- Posted May 20, 2014 by
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On the Public Consequences of the Ever Increasing Cost of a Healthcare Education
Healthcare programs are in a favorable position to charge high rates for their services due to student demand. Paulo Freire introduced the concept of the banking system of education in his 1970 book Pedagogy of the Oppressed. He wrote that students are treated as empty vessels to be filled with knowledge (Freire). The banking system allows decisions affecting students to be made without resistance because it creates a disparity between students, as "docile learners", and educators, as "professional authorities". Much like Freire's argument, the schools paternalistic point of view uses a "humanitarianism" argument to keep prospective students interested in applying to their program (Freire). Students' credulity keeps them interested in the programs because they believe the cost is necessary if they want a career helping others. Students expect that they will be able to recoup the expenses by getting a higher paying job using their degree. Economists call the student's relationship with education "inelastic", meaning that the demand does not decrease significantly even when prices are higher because the degree is a requirement to enter certain professions (McArdle). Additionally, schools have selectivity to their advantage. There are many applicants each year who want to enter the healthcare profession and only a fraction of these students are accepted into programs. Admitted students have pride in being one of the best applicants and are willing to pay the price to complete their program. The student also knows they cannot fight for lower tuition because another student will gladly take their position in the class. If education were viewed like a company, inelasticity and selectivity are two factors that feed the supply and demand model and contribute to rising tuition costs.
Another contributing factor to the rising healthcare tuition is the easy access to loans for tuition, fees, and living expenses. Many schools have several full-time employees to help students file applications for aid. While these loans are an amazing resource to help all students attain a higher degree, especially those from financially disadvantaged backgrounds, they also pose a problem because universities are able to raise their rates to the maximum limit that a student could receive in federal loans. Universities compile a cost of attendance sheet, often inflating values for living expenses, to provide a maximum value on the amount of federal aid a student can receive. Some financially inexperienced students look to these sheets for a guideline of how much they can spend on things like room and board since they will not be able to hold a part-time job with 40 hours of class per week plus time for studying. Since those loans have initiation fees and start accumulating interest the day they are dispersed, healthcare graduates are already faced with a lifelong crippling debt the day they graduate. One new dentist feels like a "victim of the federal government loan policy" after graduating with $520,000 in debt and agrees that "unlimited federal loans have resulted in the increased price of the graduate school system" (Anonymous Dentist). Schools can increase tuition and know for certain that the student will be able to pay them by the tuition due date. Allowing the loan maximums to be contingent on expense sheets developed by university administration is a flawed system because it allows schools to raise the prices indefinitely without appropriate checks and balances.
Recent legislation has changed loan options significantly for students. The Health Care and Reconciliation Act increased the loan value available to students, doubled the interest rates, and also allowed a longer time period to pay off loans. The government promotes this program because the interest on student loans is profitable and is being used specifically to support the Affordable Care Act (Spratt). Also, since 2012, federal Stafford loans have been unsubsidized which means they start accruing interest, currently 5.41%, the day they are dispersed. Since students can only receive up to $40,500 per year in Stafford loans they may also require Grad PLUS loans, currently 6.41% interest, to cover their additional tuition and living expenses. The Health Care and Reconciliation Act also extended the income based repayment program that allows a repayment schedule for 20 years based on a 10% cap on all net income and then forgives the loan. The caveat, however, is that the forgiven principal and interest remaining in the loan is considered taxable income. The graduate must then find a way to pay for an astronomical tax bill in one lump sum on April 15th. One dentist states that " I roughly save $1000 a month to pay off the huge taxable income I will be billed with" but also mentions that repaying loans this way doesn't require sacrifices in lifestyle that some other healthcare professionals are choosing to do (Dr. J.). Unfortunately, the increasingly exorbitant charges for a health education has "transformed an education that was once a path to public service into a significant financial investment that needs to yield returns" (Pauline W. Chen). It will be legislatively difficult to reverse these loan changes because of their benefit to the federal budget, yet as a society we must argue that these loan subsidies help contribute toward affordable health care in this country for both patients and the government.
Though most healthcare students are suffering from this financial crisis, medical students have been especially targeted in the recent changes in loans. Medical school first requires four years of graduate coursework then a residency to improve hands-on skills after graduation. Residents are usually paid less than $50,000 for 3-10 years while working up to 80 hours per week. Their stipend must not only cover the cost of living for themselves and potentially a family but also malpractice insurance and loans. Before 2012, there was a program that allowed medical residents to postpone their loan repayment during residency due to economic hardship. Currently, however, interest continues to accumulate while medical residents make minimum payments. This can turn the average medical school debt of $170,000 into a total debt of $476,000 over the life of the loan. Recent changes to the healthcare system in the United States can also affect a physician's compensation making it more difficult for doctors to get a return on their educational investment. African American and Mexican American stude