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Medical Education Debt

Medical Education Debt

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Medical Education Debt

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  1. Medical Education Debt Maryland ACP Diversity Council March 18, 2008 Renee Zerehi Manager, Health Policy ACP Washington Office

  2. Medical Education Debt Statistics • $139,517 – According to the Association of American Medical Colleges, the average educational debt of indebted graduates of the class of 2007. 75.5 percent of graduates have debt of at least $100,000 • 87.6 percent of graduating medical students carry outstanding loans • About 5% of all medical students will graduate with debt of $200,000 or more • Source: AAMC 2007 Graduation Questionnaire

  3. Why Has Debt Increased So Much? • Rising tuition - AAMC data show that median private medical school tuition and fees has increased by 50 percent (in real dollars) in the 20 years between 1984 and 2004. Median public medical school tuition and fees increased by 133 percent over the same time period. • Interest accrued on loans over time significantly adds to the total cost of student debt • Students now entering medical school with more education debt from undergraduate education • Increasing numbers of “non-traditional” students who have children to support

  4. Why ACP Is Concerned About Debt • Decrease in primary care physicians - students with high debt are less likely to pursue family practice and general internal medicine • Decreased diversity of physician workforce • The cost of tuition can prevent students from low-income/minority and those with other financial responsibilities from attending medical school • Physician diversity is necessary to address the needs of heterogeneous, multicultural patient populations • Promoting unsafe physician behaviors – moonlighting by residents

  5. What is ACP Doing to Address Debt? • 2005 Summit on Medical Education Debt cosponsored with AMSA and AAMC on Capitol Hill • Position papers – Revitalization of IM; Workforce • Priority issue during Leadership Day • Legislation Introduced to Specifically Address Primary Care Debt • Reauthorization of Higher Education Act • Securing adequate funding for Title VII health professions programs

  6. Authorizations and Appropriations: What's the Difference? • Authorizations establish, continue, or modify federal programs • Appropriations give agencies the authority to spend money; Authorizations are a prerequisite to Appropriations.

  7. Authorizations and Appropriations: What's the Difference? • Some authorization laws provide spending directly. • Most major entitlement programs like Medicare and Medicaid • Spending is typically permanent – no annual appropriations - spend what it actually costs • Other authorization laws cover only specific years, and must be reviewed and re-authorized every one to five years. • Discretionary spending • Annual appropriations

  8. Rapid Growth In Entitlement Expenses Cut Discretionary Spending

  9. Up For Reauthorization • The Higher Education Act of 1965 • Best vehicle for student debt relief • Technically expired in September 2003 • Reauthorized every 5 years • The Health Professions Education Assistance Act of 1963 • Title VII of the Public Health Service Act • Technically expired in September 2002 • Reauthorized every 4 years

  10. Higher Education Act of 1965 • The Higher Education Act of 1965 • Best vehicle for student debt relief • Technically expired in September 2003 • Reauthorized every 5 years • Initiated the federal student loan program • Establishes federal guidelines on student loan interest rate adjustments, deferments, subsidies and tax deductions

  11. ACP Progress on HEA Related Issues • Changed the interest rates on students loans from a variable interest rate (capped at 8.25%) to a fixed rate of 6.8% (effective 7/1/06). • Federal PLUS loan program eligibility expanded to include graduate and professional students • Combined aggregate Stafford loan limit for health professions students increased from $189,125 to $224,000

  12. HEA Progress • Net borrower loan fees incrementally reduced in both the Family Federal Education Loan Program and Direct Loan over the next 5 years to 1 percent in 2010 • Repeal of Single Holder Rule

  13. HEA Ready To Go To Conference Several provisions that we are supportive of: • Mandate lenders’ full-disclosure of consolidated loan terms including the interest rate, repayment schedules, and the option to prepay loan amounts • Tuition transparency • Require lenders to report loan payments to all national credit bureaus • GAO Study on Medical Education Debt • Increases in the annual Perkins loan limit for graduate/professional students • Simplified FAFSA

  14. HEA Conference What needs to be addressed: • Who qualifies as a medical specialist for Loan Forgiveness Program for Areas of National Need • Reinstatement of 20/220 Loan Deferment Pathway (To qualify you must be employed full-time and your federal education debt burden is equal to or greater than 20 percent of your monthly income, and your income minus the education debt burden is less than 220 percent of the greater of the minimum wage rate or the federal poverty line (FPL) for a family of two.)

  15. Other Legislation • Medical Education Affordability Act (S. 1066) Extends the deferment period for borrowers in postgraduate medical or dental internship, residency, or fellowship programs throughout the duration of training • Physician Shortage Elimination Act (S. 896) • National Health Service Corps Medical School Scholarship Program • Grants to medical schools and community health centers to increase primary care capacity

  16. Other Legislation High-Need Physician Workforce Incentives Act of 2007 (H.R. 2584) Fields of family practice, internal medicine, pediatrics, emergency medicine, general surgery, or obstetrics-gynecology • Medical School Scholarship – 1 year tuition for each year of service up to $30,000/year • Loan Repayment Program - $35,000/year for each year of service critical shortage health facility - a public or private nonprofit health facility that is not a HPSA health professional shortage area

  17. Goals of the Title VII Health Professions Program (Health Professions Education Assistance Act of 1963) • Expand the primary care workforce • Train providers in interdisciplinary settings to meet the needs of underserved • Increase minority representation in health care workforce • Help address geographic maldistribution of providers • Provide financial aid thru primary care loans, health professions student loans, and loans for disadvantaged students

  18. Why We Care about Title VII • Only federal funding dedicated to the education and training of the primary care workforce • Provides direct financial support to schools for the educational training of general internists, family physicians, pediatricians, and geriatricians • Provides loans and grants to students pursuing careers in primary care • Provides funding for primary care faculty development

  19. Title VII Troubles • Administration has zeroed out funding for Title VII for past several years • Prefers direct support to community health centers • Increased funding for National Health Service Corps • Last minute appropriations each year by Congress to restore funding • Typically level funding • Last two years, major cuts from FY2005 levels of $300 million

  20. Title VII Appropriations 1964-2007

  21. Title VII Funding FY 2008 • Title VII health professions programs given $194 million, $106 million cut from FY 2005 • Funding eliminated for Health Education Training Centers, geriatric and rural training, workforce information and analysis, and health administration programs • Only $48 million for the primary care medicine and dentistry programs, which is a $41 million cut from FY 2005

  22. Title VII Proposed Funding FY 2009 • The President's budget eliminates funding for all Title VII programs • ACP would like increased funding for FY 2009 that includes restoration of funding for Title VII to at least FY 2005 levels ($300 million)

  23. So Why Isn’t the Federal Government Doing More For Medical Education? • Budget priorities - War in Iraq, Hurricane Katrina led to massive spending, and major cuts in discretionary spending • Pay-Go Rules • Perception that medical students will become high wage earners

  24. What You Can Do • Become a Key Contact – go to • Attend Leadership Day on May 13 and 14 and White Coat Event 5pm on May 14 • Organize a meeting of Maryland medical students/residents and your members of Congress (ACP can help) • Become a member of the College’ Council of Associates, Council of Student Members or Council of Young Physicians

  25. Questions? Contacts at ACP: Renee Zerehi – Washington Office or 202-261-4555 Council of Student Members Central Atlantic Region (DE, MD, NJ, PR, VA, DC)Joseph Sivak Council of Associates North Eastern Zone(CT, DC, DE, MA, MD, ME, NH, NJ, NY, PA, RI, VA, VT, WV) Mandy Krauthamer, Luke Hansen, Jeremy Richards,