On student loans

Most students who attend medical school in the US do so with student loans. Yes, some have military scholarships and some have wealthy parents, but most don’t. I’m guessing that most students reckon they’ll easily pay off the loans with the income that an MD or DO degree commands, and so far, they’ll be right.

But the immensity of these loans has negative externalities. Here are two:

1. It affects the residency choices of graduates. Students with large loans (not just med school but college loans) are incented to choose highly compensated specialties like surgery, dermatology, cardiology and ophthalmology and not the less well-compensated fields of family medicine, pediatrics and geriatrics;

2. It affects decisions about whether to promote academically marginal students. Students who flunk out of medical school are at risk for default, and too many defaults could affect the loan rates for future students at institutions that enforce academic rigor.

Indeed, students who don’t pass the USMLE step 1 exam on the first try are finding it difficult or impossible to match for a residency, and residency is a mandatory step to achieving medical licensure in the US. If you can’t practice medicine, how are you going to pay off hundreds of thousands of dollars in student loans?

Like everything in capitalism, there can be unintended consequences.