Once upon a time becoming a doctor meant a lifetime of affluence. These days a doctor is more likely to spend his free moments trying to balance his checkbook or dickering with an HMO over a $35 office visit.
At $250,000 a year on average, according to search firm Merritt Hawkins, doctors earn four times what the typical college grad earns. (Primary care physicians--internists and pediatricians, for example--average $160,000.)
Yet in a recent survey only 18% of physicians termed their practices financially stable. What's making things tougher these days is the liability side of physicians' balance sheets. Doctors are leaving school carrying average debts of $155,000. That's up from an inflation-adjusted $50,000 in debt 25 years ago and represents eight times the debt load of the typical college graduate. Doctors' debt has jumped from 20% of their average pay to 60% today.
That adds up to very sobering financial prospects for doctors interested in the profession's lower-paying specialties. Intent on becoming a primary care physician, Linda McGee decided to let the National Health Service Corps pick up the $32,000 annual tuition for three of her four years at Wake Forest's medical school. In return McGee was required, after completing her residency in 1999, to work for three years in an underserved area of Hagerstown, Md., where she earned $110,000 a year.
It was a financial stretch given that McGee left school with $80,000 in student debt, even with the Corps' help obtaining her medical degree. After completing her service she remained a family doctor, despite the relatively low pay. A decade out of school McGee still owes $18,000 on her student loans but has no regrets.
"I enjoy being a primary care physician," McGee says.
In many other cases, entire medical careers are shaped by tightening economic realities. Ravi D. Goel, a Cherry Hill, N.J. eye surgeon, racked up $18,000 in debt getting his undergraduate degree from Yale in 1993. He opted for New Jersey's Robert Wood Johnson program because its $14,000 annual tuition was 45% below what private medical schools cost.
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Goel added $87,000 in debt during medical school. Then came four years of residency, when he earned $35,000 annually. To get by he deferred loan payments. Interest compounded. By the time he completed ophthalmology training in 2001, Goel's bill had ballooned to $130,000.
Fearful of spending his life in debt, Goel went straight into practice rather than pursuing a research fellowship. He consolidated his debt and locked in $105,000 in federal loans at 5.6% over 30 years. He's paying off another $15,000 in Sallie Mae loans over 10 years at a floating rate (currently 4.3%). The remaining $10,000 is split between a rate of 2% from a Florida foundation and 8% from the Medical Society of New Jersey.
Goel, 37, clears around $200,000 a year (before income taxes) and pays $12,000 of it to lenders. He says he's lucky he chose ophthalmology. It would be "crazy" to try to become a primary care physician given today's ballooning debt, he says.
A growing number of medical students who fail to get that message are ending up deadbeat doctors. A government Web site names 119 with $17 million in unpaid federal student loans. The deteriorating economics of medicine has not deterred prospective doctors. Last year 42,000 applied for 18,000 medical school spots.