I’ve taken out a total of $81,000 in student loans to pay for my education: $23,000 for my bachelor’s degree and $58,000 for my master’s. I’m finally about to pay it all off, and I’ve spent close to $100,000 when factoring in about nine years’ worth of interest.
It’s been a long journey and one that I’m excited to finish. People often ask me if I regret taking on so much debt to go to school, and I don’t really have a good, simple answer. In some ways, yes, I do regret it. In other ways, I don’t.
But there are a few things I wish I knew before taking on so much student debt. Specifically, my grad school loans, which sent me over the line from a manageable debt load into much tougher territory.
If you’re thinking about taking on more debt to go to graduate school, consider these five things I wish I knew:
1. The impact of grad PLUS loan interest rates 2. Dream schools are just a dream 3. Geography is a major factor 4. Wage stagnation 5. Life after school
1. The impact of Grad PLUS loan interest ratesI was fully aware of how much additional debt I was taking on with grad school loans, to attend my dream school, New York University. But I didn’t quite understand the impact of my grad PLUS loan interest rates.
My undergraduate loans were locked in at a low APR of 2.3%. My grad school loans? They ranged from 6.8% to 7.9%.
It wasn’t until I graduated and started making payments on my student loans that I realized how much I was paying just in interest alone. I did the math, and at its highest point, I was paying $11 per day in interest — that’s over $300 a month.
I hadn’t calculated how much interest I would pay over time in comparison to how much money I would actually make. After graduating, I struggled for a couple of years and didn’t make much more than $10 to $15 per hour in the nonprofit and arts sectors.
As a borrower, it’s important to do the math and truly understand how much you will pay in interest over time. It might be more than you thought — you can use our free interest calculator to find out.
2. Dream schools are just a dreamIt’s not uncommon for people like me, who take on a large amount of debt to go to school, to be met with a certain amount of criticism. I was repeatedly asked why I didn’t go to a cheaper school.
My answer? I wanted to go to my dream school. My dream obviously came at a cost, but I was willing to pay the price. I was stubborn and no one could tell me not to pursue my dream. However, I realized the reality of attending my dream school wasn’t so dreamy after all. I got a lot out of my education at NYU, but it was a lot harder than I imagined.
Our judgement can be clouded by fantasy — we think a certain school can bring us legitimacy, talent and clout. But in the end, it’s just a school. Consider carefully the cost of your dream school and what price you might pay many years down the road. And know, too, that there are some great schools out there which might cost far, far less.
3. Geography is a major factorMoving to New York City to attend graduate school felt like the right decision at the time. I was majoring in an arts-based field and would be in the center of the action.
But a few months after graduation, I moved across the country to be with my partner in Portland, Ore. I heard it was a creative city, but hadn’t anticipated how difficult it would be to find a job in the arts there.
Geography is an extremely important factor in your career and future earnings. Whether you decide to go to graduate school or not, consider how your location will affect your post-college career prospects.
Are there jobs in your field in the area? If not, will you move and to where? Will your new city have jobs available in your field? What is the average pay? Consider how the answers to these questions might affect your ability to repay your grad school loans.
4. Wage stagnationBefore attending graduate school, I had only worked in the nonprofit sector and never made more than $38,000 a year. I thought a graduate degree, and new grad school loans, was my gateway to a higher income.
I was sure that it would be easy to get a new job with higher pay. But right after the heels of the recession, I graduated and found myself making less than I ever had — and not for lack of trying. Having an obscure arts degree and moving to a smaller city had a major impact on my wages.
Just because you get a graduate degree — in any field — doesn’t automatically mean you will make more money or get a better job. In fact, I found that some employers considered me overqualified and wouldn’t even interview me. If you’re thinking of going to graduate school, consider:
The difference between what you are making now and what you could make with a master’s or professional degree. The unemployment rate in your city. The job competition. Whether your desired job actually requires an advanced degree. If not, you may be better off with an internship or networking with the right people. The opportunity cost of being out of the workforce for several years. In other words, if you’re making $40,000 per year, you’d miss out on $80,000 in wages to pursue a two-year degree full-time. Will you make enough to cover the loss of those wages and pay off your debt?These are all considerations that should go into deciding whether grad school is worth the debt that you’ll incur (unless you can find a way to get that advanced degree for free or low cost).
5. Life after schoolI was so singularly focused on going to my dream school that I didn’t really consider what life would be like after I graduated. I had neglected to think about everything else in my life, such as my relationship and passion for traveling.
Taking on so much debt didn’t seem like a big deal while I was in school. Once I was done and struggled to find a job, it stung. It affected other parts of my life, too.
If you’re considering going to graduate school, it’s key to consider what life will be like after you graduate. It’s hard to imagine and may seem a bit fuzzy, but think about what’s important to you and how an increased debt load from grad school loans will affect those areas of your life.
Taking on additional debt to go to graduate school is a personal decision. Before deciding either way, compare the pros and cons. Think long term, not only about your financial goals, but your life goals as well. You might find that the true cost of borrowing tens of thousands of dollars in grad school loans isn’t worth it.
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