Saturday, September 27, 2008

Should some of the $700B go to loan forgiveness for student debt?

Last year, the average debt of a graduating medical student was $139,517 and 75% carried debts of greater than $100,000. I'm going to make a leap of faith that there are doctors in the US that have also been caught over-extending themselves in order to finance lifestyle choices. Massive graduating debts are pushing newly minted physicians out of primary care and into specialty practices. This limits access for patients, increases costs and forces people to use the ER for primary care.

Should the US Congress use a portion of the $700B bailout plan to target health care professionals? Absolutely, this is a once in a lifetime opportunity for the government to leverage payment for service.

Like so many other Americans, thousands of young doctors will be eager to avoid a cash flow crunch caused by excessive debt. If the government partitions part of the funds to service medical school debt they would be able to make demands on the payment outside of the normal terms of a bank loan. For instance, service of medicare patients, service in remote communities, county hospital coverage and primary care practice. Terms that might help alleviate some of the health care crisis. In effect, the government would be retrospectively paying to train physicians using the same money they are already committing.

If the work is not what the a young doctor is looking for in life, repayment will be quick with low risk on accepting the loan. On the other hand, some physicians may find a niche that they enjoy.

Either way, it's a win-win for the tax payer and physician.


everdream said...

Similarly, teacher's loans are forgiven if they agree to teach in certain urban poverty zones for so many years. But with the physicians, won't we see either more Docs from India (and other countries), or an increase in ANP's to make up the difference in losses of family practice Docs?

I'd like to see a loan forgiveness program for U.S. family practice Docs if they agree to practice in either an urban low income zone or a rural low income zone. I haven't thought about how many years they should agree to serve. What do you and others think?

Ian Furst said...

Since most of these loans are without colateral anyway one would thik it would be a perfect fit for banks with liquidity issues. That being said, I'm going to guess that most family practice docs make their payments.

I think many countries ask for 2-3 years depending on the size of the loan which seems fair. The reality however, seems to be that Congress is having trouble agreeing on the basics let alone hand picking sub-groups that might improve society