Stephen C. Shannon, DO, MPH
Finding Ways to Reduce Graduates' Debt Burden
As I write this, the academic year is coming to a close, with approximately 4,500 proud students graduating from osteopathic medical colleges and moving on to the next phase of their medical education. I congratulate each and every one of them on their accomplishment, and I also send special good wishes to the Pacific Northwest University of Health Sciences College of Osteopathic Medicine and the Rocky Vista University College of Osteopathic Medicine, both of which graduated their inaugural classes this year.
Today’s graduates enter medicine at an exciting time. With a health care system in serious flux, they will have the opportunity to help shape the future of their profession as they also work to help fill a critical physician shortage. They will be welcomed by a U.S. population that has been crying out for the patient-centered, prevention-focused, compassionate health care that characterizes osteopathic medicine.
Nevertheless, these also will be challenging times for new graduates. One of the big challenges they will face in the immediate period ahead is a very personal one. More than 90 percent of graduates have taken out loans to finance their education, and these new DOs have educational debt that averages more than $200,000. With national student debt numbers making headlines throughout the nation, osteopathic medical school graduates shoulder some of the highest debt loads of all new workforce entrants. We all know about the associated challenges. Even while they make the lowest salaries of their careers in residency programs that are necessary for licensure, they will begin paying off student loans.
The American Association of Colleges of Osteopathic Medicine (AACOM) continues to be a strong advocate for increased funding of scholarship and loan repayment programs that lessen the debt burden on new osteopathic physicians. AACOM is working vigorously on Capitol Hill and with its member colleges to raise awareness of the importance of funding for Title VII of the Public Health Service Act health professions education and training programs and the National Health Service Corps (NHSC) and Indian Health Service (IHS) scholarship and loan repayment programs. AACOM strongly supports the Student Loan Forgiveness Act of 2012, introduced by Representative Hansen Clarke (D-MI), which would cap interest rates on all federal direct loans at 3.4 percent; cap payment at 10 percent of a borrower’s discretionary income; and forgive the debt, capped at $42,520, after 120 payments (10 years). For those in public service, loan forgiveness would occur after 60 payments. (See AACOM’s action alert to support the legislation.) AACOM also supports the Student Loan Affordability Act introduced by Senator Jack Reed (D-RI) and Representative Joe Courtney (D-CT), which would extend the reduced interest rate for Federal Direct Stafford Loans and would permanently cap Stafford Loan interest rates for low and moderate income students. Without the extension, millions of undergraduate students will have the interest rates on their subsidized Stafford Loans double from 3.4 percent to 6.8 percent beginning on July 1, 2012. AACOM remains involved in ongoing negotiations regarding this legislation. Please look for future information from AACOM as this continues to develop, and join us in these advocacy efforts. In addition, AACOM has developed a financial aid module for graduating seniors to enhance their understanding of loan repayment options.
But just as with the national budget, where policy makers continue to struggle with implementing the right mix of revenue generation, cost cuts, and efficiency initiatives, a multi-pronged approach is needed to keep medical school affordable and lessen our graduates’ debt burden. As the nation’s policy makers consider how to assure an adequate physician workforce in the future—in numbers, specialties and distribution—this issue must be a part of that discussion. Of course it is an important issue for our aspiring physicians; it is also a vital issue for the nation’s health care system.