Dunbar was born in Sunnyside, Washington. She graduated from Sunnyside High School in 1967. She attended the University of Washington and received her undergraduate degree in ceramic engineering in 1971. After college, she worked for Boeing Computer Services for two years as a systems analyst. From 1973 to 1975, Dunbar conducted research for her master's thesis at the University of Washington in the field of mechanisms and kinetics of ionic diffusion in sodium beta-alumina. She is a member of Kappa Delta sorority.