There are details that a Army medical recruiter might leave out when talking to you about the Army’s Health Professions Scholarship Program. The fact is military physicians receive a relatively lower salary compared to civilian physicians. As a result, the Army offers huge financial incentives to medical students to reduce the student’s financial burden during medical school. In return, medical students serve in the military as a physician for a determined number of years.
The Health Professions Scholarship Program, or HPSP, is a scholarship offered by the United States Army that pays for 100% of tuition and expenses for professional school programs, including medical school. The scholarship seems ideal to aspiring medical students, especially those who do not come from higher-income families. The average medical school graduate enters residency with six-figure loans and interest on those loans. However, there is a catch.
The following outlines not only the details of the HPSP, but also determines the true value of the scholarship for students in different situations.
The benefits of the Health Professions Scholarship Program are all-too-easy to find. The financial incentives offered to medical students can be found on any military recruiting website. If a medical student happens to send a recruiter an email or call them, they’ll likely find a new an unexpected friend. In contrast, the following outlines the total financial value of the scholarship in an effort to determine a quantifiable comparison of paying for medical school via the HPSP versus paying for medical school with student loans.
The Health Professions Scholarship program pays for 100% of tuition for any fully-accredited M.D. or D.O. medical school in the United States. The cost of medical school in the United States ranges from $7,000 (Baylor) to $56,000 (Tufts) per year in tuition alone. Over the span of four years, the financial benefit of tuition benefits can be from $28,000 to $224,000.
Fees, books, and expenses
The scholarship also covers 100% off all required expenses. Expenses include fees assessed by the medical school as well as books and equipment that are required as a condition of enrollment. The cost of books for medical school range from about $1,000 to $2,000 per year. Over four years, the Army will pay between $4,000 to $8,000 for your books while in medical school.
Medical school enrollment fees can cost as much as $10,000 per year. Equipment and supplies, such as a laptop and stethoscope, can cost as much as $4,000 over four years of medical school. In the end, the scholarship benefit of fees, books, and equipment can range from $4,000 to over $60,000.
While enrolled in HPSP, medical students receive a monthly living allowance that is paid as a stipend. The recipient receives $2,000 per month for 10 and 1/2 months each year. The stipend is considered taxable income by U.S. law and should be reported to the IRS annually. Over 4 years, the Health Professions Scholarship Program provides scholarship recipients $84,000 to pay for rent, utilities, and other living expenses.
Sign-On Bonus and Training
Currently, as of 2014, the Army is offering a $20,000 signing bonus for qualifying Health Professions Scholarship Program recipients. The benefit speaks for itself.
Also, HPSP recipients train for 45 days each year with the Army healthcare team. While in training, they are paid full salary and benefits as a second lieutenant. As of 2014, the base pay and allowances during training can be approximated at around $7,000 per year, resulting in about $28,000 over the course of four years of medical school.
The Bottom Line
The potential financial benefits of the Health Professions Scholarship Program can be enormous. Over four years, the HPSP can save a medical student as much as $420,000. However, now that the benefits have been identified, consider the obligations and therefore the cost of the scholarship.
Nothing is life is free. The Health Professions Scholarship Program, like any other benefit, comes at a cost. The following discusses the obligations incurred for HPSP scholarship recipients.
The service requirement for the Health Professions Scholarship Program is one year of active duty service time for each year of the scholarship. Medical students have the option of accepting the scholarship for one to four years. Please note that one day of the scholarship incurs a six-month commitment.
There are a few things that medical students should know about the service obligation. The most important is the actual length of the obligation. Many people are unaware that everyone agrees to an EIGHT-YEAR service contract, referred to as a minimum service obligation (MSO). Yes, everyone. It doesn’t matter what the recruiter told you. Read the contract.
The time you owe the military in exchange for the scholarship is called the active duty obligation (ADO). The ADO is dependent solely on the number of years of medical school paid for by the Army. The remainder of the MSO is served in a status known as the individual ready reserve (IRR). While not “in the military” the terms of the IRR provide the Army with the ability to call IRR members back to duty at any time.
Also, time in residency and fellowship does not count towards the active duty obligation. If you owe four years, your four years do not begin until you have completed residency and fellowship. However, time in a military residency counts towards your MSO.
Annual Training Requirement
Health Professions Scholarship program participants are required to spend 45 days each year training with Army healthcare teams. This requirement is dictated by law and there are very few exceptions.
The only drawback to this obligation is that it is your only time off in medical school. While other students vacation, visit family, or go on mission trips, HPSP participants are working. Also, this is a stand-alone requirement. Time spent in training does not count towards the ADO or MSO mentioned above.
Military Residency/Internship Year
Medical students in the Health Professions Scholarship Program are required to apply to Army First Year Graduate Medical Education (FYGME) Program. Furthermore, if you are accepted, you will be required to participate.
The Value of the HPSP
Is the Health Professions Scholarship Program worth it? Well… it depends. First of all, it is impossible to quantify intrinsic benefits. That considered, those medical students with a sense of duty, patriotism, and willing to serve the people of the United States will find any financial evaluation useless. Secondly, there are greater financial benefits for HPSP participants who have previously served in the military. Because military pay is determined of your initial entry date (also known as BASD or PEBD), pay for a physician with prior military service could easily be double that of one with no prior military service.
The first benefit of the HPSP after graduation is a military residency. Military residencies are competitive in a similar fashion to civilian residencies. However, they are bound by the same laws that govern civilian residency programs. So, in many ways, there isn’t much of a difference. Except one – the pay.
When completing a military residency in uniform as a commissioned officer, residents are provided the full salary and benefits at the rank of Captain. The base pay with no prior military service is $3,873.90 per month. Residents are also given a non-taxable allowance for housing and food of $1,266 per month. In the end, a military resident earns at least $61,668 the first year! Because military pay is partially based on time in service, residents receive an annual raise in addition to a cost of living increase. A third year military resident earns more than $70,000 a year!
Rank, Pay, and Allowances
Physicians entering the Army are commissioned as officers with the rank of Captain (O-3). Most officers enter the military as a Second Lieutenant(O-1). As of 2014, the pay difference between a O-1 and O-3 is about $1,000 per month.
While serving in the U.S. Army, soldier on active duty are also provided with allowances for housing and subsistence. A physician can expect to receive about $1,300 per month in allowances. These allowances are non-taxable and increase with rank and are subject to costs of living adjustments.
Health professional officers, such as physicians, also receive “special pay”. Variable special pay for all physicians in the military starts at $100 per month. Board certified special pay for physicians starts at $208 per month. The amounts for special pay vary with rank and years of service. Incentive special pay ranges from $20,000 to $36,000 per year and is determined by specialty.
Ultimately, a new physician in the Army with no prior service can expect a starting base salary of around $90,000 once they have completed residency. This may not seem like much. The average starting physician salary in the U.S. is around $200,000 on the low-end. However, take a closer look.
Remember that allowances received for housing and subsistence are non-taxable income. These allowances add up to around $18,000 per year. If you consider a conservative income-tax estimate of 25%, that is equivalent to earning $6,000 more per year. Also, soldiers on active duty do not pay for healthcare insurance for themselves or family. Lastly, physicians in the military do not pay malpractice insurance, which is an additional savings of $10,000 to $20,000 per year.
Furthermore, military doctors are paid based on rank and time in service. After 20 years, a military physician can expect to earn $105,000 base pay, just before they retire will full benefits.
Let’s consider the difference between a HPSP participant upon completion of family medicine residency and the average civilian physician. The average starting salary for a family physician is around $200,000. Income tax on $200,000 can be estimated to approximately $50,000. Malpractice insurance costs another $12,000 per year. This brings the average take-home salary of a family physician to around $130,000.
Using the estimates above, the estimated take-home income of a family physician in the military can be estimated to about $80,000. Ultimately, a family physician in the military makes approximately $50,000 less a year than a civilian family physician.
However, the civilian physician leaves medical school with $200,000 in student loans. Over 20 years, the approximate interest on $200,000 is actually another $200,000 with the current interest rates on student loans. All other things equal, the civilian physician will pay $400,000 over 20 years.
Under the Health Professions Scholarship Program, the military physician serves 4 years earning $50,000 less than his civilian counterpart. In four years, the military physician only earns $200,000 less, which is still less than the $400,000 of debt accrued by the civilian.
A 20-year Analysis
The civilian physician has -$400k when he starts, but makes $50 more. The military physician starts with $0 in debt, but makes $50 less. Also, there is no guarantee that the civilian will receive annual increases in pay, whereas the military physician is guaranteed increases with rank and time in service. The debt from medical school essentially reduces the civilian physician’s annual income by $20,000 for 20 years. Ultimately, the two physicians earn nearly the same income after 10 years of practice. However, the military physician will continue to receive pay increases until retirement after 20 years of service.
Therefore, after ten years of military service, it is likely that a military physician will earn more than the average civilian family practice physician. If you consider that most physicians become eligible for retention bonuses of up to $100k, “likely” becomes “definitely”. Also, the military physician continues to draw 50% of his/her base pay after retirement.
Essentially, we’ve determined that the Health Professions Scholarship Program could actually be a good financial decision. However, there’s an exception to every rule. There are two situations where the numbers used earlier would be invalid.
- High-Paid Sub-Specialties. Orthopedic surgeons earn an average salary of nearly $500,000. Choosing any specialty or sub-specialty that enables a physician to earn more than $400,000 per year would make the Health Professions Scholarship Program costly.
- Low-Debt or Zero-Debt Medical Students. If you manage to leave medical school with less than $100,000 in debt, consider yourself lucky. Your parents may be wealthy, you are enrolled in a PhD program, or you are the one medical student that gets a full-ride courtesy of a academic scholarship. Either way, the HPSP probably will not provide students expecting a minimal amount of student loans with much financial benefit.
Eligibility and Special Considerations
Although the Army HPSP is great, it is not for everyone. Even those who are determined that military medicine is their ideal career, some may simply not be eligible. In determining the cost/benefit of the Army scholarship, it’s easier to initially determine whether or not you should even consider applying. Here is an overview of some of the requirements and initial considerations of applying for the program.
To be eligible for the Health Professions Scholarship Program, you must be a U.S. citizen. Furthermore, participants are required to renounce citizenship of other countries if they are citizens of more than one country.
Commission as a U.S. Army Officer
To be eligible for the HPSP, you also have to fully-qualify to become a commissioned officer of the U.S. Army. This requirement is a little more in-depth than many recruiters would lead you to believe. There are factors considered to enter the military that are not used to otherwise qualify medical school applicants, although some are similar.
- Background Check. Many medical schools will already conduct a background screening prior to admission. However, to be eligible for commission, and therefore HPSP, you’ll need to go through a background investigation that allows you to hold a Secret Security Clearance.
- Credit Check. The Army will conduct a credit check. Most students probably have no need to be alarmed. They are not determining your ability to qualify for a loan, so they won’t be looking at your credit scores. However, issues that raise flags are those such as any form of bankruptcy or any accounts in default.
- Physical Fitness. Physicians in the military are also required to meet specific standards for physical fitness. Fitness standards measure the ability to ensure the rigors of combat and ultimately maintain a soldierly appearance. Physical fitness standards vary by age and gender.
- Medical Screening. In addition to being physically fit, you’ll need to be medically ready. Although most medical issues minor, some medical conditions can disqualify candidates from initial entry.
The Army’s Health Professions Scholarship Program is one of the few scholarships in the United States that offer payment of full-tuition for medical school. Although the requirements can be strict and the obligations can be rigorous, the financial benefit may outweigh the cost for some.
Unless you have a strong sense of duty, patriotism, and dedication or simply love military medicine, the HPSP may not be the best financial decision for those hoping to enter certain high-paying specialties. A physician in a high-paying specialty can expect to earn a salary greater than the total of his/her student loan debt in the first year after the completion of residency and fellowship.
On the other hand, those who are hoping to enter relatively lower-paying specialties may receive a huge financial benefit as a result of leaving medical school with zero debt. Some of these specialties are usually in primary care and include, but are not limited to Family Practice, Internal Medicine, and Pediatrics.
- USAREC Regulation 601-105. “Health Professions Scholarship Program Instruction Handbook on Applicant and Selectee Processing”. 28 February 2006.
- AAMC Tuition and Student Fees Reports. Tuition And Fees First Year Medical Students (2013-2014).
- 2014 Military Pay Tables.
- Military Graduate Medical Education