Debt contagion

It’s a strange thing teaching a final-year undergraduate course. You become aware of the rising panic among the students who are about to exit the relative security of university life. I imagine it’s a little bit like watching paratroopers standing in the open doorway of an aircraft in flight, shortly before you kick them out over enemy territory. They must wonder if their time in preparation has provided them with the right training and ammunition for what is to follow.

The medical students in the class always seem a little more relaxed. The road ahead for them might appear tough, but with pretty good guarantees of employment, it looks a lot less uncertain. I do wonder how long that will last, though: back-of-the-envelope calculations on the likely magnitude of their future debt are pretty eye-watering. For their five-year courses, the British Medical Association believes that individual debt could soon exceed £70,000. For medical schools in large metropolitan cities, I’d hazard a guess that it might be much worse than that.

Now don’t get me wrong. I’m not about to launch a welfare appeal for impoverished doctors. As a cohort of graduates they are in comparatively good shape. Unlike their compatriots launching themselves out into the thin air above the open labour market, medics can at least be sure that their parachutes are packed properly.

For the US, student debt appears to have exerted a significant effect on the postgraduate destinations of its medical graduates, with knock-on effects for both the academy and attempts to expand access

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But if things continue to progress, medics’ graduate debts are likely to be among the highest in the developed world, second only to those of private university graduates in the US. And the gap between us and our American buddies isn’t that wide: median debt for medical graduates in the US sits at around $150,000 (£93,540). The BMA’s projections for UK medical student debt already stand at a significant fraction of that and we are only just getting started in the tuition fee inflation game.

While I very much doubt this will end with the spectacle of medics living hand to mouth, I do wonder what the unintended consequences of these large debts might ultimately be. There must, for example, be a risk of harm to the widening participation agenda. In the UK, our pattern of admission to medical school has remained remarkably stable for decades despite our best efforts to attract a broader demographic to the profession.

The US has a similar problem. There, students from families in the lowest 20 per cent of the income bracket account for less than 3 per cent of the medical school intake, something that the American Medical Student Association believes has been exacerbated by tuition fee hikes.

There is also a suggestion that student debt may skew the way that trainee medics specialise in later life. For example, colleagues in orthopaedic surgery on average earn much more than those in, say, public health, which attracts little in the way of private income. In the US there is a tendency to veer away from less well salaried specialties in favour of those that give medical graduates a better chance of paying off their loans more quickly.

In an Association of American Medical Colleges’ survey of US medical graduates, half cite the size of their student debt as a determinant in their choice of specialty. This has made recruitment to “Cinderella services” – specialties traditionally seen as worthy but less well paid – even more of a challenge. And that same effect has also been implicated as a factor in the declining number of physician scientists across the Atlantic.

For the US, the size of student debt appears to have exerted a significant effect on the postgraduate destinations of its medical graduates, with knock‑on effects for both the academy and its attempts to expand access to this course of higher education.

The situation is now so acute that the authorities have begun to talk about a potential “bubble” market within medical education. Defaults on all US student loans currently stand at nearly 15 per cent and the burden of debt appears to some to be unsustainable in the same way as it was in the mortgage market not so long ago. Among the stock-trading wheeler-dealers, there has been plenty of chatter about the potential for making a profit out of shorting the US student loans market.

If we in the UK follow the same trends, the shift in responsibility for financing higher education from state to individual looks set to do much more than simply displace the burden of debt from taxpayer to student.

There are, of course, lots of reasons why the US scenario might not play out quite the same way for UK medical education. When it comes to the structure of our system of higher education, tuition fees and student debt, there are fundamental differences between us and our American cousins. But they used to say the same thing about the structure of America’s sub-prime mortgage market, didn’t they? The old adage about the US sneezing and the UK catching a cold has proved true in the past. And when it comes to medical student debt, I’m not yet sure that our immunity will prove any more robust.