MD vs PharmD: Return on Investment between pharmacy schools and medical schools

The high costs of pharmacy school and medical school make it important that any student considering entry into one of those two programs should carefully assess what the return on investment would be for each. Any such assessment should take into account the cost of tuition for each year of the program, loan interests, room/board, the total debt load likely to be accumulated while at school, and the anticipated future salaries which would hopefully offset that total investment.  Of course, expected salaries are dependent on market demand, the ability to obtain and maintain employment after achieving the targeted degree, passing the board requirements, and being licensed to practice.

As of 2014, according to the American Association of Colleges of Pharmacy, the average tuition rate for pharmacy school education was $25,000 per year. The Association of American Medical Colleges tells us that the tuition cost for medical school during that same period was $39,500 per year.  Costs may vary considerably between in-state and out-of-state tuition, but it may be safe to suggest that on average, medical school are more expensive than pharmacy schools, generally speaking.  The corresponding debt loads for students graduating from those two programs were as follows: for pharmacy school $144,000 of indebtedness, and for medical school $161,172.  Again, this may vary dependent on whether a student gains in-state or out-of-state tuition status.

Expected salaries of the two professions

As of May, 2015, the average salary for a pharmacist in the US was $119,270, with that figure being higher in some sections of the country, and lower in others. For physicians, the 2015 average salary was $197,700, with the same qualifier regarding salary differences and sectionalism. Part of the reason for the differential between salaries in these two fields comes from the fact that some doctors will have specialties which allow them to earn significantly more in their profession, whereas pharmacists have fewer such opportunities.

Paying off your college loan

How long will it take to pay off the debt load mentioned above for pharmacists and physicians? One of the factors influencing this answer is the duration of both programs, since the longer the program, the greater the debt incurred. Another factor is that with areas of specialty available for physicians, the potential for greater earnings exists, thus facilitating quicker payoffs of the debt load.  Also, one must consider the demand for employment as it may greatly influence the ability to pay off the loans.  Higher demand may garner better compensation, whereas the inability to obtain employment quickly could severely impact the the time it would take to pay off the loan.

However, for physicians coming out of school, residency wages will be fairly low, and with the accumulation of interest on student debt, the total investment in a medical school education can approach a staggering $1 million. The US government allows new professionals to repay student loans based on their level of income, so this Income-Based Repayment (IBR) program permits medical professionals to repay their loans at a rate equal to 10% – 15% of their income.

Pharmacists may also have the option to apply for a residency or fellowship program, although they are optional unlike medical school graduates.  If they choose a residency or fellowship program, the wages will be significantly less.  Pharmacists graduating with the typical $144,000 of debt, and incurring a 7% interest rate on that amount, can expect to pay off a loan in about 26 years, assuming a $1,000 monthly payment. By doubling that amount to $2,000 monthly, the entire loan could be paid off in only 8 years, so the obvious conclusion is that a significant increase in monthly payment can dramatically lessen the number of years necessary to pay it off, similar to paying off a mortgage.

Medical school students would be faced with a similar scenario, except that the debt load coming out of school would be higher on average. Assuming a slightly larger pay scale for doctors, the rate of repayment would probably be somewhat higher than for pharmacists, with the same proviso for earlier payoff using higher payment amounts.  One must also consider that with graduates of both pharmacy and medical programs finishing school or residency in their 20s and 30s, more than likely they will have other financial considerations that are expected in life such a wedding, honeymoon, hourse, car, or having kids.

Return on investment 

In order to determine whether the obviously considerable investment in either of these two programs is justified by future earnings, it is necessary to compare the total payoff against the expected earnings in salary for both fields. The Bureau of Labor Statistics projects that over the next 10 years, there will be a greater demand for more physicians, as opposed to pharmacists, so the likelihood of finding desirable employment would also be greater in the medical field.

Given all the above data, it would seem that there is a slightly greater return on investment for those entering the medical profession, and that the potential for paying off college loans is somewhat easier. Statistically speaking, the expected salary rate for pharmacists will be lower for the foreseeable future, with the job outlook also being less optimistic, so debt repayment is likely to take longer.

In the end, the return-on-investment will depend on many factors which include but are not limited to the financial health of the individual considering either of these programs, the ability to finish all the requirements to practice the profession and obtain/maintain employment, the demand for the professions, the specific school the applicant is enrolled in, the loan rates, life situations, and the chosen speciality.  Still, both jobs have historically provided good futures for incoming professionals, and can be expected to yield worthwhile returns on investment, although freedom from debt may take a while.


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