Abstract
Objective—To assess student awareness of the financial costs of pursuing a veterinary education, to determine student expectations for financial returns of a veterinary career, and to identify associations between student debt and factors such as future career plans or personality type.
Design—Survey.
Sample—First-year veterinary students at the University of Minnesota College of Veterinary Medicine.
Procedures—In 2013, prior to the first day of class, all incoming first-year students received an email invitation to complete an online survey. The survey contained questions about demographics, current financial situation, current debt, expected debt at graduation, expected annual income following graduation, intent to pursue specialty training, and Myers-Briggs personality type.
Results—72 of 102 (71%) students completed the survey; 65 respondents answered all relevant questions and provided usable data. Student responses for expected debt at graduation were comparable to national averages for veterinary college graduates; responses for expected annual income following graduation were lower than averages for University of Minnesota veterinary college graduates and national averages. However, students predicted even lower annual income if they did not attend veterinary college. Expected debt and expected annual income were not correlated with factors such as personality type or future career plans.
Conclusions and Clinical Relevance—Results indicated that first-year veterinary students were aware of the financial costs of their veterinary education and had realistic expectations for future salaries. For typical veterinary students, attending veterinary college appeared to be financially worthwhile, given lower expected earnings otherwise. (J Am Vet Med Assoc 2015;247:196–203)
As the result of various factors, including reduced state and federal funding of veterinary medical colleges1 and decreased teaching hospital revenues,2 tuition for veterinary medical degree programs has steadily increased over the past decade.3 The result is an increased need by veterinary students to borrow funds while pursuing their education and a corresponding escalation in educational debt at the time of graduation. From 2003 to 2013, mean educational debt for the approximately 90% of new graduates from veterinary medical colleges in the United States with debt increased from $76,558 to $162,113.4,5 Adjusting for inflation on the basis of the Consumer Price Index, mean educational debt for year-2003 graduates with debt was $96,946 in 2013 dollars, meaning that debt increased 67% in real terms over that period. Meanwhile, starting salaries for new graduates have also increased,4,5 but these increases have not kept pace with inflation, let alone with the increase in educational debt. For example, for year-2003 graduates of US veterinary medical colleges,4 mean starting salary, combining all employment types, was $41,602 (or $52,580 in 2013 dollars after adjusting for inflation), whereas the comparable figure was $50,606 for year-2013 graduates,5 meaning that salaries actually decreased in real terms over the decade. Even considering only those new graduates who had accepted a position in private practice, mean starting salary for year-2013 graduates was $67,535,5 compared with a mean starting salary of $48,004 for year-2003 graduates4 (or $60,788 in 2013 dollars after adjusting for inflation), representing only an 11% increase in real terms from 2003 to 2013 for individuals entering private practice. Because of the disparity between increases in educational debt versus starting salaries, the ratio of mean educational debt (for graduates with debt) to mean starting salary (for all employment types) has increased precipitously, from 1.8 in 2003 to 3.2 in 2013. Although debt-to-income ratios are also increasing for other health professions, the increase has been steepest for veterinarians.6
Adding to concerns about the increase in educational debt-to-starting salary ratio is the finding from a recent workforce analysis1 suggesting that it has become more difficult for new graduates to find employment in recent years. Furthermore, mean salary for practicing veterinarians at all career stages has not been increasing, with an AVMA report1 suggesting that veterinarians' mean income decreased from 2006 to 2012, after adjusting for inflation, and the US Bureau of Labor Statistics' Occupational Employment Statistics databasea showing that veterinarians' annual earnings were flat over the same period. The AVMA and the Bureau of Labor Statistics defined annual earnings in different ways in their analyses, which may account for the different findings. Nevertheless, these findings, combined with a reported decrease in the number of veterinary patient visits (and therefore a decrease in practice revenues)7 and a possible oversupply of veterinarians,1 mean that the economic outlook may appear bleak for those currently entering the veterinary profession.
Surprisingly, even though the financial outlook for new veterinary graduates in the United States appears to be weakening, the demand for a veterinary education is not. The number of applicants to veterinary medical colleges in the United States increased by 51% from 2003 to 2013, and even though class sizes have increased, the number of applicants remains more than double the number of seats available.1 In addition, foreign veterinary medical colleges accredited by the AVMA continue to graduate hundreds of veterinarians each year,8 and 2 new veterinary medical colleges have recently opened in the United States.9
The reasons for these apparent contradictory trends are not known. Factors such as financial acumen, career intentions, and personality type may play a role in an individual's decision to pursue a veterinary education despite high costs and a low return on investment. The present study, therefore, was designed to determine student awareness of the financial implications of pursuing a career in veterinary medicine. Specifically, the purposes of the study reported here were to assess student awareness of the financial costs of a veterinary medical education, to determine student expectations for financial returns of a veterinary career, and to identify associations between student debt and factors such as future career plans or personality type. As a measure of the financial return on investing in a veterinary education, we calculated IRR. To our knowledge, the IRR of pursuing a veterinary education has not been reported previously, although it has been calculated for other health professions.10–14
In our study, we attempted to determine whether first-year veterinary students were misinformed about the financial consequences of pursuing a career in veterinary medicine (specifically, whether such students were unaware of the educational debt they would be likely to incur or the future earnings they could expect to receive), had accurate information about expected educational debt and starting salaries but believed a veterinary career would still be more financially rewarding than alternative careers, or were more comfortable with financial risk owing to specific personality traits or overoptimism about their own financial situation, believing that they would incur less debt than average or earn a higher-than-average starting salary.
Materials and Methods
In August 2013, prior to the first day of class, an email invitation to complete a survey regarding financial expectations was sent to all 102 incoming first-year students at the University of Minnesota CVM. The survey was reviewed and approved by the Institutional Review Board at the University of Minnesota and contained 25 questions intended to elicit information about demographics, educational debt prior to entering veterinary college, home ownership (and, if so, mortgage debt), other debt owed at the present time, educational debt expected to be incurred during veterinary college, expected annual income for the first job after graduation (excluding internships, residencies, and other training programs), expected annual income 10 years after graduation, expected annual income if the respondent were to quit veterinary college and seek other employment, intent to pursue specialty training, Myers-Briggs personality type (at the time of the study, the MBTI, an assessment of an individual's preferred way of perceiving information and making decisions, was administered to all incoming students at the University of Minnesota CVM), how much debt the respondent thought the average student in the class would have at the time of graduation, annual income the respondent thought the average student in the class would receive for the first job after graduation (excluding internships, residencies, and other training programs), and annual income the respondent thought the average student in the class would receive 10 years after graduation.b
The financial benefits of pursuing a veterinary education were assessed by calculating the IRR. A simple calculation of years of added earnings needed to repay the cost of veterinary education would not have considered the fact that those added earnings would be received several years in the future while the costs would be incurred immediately, nor would the simple calculation have recognized students' expectation that their earnings would increase over the first 10 years after graduation. These factors were accounted for by calculating the IRR. The IRR is the interest rate at which the present discounted value of the costs of pursuing a veterinary education (debt and forgone earnings while in school) equals the present discounted value of the benefits of that education (higher annual income after graduation). In other words, the IRR is the discount rate at which the NPV of an investment is zero. For an investment in which all negative cash flows (in this case, debt and forgone earnings) precede all positive cash flows (in this case, higher annual income after graduation), the NPV is positive for any discount rate lower than the IRR and is negative for any discount rate higher than the IRR. Therefore, it is possible to draw conclusions about respondents' expected NPV of a veterinary education by comparing the IRR with whatever discount rate would be considered appropriate. Calculating the IRR was preferred to directly calculating NPV because an NPV calculation would have required an assumption about the appropriate discount rate.
The following simplifying assumptions were made to calculate the IRR for each student: that students completed veterinary school in 4 years and had no earnings during that time; that students incurred one-fourth of their expected veterinary college debt during each year of education; that there were no direct costs of attending veterinary college other than debt (ie, any other funds students might use to pay for veterinary college, such as help from parents, would not have been available otherwise); that annual income increased linearly from expected annual income for the first job after graduation to expected annual income 10 years after graduation and remained flat thereafter (this linear increase in dollar terms meant that the percentage increase was highest during the earliest years of the career, consistent with previous evidence that returns on experience diminish over time15); that if respondents were to quit veterinary college and seek other employment, their annual income would have increased linearly at the same rate as expected for the increase in annual income during the first 10 years after graduation from veterinary college (ie, annual income from 2014 through 2023 in other employment was assumed to increase at the same rate as the increase in annual income from 2018 to 2027 in a veterinary job); and that respondents would work until 65 years of age, which meant that expected IRR would be lower for older students.
Increases in annual income were assumed to plateau after 10 years because the survey did not ask about expected annual income after this time and because the greatest returns on experience typically occur early in one's career.15 Because veterinary and nonveterinary annual incomes were assumed to increase at the same rate, assuming some further increase in earnings past year 10 would have had little effect on the calculated IRR.
The IRR was first calculated with the assumption that each student had the option to pay off the debt immediately when it was incurred by repaying the principal amount. This assumption meant that the interest rate on the debt was treated as being equal to the rate of return on other investments. The analysis based on this assumption therefore ignored any losses or gains students might have had if interest rates on educational debt were higher or lower than potential returns on other investments. Because the survey did not collect data on interest rates and amortization schedules, the effects of such factors could not be assessed. However, to assess whether the survey results would be different if actual debt repayment schedules were taken into account, the IRR was also calculated under 3 alternative assumptions about repayment of the debt: a 10-year loan at a 5% interest rate, a 25-year loan at a 5.41% interest rate, and a 25-year loan at a 6.8% interest rate. These loan structures were based on types of loans available through the federal direct unsubsidized Stafford loan program. At the time of the study, 10 years was the standard repayment period for students with < $30,000 in loans, and 25 years was the maximum repayment period for students with larger loans.16 When survey respondents started veterinary school in 2013, the interest rate for such loans was 5.41%, but historically it typically was 6.8%.17 In line with loans obtained through the Stafford program, calculations were made with the assumption that interest would accrue while students were enrolled in veterinary college and that the repayment period would begin after graduation.
Statistical softwarec was used to analyze the data. Paired t tests were used to compare mean values for respondents' personal expected income versus predicted income of classmates and to compare mean values for respondents' personal expected debt versus predicted debt of classmates. Two-sample t tests were used to compare mean values for expected earnings between groups when students were grouped on the basis of MBTI or on the basis of plans for pursuing specialty training. Linear regression was used to test for associations between personal expected income and predicted income of classmates, to test for associations between personal expected debt and predicted debt of classmates, and to test for associations between previous educational debt and other debt. Values of P ≤ 0.05 were considered significant.
Results
Demographic data—Survey responses were obtained from 72 of the 102 (71%) students. However, 7 individuals did not provide answers for key questions on age, expected debt, or income. Responses from these individuals were therefore removed from the remainder of the analysis. In addition, 1 respondent reported extremely low values for expected annual income for the first job after graduation ($6,000) and expected annual income 10 years after graduation ($10,000). Because of the possibility that these values were typographical errors, analyses were performed with and without this respondent's data. However, similar results were obtained, with the main consequence of dropping this respondent's data being an increase in the difference between respondents' expected annual income and annual income respondents thought the average student would receive. Therefore, data for this respondent were included in analyses.
Of the 65 students included in the analysis, 55 (85%) were female (Table 1). Given the small number of men in the sample, no attempts were made to analyze data by gender group. Most (43/65 [66%]) respondents were between 21 and 23 years of age. One respondent (1/64 [2%]; 1 individual did not respond to this question) was a military veteran. Eleven (17%) respondents were married or had domestic partners; the rest were single. Demographics of the respondents were overall similar to demographics for the first-year veterinary college class as a whole.
Demographics of incoming first-year students at the University of Minnesota CVM in 2013 (n = 102) and of students from that class who responded to a survey on financial expectations of pursuing a veterinary education (65).
| Variable | No. (%) of survey respondents | No. (%) in class |
|---|---|---|
| Age (y) | ||
| 21–23 | 43 (66) | 62 (61) |
| 24–27 | 15 (23) | 22 (22) |
| 28–32 | 7 (11) | 14 (14) |
| ≥ 33 | 0 (0) | 4 (4) |
| Female | 55 (85) | 86 (84) |
| Married or has domestic partner | 11 (17) | NA |
| Veteran | 1 (2)* | NA |
One respondent did not answer the question about military status.
NA = Not available.
Current financial situation—Of the 65 respondents, 30 (46%) had completed their preveterinary education at an in-state 4-year public college or university (24 [37%]) or community college (6 [9%]); the rest had attended a 4-year private college or university (18 [28%]), an out-of-state 4-year public college or university or community college (16 [25%]), or some other school (1 [2%]). Sixty-three of the 65 respondents provided valid responses on educational debt prior to entering veterinary college; 1 respondent did not answer the question, and the remaining respondent provided an implausible value of $900,000, which was excluded from analyses. For the 63 individuals who provided valid responses, mean educational debt prior to entering veterinary college was $16,024 (SD, $23,482; range, $0 to $120,000). All 65 respondents answered the question on home ownership, and 2 reported owning a home. Of the individuals who reported owning a home, one reported having mortgage debt ($275,000) and the other reported not having any mortgage debt. Fifty-seven of the 65 respondents answered the question on other debt (eg, credit card debt) owed at the time of the survey. For the 57 individuals who responded, mean other debt was $3,663 (SD, $13,671; range, $0 to $100,000). We did not detect a significant association between previous educational debt and other debt.
Two respondents reported financial responsibilities beyond existing debts and educational expenses; one was supporting a nonworking spouse or partner, and another was supporting a dependent other than a nonworking spouse or partner.
Many students received some form of assistance in funding their veterinary education. Of the 11 respondents who said they had a spouse or domestic partner, 10 reported that the spouse or domestic partner was currently working. In addition, 30 (46%) respondents reported that they were receiving financial support from relatives other than a spouse or domestic partner. None of the respondents was receiving financial aid from a current or former employer, such as veterans benefits or university employee tuition discounts.
Expected educational debt at graduation—All 65 respondents answered the 2 questions on educational debt expected to be incurred during veterinary college and debt the average student in the class would have at the time of graduation. Mean expected educational debt was $166,769 (SD, $77,682; range, $0 to $300,000); mean expected debt for the average student in the class was $166,415 (SD, $49,582; range, $60,000 to $300,000). These values were not significantly (P = 0.97) different. However, students who expected to incur higher debts themselves also predicted higher debts for the typical student, with results of linear regression analysis (P = 0.001) indicating that each $1 increase in a respondent's own expected debt was associated with a $0.28 increase in the respondent's prediction for expected debt of the typical student in the class.
Thirty-six of the 65 (55%) respondents reported paying in-state tuition (at the time of the study, residents of Minnesota and South Dakota and a limited number of North Dakota residents were eligible to pay in-state tuition for their first year at the University of Minnesota CVM; students originally from other states could pay in-state tuition in subsequent years if they met residency requirements). Forty-nine (75%) respondents said that the CVM had informed them of expected veterinary college debt after graduation, and 16 (25%) said they were not informed.
Expected annual income and career goals—All 65 respondents answered the questions on expected annual income for the first job after graduation, expected annual income 10 years after graduation, expected annual income if the respondent were to quit veterinary college and seek other employment, annual income the respondent thought the average student in the class would receive for the first job after graduation, and annual income the respondent thought the average student in the class would receive 10 years after graduation. Mean expected annual income for the first job after graduation (excluding internships, residencies, and other training programs) was $60,692 (SD, $15,834; range, $6,000 to $115,000). Mean annual income respondents thought the average student in the class would receive for the first job after graduation (excluding internships, residencies, and other training programs) was $59,823 (SD, $13,077; range, $40,000 to $120,000). These values were not significantly (P = 0.57) different.
Mean expected annual income 10 years after graduation was $91,269 (SD, $32,650; range, $10,000 to $250,000), and mean annual income respondents thought the average student in the class would receive 10 years after graduation was $85,185 (SD, $15,783; range, $50,000 to $150,000). Again, these values were not significantly (P = 0.06) different.
As with debt expectations, there was wide variation in expected annual incomes, but respondents who expected their own annual income to be higher tended to expect that the average student in the class would have a higher annual income as well. Results of linear regression analysis indicated that each $1 increase in a respondent's expected annual income for the first job after graduation was associated with a $0.54 increase in the respondent's prediction of annual income of the average student (P = 0.001), and each $1 increase in a respondent's expected annual income 10 years after graduation was associated with a $0.31 increase in the respondent's prediction of annual income of the average student 10 years after graduation (P = 0.003).
Mean expected annual income if the respondent were to quit veterinary college and seek other employment was $40,323 (SD, $11,661; range, $15,000 to $75,000).
Nineteen (29%) respondents indicated that they planned to pursue a residency leading to specialty board certification, either immediately or eventually; the rest were undecided (33 [51%]) or did not plan on pursuing a residency (13 [20%]). Those who planned to pursue a residency expected to earn more in their first job after training (mean, $62,947) than did respondents who did not plan to pursue a residency or were undecided (mean, $59,761) and expected to earn more 10 years after graduation (mean, $102,632) than did respondents who did not plan to pursue a residency or were undecided (mean, $86,576). However, these values were not significantly different from each other.
Myers-Briggs personality type—Respondents were asked to indicate their Myers-Briggs personality type for 4 dimensions: extraversion versus introversion, sensing versus intuition, thinking versus feeling, and judging versus perception. For all 4 dimensions, differences of thousands of dollars in expected annual income were found between personality types. However, none of these differences were significantly different from 0, and the data were not further analyzed.
IRR—One respondent reported an expected annual income for the first job after graduation that was less than the expected annual income if he or she were to quit veterinary college and seek other employment. Because there would be no return on pursuing a veterinary education given these expectations, this respondent was removed from the analysis of IRR. Four other students were also excluded from analysis of IRR because they reported an expected annual income for their first job after graduation equal to the expected annual income if they were to quit veterinary college and seek other employment. Because veterinary and nonveterinary annual incomes were assumed to increase at the same rate, these students also would have gained no financial advantages from pursuing a veterinary education.
For the remaining 60 respondents, when IRR was calculated under the assumption that each student paid off the debt immediately, 5 respondents had negative IRRs ranging from −3.6% to −1.6%, whereas the rest had positive IRRs. Assuming immediate debt repayment, mean ± SD IRR was 6.5% ± 5.2% (Table 2). Including the 5 respondents for whom IRR could not be calculated as having extremely negative returns reduced the median IRR from 6.2% to 5.5%.
Distributions of IRRs (%) of pursuing a veterinary education calculated on the basis of responses to a survey of financial expectations completed in 2013 by first-year veterinary students at the University of Minnesota CVM (n = 60) assuming that educational debt was paid off immediately (immediate repayment schedule), over 10 years at a 5% interest rate (repayment schedule 1), over 25 years at a 5.41% interest rate (repayment schedule 2), and over 25 years at a 6.8% interest rate (repayment schedule 3).
| Repayment schedule | ||||
|---|---|---|---|---|
| IRR | Immediate | 1 | 2 | 3 |
| Minimum | −3.6 | −5.8 | −14.1 | −15.9 |
| 10th percentile | 0.1 | −1.1 | −3.6 | −4.3 |
| 25th percentile | 2.7 | 2.3 | 1.7 | 0.9 |
| Median | 6.2 | 6.3 | 6.3 | 5.5 |
| 75th percentile | 9.9 | 11.0 | 11.5 | 11.1 |
| 90th percentile | 12.7 | 16.4 | 18.8 | 17.7 |
| Maximum | 20.9 | 24.6 | 28.1 | 26.4 |
| Mean | 6.5 | 7.0 | 6.9 | 6.0 |
| SD | 5.2 | 6.8 | 8.6 | 8.6 |
| Adjusted median* | 5.5 | 5.5 | 5.3 | 4.5 |
Median IRR adjusted to account for negative returns of 5 additional survey respondents for whom IRR could not be calculated.
Assuming debt repayment over 10 or 25 years spread out the distribution of IRRs because borrowing money at a given interest rate reduces the IRR for students with low returns and raises the IRR for students with high returns (Figure 1). For 2 of the 3 repayment schedules, mean and median IRRs were slightly higher than IRR if debt were repaid immediately.
Histograms of the IRR of pursuing a veterinary education; IRRs were calculated on the basis of responses to a survey of financial expectations completed in 2013 by first-year veterinary students at the University of Minnesota CVM (n = 60) assuming that educational debt was paid off immediately (immediate repayment; A), over 10 years at a 5% interest rate (repayment schedule 1; B), over 25 years at a 5.41% interest rate (repayment schedule 2; C), and over 25 years at a 6.8% interest rate (repayment schedule 3; D).
Citation: Journal of the American Veterinary Medical Association 247, 2; 10.2460/javma.247.2.196
Discussion
Results of the present study indicated that, on average, first-year veterinary students expected to be financially better off as a result of attending veterinary college. In addition, study participants were generally aware of the financial costs of their veterinary education and had realistic expectations for future salaries.
The cost of attending veterinary college consists of tuition and foregone earnings during the time that a student is attending college instead of working. In the present study, mean expected annual income if respondents were to quit veterinary college and seek other employment was $40,323. Thus, mean foregone earnings during the 4 years of veterinary education were estimated to be $161,292. Adding mean expected educational debt of $166,769, the mean cost of attending veterinary college was $328,061. Meanwhile, mean expected annual income for the first job after graduation (excluding internships, residencies, and other training programs) was $60,692, or $20,369 more than mean expected annual income if respondents had taken a job instead of attending veterinary college. This difference would have been sufficient to repay the cost of attending veterinary college after approximately 16 years, after which the individual would continue to benefit from higher earnings for the rest of his or her career.
Our findings for the IRR of pursuing a veterinary education based on students' expectations can be compared with results of a recent analysis that calculated the NPV of a veterinary education on the basis of mean salaries reported in surveys of veterinarians and other college graduates.18 In that analysis,18 NPV was calculated at a 4% discount rate, and the authors reported a negative NPV for the typical female student and a slightly positive NPV for the typical male student. By contrast, the present study, in which respondents were mostly women, found mean and median IRRs substantially higher than 4%. However, calculations in this study were based on the students' own expectations about what they could earn as veterinarians and in other jobs, whereas analyses for the previous report18 were based on mean reported earnings of veterinarians and nonveterinarians. Thus, results of our study reflect students' expectations for their own careers. Importantly, survey respondents did not appear to be overoptimistic about what they would earn as veterinarians. If anything, they were too pessimistic. The higher estimated return on pursuing a veterinary education in the present study, relative to findings of the previous study18 based on mean earnings, was therefore likely due to the belief of respondents to our survey that they would have received low salaries if they were not veterinarians.
The finding of a positive mean IRR in the present study was consistent with findings for other health professions.10–14 The positive mean IRR further supported the notion that students expected veterinary school to result in an eventual financial benefit. When veterinary debt was assumed to be repaid immediately, mean IRR in the present study was 6.5% (median, 6.2%). These returns compared favorably with the interest rate of 5.41% that was in effect for federal Stafford loans at the time survey respondents entered veterinary school.17 Accounting for a typical 25-year student loan repayment schedule at that 5.41% interest rate increased the mean and median returns. However, accounting for typical repayment schedules also increased the fraction of students who had negative returns, and accounting for a higher 6.8% interest rate and a typical 25-year repayment schedule lowered the median return to 5.5%.
The IRR findings in the present study suggested that for many students, there is an expected financial benefit in pursuing a veterinary education. These estimated returns may understate the true return on pursuing a veterinary education for students who use income-based repayment plans for their debts. Rates of return for these students will be higher than reported rates because they will not pay their full debts. However, borrowers who have a lump sum of debt forgiven at the end of an income-based repayment plan are subject to immediate income tax on the full amount of the forgiven debt. This tax can be substantial, particularly if the amount of debt forgiveness moves a borrower into a high tax bracket. The tax reduces the benefit of debt forgiveness. In addition, if the borrower does not have sufficient savings to pay the tax immediately, he or she must take out a new loan to pay the tax, and this new loan could be at a higher rate than the student debt, further reducing the benefit of debt forgiveness. Calculating the IRR under an income-based repayment plan was beyond the scope of the present study because the calculation would have required essentially arbitrary assumptions about tax rates many years in the future, about whether respondents would have sufficient savings to pay the tax on debt forgiveness, and about the interest rates respondents would need to pay on new loans to cover the taxes if their savings were insufficient.
Our analysis also did not account for taxes, which could reduce the return on a veterinary education. Earnings are subject to income tax, but not all costs of a veterinary education are tax-deductible. In particular, interest on loans may be deductible but principal payments are not. As a result, the after-tax return on an education is lower than the before-tax return. Modeling the effect of taxes was beyond the scope of the present study because it would have required more detailed information on students' family structures, the earnings of other household members, and other sources of income as well as forecasts of federal and state income tax rates many years in the future.
Our analysis also assumed that there were no direct costs of veterinary school other than debt; any such costs, if present, would have reduced the return on veterinary education. Students who pay their schooling costs by means other than debt likely are receiving scholarships or help from relatives. By ignoring such expenditures in our calculation, we effectively were assuming that these students would not have received this money if they did not attend veterinary school. This was obviously true in the case of scholarships. However, our approach meant that we were calculating the return on pursuing a veterinary education for individual students but not the return on veterinary education for society at large. Calculating the return for society at large would be difficult because we would need to account for expenditures such as scholarships that are made by people other than the student. More broadly, veterinary education may have costs that cannot be directly measured in financial terms, such as long hours spent studying, as well as nonfinancial benefits such as the joys of learning and being a veterinarian.19 Our analysis did not account for such nonfinancial costs and benefits.
Our data did not support the hypothesis that first-year veterinary students were unaware of the debt consequences of attending veterinary school, nor did the data suggest that students expected to have below-average personal debts. Further, respondents expected to have debt loads quite similar to the actual mean debt load for current veterinary graduates, perhaps reflecting the CVM's efforts to inform students about debt loads.
In our study, we did not find any significant relationship between personality characteristics measured by the MBTI and earnings expectations. Therefore, the data did not support the hypothesis that veterinary students have personality traits that increase comfort with financial risk or result in excessive optimism regarding this risk.
Other data from the survey also did not support the hypothesis that students were overoptimistic about their future earnings. If anything, the respondents were too pessimistic about earnings. Mean annual income that respondents thought the average student in the class would receive for the first job after graduation (excluding internships, residencies, and other training programs) was $59,823 (SD, $13,077). In fact, in 2013, mean starting salaries (excluding advanced training programs) for new veterinary graduates nationwide and for graduates of the University of Minnesota CVM specifically were higher, at $67,1365 and $67,812,20 respectively. Furthermore, respondents' own expected annual incomes were barely higher than what they expected their classmates to earn initially, although there was some slight evidence that respondents thought they would have above-average annual incomes 10 years after graduation. Additional evidence of undue pessimism came from the comparison of responses for students who planned to pursue residency training with responses for those who did not. Specialists' lifetime earnings are on average 86% higher than general practitioners' earnings,21 yet students in the present study who planned on pursuing advanced training expected only slightly higher earnings. However, nonspecialists who own their practices have earnings approaching those of specialists,21 so the small difference in earnings expectations for students who were not planning on pursuing residency training might have reflected those students' plans to be practice owners.
Overall, our data suggested that most first-year veterinary students had accurate information about the debts associated with their schooling and what their future salaries would be and that typical students believed a veterinary education would be financially worthwhile. An important driver of this conclusion was the respondents' expected earnings if they left veterinary school. Although the respondents' expected annual incomes if they quit veterinary college were lower than expected annual incomes for the first job after veterinary college graduation, they may not have been unrealistically low. Veterinary students typically receive good grades in challenging majors as undergraduates. As such, we would expect them to be able to earn more than the typical college graduate. According to microdata from the 2012 American Community Survey,d mean wage and salary income of 21- to 23-year-olds with bachelor's degrees who worked all year was $26,274. The mean values in the American Community Survey were even lower for women and Minnesota residents, who made up most of our sample. Thus, survey respondents expected that if they left veterinary college, they could earn, on average, approximately 50% more than the typical college graduate their age. Importantly, mean income in the American Community Survey includes incomes for individuals working full-time and part-time jobs as well as income for individuals working jobs that do not require a bachelor's degree. It therefore may be lower than figures reported as mean earnings for full-time jobs that require a bachelor's degree. However, because not all college graduates find full-time work in their fields, it is appropriate to consider mean earnings of all college graduates, not just those in full-time jobs that require a degree. For example, a potential reason for attending veterinary college may be that students believe a veterinary degree will increase the chance of finding full-time work that requires education beyond a high-school degree.
Tuitions at veterinary, medical, and dental schools are typically comparable. For example, at the University of Minnesota, current total in-state tuition and fees are $143,498 over the 4-year medical school program, $174,413 over the 4-year school of dentistry program, and $134,183 over the 4-year veterinary degree program.e However, salaries are typically higher in the human health fields than in the veterinary profession. As of May 2013, mean annual wage of veterinarians was $96,140, mean annual wage of general dentists was $164,570, and mean annual wage of doctors in family or general practice was $183,940.a
Direct comparisons of the present study's estimated IRRs for pursuing a veterinary education with estimates for other health professions were not possible owing to differences in methodology and in the years when studies were conducted. In particular, the present study calculated the IRR on the basis of students' expected earnings, while studies of other professions calculated the IRR on the basis of observed earnings of people working in that profession. However, the discrepancy between tuitions and salaries may explain why studies of other health professions have found higher IRRs than the present study found for veterinary students, such as IRRs of 10% to 20.9% for physicians, 20.7% to 22% for dentists, and 10.2% to 16% for pharmacists pursuing fellowships and academic training.10,12–14 On the other hand, relatively low IRRs are not unique to veterinary education. One study11 of the return on completing a PhD in pharmacy after already obtaining a PharmD degree found IRRs ranging from −1.4% to 1.3%, substantially below the median IRR for pursuing a veterinary education in the present study.
Of note, our survey did not ask students about the potential for pursuing other professional education instead of attending veterinary college. Therefore, we cannot address why veterinary students prefer veterinary medicine to human health professions requiring comparable skills, when tuition costs for training are comparable to those in veterinary medicine but wages are higher. However, individuals in the veterinary field frequently state that veterinary medicine has been a lifelong ambition. Many times, those who are passionate about becoming veterinarians may appear to discount the challenges, including the financial investment, involved in becoming a veterinarian.19 Although the motivations for pursuing a veterinary career were not directly addressed in the present survey, a long-standing desire to work with animals is suspected to contribute to students' decisions to pursue veterinary careers.19 This reasoning is also a potential explanation for why 1 respondent expected a lower annual income after obtaining a veterinary degree than he or she would have received in some other field and why the respondent for whom a negative IRR was calculated still elected to attend veterinary college. However, complete disregard for the financial implications of attending veterinary college was not apparent in the present survey, considering that most individuals not only demonstrated awareness of their current and future economic situations but also indicated that veterinary medicine would provide superior financial returns to alternative career paths.
In summary, results of the present study indicated that students enter into a veterinary education with awareness of the monetary costs of their education and realistic expectations of their future incomes. Correlations between personality traits or career plans and current or predicted financial situations were not identified.
ABBREVIATIONS
| CVM | College of Veterinary Medicine |
| IRR | Internal rate of return |
| MBTI | Myers-Briggs Type Indicator |
| NPV | Net present value |
Current Employment and Wages from Occupational Employment Statistics (OES) Survey [database online]. Washington, DC: Bureau of Labor Statistics. Available at: www.bls.gov/oes/data.htm. Accessed Aug 12, 2014.
Copies of the questionnaire are available from the corresponding author on request.
Stata, version 13.1, StataCorp, College Station, Tex.
IPUMS-USA [database online]. Minneapolis, Minn: University of Minnesota, 2010. Accessed Aug 11, 2014.
University of Minnesota One Stop Student Services. Estimating your costs. Available at: onestop.umn.edu/finances/costs_and_tuition/cost_of_attendance/index.html?year=2014-15&residency=resident&program=undergrad&CSOM=false. Accessed Apr 1, 2015.
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