Why we have a credit crisis, just take a look at medical schools

[sirus_virus]

Just reminding you guys how our wonderful institutions of higher education (especially medical schools) have contributed to our credit crisis too. Why are they charging 200K to train one physician? Because sallie Mae/government told them the loans will be available. So while physicians’ income are declining, the loan burden kept rising exponentially, mainly because medschools charged whatever they heard was available to borrow. Big time extortion IMO. If not, tell me why the cost of medical education is rising faster than any other economic metric. Now, if physicians income declines to a point where they cannot service their 200-300k loans (and this is more likely than not), how do the lenders plan to get their money besides asking for a bailout from taxpayers?

With the credit crisis going down, I am beginning to suspect medical school loans will be significantly more difficult to obtain in the next year and beyond. Good thing in my opinion, since it is this very style of loan heist operations run by institutions of higher education and banks (refereed by the government ofcourse) that has the country stumbling today. This might be a good thing, because soon when there is no 200K loan available for medschool, they might actually get real with what it really costs to train a physician, and I guarantee you it is not anything close to the present price tag.

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[plainfacts]

those who have already taken the loans are in deep ****.

 

[coldweatherblue]

they might actually get real with what it really costs to train a physician, and I guarantee you it is not anything close to the present price tag.

I've read that the actual cost of four years of medical education is actually much higher than the tuition charged by the med school. It's hard to believe because I feel like I learn everything from wikipedia and BRS books... but that's what I've heard.

graduate medical education is a different story all together; training residents costs hundreds of thousands of dollars per year (so I've heard.)

I don't think educational loans are really in any way related to the current economic crisis. Could you care to elaborate since you're reminding us of the connection?

The economic troubles involve investment banks. Basically about fifteen years ago J.P. Morgan bankers developed a way to offer third-party security for loans and mortgages. Now they could invest money that had been previously tied-up in banking reserves (due to federal law that states a bank must have sufficient cash to guarantee its credit). So what they did was give money that should have been left untouched to a bunch of people who should NEVER have gotten loans in the first place. Now years later due to the number of people defaulting on those loans, the banks can no longer pay their creditors and they have no reserves.

IMO they're getting what they deserve and it's unfortunate that they've managed to get the rest of the country involved. The government opted NOT to bailout these institutions.

Medical school loans, otoh, are mostly FEDERAL educational loans. Contrasted with any kind of investment loan or mortgage from WaMu, J.P. Morgan, etc, medical school (stafford) loans are directly tied to the federal government. You may use a lender but the feds back it all the way.

Totally different system. I know nothing about business or any kind of accounting/financial stuff, this is just how I understand it. Anyone with better information feel free to correct me.

JMO but our economy would have to be in SERIOUS trouble (like armageddon) for congress to try and cut costs by cutting out medical educational loans. There are many other frivolous wastes of tax-payer's money that would be cut before politicians would vote to cut educational loans for physicians and therefore cripple medical education.

 

[geogil]

.

 

[geogil]

those who have already taken the loans are in deep ****.

Why do you say that? I think the real danger is the possibility of Obama-care style socialized medicine eroding re-imbursements to the point that we can't repay said 250K loan.

 

[GreenShirt]

Considering that federal student loans can't be forgiven under any circumstances short of death or disability, I would imagine that medical school loans are actually a great cash cow for the government and therefore more likely to increase than decrease. Think about it: there's low attrition in the profession, 6-figure salaries, and while we grumble about it...every penny gets repaid in the end with interest (cha-ching). You can look to recent legislation regarding resident deferment to see the government is trying to milk more interest out of doctors. (I'll have to say I don't know much about economics or government though...these are my random thoughts...correct me if I'm wrong).

 

[thechad]

Just reminding you guys how our wonderful institutions of higher education (especially medical schools) have contributed to our credit crisis too. Why are they charging 200K to train one physician? Because sallie Mae/government told them the loans will be available. So while physicians’ income are declining, the loan burden kept rising exponentially, mainly because medschools charged whatever they heard was available to borrow. Big time extortion IMO. If not, tell me why the cost of medical education is rising faster than any other economic metric. Now, if physicians income declines to a point where they cannot service their 200-300k loans (and this is more likely than not), how do the lenders plan to get their money besides asking for a bailout from taxpayers?

With the credit crisis going down, I am beginning to suspect medical school loans will be significantly more difficult to obtain in the next year and beyond. Good thing in my opinion, since it is this very style of loan heist operations run by institutions of higher education and banks (refereed by the government ofcourse) that has the country stumbling today. This might be a good thing, because soon when there is no 200K loan available for medschool, they might actually get real with what it really costs to train a physician, and I guarantee you it is not anything close to the present price tag.

Well...You were able convey the fact that you know two things: Jack and $hit. Do you honestly think this has anything to do with student loans (which are mostly federal) or private bank loans (defaulted mortages, car loans, et cetera)?

 

[sirus_virus]

I've read that the actual cost of four years of medical education is actually much higher than the tuition charged by the med school. It's hard to believe because I feel like I learn everything from wikipedia and BRS books... but that's what I've heard.

graduate medical education is a different story all together; training residents costs hundreds of thousands of dollars per year (so I've heard.)

I don't think educational loans are really in any way related to the current economic crisis. Could you care to elaborate since you're reminding us of the connection?

The economic troubles involve investment banks. Basically about fifteen years ago J.P. Morgan bankers developed a way to offer third-party security for loans and mortgages. Now they could invest money that had been previously tied-up in banking reserves (due to federal law that states a bank must have sufficient cash to guarantee its credit). So what they did was give money that should have been left untouched to a bunch of people who should NEVER have gotten loans in the first place. Now years later due to the number of people defaulting on those loans, the banks can no longer pay their creditors and they have no reserves.

IMO they're getting what they deserve and it's unfortunate that they've managed to get the rest of the country involved. The government opted NOT to bailout these institutions.

Medical school loans, otoh, are mostly FEDERAL educational loans. Contrasted with any kind of investment loan or mortgage from WaMu, J.P. Morgan, etc, medical school (stafford) loans are directly tied to the federal government. You may use a lender but the feds back it all the way.

Totally different system. I know nothing about business or any kind of accounting/financial stuff, this is just how I understand it. Anyone with better information feel free to correct me.

JMO but our economy would have to be in SERIOUS trouble (like armageddon) for congress to try and cut costs by cutting out medical educational loans. There are many other frivolous wastes of tax-payer's money that would be cut before politicians would vote to cut educational loans for physicians and therefore cripple medical education.

The credit crisis is a result of people simply not being able to pay because they owed more than they can afford. Why do they owe more than they can afford? Because the banks made it easier to get get credit. That is the same methods they are using to dish out medical school loans, and soon physicians will owe more than they can afford.

If students cant secure 200k loans, do you think medical schools will shut down? Nope!! and they would not even know they lost money, seing as medschool tuition only accounts for 3% of their income.

 

[sirus_virus]

Well...You were able convey the fact that you know two things: Jack and $hit. Do you honestly think this has anything to do with student loans (which are mostly federal) or private bank loans (defaulted mortages, car loans, et cetera)?

Mostly federal? What the hell? Are you even familiar with what we are talking about? Just in case you don't know, the government is only serving a garuantor for the loans, and besides paying a few dimes for the subsidised loan interests they are not actually giving out any money.

 

[FoundationsFan5]

Wow. Opening this thread (let alone actually reading the first post) was such a waste of my time.

 

[thechad]

Actually, coldweatherblue summed it up quite nicely.

And do you really think that when you are making over 100k/year, you won't be able to pay off 250k?

 

[thechad]

Mostly federal? What the hell? Are you even familiar with what we are talking about? Just in case you don't know, the government is only serving a garuantor for the loans, and besides paying a few dimes for the subsidised loan interests they are not actually giving out any money.

So you've never filled out a FAFSA?

EDIT: I will reiterate the fact that I think you are the one who doesn't know what they are talking about.

EDIT 2: You think all the fed gov does is give grants?...............that's really what you think?

 

[coldweatherblue]

The credit crisis is a result of people simply not being able to pay because they owed more than they can afford. Why do they owe more than they can afford? Because the banks made it easier to get get credit. That is the same methods they are using to dish out medical school loans, and soon physicians will owe more than they can afford.

If students cant secure 200k loans, do you think medical schools will shut down? Nope!! and they would not even know they lost money, seing as medschool tuition only accounts for 3% of their income.

What exactly are you arguing? That med schools are analogous to investment banks? That medical schools are trying to fleece students? That med schools are in cahoots with banks propagating the sub-prime crisis?

Anyone who takes out a loan for medical education should be well-aware of the costs involved. If you don't want to take on debt, don't matriculate.

All things said and done, physicians in the US still have it very good financially compared with elsewhere in the world.

 

[sirus_virus]

What exactly are you arguing?

... That medical schools are trying to fleece students?

Yes, knowingly or unknowingly.

Anyone who takes out a loan for medical education should be well-aware of the costs involved. If you don't want to take on debt, don't matriculate.

Easier said than done, we are talking pre-meds here, not financial gurus. Did you notice someone on this thread doesn't even know where the loan money is coming from.

All things said and done, physicians in the US still have it very good financially compared with elsewhere in the world.

Not entirely true.

 

[FrickenhugeMD]

So do you have a suggestion? or just more whining....

 

[masterofmonkeys]

The credit crisis is a result of people simply not being able to pay because they owed more than they can afford. Why do they owe more than they can afford? Because the banks made it easier to get get credit.

Banks made it easier to get credit because certain factions of government INSISTED they do it. Granted, banks are to blame as much as anyone for this crisis, but the people in govt who insisted that loans be made to people who couldn't afford them bear responsibility as well.

And last but not least...actually the opposite...the people who TOOK the loans and the credit. We are free agents. If a person is too stupid to manage their own finances and realize that when their house is worth 6x their yearly income, they're in a bad situation, how are they smart enough to vote?

 

[deleted77919]

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[sprinkibrio]

Volunteers cost hospitals tons of money... I wish I had the power point slide from my volunteering days. 3rd and 4th year medical students who are there all day do the same.

My school has extremely low tuition comparatively but it's the state government who is footing the bill equal to what private school students have to pay. They are investing in us to stay in the state, which is the reason for such tight handling of out of state acceptances. Is there some other reason for the state financing that I'm missing?

 

[deleted77919]

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[nogolfinsnow]

I've heard the same BS about tuition only covering a portion of our "cost of education." I simply refuse to believe it until I see a detailed breakdown of actual medical school operating expenses directly tied to my education. The way I see it they need 1) a lecture hall or two 2) utilities - electricity and the like for the lecture halls 3) an anatomy lab 4) professors of anatomy 5) a dean or two (although I firmly believe fully half that staff should be cut). That's it. I have a hard time seeing that add up to a total operating budget of 4 years of students x 163 per class x $40,000/yr = $26,000,000. I'm really curious as to what all the other expenses are.

I included anatomy professors because without the medical school I imagine the anatomy lab would pretty much close sown, so it's fair to count their salaries. The clinical faculty have told us on more than one occasion that they are not compensated for their teaching time, so that's free. The hospitals we rotate at don't charge for us to be there, so that's free too. I suppose there are the PhD researchers who have a certain number of teaching hours as part of their jobs, so you can take the portion of their salary that is directed related to teaching time and add it to the above costs (although for a few of them cutting them to one office hour per week and using the saved money to buy the class a set of BRS books might be a better cost/benefit ratio).

Schools like SGU are for profit enterprises that have to pay hospitals for their students to have clinical rotations (see recent NYC HHC scandals). Despite that added cost they are turning a profit. I just don't see how $26,000,000 represents a "small portion of the cost of educating us," if you are looking at direct costs the school incurs. The only thing $26,000,000 represents a small portion of is the total hospital operating budget (roughly $1 billion around here) but it is ludicrous to say that in any way represents the cost of education. If the medical school here disappeared tomorrow the hospitals would still be open and their operating budget unchanged.

If someone has numbers on direct costs of attendance I'd love to see them and will eat my words. Until then I stand by my belief that medical schools charge what they think the market will bear rather than having some actual formula that takes direct costs of attendance incurred into account.

I've hear a little talk at our school that one of the class presidents is trying to push the administration to provide a breakdown of costs associated w/ training the students. If we ever get it I'll share. I've heard the same you have, but they never actually prove it to us that it costs so much.

 

[cpants]

I've heard the same BS about tuition only covering a portion of our "cost of education." I simply refuse to believe it until I see a detailed breakdown of actual medical school operating expenses directly tied to my education. The way I see it they need 1) a lecture hall or two 2) utilities - electricity and the like for the lecture halls 3) an anatomy lab 4) professors of anatomy 5) a dean or two (although I firmly believe fully half that staff should be cut). That's it. I have a hard time seeing that add up to a total operating budget of 4 years of students x 163 per class x $40,000/yr = $26,000,000. I'm really curious as to what all the other expenses are.

I included anatomy professors because without the medical school I imagine the anatomy lab would pretty much close sown, so it's fair to count their salaries. The clinical faculty have told us on more than one occasion that they are not compensated for their teaching time, so that's free. The hospitals we rotate at don't charge for us to be there, so that's free too. I suppose there are the PhD researchers who have a certain number of teaching hours as part of their jobs, so you can take the portion of their salary that is directed related to teaching time and add it to the above costs (although for a few of them cutting them to one office hour per week and using the saved money to buy the class a set of BRS books might be a better cost/benefit ratio).

Schools like SGU are for profit enterprises that have to pay hospitals for their students to have clinical rotations (see recent NYC HHC scandals). Despite that added cost they are turning a profit. I just don't see how $26,000,000 represents a "small portion of the cost of educating us," if you are looking at direct costs the school incurs. The only thing $26,000,000 represents a small portion of is the total hospital operating budget (roughly $1 billion around here) but it is ludicrous to say that in any way represents the cost of education. If the medical school here disappeared tomorrow the hospitals would still be open and their operating budget unchanged.

If someone has numbers on direct costs of attendance I'd love to see them and will eat my words. Until then I stand by my belief that medical schools charge what they think the market will bear rather than having some actual formula that takes direct costs of attendance incurred into account.

You forgot a lot of things. The most expensive thing is the professors. The school needs a lot more than just anatomy professors. They need people with the knowledge to teach biochemistry, histology, pathology, pharmacology, genetics, and every other subject that you will learn in school. They also need people to do the research that keeps medicine moving, gives students opportunities, and brings prestige and grant money to the university.

Yes, they must pay deans. It takes more than a couple of administrators to run something as complicated as a medical school. You may not know what they all do, but they are behind the scenes working on accreditation, financial aid, admissions, and all of the other things you take for granted at school.

They have to pay people to take care of the buildings, labs, libraries, to embalm the bodies, to serve lunch in the cafeteria, etc. Each school employs hundreds, if not thousands of people to keep it running.

The school must purchase and maintain millions of dollars worth of equipment used to train students. They must buy hundreds of thousands of dollars worth of books and journals for the library. They purchase vehicles used by maintenance and security.

Another biggie is insurance. They have to insure all of the grounds and buildings. A medical school isn't cheap to insure. There are a lot of occupational hazards, and they need coverage for when you get hurt or when you hurt one of their patients during your training.

These are just a few things that I thought of off the top of my head. I have no problem believing that running your average medical school costs well over 26M/yr.

 

[cpants]

I've been poking around a little, and medical school budgets are measured in the 100s of millions not the 10s of millions. Student tuition doesn't begin to dent the cost of running a medical school for a year. At the schools I looked at, the tuition generally covered around 5% of the school budget.

 

[nogolfinsnow]

You forgot a lot of things. The most expensive thing is the professors. The school needs a lot more than just anatomy professors. They need people with the knowledge to teach biochemistry, histology, pathology, pharmacology, genetics, and every other subject that you will learn in school. They also need people to do the research that keeps medicine moving, gives students opportunities, and brings prestige and grant money to the university.

Yes, they must pay deans. It takes more than a couple of administrators to run something as complicated as a medical school. You may not know what they all do, but they are behind the scenes working on accreditation, financial aid, admissions, and all of the other things you take for granted at school.

They have to pay people to take care of the buildings, labs, libraries, to embalm the bodies, to serve lunch in the cafeteria, etc. Each school employs hundreds, if not thousands of people to keep it running.

The school must purchase and maintain millions of dollars worth of equipment used to train students. They must buy hundreds of thousands of dollars worth of books and journals for the library. They purchase vehicles used by maintenance and security.

Another biggie is insurance. They have to insure all of the grounds and buildings. A medical school isn't cheap to insure. There are a lot of occupational hazards, and they need coverage for when you get hurt or when you hurt one of their patients during your training.

These are just a few things that I thought of off the top of my head. I have no problem believing that running your average medical school costs well over 26M/yr.

Professors doing actual shouldn't be too big of an expense for the school. Their money comes from government funded grants. If you can't bring grant money to support your projects with you, you likely aren't getting a faculty position as a PhD. In fact, the way it works is that when a researcher gets a grant, money is also given to the institution to cover some of the overhead. I do agree with a lot of your other points.

 

[Coastie]

You think we have it bad?

www.jdunderground.com

Check out that lawyer forum.

 

[deleted77919]

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[medicinesux]

You know what I find the biggest kick in the pants? Paying XY thousand dollars a year during 3rd and 4th year rotations. Who else in their right mind pays to go to work? This to me is the worst milking of them all. There is no reason in the world why medical school can't be 3 years in duration- 4th year is a needless waste of time and money!

 

[dragonfly99]

I agree with most of the points made by Dakota and nogolfinsnow,
though I agree that the cost of liability insurance for med students should be added in.

You will *NEVER* get your medical school to release to you an itemized list of where your tuition money is going. Mark my words. *NEVER*.
This idea was bandied about yearly by the class presidents, etc. of my med school and it never materialized. Med schools don't do their accounting that way (in such a way they could show you where your tuition money is going). I do agree it is ludicrous to claim that educating a med student costs even the 33k/year I was charged in 2000-2004 when I attended.

I actually don't believe that it costs many many thousands/year to educate a resident, either, particular in the nonprocedural fields like psych and internal med. We (residents) work cheaper than RN's and many other hospital staff, yet work far, far more hours. We save the hospital some money with our work. We cost them with some of the educational lectures, free meals on call, etc. that we get. We also get paid...if you include the benefits, what we get paid is probably about 50k/year.

Med students do not get paid. There is no way in hell that my 2 years of indentured servitude as a 3rd and 4th year med student cost the school 33k/year. No way. Our tuition was set by the board of regents of our university, and I'm sure the tuition went straight into the university's coffers.

 

[nsx]

Just reminding you guys

I see what you're doing here. Nice.

 

[LADoc00]

Just reminding you guys how our wonderful institutions of higher education (especially medical schools) have contributed to our credit crisis too. Why are they charging 200K to train one physician? Because sallie Mae/government told them the loans will be available. So while physicians’ income are declining, the loan burden kept rising exponentially, mainly because medschools charged whatever they heard was available to borrow. Big time extortion IMO. If not, tell me why the cost of medical education is rising faster than any other economic metric. Now, if physicians income declines to a point where they cannot service their 200-300k loans (and this is more likely than not), how do the lenders plan to get their money besides asking for a bailout from taxpayers?

With the credit crisis going down, I am beginning to suspect medical school loans will be significantly more difficult to obtain in the next year and beyond. Good thing in my opinion, since it is this very style of loan heist operations run by institutions of higher education and banks (refereed by the government ofcourse) that has the country stumbling today. This might be a good thing, because soon when there is no 200K loan available for medschool, they might actually get real with what it really costs to train a physician, and I guarantee you it is not anything close to the present price tag.

you absolutely 100% correct. ALL HIGHER EDUCATION has jacked costs up to a huge level because of the belief that students could borrow that money, well now they cant! And even more telling will be the undergrads who default on 20-200K in loans in the coming decade. This is the untold and often ignored second wave of the credit crisis. The proverbial 2nd shoe that hasnt dropped yet.

 

[medicinesux]

Sallie Mae is cratering today....down over 30% into the single digits when the market was even. Wonder why that is? Would love to short this one into ground.

 

[mgdsh]

Sallie Mae is cratering today....down over 30% into the single digits when the market was even. Wonder why that is? Would love to short this one into ground.

Their the worst run pubically traded company in the US (and that's saying a lot). If they weren't a essentially government sponsored agency, they would have gone bankrupt a long time ago.

Just last year their CEO was on a conference call dropping f-bombs, including walking away early saying "Lets get the F#!K out of here." Talk about being professional, lol.

 

[Dr.Millisevert]

you absolutely 100% correct. ALL HIGHER EDUCATION has jacked costs up to a huge level because of the belief that students could borrow that money, well now they cant! And even more telling will be the undergrads who default on 20-200K in loans in the coming decade. This is the untold and often ignored second wave of the credit crisis. The proverbial 2nd shoe that hasnt dropped yet.

I have a few questions:

1) Why hasn't the US dollar dropped in value in comparison to other major world currencies recently considering our piss poor economy and current financial crisis (past 3 months)?

2) Also, does anyone think that things will get to the point in the US (our economy) where students in such great debt will be able to reconsolidate their loans at much lower interest rates? (Will interest rates fall?)
Will the gov ever do a bail out of our loans?

3) If it is impossible to have federal loans forgiven... could one reconsolidate all federal loans privately and then have them forgiven?

 

[michaelrack]

I have a few questions:

1) Why hasn't the US dollar dropped in value in comparison to other major world currencies recently considering our piss poor economy and current financial crisis (past 3 months)?
?

The dollar has been strengthening due to 1) the flight to safety and the increased demand for US treasuries and 2) slowing economy (less inflationary pressures).

 

[medicinesux]

LOL- Hilarious. Looks like we have some disgruntled employee from the student loan industry about to go postal. Kind of sucks that word is getting out and that you are about to lose it all. Karma is a b!tch, isn't it? The days of reeping profits from the young and naive and spinning tales of how "student debt is good debt" are long over. I will be grinning from ear to ear as the last nail seals your coffin when Sallie Mae goes under in the near future.

 

[NiteOwl]

Someone is about to be beaten with a banstick!

 

[link2swim06]

Someone has too much time on there hands to make an entire new account to post a porno image.

 

[Stroganoff]

Someone has too much time on there hands to make an entire new account to post a porno image.

Yeah, seriously. Not to make a bad pun, but "grow a pair" and post porn with your main account. Not that I have or will.

PS. Nice "money" shot. How apropos.

 

[LADoc00]

FOLKS:

Since the early 1980s,

Energy has risen a whopping 110%
Medical costs a staggering 240%

COLLEGE HAS GONE SUPERNOVA INCREASING By 450%

This isnt a free market, its a criminal conspiracy.

 

[creditfiles]

ouch...that's a hard loan