is pharmacy school worth it?

Is Pharmacy School Worth it? Part II

There has been a lot of feedback about my original article “Is Pharmacy School Worth it?” I decided to address all the complaints. Thus I will break down the math as simple as possible for those who got confused. Let’s do math together!

Assumptions/Analysis:

  • Both Salary Increases, Expenses, Inflation are kept stagnant and not accounted for. For the most part this should cancel each other out (see below in the comments section as why I decided to do this, plus it will make this scenario much more simple).
  • Starting Year 9 both Pharmacy Technician and Pharmacist move out of parents home and significantly increase their cost of living from $8,000 to $30,000 a year.
  • Return on Investment (ROI): Using the history of the S&P 500 index a 8% annualized return is utilized for investment returns. This is simple index investing: Vanguard 500 Index Fund (Since inception its produced a 11.1% annualized return)
  • Tuition is not increased year to year, favoring pharmacist. (compound interest with higher debt working against the pharmacist not accounted for)
  • University of Washington Tuition Costs were used in this example. This also favors the pharmacist with public school prices vs out of state tuition or private pharmacy school.
  • Pharmacy Technician is in the 15% income bracket making their capital gains and dividends TAX FREE which will not be accounted for, thus favoring the pharmacist.
  • The Pharmacist will have ZERO expenses during school because they work part time jobs or holds a pharmacy internship. They bring home $8,000 / year canceling out their living costs.
  • Pharmacy Technician does not work any extra shifts for overtime or put themselves on call to collect extra pay (hospitals often times pay techs $4/hr to $5/hr just to be on call if someone calls out sick). Favoring Pharmacist. (missed opportunity for compound interest)
  • Pharmacy Technician Benefits for 8 years while the Pharmacy Student is going to school is not accounted. 401k plans ect… My hospital currently matches dollar for dollar up to 7% of salary, again favoring pharmacist. (missed opportunity for free money and compound interest)
  • Undergraduate Student Loans: Each year only $6,000 out of $12,000 accrued 4.33% interest. Once they graduated the entire loan will accrue interest.
  • Graduate Student Loans: Each year only $14,000 out of $28,000 will accrue 6.21% interest. Once they graduate the entire loan will accrue interest. (Interest Rates taken from: https://studentaid.ed.gov/types/loans/subsidized-unsubsidized)
  • Pharmacy Student did not take any Private Loans.
  • Pharmacist does not do any residency programs, which can add an additional 2 years.
  • Pharmacy student went straight through without any issues. My class average starting age of pharmacy school was 26 and finished at 30 years of age. This scenario shown has the pharmacist finishing at 26 years old.
  • Pharmacist does not increase standard of living to luxury status: new house, new BMW, extravagant vacations, designer clothes, and fancy restaurants.
  • In favor of the technician is that they are paid on the higher end scale comparatively to the national average, however, this information is pulled from my current employer. Thus, I would assume other hospitals in the Seattle area would be fairly competitive. Also this is comparing a pharmacist salary from the same hospital.

Pharmacy Technician Scenario

  • Graduates high school at the age of 18.
  • Starts working in long term care pharmacy as an assistant. (My current employer pays $14.50 for assistants, and pays for their schooling)
  • Becomes a Pharmacy Technician within a year at no cost.
  • Gets new job at a hospital inpatient pharmacy with a base pay as a new grad of $20.00/hr (based on my current employer pay scale). For those who don’t know, I work in Long Term Care and Inpatient Pharmacy.
  • See Below which is an OLD pay scale from early 2014 and has been increased since (hospital where I currently work, which includes the outpatient retail techs):
  • PharmTechPay

Pharmacy Assistant Pay Calculations:

  • $14.50/hr x 40 hours = $580 / week x 52 weeks = $30,160
  • Federal Income Tax = $2,550 (TurboTax Calculator)
  • Social Security Tax 6.2% = $1,869.92
  • Medicare Tax 1.45% = $437.32
  • Final Take Home Pay = $25,302.76
  • Expenses = $8,000 (University of Washington Estimate for those Living at Home with Parents)
  • Total Savings = $17,302.76

Pharmacy Technician Pay Calculations: 

  • $20.00/hr x 40 hours = $800 / week x 52 weeks = $41,600
  • Differential Pay for Every Other Weekend = $24 / weekend x 26 weekends = $624
  • Works 3 out of 7 Holidays (Gets compensated at 2.5x rate, 1.0 is accounted for in gross pay calculation above). $20 x 1.5 = $30/hr x 8 hrs = $240 x 3 Holidays Worked = $720
  • Final Gross Pay: $41,600 + $642 + $720 = $42,962
  • Federal Income Tax = $4,470 (TurboTax Calculator)
  • Social Security Tax 6.2% = $2663.64
  • Medicare Tax 1.45% = $622.95
  • Expenses = $8,000 (University of Washington Estimate for those Living at Home with Parents)
  • Total Savings = $27,205.41

Pharmacist Pay Calculations (Pay-Scale Chart is from my Hospital):PharmacistPay

  • My first job out of school in 2012 paid me $50.00/hr as a LTC pharmacist. Salaried employee with no differential pay or holiday pay. (Since I know time is against me, I worked 2 jobs to increase my gross to 155k my 1st year out of pharmacy school. To keep it simple lets just use the scenario of a normal human working 1 job. The tech can work 2 jobs as well and pull overtime but lets just do 1:1 for now).
  • $50 x 40 hours = $2000 / week x 52 weeks = $104,000
  • Federal Income Tax = $19,461
  • Social Security Tax 6.2% = $6,448
  • Medicare Tax 1.45% = $1,508
  • Final Take Home Pay = $76,583 *Washington does not have a State Income Tax*

Results/Conclusion

  • After 30 years the Pharmacist breaks even with the Pharmacy Technician in Net Worth.
  • I may do a future post on technician pay at $15/hr (which is on the low end in Seattle) vs a $55/hr pharmacist. Adjust wage increases, account for capital gains/dividend taxes, increase tuition costs yearly, and take advantage of the employer benefits package. I just need to find time to do this. But my suspicion is the outcome would be fairly comparable, especially if the technician buys a house in cash in year 9-15 or so (dropping their expenses down) and the pharmacist decides to buy a house then too (with a 15 or 30 year mortgage). Or the tech can continue renting while the pharmacist buys a house. It would be interesting to see the outcome. The pharmacist savings rate would be so low that the tech can invest more than the pharmacist until year ~30 again.
  • This post is not promoting to be a pharmacy technician. It is just to ponder the question if it is really worth the time and debt to get the pharmacist salary. There are many other options and if money is your goal, pharmacy is not the answer if you start today. You can stick any profession in this scenario such as an RN, Dental Hygienist, Radiology Tech, and many more that require less debt & years of school. The outcome would be exactly the same or even more favorable for other professions.
  • Key take aways: save early, invest early, compound interest is your friend, minimize debt, live smart, and avoid being sucked into consumerism.
  • Keep in mind the pharmacist expenses matched the technician (At $30k expenses, this is very generous for 1 person, if you look at Mr. Money Mustache family only spends $25k a year for 3 people). Most pharmacy graduates buy a large house almost immediately, luxury car, and take expensive vacations. Their savings rate would be extremely low. Even if you save diligently, is a 30 year break even point really worth it? We also gave the pharmacist a lot of freebies on assumptions.
  • There is no real way of knowing exactly every scenario. Everyone will have a different savings percentage. A great example is my own personal finances. I tend to save somewhere around 75% of my earnings each month. I do not believe many people have this high of a percentage. This is just one scenario!
  • For all the students and recent graduates upset about my post. Just take away the positives from this article. You will try to prove me wrong by paying off your debt at an accelerated rate and invest a majority of your income to build your net worth (why do you think I punish myself working 2 jobs and have 4 other hobby income streams). This will help the rest of us because you have a higher probability of not defaulting and thus avoid having the taxpayers cover student loan debt. Thank you!

Tech

Pharmacist

 

Comment Below, would love to get some feedback. 

I hope the recommendations above will help guide, motivate, and inspire you to achieve your goals. Follow my blog for more tips and advice on finances and being a pharmacist. What are your experiences? Please comment below and share your thoughts.

23 thoughts on “Is Pharmacy School Worth it? Part II

  1. Pingback: Is Pharmacy School Worth It? - The Pharmacist Blog

  2. Anonymous

    ^^I agree. I thought the first article was pretty conservative and pharmacist friendly actually. There is no way a lot of these pharmacists will have $60K take home pay floating for 30 hours per week at decreased wages. But, I guess we can’t hurt too many idiots’ feelings out there! Pharmacy is NOT immune to supply and demand!

    Reply
  3. ThePharmacistBlog Post author

    “Dr_Mario87 3 points 7 hours ago
    Show me a tech making 20$ an hr with no experience and I will send you great techs. I don’t know any technicians making over 16$ that aren’t interns
    Edit will agree going 200 to 300k in is ludicrous. Sometimes I regret it but in 6 years the debt will be gone
    permalink
    [–]pharmprophetP4 Retail Intern 1 point 4 hours ago*
    Yeah, and correct me if I’m wrong, but don’t most technicians work in retail? At my chain, techs are capped at $10/hr unless they’re certified but even then they don’t start at $10/hr.
    It just removes the cap. I know inpatient technicians make more, but $20/hr as a starting salary without experience sounds extraordinarily outlandish to me.
    I know so many amazing technicians at my chain who live pretty much in poverty. Can I get an application for this mystical $20/hr starting rate job, so I can give it to them please? Because they don’t make nearly as much as they deserve.
    Like I said on the last post, I’m not saying the situation isn’t bleak. I’m just saying this article, like the one before it, is unrealistically skewed. It has maximum optimism for the technician scenario and maximum pessimism for the pharmacist scenario. All sources I can find cite $20/hour as being far above the 90th percentile for a CPhT with no experience, and as ~90th percentile for experienced CPhTs.
    Yeah, the situation sucks. But this comparison is not realistic, either. If you’re gonna compare 90th percentile CPhT wages, shouldn’t you compare them to the 90th percentile of pharmacists? Doesn’t make any sense.”

    RESPONSE From The Pharmacist Blog:

    Okay these two students in school just don’t know how pharmacy works. First off I just posted above in the post the pay scales at my hospital. Just because you don’t know any techs making $20/hr does not mean they do not exist. Since you are using anecdotal evidence, I coached an assistant to technician who gross $60,000 his 1st year out of tech school. I know many veteran techs making $60-100k/year gross as well (on the high end through overtime). It is not that uncommon in Seattle. I guess I must hang around the super all star techs in the nation but still they exist! The other kicker that will also hurt, our outpatient retail techs are paid under the same pay scale.

    Anybody that has any financial knowledge would not take a $10/hr retail tech job. Are you kidding me? The smart ones go where the money is. Did you know Seattle is implementing a $15/hr minimum wage soon? This will push technicians pay even higher.

    Also what kind of manager would hire techs with 15+ years experience to pay them more based on the pay scale above? They think about the bottom line and thus new grads are the cheapest and can generally put out the most work since they are so young. They are the easiest to mold as well, without bad habits to break. You are telling me you would hire a veteran tech and pay them $30/hr based on the pay scale provided above vs a new pharmacy tech grad at $20/hr? And the CFO of the hospital is breathing down your neck to save on the budget? I’ll let your ignorance pass for now since you guys don’t have real life work experience yet.

    Reply
    1. Pharmprophet

      PharmProphet here to defend myself since you were too cowardly to actually defend yourself on Reddit. I have plenty of real-word experience, and I’m just telling you that your technician example is an extreme extreme extreme extreme extreme extreme extreme extreme extreme extreme extreme extreme extreme extreme extreme extreme extreme extreme extreme extreme extreme extreme extreme extreme extreme extreme extreme extreme extreme extreme extreme extreme extreme extreme extreme outlier and to not preface it as such is ridiculous and dishonest. It. Is not. Realistic. And you know damn well it is not realistic. I guess Seattle is a parallel universe.

      I know I’m not going to change your opinion and make you realize that your experience is not reflective of most technicians or pharmacists, because you’re already defending your ludicrous previous post. But at least I don’t try to hide from criticism..

      A $10/hr tech job is pretty effing generous, dude. I’m sorry, but if you don’t understand that most pharmacy technicians make under $10/hr, then you’re in some kind of LSD fantasy world I cannot possibly help you in.

      Reply
      1. ThePharmacistBlog Post author

        I guess you missed the entire point of the article. Debt and Savings and Personal Finance advice…

        There is a reason why Seattle is one of the fastest growing cities in the US.

        Reply
        1. Pharmprophet

          Okay so basically your point is that Seattle is awesome and that people are should be more fiscally responsible, then.

          Reply
        2. Pharmprophet

          P.s. your post was titled “Is Pharmacy School Worth it?” not “Is Pharmacy School Worth it when considered against extremely well-paid pharmacy technicians in Seattle which pays outlandishly high salaries to techs?”

          So perhaps misleading title, darling.

          Reply
        3. Pharmprophet

          Further fact-checking reveals that I can find Seattle on a single “fasting-growing” cities list. According to Forbes, those spots go to Raleigh NC, Austin TX, Las Vegas NV, Orlando FL, Charlotte NC, Riverside CA, Phoenix AZ, Houston TX, San Antonio TX, Dallas TX.

          The only list I could find was the dubious source Wallet.com proclaiming Seattle the 89th fastest growing city.

          Do you have a single fact to back any of this up other than your non-applicable anecdotal evidence you seem to love?

          Reply
  4. ThePharmacistBlog Post author

    [–]jackruby83PharmD 07, BCPS, Transplant 1 point 6 hours ago
    One of my gripes with this is that it does not take into account raises over time. Keeping them stagnant does not control for it. Let’s compare two people, one starting off at 40k and another starting off at 100k, and each getting 2% increases per year. At year 10, person A is making 47,803 (19.5% higher than where he started), and person B is making 119,509 (also, 19.5% higher). The difference is between how much more person B made over 10 years than person A, which in this case is 54k. Every year that goes by that difference grows more, and that money is able to be invested, etc.

    Response from The Pharmacist Blog:

    Good point, however, you did not take into account that any extra money made from the pharmacist with those 2% raises is also taxed federally @ 28% income bracket and if you live in a state with state income tax this is also higher for higher income earners vs a pharmacy tech @ 15% income bracket. Also the tech can stay in the 15% income bracket by maxing out their retirement plans all the way up till 18k 403b + 18k in 457 plan + 45k gross = 81k gross and still be in the 15% income bracket!

    You also did not take into account the 1st 8 years that the technician could have had pay increases which would increase their savings % and thus create even more compounding interest as the years pass. This is exactly why I kept both stagnant is I would figure it would be cancel each other out for the most part and just be much simpler to calculate.

    Do people also not realize the power of tax free capital gains and dividends on the tech side at the 15% income bracket. This would easily kill any pay increases the pharmacist makes. I guess even if you have a BCPS you can’t do simple math….

    Reply
  5. Anonymous

    JackRuby also forgot to account for the technician starting out at step 8 on the payscale vs the new graduate pharmacist entering in at base pay on year 9. This would further bolster the compounding effect on savings percentage as the author has mentioned.

    Reply
  6. Vinh Trang

    I looked at part 1 and part 2. I think the take home is pretty clear. Numbers are not the same for everyone, so this is a good estimate. Pharmacy school is no longer a smart investment. Some of these students also do not understand the concept of supply and demand, threats of automation to pharmacy (see Walgreen’s current situation) and the saturation of grads which in my opinion, puts the icing on the cake in terms of screwing us all over. I think the idiotic responses from the remarks above from P4 Intern originates from the inability to cope with reality, hence, they lie to themselves to alleviate the pain. Who can blame them?

    Reply
    1. Pharmprophet

      I understand supply and demand. I also understand that it doesn’t make sense to compare 90th percentile wages to like bottom of the bottom. It’s not a fair comparison. I don’t have rose-colored glasses on. We’re in a sh*t situation. I had retail experience before school. But I simply cannot agree with this comparison because I do not know of any technicians who fit the criteria the author mentions other than technicians at his clinical site that are in Seattle. I should tell all the awesome techs I know to move to Seattle so they can make $20/hr starting salary instead of the $8-10/hr they make here in the real world.

      Reply
  7. Kevin Nguyen

    Hi Paul,

    I completely agree with what you are saying. I need your advise with my current situation on pharmacy school.

    My options are as follows:
    Pharmacy school A – accredited but not ranked, not prestigious, predominantly black school and potential for minority scholarship, cost of attendance around 60k for all four year. If I attend this school I will be able to stay home with family and friends. My only concern is that since it is not reputable, it may be hard to get a residency or job.

    Pharmacy school B – accredited and ranked number 71 according to US news, private pharmacy school, 3 hours and 30 minutes away from home, 40k a year for tuition not including room and board and living costs (will owe approximately 180k).

    Pharmacy school C – accredited and ranked 56 according to US news, private and out of state, approximately 3 hours away from home, 36k a year for tuition not including room and board and living expenses (will also owe around 160-180k after completion).

    Pharmacy school D – accredited but not ranked, in state, approximately 5 hours away from home, 32k a year tuition not including room and board and living expenses (estimated debt 100-130k), this school pharmacy school is a 3 year program.

    Paul, please give me advise on what you I should do. Does it matter if I go to a higher ranked school so that it would be easier for residencies or would you recommend just going to the cheapest school that is accredited? 180k will internet will be very hard to pay off as a pharmacist. If I stay home and attend pharmacy school A, my parents may be able to pay off all my expenses.

    Also, if you had an email where I could contact you privately and include more details that would be great!

    Thanks

    Reply
  8. Michael Berger

    Kevin –

    This is a great question. I guess my initial reaction would be to say go with the school that will leave you with as little debt as possible. I’m disappointed in the direction that tuition has gone in the past 5-10 years, seeing so many students come out of school with $200k in debt.

    What are your plans post graduation? Do you want to go straight in to practice, do you want to do research, do you want to pursue a residency?

    While school ranking is important for potential candidates, I don’t think that it’s necessarily the only factor that plays into whether or not you will get the residency you want. Like pharmacy school, the PCAT, GPA, interview all plays into whether you get accepted.

    You can talk to the colleges of pharmacy and ask them what their rates are for residency acceptance, how many students are employed, etc. post graduation.

    If all things are equal, I would probably go with the cheapest path that will keep you from being saddled with debt. I am in year 10 of paying off student loans and it isn’t fun!
    Mike

    Reply
  9. John lee

    I just graduated from pharmacy school and now making 56 dollars an hour. I thought I would be making 70+. After factoring in loans repayment and the fact that full timr position no lomg exist, i make so less money. Sigh, harsh reality…

    Reply

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