A dental degree is probably the most expensive diploma money can buy. Unfortunately, statistics on average dental student indebtedness do a poor job of portraying the reality that current dental students face.
While most figures seem to hover around the high $200,000 and low $300,000 mark; the reality is that a large percentage of current dental students at private schools will pay well over $400,000 for their DMD/DDS.
So, how do schools get away with charging so much?
Because They Can
Not even higher education can escape the fundamental economics that underlie any exchange. In this case, schools offer an education and the degree that comes with it for a share of their students’ future income. This is a simple supply / demand relationship, and right now dental degrees are in high demand.
Last year, 11,000 students competed for just over 5,000 seats. They did so in no small part because of articles like this one from U.S. News ranking dentistry as the #1 profession in the United States.
Also, in the public conscience, dentists are assumed to be wealthy. Everyone has a story about the dentist they know with a lake house in Tahoe or a luxury townhouse in Park City.
The veracity of such claims is often suspect, but that doesn’t change the fact that public perception of dentistry is a profession with plenty of green. This drives many people to apply to dental school who would otherwise look elsewhere to claim their fortune.
No doubt about it, dentistry affords a good income with a great lifestyle. Many dentists work only four days per week and own their own business. And the perks of being your own boss are hard to deny.
Moreover, a six-figure income for working less than 40 hours per week seems like a pretty sweet deal to many. But it’s important to remember that these dentists are in the minority.
Everybody’s Doing It
Virtually every college and university across the nation is raising tuition faster than inflation. This is a problem that affects higher education as a whole, not just dental schools. The root cause of the tuition increases is largely the same for both.
First, college was once an institution of the wealthy elite. That all changed after World War II when eight million veterans came home and enrolled in college using the GI Bill. The booming postwar economy allowed states the help shoulder the high costs of skyrocketing demand for a college diploma.
Meanwhile, the federal government was creating financial aid options for civilian families so that their children could attend college too. During the postwar period, the strong American economy, and support from federal and state governments, allowed middle class Americans to attend college. No longer a bastion of the wealthy elite, college soon became an expectation for many American families.
Fast forward to now and it has become a near requirement for most fields that job applicants have a college degree. But the booming postwar economy of decades past has meant that federal and state governments have significantly cut education budgets.
In many cases, the steady rise in tuition reflects a decrease in support from state legislatures. Family incomes are rising slowly and have been unable to offset rising inflation. As parents are increasingly unable to fund their children’s college expenses, student loans will continue to rise. And with American citizens now collectively owing $1.48 trillion in student loan debt, there are concerns that we may be in the midst of a bubble.
Financial Aid – The Blank Check
How long will the government continue to fund increasingly expensive degree programs such as dentistry? No one seems to know, but schools are betting that they can continue to raise prices and that the government will keep handing out money to qualified students.
Where should Congress draw the line? The political consequences of refusing to fund the education of poor Americans — while wealthier citizens earn degrees — seems beyond any legislator’s ability to bear.
Currently, dental students on financial aid have two buckets to tap into when funding their tuition, both funded by the federal government. The first is a Direct Unsubsidized Loan which awards up to $47,167 annually and is capped at $224,000 aggregate. The second bucket is the Grad PLUS Loan. The Grad PLUS has a flexible loan limit and is dependent upon the credit of the borrower. There have been instances where dental students needed a co-signer to secure a Grad PLUS Loan.
As long as students have the ability to take out Grad PLUS Loans and gamble that their future earnings will offset their educational costs, then schools can keep charging more. As long as Grad PLUS Loans carry a ~7% interest rate, the government will continue to fund them.
Travis, over at studentloanplanner.com thinks that 50% of current dental students will default on their student loans. [Correction: Travis thinks 50% would default if not for income-driven repayment options such as PAYE and REPAYE]
That number seems pretty high, but I don’t have the spreadsheets or the accounting background that Travis does. One thing we can agree on is that the current rate of rising tuition ultimately ends with a mass of student loan defaults. The question then is not if, but when?
Will Congress impose hard limits on student loan borrowing? Perhaps student loans could be made a tax write-off like home mortgage interest with a $1 million deductible limit. Perhaps more service scholarships should be made available to help solve the access-to-care crisis.
Our vision of the future is imperfect and therefore inherently risky, but with risk comes the greatest rewards.
A Lack of Public Options
High tuition and a dearth of applicants led to many school closures in the ’80s and early ’90s. Georgetown, Loyola, Washington University, Oral Robert’s University, Emory, all closed when dental school applications tapered off and operating costs continued to soar. Between 1986 and 2001, seven dental schools closed; all of them were private institutions.
Georgetown was the largest private dental school in the United States before shutting down in 1987. Since then, nearly a dozen dental schools have opened and only two of them are public: Texas Tech University Health Sciences Center and East Carolina University.
The volatility surrounding private dental schools is astonishing. From 1986 to 1993 one dental school closed almost every year. In the last fifteen years, nearly one school has opened every year on average. If private schools are any indication of the boom and bust cycles of the dental school market, then we may very well be fast approaching another crash.
A large volume of dental school applicants has created a lucrative market for private education institutions. A school charging $300,000 in tuition for 150 students will collect $180,000,000 in total tuition over four years. When considering that many of these institutions run dental clinics that also turn a profit, it is easy to see why so many private schools are opening to capture as many dental school applicants as possible.
With so few public schools available and so many states without a dental school — 14 to be exact — it isn’t surprising that students are increasingly forced to attend private schools where tuition and volatility are higher.
An Inevitable Crash?
As I said earlier, the current situation is untenable. At some point, recent dental school grads will no longer be able to afford their tuition. I don’t know when that will be, but I suspect it isn’t far off.
Stagnant incomes and increasing student loan burdens may mean that dentistry will have a falling off point just as it did three decades ago. Many schools will close, fewer dentists will graduate, and the market will correct itself.
But will dental schools reduce their tuition? If they want to survive in lean times they will have to. Maybe this is the kind of market correction that Congress is hoping for. In the meantime however, it seems that uncapped borrowing and a lack of public funding is only adding gasoline to the fire.
Why So Pricey?
In summary, there are many reasons that dental school tuition continues to skyrocket. A lack of public investment in higher education coupled with a changing socioeconomic landscape have had the most dramatic impact. Fewer public options, less state funding, and federal student loans with high interest rates have left students with more debt than ever before.
Uncapped student loans have allowed and even encouraged young professional students to borrow far more than they should on false promises of artificially inflated future earnings. In turn, high interest and loan origination fees make it hard for the government to turn starry-eyed professional students away. Moreover, the prospect of pushing for an educational divide between rich and poor would be political suicide.
And finally, we have all accepted the risk of burdensome student loans on the promise that we will have a better tomorrow for ourselves and our families. This is the world we came up in, not the world of our making. We must all make the most of our present circumstances.
There is plenty of blame to go around. Unfortunately, the only thing we are short on is ideas to solve the crisis. Perhaps more than ideas, we also need strong leadership capable of making tough decisions. Whether we will find either before it is too late is anybody’s guess.