HSP Workshop Offers Real World Financial Advice to Young Physicians

Around tax time an old adage is, "It's not how much you make but how much you keep." To a medical student leaving school with tens of thousands of dollars of debt and facing several years of residency making around $37,000 per year, it might be said, "It's not how much you make, but how much you owe." In the early years of their career, debt repayment may be at best difficult, more likely impossible, for a young doctor.

Each year, Dartmouth Medical School addresses these real world challenges for today's young physician through the Health, Society and the Physician (HSP) program. The department of community and family medicine developed HSP on the premise that physicians should incorporate relevant concepts from social sciences and humanities disciplines into their practices with the belief that such integration would benefit their patients and their communities. Course directors and faculty constantly scan the education and practice horizons for important themes and issues to which students should be exposed before moving on to residency.

Eric Wadsworth, CPA, a DMS fiscal consultant and former chief financial officer, offers a workshop for fourth year medical students. In two hours, Wadsworth, a Colby-Sawyer College business professor and certified financial planner, moved seamlessly through debt, budgets, student loans, insurance, 401ks, keogh plans,the beauty of Roth IRAs, retirement, saving for college, tax strategy, and a variety of investing models. In this year's course, Wadsworth held the crowd spellbound with insider's secrets of asset allocation, market segmentation, investment diversification and other topics typically not known to excite anyone except a convention of stock brokers.

Historically, doctors are often too busy to devote a great deal of time to financial planning until well into their career, but Wadsworth showed them how, by starting now, life could be made much less complicated down the road. He showed in eye-opening charts and startling graphs that time and money can be enemy or friend, with debt eating away financial security if improperly managed. Wadsworth gave the students clear goals for planning for the future as well as budgeting for the present so they could take control and, through basic financial discipline, develop a successful plan for their lives. He advised inexperienced investors to get advice from a qualified financial adviser with solid credentials and a good track record. He suggests only working with someone who listens to your issues and is willing to work with your situation.

DMS financial aid director Nancy Cirone explains that for a student entering medical school, two terms are of supreme importance, "base loan" and "scholarship." After determining an accepted student's financial aid eligibility, the School sets an amount that he or she would be required to contribute and the remainder is the base loan. The need beyond the contribution and base loan is awarded as a scholarship.

A low unit loan figure is that it attracts a larger pool of applications and, therefore, a higher standard from which to choose the entering class. Simply put, the lower the real cost of tuition, the better the chances of attracting more top-notch students who must weigh how much debt they want to incur in obtaining a medical degree.

Wadsworth identifies debt as a "cancer" on the financial health of the physician, and keeping it low benefits the graduate (a graduate typically leaves DMS with around $95,000 in debt--lower than the $118,000 from other private US medical schools). Says Wadsworth, "this low net cost has given DMS additional competitiveness among its peers--perhaps the best value among the Ivies.

Bottom Line, says Wadsworth

• Minimize student debt.
• Pay off student loans within 10 years-consolidating debt where appropriate.
• Budget income as soon as possible-allowing for savings and debt repayment.
• Establish a retirement savings plan now.
• Invest long term with a diversified portfolio.

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