Veterinary practices have gotten busier in the past two years, but those wanting to join the profession still face a combination of educational debt and low earning potential that makes a veterinary education a poor financial investment for most college graduates, according to preliminary results from several studies presented Tuesday at an American Veterinary Medical Association economic summit in Chicago.

The strengthening national economy is the main driver behind the pickup in business at veterinary clinics, AVMA economist Ross Knippenberg reported. Last year, an AVMA study found that while unemployment among veterinarians was very low, many clinics were not as busy as they could be, as measured by what economists call “excess capacity.” National average excess capacity has fallen from 12.5 percent in 2012 to less than 10 percent in 2014, Knippenberg said Tuesday, and the AVMA expects it will fall to roughly 6 percent within the next two years.

But most of Tuesday’s discussion focused on more troubling findings.

Michael Dicks, who heads AVMA's economics division, reported that based on projected lifetime earnings potential, the average college graduate may do better financially to take a job immediately after earning a Bachelor of Science degree rather than attend veterinary school and work a full career as a veterinary associate. That is, the increase in lifetime earnings conferred by the DVM degree for the average associate in a companion animal practice will not make up for the average cost (including the loss of potential earnings during veterinary school) of a veterinary education.

For some practice areas, the outlook is significantly worse: a student entering veterinary college today to become an equine practitioner might expect by age 65 to be more than $500,000 (in 2014 dollars) behind a person with only a bachelor's degree who worked an average-salary job over the same period.

Jobs in industry, government and academia typically provide a positive return on the veterinarian’s educational investment, Dicks said, but every private-practice area averages a negative return for associates. Female veterinarians tend to fare worse than their male counterparts because women have a higher average debt burden after veterinary school and lower expected earnings.

In the calculations, the average veterinary school debt was assumed to be $135,283, which represents the average debt for all graduates, including those with no debt. Dicks’ calculations are based on salary data for associates, not practice owners, who generally earn more. About 41 percent of veterinarians in private practice are practice owners, according to AVMA figures.

To make getting a veterinary education economically rational — as it was prior to the tuition increases of the past decade — would take major shifts in one or more of the systems that define the veterinary economy: the tuition and output of veterinary colleges; the job market for veterinarians; and the market for veterinary services, Dicks said.

"We're at a point where marginal changes will not provide a substantially better outcome," he said.

The economic summit provided the second major update on what AVMA calls an unprecedented research effort to better understand the economic forces shaping the profession. The organization now employs three full-time Ph.D.-level economists. A public report on the findings presented Tuesday is scheduled for release in January.

Despite increasingly prominent warnings about the economics of the profession, student enrollment has continued to grow. New schools as well as class size increases have raised the number of available seats domestically, while a growing number of U.S. students are attending veterinary colleges in other countries. In 2013, more than 25 percent of the 4,460 new U.S. veterinary students were attending foreign colleges, according to data from the Association of American Veterinary Medical Colleges.

The growth in student enrollment has not been accompanied by a proportional increase in applicants. Counting international seats, the ratio of applications to first-year enrollment has fallen to 1.64 to 1, according to figures presented Tuesday by Lisa Greenhill, AAVMC’s associate executive director for institutional research and diversity.

Greenhill also noted that veterinary school applications have in the past followed a strong cyclical pattern — peaking every 16 to 19 years — and that applicant numbers now appear poised to fall. As a result, she said, the applicant-to-seat ratio could fall below 1 to 1 within the next five years, meaning seats would go unfilled.

"Some schools may be at risk," Greenhill said.

Dicks cited economic theory that suggests the most expensive seats (that is, those at the schools with the highest total cost of attendance) would be the first to go unfilled. But Greenhill cautioned that in surveys, prospective veterinary students tend to name cost as a secondary concern, behind factors such as geography and differences between educational programs.

In its economic modeling, AVMA is now projecting that the number of U.S. students enrolled in veterinary college will stop growing abruptly after the class that enters in the fall of 2015.

The experience of dental schools offers an historical comparison. From 1986 to 2001, seven U.S. dental schools closed, largely because of a steep and prolonged drop in the applicant-to-seat ratio driven by a widespread public perception at the time that the success of fluoridation made dentistry a dead-end career.

In the veterinary profession, changes in any of several areas could help to improve the financial prospects for veterinarians, Dicks said. The changes he cited are reduced enrollment, lower tuition and increased overall demand for veterinary services, which in turn could help increase salaries.

While Dicks didn’t offer suggestions for how to bring about such changes, a handful of others did.

Dr. Paul Pion, president of the Veterinary Information Network, which is parent of the VIN News Service, noted that changes in federal student loan practices, which are the subject of ongoing discussions by policymakers, potentially could reduce student demand for veterinary education. Mechanisms might include a cap on the amount of money loaned to each student entering certain professions, which would put pressure on schools to find ways to bring tuition costs in line with the return on investment; or changes to the income-based repayment program to make borrowing less attractive.

Karl Wise, who was AVMA’s staff economist in the 1970s and 1980s and spoke at the conference on the history of veterinary economics, suggested splitting veterinary medical education into two tracks. One would be a three-year degree for practitioners, a distilled and lower-cost version of the current DVM degree. The other, also three years, would be designed to prepare students for animal health careers in research, public health and industry.

Dicks' team has multiple studies underway and the AVMA plans to continue holding annual economic conferences to report findings. An area of particular focus for the next 12 months, Dicks said, is research designed to understand how veterinary clients respond to changes in the price of various services. Dicks wants to learn more about the veterinary-services market, which he said is poorly understood.