An Investment In Yourself: Culinary School Debt

I never thought I would ever be the kind of person to rail against the educational system. I firmly believe that education can be a great way to invest in yourself and your future earning potential. But sometimes the investment can be so expensive and the return on investment so minimal, that any seasoned daytrader would look at the numbers and simply walk away.

My sister has decided to take advantage of a unique opportunity to further her education. She has been involved in the restaurant industry now for a decade and a half. What started out as a job at pizza places during high school transformed into working almost entirely as a front of house server and bartender at some fairly swanky restaurants and clubs in Boston, New York City, Miami, and Nashville, where she currently resides. Having gained so much experience in the food industry over the years, she knew that unless she wanted to waitress into her golden years, she needed to take charge and go back to school. In a serendipitous twist, my father happens to be teaching business courses at the Nashville branch of the Art Institute, which also provides curricula for several culinary arts programs. One of the perks of teaching at the school is that up to two direct relatives can attend the school tuition free. The only stipulation is that they must attend the same location as the employee* (there are branches nationwide).

While I've always toyed with the idea of going to culinary school, one of the bigger obstacle's in the way of me taking advantage of this is simply that I don't want to relocate to Nashville. While this doesn't track my current path in life well, it was a great fit for my sister. I don't think that she ever really had some grand notion of running her own kitchen, but management is definitely something on her mind and thus, she has enrolled in the Bachelors of Science Culinary Arts Management program. Because all of the programs require some kitchen training, every new student is required to purchase a start-up kit. This kit includes a set of knives, uniforms, and other key items needed by someone starting out in a professional kitchen. The kits aren't cheap at $1000, but since this is an investment from which she will get years of use, it seems a worthwhile expense.

Curious about her other start-up costs, I decided to visit the tuition and fees page on the Art Institute's website. After selecting her program and degree path, the page helpfully informed me of the cost for a successfully completed program. I thought I would post the information here for you, gentle reader, to consider as well:

Quarters: 12
Credits: 192
Cost Per Credit: $472.00
Tuition Per Quarter: $7,552.00
Total Tuition: $90,624.00
Application Fee: $50.00
Tuition Deposit: $100.00
Lab Fee: $285.00
Starting Kit (first quarter only): $1,000.00

I already knew about the cost of the Starting Kit and while the Lab Fee seemed like something that should already be part of tuition, I remember paying similar fees when I went to Case Western Reserve University back in the mid 90's and just accepted that they were part of the college experience. However, when I saw what the cumulative cost of tuition was for the entire program, my jaw just hit the floor: NINETY THOUSAND DOLLARS!

I do not doubt the quality education one can receive at the Art Institute. But the reality of the matter is that despite what the recruiters tell you and the glamorousness of chefs like Emeril Lagasse, Bobby Flay, and the cadre of other TV chef personalities, NO ONE graduates a culinary school program and makes that kind of money right out of the gate. Those chefs make serious bank because they have invested decades of time into building up not only good restaurants, but also their own individual brands.

So, I had to ask myself, what kind of jobs can a recent graduate with a BS in Culinary Arts Management expect to get? Once again to the rescue was the Art Institute's very own website with a list of suggestions:

* Management trainee
* Kitchen manager
* Assistant pastry chef
* Banquet chef
* Sous chef
* Assistant purchasing manager
* Prep cook
* Line cook
* Catering assistant

Not a bad list of professions, if you ask me. That being said, what type of pay range can these professions expect to make right out of school? Well, of course it will depend on the area of the country and the job role itself, but here is a list of median hourly rates by job:

* Line Cook - $11 per hour
* Sous Chef - $12-13 per hour
* Head Chef/Cook - $12-13 per hour
* Cook, Restaurant - $10-11 per hour
* Kitchen Chef - $11 per hour
* Pastry Chef - $13 per hour
* Executive Chef - $15 per hour

So that means, given a 40 hour work week (which no restaurant professional ever works) over a 52 week year, that means a potential graduate can earn between $22,880 and $31,200. For the sake of my argument, I'm going to split the difference and say that our recently graduated culinary arts student has a potential earning income of $27,040. After taxes, let's say of roughly 25%, the take home pay is now $20,280 or $1,690 per month. Let's just consider this to be the best case scenario.

So here we are, three years invested in school with student loans taken out for $90,624. Once graduated, you will need to start paying those loans back. According to the fine people at FinAid, I plugged in the principal amount, selected a payback schedule and interest rate that match one of the most popular student loan programs, the Stafford loan, and clicked on "Calculate." To my amazement, here is what popped out of the calculator:

Loan Balance: $90,624.00
Adjusted Loan Balance: $90,624.00
Loan Interest Rate: 6.80%
Loan Fees: 0.00%
Loan Term: 10 years
Minimum Payment: $50.00

Monthly Loan Payment: $1,042.90
Number of Payments: 120

Cumulative Payments: $125,148.69
Total Interest Paid: $34,524.69

So based on these numbers, of my $1690 per month in take home pay, $1043 of that is already earmarked for loan repayments? That means the newly employed culinary professional will have a measly $647 for rent, food, utilities, a car payment, insurance, gas, clothing and other sundries. Heaven forbid that the individual have any other debts, too, like credit cards. By my calculations, ($1043 / $1690), that's a debt-to-income ratio of 62%. Most financial advisers I've ever read suggest that you should never carry more than a 33% debt-to-income ratio. And that's a payback period of TEN YEARS. Of course, your earning potential will hopefully go up over ten years, but I doubt it will be to the point where your ratio will fall below that 33% figure.

Now, of course I've made some general assumptions here. Very few students would find the need to borrow their entire tuition. Most will have jobs on the side, either part or full-time. That being said, the $90,624 figure is just for tuition. Students still have to pay for their own housing, meals, books, and extras, so a job doesn't necessarily mean that they'll be able to make a dent in their tuition payments every quarter. And coming from a position of knowing exactly how easy it is to accept as much assistance as possible when you need it without thinking about the long-term consequences, I can definitely see many students racking up a mountain of debt before graduating.

I was fortunate to be in a career field where explosive job growth (and earning potential) was the norm, not the exception. While I graduated with some $50,000 in school loans myself, I was making enough money within a year or two of graduating college that my monthly loan payments might have been annoying, but they were still manageable and I didn't have to subsist living in torn rags and eating dried Ramen noodles every day. For every famous celebrity chef who is making millions of dollars per year, how many hundreds of other culinary professionals are out there that will never have that kind of earning potential? The kind that dutifully show up day after day and perform to the best of their ability, but at the end of the day, still make a pittance compared to what Wolfgang Puck makes every minute?

I think it is fantastic that the programming on cable channels such as the Food Network and the Cooking Channel has inspired a renewed interest in cooking and food. And I think it is great to celebrate those individuals in the restaurant industry who have truly made a name for themselves. However, I think we are doing these potential culinary arts students a great disservice by not being completely honest with them about the financial reality that they will face for up to ten years after graduating. Am I suggesting that going into a culinary arts program is a bad thing? No, not at all. But I would suggest that students be aware (and one would hope that the school's recruiters would mention this during the information gathering phase) that they could potentially be paying back $125,000 over ten years during the point in their careers where their earning potential is most likely at its weakest.

If you find yourself without a way to afford your schooling and you don't have an "in" such as a family member already teaching at the school (such as in my sister's case), you may want to really consider whether the investment you make now will have a worthwhile return on investment. If you are entering the culinary professional with hopes of fame and fortune, you will more than likely be quite disappointed (and broke). If you do it because you love the profession and are willing to put up with all of the sacrifices that the industry requires, then by all means, feel free to sign on the dotted line.

[*Update: It appears that there is some question as to whether as a a child of an employee, you have to attend the exact same Art Institute as the employee to qualify for the tuition waiver. While I based this statement on what my father told my sister, apparently further digging into the issue will be required. When I have a definitive answer to this question, I will post it here. Regardless, the point of this essay isn't tied to that bit of information.]