Why a Teaching Hospital Offers an Employment-Based Tuition Waiver Program

Article · June 26, 2019

Medical education is expensive. In the United States, more of the cost of medical education is borne by students through tuition than elsewhere, such as in Europe, where subsidies from national governments offset much of the cost. In recent decades, reductions in cross-subsidies from clinical revenues, and in state subsidies to public medical schools, have put further pressure on schools to raise tuition. And for students, the total cost of attendance goes well beyond tuition alone, as they need to cover other fees, housing, and other living expenses, travel to clinical venues and for residency interviews, licensing board exams, and other costs. It is common for the total cost of attendance to exceed $80,000 per year. While tuition at public medical schools is lower than at private ones, the reduction in public subsidies is narrowing this difference.

In the absence of government doing what government does in Europe, our institution, Geisinger Commonwealth School of Medicine, is offering to fill this role for willing medical students, by subsidizing their education in exchange for their willingness to practice at Geisinger Health System, thereby mitigating Geisinger’s recruiting costs, especially in primary care.

The Increasing Burden of Debt for Medical Education Threatens to Disrupt the Profession and Our Nation’s Health

As a consequence, medical student debt is a serious problem nationally. Data from the Association of American Medical Colleges indicate that 75% of medical students graduating in 2018 had accumulated a median debt exceeding $196,000 for all students and $209,000 for students graduating from private medical schools. Medical school debt in the United States has been rising at twice the rate of inflation.

Several factors contribute to these rises in tuition. Medical education at Liaison Committee on Medical Education (LCME)–accredited (i.e., allopathic) schools cannot break even on tuition alone and has long depended on cross-subsidies, particularly from the clinical mission. Tightening of clinical reimbursement in the past 2 decades has increased pressure on these subsidies. Across the nation, operating support from state governments, particularly to public medical schools but private schools as well, has been progressively reduced. Costs for a range of technology, such as library subscriptions, have risen faster than inflation. In the face of all this, the rigor of the program prevents medical students from being able to work part-time.

Acknowledging all this, Geisinger Commonwealth School of Medicine has held tuition increases to 2% per year for the past 4 years, and our current long-range financial model projects to maintain this level of increase for the next 3 years.

The cost to medical students carries unwanted consequences. Higher levels of debt have been linked with resident dysfunction, such as poor performance, stress, and burnout, and with alcohol abuse/dependence.

Debt is a deterrent to diversity, as students who are economically underprivileged are often intimidated by the prospect of tuition as well as by the costs of merely aspiring to medical school. These include the need to forgo paying jobs to log volunteer experiences, preparation for MCAT® exams, and travel to interviews. Together, the prospect of such costs deters low-income students from even applying to medical school. As a result, fully half of American medical students come from the top quintile in family income, and barely 5% from the lowest quintile. In contrast to the general population, half of medical students have a parent with a graduate degree.

Levels of debt can also be a significant factor in career choice. While many students with heavy levels of debt will still choose careers in less lucrative specialties such as primary care, on balance the weight of evidence in published reports is that debt can dissuade trainees from choosing to practice in rural or underserved areas.

How Costs Can Be Offset by Students, Society, and the Profession

Several mechanisms exist to assist students with the substantial cost of medical school. These include federally guaranteed loans, federal service awards, and traditional scholarship grants:

  • Federally guaranteed loans are the most widely used mechanism to assist students with the costs of medical education. Stafford Loans offer favorable interest rates, with interest accruing during school onward. Other loan programs include a primary care loan program that offers favorable terms but requires the recipient to pursue a primary care residency and up to 10 years of primary care practice. Some states also offer loans to medical students at favorable interest rates, as do private loan servicers.
  • Federal service awards offer tax-free full tuition plus taxable stipends, in exchange for a service obligation. These include the National Health Service Corps (NHSC), which carries an obligation to practice in an underserved area, and the Armed Forces Health Professions Scholarship Program (HPSP), which requires military service. Enrollment at the Uniformed Services University of the Health Sciences allows students to obtain a medical degree with no tuition and the fringe benefits of active duty while medical students, with the obligation to remain in the service for a minimum of 7 years after residency.
  • Scholarships are of course offered by medical schools and can be very generous in individual cases though clearly not sufficiently to prevent aggregate debt from being so large. Few schools can reproduce the elimination of tuition, as NYU recently announced; this received some criticism as indiscriminate generosity without regard to financial need, career plans, or potential earning power. The Cleveland Clinic Lerner College of Medicine, whose mission is to train physician-investigators, charges no tuition. More commonly, scholarship largesse is linked to financial need or institutional goals, such as diversity. At Columbia’s Vagelos College of Physicians and Surgeons, the $250 million naming gift supports scholarships based on financial need so that Columbia students do not need to borrow.

Each of these mechanisms is activated at the time of matriculation or during attendance in medical school. Loan forgiveness or repayment offers graduates debt relief after graduation. Structured loan forgiveness is available through the Public Service Loan Forgiveness program whereby federal debt is forgiven for physicians who become employed by a qualifying government agency or a 501(c)(3) nonprofit organization. Many practices and health systems offer loan repayment as a recruitment incentive. Individual states have loan repayment programs to incentivize physicians to work in underserved areas. In such circumstances, the repayment incentive discussion typically occurs well after medical school, near the end of residency, and is not otherwise aligned with programmatic or curricular elements.

Such incentives would not be terribly meaningful in countries, such as in Europe, where medical education is heavily subsidized by the government and physicians graduate with little or no debt.

Geisinger Health System and the Geisinger Commonwealth School of Medicine

At Geisinger Commonwealth School of Medicine, a private school in Scranton, Pennsylvania, tuition is $54,600 for in-state residents and $60,700 for out-of-state residents, and the overall cost of attendance exceeds $84,000 per year. Over 82% of the class of 2018 graduated with a median debt of $256,000. Over 23% of students at our medical school are the first generation in their family to go to college and thus are from modest means with limited ability to cover tuition without relying heavily on loans.

The school was founded in 2009 as The Commonwealth Medical College (TCMC), an independent allopathic school without a parent university or sponsoring clinical system, by the community of northeastern Pennsylvania, with modest governmental support and a larger financial commitment of $35 million from Blue Cross of Northeastern PA (which has grown to more than $120 million).

This represented a challenging financial model. The school was completely dependent on partnerships with hospitals and hundreds of community physicians for venues and preceptors for clinical training. TCMC received no financial support from these hospitals, which, however, were enthusiastic about hosting students, and had no clinical revenues, such as from a practice plan. Preceptors were all volunteers. For the school, integration with Geisinger meant financial sustainability and the ability to offer clinical experiences and access to research programs, such as the MyCode genomics initiative (a partnership with Regeneron Pharmaceuticals with the goal of sequencing the entire exome in 250,000 individuals in Geisinger’s electronic health record system).

The vision and impetus for TCMC came from a self-organized group of community leaders. Since there was no corporate entity (university or hospital system) they created and incorporated the Medical Education Development Consortium with a board made up of local community leaders. Community philanthropy raised enough money to cover half the tuition of the entire charter class for their 4 years of medical school.

Geisinger Health System (which was founded in 1915 and directly employs 1700 physicians, advanced practitioners, and other providers) has had residency and fellowship programs for many decades, and has hosted medical students from other schools. Having its own medical school completed the continuum of medical training, and brought the ability to align curriculum and culture with Geisinger’s processes and culture, as well as the ability to coordinate training across health professions (the medical dean, one of the authors, is also system chief academic officer). And it is now possible to establish new graduate degree programs in precision medicine, informatics, pharmacy system science, and other areas. It will make education and inquiry more prominent in the clinical culture.

The Abigail Geisinger Scholars Program

Several years ago, the Geisinger Commonwealth School of Medicine decided to create a program that would help increase our supply of physicians, particularly in primary care, as well as help us attract students who might otherwise choose to go to other schools that might offer generous scholarships. One of our main goals was to attract physicians who would stay in the region following their term of service.

We sought other examples of such programs, but (other than the governmental programs) we were not able to find others. The closest example we could find was an agreement between Kaiser Permanente and the University of California at Riverside whereby tuition for the last 2 years of medical school was covered in exchange for a 2-year service obligation at Kaiser Permanente. That program is too recent to have meaningful outcomes data yet. We are not aware of any other programs resembling ours.

At Geisinger, the clinical enterprise (comprising a multi-specialty employed physician group, hospitals, and clinics), health plan, and medical school are all part of a single integrated organization. This has enabled us to create a program to alleviate student debt and address workforce needs prospectively.

The cost of the program is supported by the clinical enterprise and health plan, which already provide fundamental support to the medical school and which benefit from the program. The school already works closely with the clinical system regarding clinical training venues, collaborations in curriculum, and such. While such arrangements might in principle be possible were these entities entirely separate, the integration of all of these elements greatly facilitates the financial arrangements and the ability to create programmatic opportunities for the recipients.

While we had been interested in creating a scholarship with a service obligation, we did not have a mechanism to administer it or enforce the obligation. Geisinger has had an established loan-repayment recruiting incentive. Thus, when the school was acquired by Geisinger in 2017, this concept became workable. Further, Geisinger clinicians are now faculty of the medical school, which greatly simplifies creating programming (such as a seminar series) as part of the program.

The Abigail Geisinger Scholars Program offers students entering the Geisinger Commonwealth School of Medicine free tuition for all 4 years of medical school in exchange for a commitment to work at Geisinger for 4 years after completing residency. The program is modeled generally after the federal NHSC and HPSP programs, though without the taxable stipend. Key elements of the program are the following:

  • Recipients are not required to declare their specialty choice upon entering medical school. That would be an unrealistic expectation.
  • Recipients are free to enter the residency Match and have no obligation to do residency at Geisinger.
  • Geisinger commits to hiring the recipient upon completion of residency, providing that the recipient has met performance expectations.
  • Provisions allow for Geisinger or the recipient to opt out. In such circumstances, the benefit received to that point is converted to a loan with a rate consistent with that for federally subsidized Stafford Loans. Such circumstances include Geisinger not having a need in the recipient’s specialty (with timely notification of such to the recipient), Geisinger deeming the recipient’s performance inadequate, or the recipient choosing to withdraw.
  • While recipients are free to pursue residency in the specialty of their choice, there is an additional incentive for those who choose one of the prioritized fields that Geisinger identifies (no later than the start of the third year of medical school) based on particular need, such as primary care. Students who match to a specialty on that list receive a bonus payment of $25,000 after the Match.

In addition to the substantial financial incentive, Abigail Geisinger Scholars benefit from curricular enhancements, which include preference in selection for Geisinger research opportunities, assignment to an Abigail Geisinger Scholars mentor, and prioritization for Geisinger clinical sites.

Applicants accepted to the Geisinger Commonwealth School of Medicine are invited to apply for the Abigail Geisinger Scholars program and will be notified of the selection decision by early March. (The program was launched in late 2018, during the semester, so the first cohort of recipients was composed of current first- and second-year students.) Priorities for selection include financial need, academic merit, diversity, and predictors of the likelihood that they will remain at Geisinger after the 4 years of obligation (such as where the applicant grew up, as evidenced by the location of the high school from which they were graduated; additional ties to the region or to Geisinger also count in their favor).

Benefits of the program are many, both to the clinical system and the recipients. For the recipient it means the opportunity to fulfill the service obligation at a clinical system widely recognized for its excellence and innovation, and which for many of the recipients (for example, 7 of the 10 in the first cohort) happens to be close to their hometowns.

For Geisinger, the program affords the opportunity to identify and more deeply acculturate potential new physicians in advance. It bolsters a pipeline of future recruits and affords the opportunity to invest in their continued development. It also makes good financial sense. Assuming that tuition will rise by 2% per year (as is our recent history), the cost approximates $230,000 per recipient. In comparison, when taking into account the direct costs of recruiting and onboarding a new physician, combined with the opportunity cost associated with typical vacancy duration, it is not uncommon for the cost of turnover to exceed $750,000 per physician vacancy, depending on specialty. Multiplying this over a potential cohort of 20 to 30 recipients per class represents a significant savings to the clinical system.

Since well before becoming Geisinger, the med school (originally The Commonwealth Medical College) has had a committee that maintains contact with alumni for the purpose of recruiting them back to the region after residency to practice.

Our hunch is that by freeing this cohort from the debt obligations associated with medical school, we have a better chance that they will be free to pursue specialties more independent of financial considerations. It is our hope and expectation that this results in more graduates pursuing primary care specialties, which, of course, is the backbone on which good population health is predicated.


The first cohort of 10 recipients were selected from 25 applicants, all members of the current first- and second-year MD classes. The next cohort of 10 was selected from 50 applicants, all of whom had been accepted for admission to Geisinger Commonwealth. We are impressed by these numbers of applicants, as the program was launched in mid-year and therefore wasn’t promoted in the early material sent to applicants, and applicants didn’t meet any recipients when they visited for interviews. We anticipate that as the program becomes more established and more fully promoted, the numbers of applicants will grow, perhaps substantially.

Of the first 20 recipients (in two cohorts of 10 each) 19 were from Pennsylvania, of whom 16 are from the Geisinger Commonwealth footprint. Seven of 20 are women, 8 are from disadvantaged backgrounds (as documented on the American Medical College Application Service application), 4 are first-generation-to-college, and 1 is from a group underrepresented in medicine. GPA and MCAT® scores were comparable to national values. The mean Institutionally Estimated Family Contribution (a measure of financial need) is only $22,334, indicating that the group as a whole was predominantly from families of modest means.

The program was initiated in the middle of the 2018–19 academic year, with the selection of 10 students, 4 first-year and 6 second-year. Going forward, it is our intent to select recipients in the spring of the year from among accepted applicants for each incoming class. This year, 50 of our accepted applicants applied for the program, and we selected 10.

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