by Ryan Hamic PT DPT
Apparently my last blog, Informed Consent and the Cost of Residencies in Physical Therapy, struck a bit of a chord. I appreciate all of the replies and discussion. One theme that came up frequently was the impression that potential DPT students ought to be doing more research on the cost of the program they are choosing and the implications on their ability to pay this back. While that seems a very valid point, worthy of discussion and action, the reality is it is very dismissive of the problems facing our profession in regards to cost of education and the debt/income ratio this it is currently generating. Many were shocked that I referenced several students with $150,000 in debt upon graduation. They opined, “Why didn’t they go to state school?” or “Couldn’t they have lived more modestly?” In some instances, this may be applicable advice, but it is my opinion that many commenters are simply ignorant of the enormous exponential growth in the cost of education across the board including DPT programs. Given the prevailing evidence I should have replied, “It is a miracle they don’t have more!” Higher education in this country and PT school along with it has created a new model of indentured servitude amongst the well-educated population.
You are probably saying “Really Ryan, Indentured servitude, use a bit much hyperbole?” Perhaps, but consider the fact that in order to get to the promised land of reasonable financial security we have a created a structure in which people are saddling themselves regularly with the equivalent of a house mortgage to be paid back throughout their prime wage earning years. How can we expect people to become home owners, clinic owners, entrepreneurs, parents and leaders in their field when they are likely spending 25-35% of their after tax income simply to meet the payment on their student loans!
How on Earth did you end up with so much Student debt!?!
So how are people racking up this kind of debt? Probably going to Vegas and eating steak and lobster every night on that fat student loan money! Well here are some facts. Let’s assume that an 18-year-old student leaving high school decides to become a physical therapist. Assuming that their parents are not in the position to finance this education they likely believe that pursuing a college education and attaining a doctoral degree by the time they are 25 years old would be a wise investment. Certainly no one would be ashamed to tell their friends that their child was pursuing this path. So they do what the majority do and take out loans to pay their tuition with a relatively meager cost of living stipend.
“The national average cost of attending a four-year public college is over $28,000 per year, and the average cost of attending a four-year private college is now over $59,000.” – Forbes
Our erstwhile student decided to go to a 4-year public university and took only the loans indicated to them as meeting their cost of attendance (this includes money for food and lodging, such as a shared dorm room and delicious cafeteria cuisine!). Upon graduation they will have taken loans amounting to $112,000. Let’s suppose they held down a part time job during undergrad to make ends meet at $10 per hour 20 hours per week and were thus able to offset $10,000 per year of expenses. That leaves our graduate with $72,000 in loans as a 22-year-old PT school applicant.
Time to apply for PT school! Let’s assume again that our student does their homework and targets public universities for their DPT program in an attempt to save money. CAPTE has been nice enough to provide us with aggregate data for all DPT programs:
This cost chart excludes cost of living. So let’s assume our candidate can figure out a way to live on $12,000 per year, through an inventive combination of Ramen noodles, candlelight, and showering at the school gym using their coconut scented body wash. Let’s further assume they were also capable of passing PT school while continuing to hold down a part time job, offsetting $30,000 over those three years. Congratulations young person, you are a doctor of physical therapy at 25 years old! You also now owe $133,997 in loan principle. With capitalized interest coming due 6 months after graduating this newly minted doctor will owe over $150,000.
This was an idealized version, many students simply can’t choose to attend in-state public universities for their DPT. When I was applying to school I lived in Oregon, a state without a single public university administered DPT program. The option to stay in state was a private university with tuition and fees of $30k+/ year. In Arizona there is one public DPT program. In a recent year, the admissions statistics for that particular school showed ~1100 applications for ~64 seats. The gap between industry demand for practitioners and available educational opportunities is thus filled by private schools and students traveling to become out of state students. Clearly there is ample demand for physical therapists in the work force as our 99% employment rate supports. So we have workforce demand and ample supply of people seeking to perform that work, and yet the invisible hand has either been restrained from fixing the wage problem or it has no ability to do so. I will leave it to the Keynesians and their opponents to war about the why. I am simply stating that it is.
It is clear our profession has a problem, as does the higher education system on the whole. Unless a potential student comes from prepared wealthy parents, they are going to be heavily incentivized to pursue a different career. Now let’s face facts, at 18 years old almost no one is able to have the foresight to even really consider the situation they are putting themselves into, and is more or less choosing a career path based on their perception of what they want to do with their life. By the time they realize their predicament it is too late they have un-bankruptable unforgivable debt in amounts that they are woefully unprepared to pay back.
The Lie of Higher Education:
The higher education system has long sold itself as the gateway to a better financial future. It has become completely status quo to assume that everyone should attend college and that the vast majority will be financially better for it. They are very fond of advertising the following statistics.
There it is in Blue and Green…better education lower unemployment and higher earnings! What these statistics, and the advertising built on them, usually fail to take into account is the vast disparity in income between varying degrees. That bachelor degree in fine arts turns out to be not quite equivalent in earning potential to the same priced bachelors in civil engineering. The people at the Hamilton project have done the hard work for me here:
I will spare you the calculations but the area between those two curves comes out to ~ $1,000,000 USD over the wage earning lifetime of a bachelor’s educated civil engineer and a bachelor’s educated fine arts major. What’s worse is the fine arts major in the 50th percentile of wage earners for their major will earn only $830,000 in their lifetime. It just so happens that is only about $150,000 more than somebody who never moved past a high school degree. Keep in mind the person who got that bachelor’s degree gave up 4 years of wage earning and will deal with student loan repayment and debt eating away at that $150,000.
When you eliminate particularly high paying bachelor’s degrees from the calculation it is fast approaching that a bachelor’s degree will be utterly valueless in terms of wage generation, if it isn’t already. On the upside at least the students who get them will have about $80k in loans to pay back! Well at least they have the opportunity to pursue graduate degrees which will really get the money rolling and make the investment worth it! I bet you can see where this is headed can’t you?
Certainly there are myriad reasons for pursuing education other than wage generation, just ask my first college degree which sits proudly on my bookshelf reading “Bachelors of Philosophy”. At the right price education is priceless. What happens when it comes at the wrong price though?
One of our Founding Fathers John Adams said in a letter to his wife in 1780:
We need to decide as a culture and a profession if the only reason a person ought to be able to pursue a passion career is if their parents have afforded them the right to do so. Unfortunately even this may become out of reach as we have seen with wage stagnation throughout this country over the past 40 years it may simply become impracticable to all but the extremely wealthy to afford any type of post graduate education without saddling their children with debt that is becoming harder and harder to pay back. In practice we are complicit in the fleecing of wealth from the generation following us.
Many people simply do not realize how out of proportion the cost of education has become when compared to its wage earning potential. I made a graph here showing the increase of Tuition at a public university and compared it to the figures of Real household income over the past 40 years.
So there you have it just the cost of tuition has increased by a factor of 4 in the same period that median wages have stayed almost completely flat. This has made it even harder for the prior generation to finance the education of their children and nearly impossible for the current generation to afford to pay it back. Something has to change here. I am seriously considering teaching my daughter how to weld, considering a two year program in welding can yield a salary of $140k per year starting! I personally value the ability for people to choose to work in areas that are valuable to them, however we can’t deny that if the bottom line isn’t satisfied then no amount of passion will put food on the table. If we as a profession don’t seriously investigate solutions, we will eventually fail to attract bright qualified students to our profession.
Let’s return to the idea of indentured servitude. The idea is not an inherently bad one. Someone with no resources agrees to work for someone else for a period of time in exchange for something they would otherwise not have access to. That seems both reasonable and fair, when the information and agreement between the parties is reasonable and fair. Unfortunately this was often not the case in history. What happens to the system when the side that has is not forthcoming with the side that needs? We see it every day in the payday loan and car title loan scam industries. They predate their clients, making loans at outrageous rates with minimum payments that allow the principle to grow over time. They know it is only a matter of time before the client will default and they will acquire both the collateral asset and a judgment to garnish wages. The educational system in its current form is performing a similar financial bushwhacking of the modern university student.
I realize I have raised a lot of questions and not provided any answers. So here is a teaser….check out my next blog not at all provocatively titled:
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