Thursday, June 7, 2012
Award will allow school of medicine to offer no-interest, moral obligation loans
A $100,000 award from the Charles E. Schell Foundation, presented by foundation trustee Fifth Third Bank, will allow the Oakland University William Beaumont School of Medicine to offer students no-interest, moral obligation loans.
Established in 1938, the Charles E. Schell Foundation, Fifth Third Bank, Trustee, provides money to citizens of Michigan, Ohio, Kentucky, West Virginia and adjoining states to pursue education. The foundation has made it possible for a number of educational institutions to make no-interest, moral obligation loans, but this award represents the first made to a medical school.
Student loan recipients will sign a promissory note to repay the money after graduation. The transaction will not appear on the students’ credit reports; it’s made on the honor system.
The funds from the foundation will be organized in a revolving loan pool. As loan recipients repay the money they received, it will become available to other students who need it.
At the same time, the loans offer a certain amount of flexibility that allows students who cannot immediately repay their loans due to extenuating circumstances to avoid financial hardship.
This award will support the medical school’s efforts to reduce student indebtedness, says Angela Nuzzarello, the medical school’s associate dean for student affairs.
The Association of American Medical Colleges estimated in 2011 that the average medical student could expect to accumulate approximately $161,000 in debt by the time they earned their medical degree. That figure — up from $131,000 in 2006 — refers to money spent on educational expenses and does not include home, car or credit card debt.
The Medscape Physician Compensation Report for 2011 showed the median annual income for physicians was $201,500, but it can take years for physicians to reach that level.
“These are people who are trying to serve the health care needs of the country — and their communities,” Nuzzarello says. “These no-interest, moral obligation loans will help us lighten these students’ loads.”
Currently, accrediting boards expect medical schools to take steps to reduce student indebtedness.