Shaken by the level of debt carried by young doctors to pay for their education, officials at the Johns Hopkins University have decided to continue counseling them on finances years after they have graduated.
This word to the wise will not put T. Rowe Price out of business. When financial aid advisers at the medical school speak of portfolios, they are talking of loans, not investments.
But it's a service for Hopkins doctors that also has become a selling point in attracting future physicians to Hopkins' medical school. Only a handful of other U.S. schools have similar programs.
"Hopkins graduates and residents were finding that they were overwhelmed," said Julie Disa, director of financial aid for Hopkins medical school. She started the program in 1993.
"The debts have grown over time. They've had to borrow from multiple programs. It's not uncommon for people to come into our office with loans from five to eight different sources, each with its own terms." And each with its own paperwork.
About 200 doctors a year have taken advantage of the program. Keeping track of such loans, much less paying them off, can be daunting, doctors said.
Most physicians graduate with debt, and the level of their indebtedness is rising. According to a study cited in the September 1994 issue of the Journal of the American Medical Association, the average medical student carried debt of slightly less than $60,000 in 1992-1993 -- a $14,000 increase from four years earlier.
That trend likely will continue. A few years ago, the government ruled that residents no longer could be considered students, which meant repayment of loans would commence within three years of graduating from medical school.
Doctors sidestepped that by a procedure related to bankruptcy law that enabled them to delay repayment longer -- but required them to pay interest on the unpaid principal and the interest.
Hopkins medical students who have debt owe an average of $56,389 on medical school loans. Annual tuition is $21,800 for this year's entering class, and yearly costs exceed $38,000.
Sometimes doctors do not question the terms of their loans. That can lead to unintended defaults and ruined credit ratings.
Doctors often have to decide whether to consolidate loans at a fixed rate or renegotiate the rates.
"Even though it was one lump sum, I started out with about six different lenders. Depending on the year, there were different interest rates," said Dr. Nicola Bravo, a fellow in dermatopathology at Hopkins Hospital. "I'd say it's harder than taxes."
By graduation day, every new M.D. has met with a financial aid adviser to sort through a portfolio of loans. It's often a grueling session lasting an afternoon, with belabored explanations of strategies and logistics. Ms. Disa and her staff spell out the yearly deadlines, what forms need to be completed and where they should be sent.
But what doctor-in-waiting wants to listen? The first payment on such loans will not be due for another two or three years after commencement.
So two years ago, Ms. Disa announced she would extend the service to residents -- doctors in training during their first four years out of college. The advice would be available for Hopkins medical graduates and residents and fellows at Hopkins Hospital. In their first years out of school, these doctors tend to make between $20,000 and $35,000 a year -- not the fabled six figures of high-powered specialists.
"In medical school, all you do is sign these pieces of paper and then you keep going to school," said Dr. Brian McKenzie, 32, a 1988 Hopkins graduate who is a Hopkins fellow in ear surgery. "You don't think about how much money you owe."
Dr. McKenzie is married to Dr. Bravo, and together they now have a debt of about $60,000. They visit Ms. Disa annually for advice.
Dr. Bravo said Ms. Disa's fiscal maneuverings have saved her thousands of dollars.
Hopkins doctors interviewed about the program credit Ms. Disa's vigor in reaching out to them to reduce costs and stress.
"She has such a good rapport with people. I feel very comfortable calling her," said Dr. Zilma Joseph, a Hopkins resident in anesthesiology.
Michael Heningburg, director of the division of student assistance for the U.S. Health Resources and Services Administration, said "What Hopkins is doing is what we're encouraging all schools to do."
Medical graduates "don't understand the terms -- capitalization, interest rates, compounding -- because they don't need to know that to graduate," he said.