Evaluating if Pharmacy School is Worth the Investment
At first glance, the answer may seem obvious: yes, it is. With an annual starting salary of over $120,000, you may quickly earn 2-3x more than your non-pharmacy school friends shortly after graduation. But will you still be outpacing those individuals 5-years after graduation? How about in 10 years? 25 years? Who will be able to retire first?
It may surprise you that your starting salary may not define your financial trajectory. A starting pharmacist’s salary is undoubtedly impressive, but pharmacy school does not come without significant costs. These costs are time, debt, and stress, and this trifecta, if not appropriately managed, can eat into and perhaps even tear apart your financial well-being.
Debt
The American Association of the Colleges of Pharmacy (AACP) found that in 2021, the average pharmacist's student loan debt was more than $170,000. While significantly less than medical school student loans, the financial aid awarded to pharmacy students must be paid back. The good news is that this student loan debt decreased slightly from 2020. The bad news is that this student loan debt decrease from the prior year was the first time such a decrease occurred in recent memory, and this decrease was only several thousand dollars.
Compare this average student loan debt to around $150,000 in 2015. That is a $25,000 increase in debt in just six years. Looking back to 2010, the average student loan debt was $100,000. Over 11 years, the average student loan debt for a graduate of a PharmD program increased by $70,000. This is a highly significant increase.
The cause of this is undoubtedly multi-factorial: increased tuition overall, increased percentage of private (more expensive) pharmacy colleges, increased acceptance of student debt burden, etc. This would be a non-issue if new-graduate pharmacist salaries equal or exceed the pace of student loan debt. Sadly, this is not the case. Not even close.
While there is excellent variability in pharmacist salaries depending on geographic location, job description, experience, etc., as a whole, pharmacist starting salaries have struggled even to keep pace with inflation. Furthermore, while the starting pharmacist salary (excluding residency and fellowship programs) is quite high, this salary is relatively flat throughout the career of a pharmacist. Retail (or community-based) pharmacists and hospital pharmacists comprise over 50% of the pharmacist labor market. In these industries, annual merit or performance raises may be only 1-3%.
So, a pharmacist with five years of experience may not make significantly more than a new graduate. While the pharmacist salary may look impressive in your first year out of school, it may lose some of its luster as you are 15-20 years into your career.
In summary, the debt-to-income ratio has increased over the past ten years, making the question ‘Is Pharmacy School Worth It?’ much more challenging to answer than it was 30, 20, 10, or even five years ago.
Time
To practice pharmacy today, you need a doctorate in pharmacy. This can be achieved in several ways, but each takes time, energy, and money. You can enter a 6-year program directly from high school. You can attend a traditional 4-year university, earn a bachelor's degree, and then attend an accelerated 3-year pharmacy program. You can attend a traditional 4-year university, earn a bachelor's degree, and then attend a traditional 4-year PharmD program. You can enter the workforce or pursue a residency or fellowship upon graduation.
These programs typically last 1 or 2 years, where you are considered a PGY1 (post-graduate year 1) or PGY2 (post-graduate year 2) pharmacist. These residencies and fellowships are designed to train the pharmacist for the intricacies and rigors of clinical pharmacy or industry. Ultimately, your training may take anywhere from 6-10 years before you enter the workforce. Considering you may only have 50-55 years of prime working years from high school graduation to retirement, this career path may consume 12-20% of those years.
Savings
In addition to years of lost earnings, pharmacists suffer from lost savings. It is easier to save with an income and a high debt-to-income ratio upon graduation. Financial planners may disagree on many wealth-building strategies, but it is universally accepted that time is our greatest tool for building wealth.
The magic of compounding interest allows your money to make more money; the longer it has to work, the more it can produce. If two people save a modest $100 per month for retirement, but one starts at 25 and one starts at 35, the 25-year-old will have nearly twice as much saved for retirement by age 65.
To think of it another way, if your goal is to have $1 million at age 65 (chances are you’ll need much more), if you start saving just $4,500 each year at 20, chances are very high that you’ll meet your goal. If you start at 30, however, you’d need to save almost $9,000 annually. If you wait until 40 years, you’ll need to save over $18,000 annually to get there. Saving $9,000 per year at age 30 may seem easy on a salary of $120,000 yearly, but then there’s that pesky student loan payment of $1,500-$2,000 yearly.
Then there’s the mortgage or rent of $1,500-$2,000 per year (or more). How about the car payment? These are just the basics. What about children? Daycare expenses for a dual-income family are often the family’s most significant expense, even larger than student loan and mortgage payments.
Saving for retirement suddenly becomes harder and harder once these things get in the way, and the longer you put it off, the more you need to put in to maintain a similar quality of life in retirement.
Stress
You finally made it. Your bachelor’s degree, your doctorate of pharmacy degree, perhaps even a year or two of residency or fellowship, is in the rear-view mirror, and you’re finally marking that hard-earned six-figure salary. But there is a problem. The last 6-10 years have taken a lot out of you. Despite your extensive training, you may still not be prepared for the challenges that the workplace faces. The stress of the healthcare worker, especially during the pandemic, can be intense.
Finding a quality pharmacy technician is challenging as the pharmacy tech position has become more stressful and less financially rewarding than other careers requiring similar education. Burnout rates are rising, you are stressed out and need a break, perhaps even a career change, but that $1,500 student loan payment looms over your head every month. The combination of occupational stress and financial stress can be suffocating. Add on personal life or family stress, which may seem like no escape.
The good news is that debt, time, and stress can be managed. Debt can be lessened by picking an affordable college of pharmacy that fits your needs. Similarly, time can be managed appropriately during summer breaks or by choosing an accelerated program. Stress can be mitigated by optimizing debt and time and finding a pharmacy program and career that meets your needs, personality, goals, and passions.
What is the ROI of today’s pharmacy degree?
It depends.
It depends on what motivates you to pursue this profession. If there is a sizeable financial motivation, the return on investment is certainly not as good as it once was. However, the ROI is still there if you have a clear picture of what you want to do with your degree and your career path, which includes a high-trajectory earning potential.
Is pharmacy school worth it?
Ultimately, the career can (and is) rewarding for thousands. With thoughtful planning, the profession can afford you the opportunity for a life full of financial prosperity, happiness, and, most importantly, positively impacting your community.
