Medical school can cost a student hundreds of thousands of dollars — but may also lead to some of the highest-paid careers available. Learn what kind of ROI you can expect, and determine whether the investment of time and money is worth it.
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For many students, a career in medicine is truly a calling — but the cost of getting there can give even the most committed doctor-in-training pause.
Given debt loads that will easily run into six figures, is it realistic for med school graduates to expect a 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 2016–17, the annual tuition and fees for public medical schools averaged $34,592 for in-state residents, and $58,668 for non-residents. Meanwhile, the average private school tuition came in at just above $50,000 a year for residents and non-residents, according to Association of American Medical Colleges.
New York University School of Medicine, one of the more expensive private schools, has tuition and fees reaching $60,687 for residents and non-residents, while Harvard Medical School charges $64,665. Surprisingly, total tuition and fees can be even higher at some public medical schools, with public institutions such as Michigan State University College of Human Medicine charging up to $87,157 for non-residents (residents pay a very reasonable $39,523).
These figures are rising each year, with no clear end in sight.
Still Other Expenses
But wait — did we mention the non-academic expenses? Housing, food, transportation, and miscellaneous costs further add to students’ financial burden. At Harvard Medical School, non-academic expenses may reach $20,500, while at Columbia University, the rent for a studio or efficiency apartment in university housing can hit $24,000 or more 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 2016, 74% of all medical school graduates had educational debt, with median debt loads of $190,000 — up from approximately $125,000 (adjusted for inflation) in the year 2000.
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, pharmacists, computer scientists, and chemical/petroleum/nuclear engineers) 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.
The Internal Rate of Return
Nicholas Roth, a researcher at 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 approximately $195,000 when surveyed in 2015, the average orthopedist earned over $421,000, followed by cardiologists at $376,000, and gastroenterologists at $370,000. 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 an annual ROI of 43.3%.
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 that specialty again, the respondents who claimed the greatest overall satisfaction were also among the highest paid: dermatologists (80% overall satisfaction), radiologists (72%), and oncologists (70%). In contrast, some of the lowest-paid specialists were the least satisfied overall, with rates of 54% for primary-care physicians, and 57% for nephrologists. For medical professionals who invested the most in both time and money, ROI does seem to matter.
