics to allow their students to rotate at their facilities.

  • Although this is a necessary part of the training to become a physician, the reality is that

  • having medical students decreases productivity.

  • Teaching a student takes time away from clinical care and is an added responsibility for residents

  • and attending physicians.

  • As such, medical schools often need to pay for the opportunity to have their students

  • rotate at these facilities.

  • Educational resources are all of the other costs that don’t directly contribute to

  • a student’s education but are still related to it.

  • This includes administrator salaries, research activities, scholarships, access to databases,

  • and maintenance of facilities, to name a few.

  • Although these don’t always directly impact a student’s ability to learn, they are still

  • necessary to keep the medical school or university up and running.

  • It’s estimated that instructional costs range from around $48,000 to $51,000 per student

  • per year and the cost of educational resources ranges from approximately $80,000 to $105,000

  • per student per year.

  • Combined, this is significantly higher than the tuition that most medical students pay

  • each year.

  • Naturally, your next question is probably, how do medical schools afford all of this

  • if not just tuition?

  • The answer is that medical schools receive income primarily from four sources: tuition,

  • endowments, government funds, and medical services.

  • The one you are probably most familiar with is tuition - the money that medical schools

  • receive from their students.

  • Next, there are endowments, which are charitable donations from individuals or organizations.

  • These may be physicians who graduated from the school or other members of the community

  • that want to contribute to that school’s medical education.

  • These charitable donations can vary from hundreds of dollars to tens of millions of dollars;

  • therefore, some schools rely on large numbers of small donations whereas others rely more

  • on large individual donations.

  • Most schools fall somewhere in the middle.

  • After that, there’s government funding.

  • This is taxpayer money that is allocated to medical schools for purposes of education

  • or research.

  • Lastly, many academic medical institutions own hospitals and clinics and therefore generate

  • revenue from seeing and treating patients.

  • How much a school charges for tuition will depend on how much money they receive from

  • the government, endowments, and medical services.

  • A school that receives more money from these sources will be able to charge less in tuition,

  • and vice versa.

  • Allopathic medical schools tend to be affiliated with state universities and large academic

  • institutions.

  • As such, they tend to receive more funding from the government and generate more money

  • from medical services, both of which decrease tuition costs for students.

  • In contrast, osteopathic schools tend to be private institutions.

  • They often receive little, if any, funding from the government and are often not associated

  • with large medical institutions.

  • This is why osteopathic schools tend to charge their students higher tuition.

  • As an example, tuition may account for 10%, or less, of an allopathic medical school’s

  • revenue, whereas it may account for as much as 15-50% of an osteopathic medical school’s

  • revenue.

  • This is one explanation for the rapid increase that we are seeing in the cost of medical

  • education.

  • In recent years, there have been many budget cuts that have affected the state’s appropriations

  • for medical education.

  • In short, government funding is decreasing.

  • As a result, these expenses are being passed onto students in the form of increased tuition.

  • If budget cuts continue to occur, we can expect tuition to continue to increase in the coming

  • years.

  • In addition to rising costs and decreasing funds, many people believe that there is another

  • factor at play that is driving up the price of medical school tuitionone that has

  • to do with supply and demand.

  • That being said, this is more theoretical than the previous two points, so take it with

  • a grain of salt.

  • Medical school isn’t just expensive, it’s also highly competitive.

  • Each year, tens of thousands of high achieving students apply to US medical schools, and

  • less than half of them get in.

  • It’s only getting more competitive too as more students apply to medical school each

  • year.

  • If we take the most recent 2021-2022 medical school application cycle, for instance, there

  • were approximately 10,000 more applicants to US MD schools compared to just the previous

  • year despite their being relatively the same number of medical school spots.

  • That’s an increase in applicants of approximately 18% in just one year.

  • Whether this past year is an outlier as a result of the global pandemic or a glimpse

  • into what we can expect from here on out, nobody can say for certain; however, the general

  • trend has been that the number of applicants is increasing at a faster rate than the number

  • of new medical school spots.

  • This creates a mismatch between supply and demand as there are many students that want

  • to become doctors, but not enough medical school spots to accommodate them.

  • As such, some theorize that, in addition to driving up competitiveness, this is also driving

  • up tuition costs.

  • As medical school admissions become increasingly competitive, fewer and fewer students have

  • the luxury of choice.

  • Getting into medical school anywhere is an accomplishment, so students will often pay

  • whatever it costs to attend that school.

  • After all, what’s another $50,000 when youre already taking out $300,000+ in loans?

  • Medical students don’t usually have to worry about paying for school either as the government

  • is happy to provide loans.

  • Investing in a medical students education is a pretty low risk investment for the government

  • as medicine is a relatively guaranteed path to a high salary and most physicians will

  • have the financial resources to pay back their loans.

  • In addition, even if a physician goes bankrupt, student loans are more difficult to discharge

  • than other types of loans which means that there is a high likelihood that they will

  • recoup their investmentplus interest of course.

  • As such, there is very little incentive for the government to intervene with the rising

  • costs of medical education.

  • After all, medical schools still have fewer spots than there are applicants, so the rising

  • cost of education is not affecting the number of physicians that are entering the workforce.

  • This leads many to believe that medical schools are charging more for tuition simply because

  • they can.

  • It doesn’t matter what price they set, because there will be thousands of premeds who are

  • willing to pay it and a government that’s ready to provide the loans to allow them to.

  • It all comes down to competition.

  • When you have multiple options, you can choose the one that is the best value.

  • When you only have one option, youre forced to take what you can get.

  • For example, let’s say there are a hundred premeds and each one gets into two medical

  • schools, one state school and one private school, each with 100 spots.

  • If the state medical school charges $30,000 per year in tuition and the private medical

  • school charges $50,000 per year in tuition, the student has the power to decide whether

  • or not the extra $20,000 per year to attend the private school is worth it to them.

  • If it isn’t, theyll choose the state school over the private school.

  • If every student chooses the state school over the private school, the private school

  • will eventually have to lower its tuition if it wants to compete.

  • Now, let’s say there are 300 students.

  • Now there are enough premeds for both medical schools to fill all of their seats and then

  • some.

  • In this second scenario, the power of choice is in the medical school’s hands so there’s

  • no incentive to decrease costs.

  • There are enough students that they can fill their classes completely.

  • In fact, they may even be able to increase costs if the only options are to go to their

  • school or wait another year to apply.

  • This is another hypothesis for how the cost of medical education has been able to increase

  • to the extent that it has.

  • In reality, the rising cost of medical education is the product of multiple factors.

  • As with most things in life, it’s not so black and white that we can point to a singular