Are Medical Schools Overcharging You? | The Cost of Medical School Explained


The average medical student graduates with around $242,000 of student loan debt with the vast majority of that coming from medical school tuition. That’s a lot of money no matter who you’re talking to. But what makes medical school so expensive?


1 | How Much Does It Cost?

If you were a first-year medical student in 2000, you could expect to pay around $17,000 per year in tuition. When adjusted for inflation, this comes out to about $26,000 per year. If you’re a first-year medical student starting in 2022, however, you can expect to pay around $55,000 per year in tuition. This is more than double what you would have paid just 20 years ago.

Of course, these numbers are averages and there are some medical schools that charge less and others that charge more. Regardless, that is around $220,000 just in tuition for four years of medical school. This doesn’t take into account living expenses, transportation, and all of the other expenses that will inevitably come up during your time in medical school.

Unfortunately, it’s only getting more expensive as well. It’s estimated that the average cost of medical school rises by approximately $1500 each year.

But where do these numbers come from? Do medical schools just throw darts at a dartboard to decide how much to charge students? Or is there a method to the madness?


2 | What’s The Cost of Running a Medical School?

To start, operating a medical school is expensive. It takes tens of millions of dollars, if not more, just to keep things running each year. These costs can be broken down into two main categories: instructional costs and educational resources.

Instructional costs include any expenses that are directly related to teaching. Professor salaries, simulation equipment, lab supplies, and actors for standardized patients would all fall into this category.

Another instructional expense that we don’t often consider is that medical schools generally have to pay hospitals and clinics to allow their students to rotate at their facilities. Although this is a necessary part of the training to become a physician, the reality is that having medical students decreases productivity.

Teaching a student takes time away from clinical care and is an added responsibility for residents and attending physicians. As such, medical schools often need to pay for the opportunity to have their students rotate at these facilities.

Educational resources are all of the other costs that don’t directly contribute to a student’s education but are still related to it. This includes administrator salaries, research activities, scholarships, access to databases, and maintenance of facilities, to name a few. Although these don’t directly impact a student’s ability to learn, they are still necessary to keep the medical school or university up and running.

It’s estimated that instructional costs range from around $48,000 to $51,000 per student per year and the cost of educational resources ranges from approximately $80,000 to $105,000 per student per year. Combined, this is significantly higher than the tuition that most medical students pay each year.


3 | Where Medical Schools Get All of Their Money

Naturally, your next question is probably, how do medical schools afford all of this? The answer is that they receive income primarily from four sources: tuition, endowments, government funds, and medical services.

The one you are probably most familiar with is tuition – the money that medical schools receive from their students.

Next, there are endowments, which are charitable donations from individuals or organizations. These may be physicians who graduated from the school or other members of the community that want to contribute to that school’s medical education.

These charitable donations can vary from hundreds of dollars to tens of millions of dollars; therefore, some schools rely on large numbers of small donations whereas others rely more on large individual donations. Most schools fall somewhere in the middle.

After that, there’s government funding. This is taxpayer money that is allocated to medical schools for purposes of education or research.

Lastly, many academic medical institutions own hospitals and clinics and therefore generate revenue from seeing and treating patients.

How much a school charges for tuition will depend on how much money they receive from the government, endowments, and medical services. A school that receives more money from these sources will be able to charge less in tuition, and vice versa.

Allopathic medical schools tend to be affiliated with state universities and large academic institutions. As such, they tend to receive more funding from the government and generate more money from medical services, both of which decrease tuition costs for students.

In contrast, osteopathic schools tend to be private institutions. They often receive little, if any, funding from the government and are often not associated with large medical institutions. This is why osteopathic schools tend to charge their students higher tuition.

As an example, tuition may account for 10%, or less, of an allopathic medical school’s revenue, whereas it may account for as much as 15-50% of an osteopathic medical school’s revenue.

This is one explanation for the rapid increase that we are seeing in the cost of medical education. In recent years, there have been many budget cuts that have affected the state’s appropriations for medical education. In short, government funding is decreasing. As a result, these expenses are being passed onto students in the form of increased tuition. If budget cuts continue to occur, we can expect tuition to continue to increase in the coming years.


4 | Supply & Demand

In addition to rising costs and decreasing funds, many people believe that there is another factor at play that is driving up the price of medical school tuition – one that has to do with supply and demand. That being said, this is more theoretical than the previous two points, so take it with a grain of salt.

Medical school isn’t just expensive, it’s also highly competitive. Each year, tens of thousands of high-achieving students apply to U.S. medical schools, and less than half of them get in.

It’s only getting more competitive too as more students apply to medical school each year. If we take the most recent 2021-2022 medical school application cycle, for instance, there were approximately 10,000 more applicants to U.S. MD schools compared to just the previous year despite their being relatively the same number of medical school spots. That’s an increase in applicants of approximately 18% in just one year.

Whether this past year is an outlier as a result of the global pandemic or a glimpse into what we can expect from here on out, nobody can say for certain; however, the general trend has been that the number of applicants is increasing at a faster rate than the number of new medical school spots.

This creates a mismatch between supply and demand as there are many students that want to become doctors, but not enough medical school spots to accommodate them. As such, some theorize that, in addition to driving up competitiveness, this is also driving up tuition costs.

As medical school admissions become increasingly competitive, fewer and fewer students have the luxury of choice. Getting into any medical school is an accomplishment, so students will often pay whatever it costs to attend that school. After all, what’s another $50,000 when you’re already taking out $300,000+ in loans?

Medical students don’t usually have to worry about paying for school either as the government is happy to provide loans. Investing in a medical student’s education is a pretty safe investment as medicine is a relatively guaranteed path to a high salary and most physicians will have the financial resources to pay back their loans.

In addition, even if a physician goes bankrupt, student loans are more difficult to discharge than other types of loans which means that there is a high likelihood that they will recoup their investment – plus interest of course.

As such, there is very little incentive for the government to intervene with the rising costs of medical education. After all, medical schools still have fewer spots than there are applicants, so the rising cost of education is not affecting the number of physicians that are entering the workforce.

This leads many to believe that medical schools are charging more for tuition simply because they can. It doesn’t matter what price they set because there will be thousands of premeds who are willing to pay it and a government that’s ready to provide the loans to allow them to.

It all comes down to competition. When you have multiple options, you can choose the one that is the best value. When you only have one option, you’re forced to take what you can get.

For example, let’s say there are a hundred premeds and each one gets into two medical schools, one state school and one private school, each with 100 spots.

If the state medical school charges $30,000 per year in tuition and the private medical school charges $50,000 per year in tuition, the student has the power to decide whether or not the extra $20,000 per year to attend the private school is worth it to them. If it isn’t, they’ll choose the state school over the private school. If every student chooses the state school over the private school, the private school will eventually have to lower its tuition if it wants to compete.

Now, let’s say there are 300 students. Now there are enough premeds for both medical schools to fill all of their seats and then some.

In this second scenario, the power of choice is in the medical school’s hands so there’s no incentive to decrease costs. There are enough students that they can fill their classes completely. In fact, they may even be able to increase costs if the only options are to go to their school or wait another year to apply. This is another hypothesis for how the cost of medical education has been able to increase to the extent that it has.

In reality, the rising cost of medical education is the product of multiple factors. As with most things in life, it’s not so black and white that we can point to a singular cause.

Regardless, the reality is that medical school is expensive, and it’s only going to get more expensive in the years to come. Although many of the points we’ve discussed are beyond your control, that doesn’t mean you are doomed to be hundreds of thousands of dollars in debt that you’ll never be able to pay back. Instead, you should focus on the things that you can control – like becoming a highly competitive applicant.

At Med School Insiders, we have a variety of services to help you become a stellar applicant that medical schools are willing to pay to go to their schools.

If you enjoyed this article, be sure to check out my piece on How to Afford Medical School or 5 Reasons Premeds Fail to Get into Medical School.


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