Reader Story: How I Paid Off $18,000 in Student Loans While Still in Graduate School
Published on - March 7th, 2010 (by J.D. Roth) This guest post from Andrea is part of the new “reader stories” feature here at Get Rich Slowly. Some reader stories contain general “how I did X” advice, and others will be examples of how a GRS reader achieved financial success — or failure.
I am a graduate student, working towards a PhD, and I hope to graduate in 2012. Prior to starting my PhD program I acquired a significant amount of student loan debt while working on a Master’s degree. I also had a small amount of debt left over from my undergraduate degree. In total I had accumulated around $70,000 in student loans.
Some people might say that isn’t too bad considering that I already had completed my Master’s degree, and would not be acquiring any new loans while pursuing my PhD. But I had lived paycheck to paycheck for the two years I worked between college and graduate school, and I didn’t want to live that way anymore. I didn’t want that much debt hanging over me, potentially impacting my future career decisions, so I decided to start paying back the loans while still in school.
A rude awakening
While I wouldn’t say that I regret taking out so much in loans for a Master’s degree, and I’m not sure that I would do anything differently if I had the chance, it is different looking at that dollar amount from the other side. I think this is a potential trap that all students can fall into, both undergraduate and graduate, when deciding where to go to school: The financial implications of having to pay back those loans are so far outside your perspective when you sign a promissory note; it’s not until you graduate and have to figure out how you’re going to pay hundreds of dollars every month for the next decade or two that the weight of your decision finally hits you!
It was with the realization that I’d be paying $800 a month for 20 years according to the “standard repayment plan,” and would end up paying as much in interest as the original loan amount, that I decided to embark on a much more aggressive repayment plan. I am very lucky because I have a husband who works full time and is able to help support me while I am in school. I also was lucky to obtain a training grant that is paying both my tuition and a stipend for my PhD program. Not all graduate students are so lucky.
However, I also work very hard to find other sources of income, and for the past year or so I have budgeted my income very carefully to start paying back some of my debt. While my stipend is enough to live on, it would not provide much extra for paying off loans. So to earn extra money I work part time doing research for a professor in my department.
At times it has been difficult balancing work and school, but in addition to providing extra money it also teaches me time management, and gives me extra experience to put on my resume, which will hopefully help me get a better job when I graduate.
I also take advantage of opportunities to be a Teaching Assistant, which pays $1500 (pre-tax) for each 8-week course. Through the combination of my stipend, working part time, and being a teaching assistant, I was able to take home around $36,000 in 2009.
While this isn’t a huge amount of money, it is a pretty decent income for a graduate student. However, what was more important for me wasn’t how much I was making each month, but how I was budgeting that money. I used an Excel spreadsheet to carefully budget my money each month, allocating money for utilities, groceries, car insurance, my Roth IRA (which I max out each year, since it is the only retirement account I can have as a graduate student), and discretionary spending.
Destroying debt
I set a goal of allotting at least $1000 every month to go towards student loans. My budget was not super strict — my husband and I are careful with our spending, but we do go out to eat and to the movies, and we buy things when we really want them. We pay off our credit cards in full each
month, own just one car, and pack lunches.
By following this reasonable budget I was able to pay off $18,246.45 between May 2008 and September 2009. Here’s the break down of how I did it:
| Payment Date | Payment Amount | Loan type |
|---|---|---|
| 5/27/08 | $2,500.00 | Grad, private |
| 12/10/08 | $1,078.77 | Undergrad, subsidized |
| 2/9/09 | $3,000.00 | Grad, private |
| 4/1/09 | $1,500.00 | Grad, private |
| 4/17/09 | $2,253.85 | Grad, private |
| 6/2/09 | $2,000.00 | Undergrad, subsidized |
| 7/3/09 | $2,000.00 | Undergrad, subsidized |
| 8/18/09 | $3,000.00 | Undergrad, subsidized |
| 9/30/09 | $913.83 | Undergrad, subsidized |
| $18,246.45 |
I used a combination of the debt snowball approach and paying off the highest interest loan first. I also chose to make payments in large chunks rather than a set amount on the same day each month. I knew I wanted to pay off the private loan early because it was accruing interest, but I also tackled one of my undergrad loans early on, because I could pay it off in one payment (the December 2008 payment). My final payment in September 2009 paid off the last of my undergraduate loans, just in time for my five-year reunion.
Back on track
For the last few months, I’ve taken a break from this aggressive loan paying, in part because the point I’m at in my degree program didn’t allow me to work as much recently. But I’m ready to tighten my budget again, and plan to devote at least $500 a month to my graduate student loans, comprised mostly of a Federal Direct loan now totaling just over $50,000 because about half of the amount is not subsidized and is accruing interest at 6.8% (a fixed rate — thanks a lot Uncle Sam!). In addition to putting money towards this loan I plan to save money in different “buckets” in my ING account for things like future travels and home improvements.
I wanted to share my story because I am an avid reader of Get Rich Slowly, and I hope I can inspire other young people out there struggling with student loan debt. You don’t have to stick to the “standard repayment plan” — most student loans have no prepayment penalties. Even if you don’t make a lot of money, it is possible to find extra money in your budget to pay down student loans early.
Reminder: This is a story from one of your fellow readers. Please be nice. After nearly a decade of blogging, I have a thick skin, but it can be scary to put your story out in public for the first time. Remember that this guest author isn’t a professional writer, and is just learning about money like you are.
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Great job on paying off that much debt and work on your phd at the same time. One thing that stood out was your comment on the promissory note. You are absolutely right. As a 18 year old freshman signing those notes everything seemed so abstract. No where was repayment even on my mind. Schools and parents have to do a better job of educating young people about debt.
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Great post. I agree 100% that when we are 17 or 18 years old, most people have no way to grasp the scale of what we are signing on for with student loans. When I went to undergraduate school, I was very angry at my dad for backing off my parents’ promise to pay for undergraduate school. Ultimately, it was a blessing in disguise (and I’ve gotten over my youthful feelings of entitlement now!), since that conflict made me choose my #3 school because it gave me a full scholarship for four years including room and board. I went on to get a master’s in a program that offered a tuition waiver and graduate stipend, and now I’m in a PhD program with a tuition waiver and fellowship. I chose all of these programs because of interest and funding, and I would not have gotten these degrees if I weren’t funded to do so. I, too, am balancing outside work with my studies and have worked full-time for most of my MA and PhD. My PhD funding helps me see my studies AS a job — for the time I put into it, it pays about the same as my other job ($15/hour). I’m also trying to bank all the “extra” income, since hours and budgets are being cut at my primary job. Being free of loans and being strategic about my educational choices has helped me be in a safer financial spot all over.
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Congrats in making a huge dent in your student loan debt. You’re right…I don’t think it computes when you are signing the promissary note exactly what impact that will have on your future. I wish I paid more off while I was in college…though my monthly payments aren’t too bad.
Thanks for sharing your story!
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My advice: if you have the opportunity, come and study in Canada, preferably in Montreal (McGill University is rated amongst the world’s best universities). It’s much cheaper than in US.
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Andrea, will you be my new best friend?!?! Haha! Reading your post, I felt like I was reading a story written about my life! My husband and I are also PhD students. Our tuition is covered by our respective programs, and we receive small stipends (totalling $20k) combined. To supplement our incomes, we are both working part-time jobs and teaching courses. Like you, we also utilize Excel spreadsheets each month–so that we know exactly where each dollar will go. There are days in which we are so exhausted and wish that the next few years would be over NOW… However, we know that this too shall pass and that accumulating no additional student loan debt will be soooo worth it in the end!
I wish I could say that we were able to pay on the pricipal of our combined $70k in federal student loans (for both undergraduate and master’s degrees), but we’re only able to pay the $50 a month in unsubsidized loan interest. We do have a plan to sell our home upon graduation in 2013, pay off the $70k and become DEBT FREE!!! Also, we are unable to contribute towards retirement right now (something that makes me very sad). However, if all goes according to plan, we’ll be able to contribute so much more in the future as we will not be making debt payments!
True, I didn’t know exactly what I was getting into when I signed multiple promissary notes before working (2001-2006). However, I would not change my undergraduate or graduate experiences for the world!
Thanks for sharing your story. We will get through these PhD programs and get rid of these ugly student loans one day and paycheck at a time!
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Inspiring story. I also paid off my student loans while getting a Ph.D., but they were MUCH lower ($12,000 total). I didn’t actually start paying on the subsidized ones until I could no longer defer them (I went half-time in the system and didn’t qualify anymore). I don’t really understand why you chose to pay off the subsidized ones first, since the government would be paying the interest while you were full time in school. I certainly understand the concept of the debt snowball, but I’m not sure how it made any sense in this case. They could have just sat there for the duration of your schooling, while you paid off the private ones.
(Oh, I just looked over you spreadsheet again and realized that you only used the debt snowball once at the beginning to pay off the first undergrad loan – that makes total sense – a great morale booster – and then you paid off ALL the grad loans before moving back to the undergrad loans. Very sensible. I retract my former statement!)
One thing though, if you only have subsidized left, have you thought of saving money in a high interest account or in CDs and earning interest on the money? That way you can maximize you money while you are able to defer the loans and pay them in a lump sum when you graduate. Just a thought.
Congrats! That’s a great achievement.
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I have to say, walking away from undergrad and grad with $60K in debt, everything Andrea described was the exact same for me when the student loan bills started arriving. In undergrad, I remember thinking taking out that much debt was necessary so I didn’t think about the repercussions when I signed the MPN. Looking back now, I wish I had been more aggressive in taking out only what was absolutely critical and supplementing the loans with other forms of grants, scholarships, etc. Awesome post, definitely speaks to a large swath of recent graduates and helps others focus their efforts in repaying to knock out the debt as soon as possible. Thanks!
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Andrea, congrats on all your hard work! I think you’re right on the ball when comes to discussing taking out student loans. Most kids in their teens really don’t grasp what a huge commitment it is to borrow $30,000-$50,000 (or more) for college.
I was extremely fortunate to have a parent work at a college and give me the opportunity to attend tuition free. Maybe a small part of me regrets not having the opportunity to more freely choose my career path. But being older and wiser, I look back and realize what a great relief it was to have graduated with no student loan debt and good chunk of money saved for retirement (thanks to my parents for urging me to save and invest).
It has put me in a great position for the rest of my life. Having no debt has allowed me continue to save and invest while responsibly spending money on things I enjoy. It’s also allowed me to help support my wife as she finishes graduate school. I’m so very proud of you Andrea and all of the hard work you’ve put in for the last several years.
Love,
Your husband Chris
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My husband and I both racked up student loans – totaling ~$60,000. Wish we had the foresight to hunker down while we were used to living like grad students – or at least to continue to live like grad students when we landed our first jobs out of school. Our default was to spend what we earned – to enjoy being able to finally do that.
Do you think that GRS will still be around in 10 years – I sure want my daughter to benefit from this…
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I am planning to attend graduate school next year. I wanted to go to an art therapy program out of state but financially and logistically, I can’t justify it. Also there would be few scholarships/grants and I don’t think there are any teaching or research assistantships. So I’ve decided to look closer to home, and am considering a couple different programs at different schools – the degrees are slightly different but all will effectively get me where I want to be. I was trying to narrow down my choices and completely forgot that I can apply to all 3 schools I am considering, and go with whichever gives me the best deal! I’m so glad I read this and was reminded of that…. we already have about $50k in loans from my fiancee’s undergraduate education (he went to a private college and received no scholarships, only loans).
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Thanks for sharing your story, Andrea.
I have a story that compliments yours, but with a twist. I was fortunate not to acquire any debt in my undergraduate schooling (I’m currently wrapping up my PhD). This was due to generous parental aid. Once I got to the MA program, I was on my own, but had funding from scholarships and bursaries.
Up until the second year of my PhD program, I was basically living paycheque to paycheque. I didn’t have any debts, but my bank account was hovering just above zero and I did not like being in that situation. That summer I only had enough to pay my rent, and barely enough for groceries. I ended up spending a lot of time in the library, surfing the internet, when I stumbled upon GRS, and other like-minded finance blogs.
Despite only having an annual income of $17,000, I decided to save as much as I could — which meant being wise in how I spent and making as much as I could. Like you, I took on any extra work that came my way; the progress on my dissertation work slowed, but I felt it was worth it.
It’s now two years later, and by taking a proactive approach, I’ve saved over $25,000. By the end of this summer, I anticipate that savings to grow to at least $32,000. I have a healthy emergency fund, and money set aside for a wedding, kitchen supplies (I love to cook!), a home, and retirement.
Stories like yours inspired me to be smart with my money, so keep on sharing what you did because I’m sure it will inspire others as well.
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I noticed that some of the loans you paid off were “subsidized,” but later you mention that half the remaining loans are “unsubsidized.” I realize some of this was a moral booster (and I think that’s a great idea), but the difference between the two types of loans is important in terms of how much you will pay over the life of the loan. For subsidized, the government pays your interest while you are in graduate school; for unsubsidized you do. And that interest in the latter case adds up & is then added to the principle after you graduate. So it’s in your best interests to pay down the principle of the unsubsidized loans before you tackle the subsidized. I think you’re planning to do this b/c the loans you paid off were all undergraduate loans, but think for anyone else in this situation, it’s an important point to keep in mind.
For anyone not in a situation with a decent income during graduate school (I’m in grad school too so $36K sounds like heaven :->), a friend told me this trick that has saved me a bunch of money: if you no longer need loans to survive, but are still making no money and you qualify for subsidized stafford loans, take out the maximum ($8.5K) every year and use it to pay off the unsubsidized loans. That way you reduce your interest by converting unsubsidized to subsidized while keeping your balance the same. That interest really adds up at a frightening pace when you don’t pay anything to the balance for 5-7 years while you’re studying.
Good luck!
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I paid off my undergraduate loans during and within two years of graduating. It was one of the better decisons I made in my 20′s. I think if I had been able to make like decisons with my credit cards, I’d be happier today.
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As an undergrad student going on to do his Masters, I want to thank you, Andrea, for this timely post.
Not only is it informative but it validates my similar approach: at 24 years of age I’m currently in my final year of undergrad, and have been ruthlessly paying down my previous loans from the first and second year while attending school. (I stopped taking loans after doing the math and realizing the horrific interest that would ensue, as well as after speaking to several unemployed graduate friends in the same field. It’s simply a risk I am unwilling to take.)
So I’m currently socking away any extra dollars I can every month towards the loans — even when this means skipping a nite out with the guys or two — because I know that if I do not gain post-education employment, these loans — like you mentioned — will hamper my future take-home dollars as well as limit my chances of obtaining a mortgage etc.
I believe young people should truly think it over before taking out student loans, and should consider a minor form of employment while in school in order to maximize their potential and limit interest.
Thanks!
PS. Many of my peers look at me as if I have three-heads when I mention I’m paying off loans & tuition WHILE attending school but I know for a fact these same friends are hiding some pretty horrendous loans in their closets!
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Great encouraging story! Once you get out of school, continue to live like a college student for a couple more years and knock the student loan debt out. A little more sacrifice like this will help you eliminate that $800 payment for the next 20 years! Imagine how that will change your budget in just a few short years. I hope you are able to provide a follow up article in a few years to let us know how things played out. Good Providence!
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Thanks so much for your post! I have been a long time reader here but never commented before. I am currently gearing up to start my ph.d and this is an excellent reminder that I CAN pay off my debt while in school. Again, thank you for this article!
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That’s an impressive story. I’m going to share it with my students!
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Timely post!
I only have another month or so before I have to make a decision on where to attend undergrad. Part of me just wants to say screw it and go to the expensive out of state university. But then my logical side tells me that it’s a mistake and to go to the cheaper in state school.
You are 100% correct that it’s almost impossible to understand what paying back hundreds of dollars every month will feel like.
Right now, it’s so easy for me to say that I don’t care about paying back 60-80k(price of the out of state school). But I also still live at home and have no bills to worry about.
Thanks for some perspective!
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Nice job, but it convinced me even more that parents should help a child through their undergrad. You might be able to make huge money after a Phd (and you must be shooting for that since you think $36,000 is a pittance), but most undergrads do not make near that amount. I have no interest in having my grandchild crushed by debt when he graduates from college in 20 years.
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Great job Andrea! It took a lot of hard work and discipline to accomplish what you did. I’d like to say how proud of myself I was when I went back for my Master’s degree while going through a divorce, I was able to get an Assitantship which paid my tuition plus a stipend, allowing me to graduate owing only $2,000! This was in addition to working a part-time job, and in my last year, completing an internship. What people need to understand is that the “dream job” is not always out there when you graduate, and your ability to pay back what you owe could be hampered by the inability to find work in your “high paying field” for months or even years. By the way, my husband and I are just finishing up paying our share of $40,000 a year tuition for his daughter from a previous marriage. After sending our share of the payments to the ex for the past four years, we’ve come to find out that she took out a loan for $24,000 dollars which we will also be responsible for. Her mother doesn’t think she should start off her excellent career as a nurse with student loans. Is there anything wrong with a child taking some responsibility for the choices they make?
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Way to go on your debt payment so far! 70K is a lot, but you can do it!
DH and I paid off 10K of his (unsubsidized at 8.5% interest!) loans back the first year of graduate school. My stipend was 18K, his was something like 20K though he got a signing bonus of 2K or so. We lived in Boston so rent ate half of that (we broke a lease on a 100 sq foot apartment when we got into a 300 sq foot subsidized university apartment late in the semester– the penalty was worth it.) I had about 3K saved up from working during undergrad, and we had about 2K from wedding gifts. DH had nothing.
We participated in university experiments. DH did some extra research assistant work which paid the rent the two months before school and his stipend started. For Christmas we asked for money to pay off loans instead of gifts from our family (my father was very generous and gave us 1K that year! He liked our goal, I guess.).
We had one subsidized subway pass since we were at different universities. I walked everywhere. We never ate out. We did not eat red meat (when I eventually tried a steak later I threw up… had to ease back on starting with processed roast beef). We mainly lived on groceries from the Haymarket, where you could get a bag of fruit or veggies for a dollar. We made that trek every 2 weeks and cooked in bulk. I’d take leftover pizzas home from business school events (MBA students didn’t want them!). We packed our lunches, even though that usually meant me eating a bagged lunch at ABP while my friends ate ABP sandwiches. I got very good at timing the Star/Shaws sales– I knew when chicken leg-thigh combinations would be 69 cents a lb and bought a bunch. Same with flour, sugar etc. at 10 cents a bag (yay for holiday sales), or macaraoni and cheese at 25 cents. We also ate a lot of soups (split pea, black bean) and potatoes. I would stew chicken meat and freeze it to add to meals in small amounts. (Something I hope never to have to clean up from again.)
For furniture we had a futon (new, $119) and got the rest (desk, kitchen supplies) for $20 from a couple that was moving out of the building. At some point my father drove up a bunch of my stuff from college, and we used some of DH’s signing bonus to buy a real bed ($2K– embarrassingly expensive– we didn’t know what we were doing, but it is still a nice bed!) after we got into the new apartment.
It was a crazy sacrificial year. But– year two we were on track and able to start earning interest on our money rather than losing it. By the time 5-6 years of graduate school were up, we had 50K saved up (the stock market had gone crazy and we had a job that gave us free rent for 2 years) and ready to be converted into a down payment and closing costs for a house. (And we maxed out our ROTH IRAs, though only because the contribution limits were much lower then.)
I am very glad I had not read Suze Orman’s Young Broke and Fabulous at that point. It never even crossed our minds to keep the debt or put on credit card debt to get to a normal standard of living. (My heuristic at the time was that debt with interest under 6% was ok, under 5% should be kept as long as possible, and debt over 6% interest needed to be paid whatever the cost.) We have friends now, 10 years later who HAD read Suze and are still saving up for that down-payment while paying down their 18% credit cards racked up in graduate school. Maybe the harsh vegetarianism wasn’t worth it, but 10 years later, I’m glad we did what we did. Would not do it again, but it is nice to pay the price while you’re young so you don’t have to worry about money and can take chances later.
p.s. Of course, DH’s school started offering 30K+ stipends AFTER we graduated. *shakes tiny fist*
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You are definitely right about not understanding what all these loans will mean once you graduate– 20 years of paying hundreds of dollars a month! I was the first one in my family to go to college and of course believed that the jobs I would get with my college degree would pay waaaaay more than my parent’s jobs. Well it does, but once I factor in those loan payments, it’s really not that much more. It took a few years for me to be making enough to cover all my bills and then actually be able to afford other stuff (like a car–which I paid for in full but the insurance in NJ is pretty high). Being single and having no one to help support me means very little is going to my loans. I pay about $100 a month more than I have to, but it seems like it doesn’t add up to much. I am a couple months away of paying off the 3K of credit card debt I had, and so hopefully I’ll soon be able to pay more on the loans. However I’m also facing layoffs, and worry that my emergency fund is not big enough, because right now I only have enough saved for a couple of months. So I may have to put the money in there instead.
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I can’t say AMEN enough to this story. Both my husband and I are graduate school educated and took on significantly more debt than is mentioned in this story. Between the ages of 18 and 25, we were just trying to get by, living on part time jobs, ramen noodles, and spaghetti, but still ended up with significant debt due to the school we atteneded (small private college). When we both got our degrees and we sat down to plan our life out with “normal” jobs, it scared the crap out of us! We are essentially paying for a non-existent house! LOL. But we have a repayment arrangement for our budget, and if things happen as planned, we will still get a planned vacation a year, work towards savings, and have everything gone in 5 years. It will require sacrifices in other areas, but those are areas we are willing to give up to get debt free and still enjoy our life with rewards for being prudent.
Congrats to you in your PhD endeavors! I will be starting mine in August!
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Andrea, your story really resonated with me. I found myself in a similar situation a year and a half ago, but chose to do the opposite of what you have done. I’m also a PhD student and will finish in 2012. I took out 28K in student loans in my undergrad so that I could focus on school and not have to get a part-time job. Hard work paid off and when I started my master’s I got scholarships, and a RA and TAship to cover my tuition and living expenses. I wish I had the foresight to save some of it but I didn’t.
When I started my PhD I got a significantly larger scholarship that lasts for 3 years, plus a half-TAship guaranteed every year. My fourth year will be funded by the university. Instead of paying off my student loans I decided to start saving aggressively, mostly for long-term/retirement savings. Since September 2008 I have saved about 39K (some of this is in an emergency fund).
There were a few reasons why I decided to hold off on the student loans: they don’t accrue interest while I’m in school, when I do start paying them off the interest I do pay is tax deductible (I live in Canada so things are a bit different), starting my retirement account early means I don’t have to save as much later on, and lastly, it just feels better to have a bit of a nest egg. Sometimes I wonder though if I made the right decision and perhaps I should have paid off the loan instead. But I feel comfortable with my decision and I think that’s what counts.
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I love the combination approach.
I disagree with using the straight debt snowball approach, because although it might be better psychologically, it costs more in the end.
Great job
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This is such a timely post…I’m going to be starting a PhD program in the fall and my husband has two years to go in med school. I was freaking out about being able to afford everything, but seeing this post and the above comments made me realize that it IS possible.
Would other readers be willing to share how they cut back on expenses to make ends meet during grad school? I’ve been reading some great tips above and want all the info I can get!
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Student debt is one of the biggest scams in this country between financial institutions and government. Do you realize that if we were citizens of Dubai we’d have our entire educations paid for? I went to a state school I could afford but was one of the first generations in college to be heavily marketed to with credit cards. (a practice I’m now told just got banned) I graduated with credit card debt but felt worse for my friends who went to big name schools and owed tons of money they could not just stop paying on.
Sometimes I feel the whole looking down the nose at people who go to state schools is really jealousy over these loans. I have to ask, with all of the money you guys know it costs to go to a masters or phD program how do you justify it? It barely made economic sense before and now with such poor job prospects, globalization and so many people in my area (SF) having these degrees it doesn’t really set you apart.
Now that I am debt free I have been meeting/dating guys just out of masters/phd programs at great schools (a good catch right?) but they have huge debt so I lose interest in planning a future together. How does this affect how you all date?
Also in CA our entire education code is being messed with by occupational skills schools (acupuncture, cooking, etc) scamming poor and working class students into loans they may never be able to repay. Our government should be ashamed but they make good money off this! And the “nonprofit” schools do too. Greedy greedy greedy…
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Congratulations on hitting your financial goals so quickly. You showed tremendous discipline! Your story should provide both a warning and a hopeful note to current and future grad students about managing the cost of education.
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#27 has a point. I read an article recently (maybe the Washington Post? Argg…my memory is going!) that ran results of a study that was done on people that had college degrees. The income people with college degrees were not based on the type of college they went to! People that went to state schools were making as much or more as people that graduated from an ivy league school. The study went on to find the important factor was how much drive the person had.
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Thanks so much for sharing your story. I too am in grad school for a PhD. I’ve been on track for a few years to get my finances in better shape. I arrived at grad school having paid off all of my credit card debt. And last year I started working on paying off my unsubsidized Stafford loan. Did you know with Sallie Mae you can request that your payments be credited to a certain portion of your loans? While I only send them $90-100 each month, I make sure to request that it get credited to my unsubsidized loan so that I pay less in interest over time. I wouldn’t mind finishing my PhD with less debt than I started with!
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It’s important not to discount private schools entirely– some of them give much better financial aid than private schools, especially for middle class families. Our (underfunded) flagship state school would have ended up costing both my DH and me more than our respective (highly endowed) private schools did; even with 3x the stated tuition, the scholarships we got more than made up for the difference. Our private graduate schools also offered larger stipends than the public ones (Berkeley made a big mistake sending its financial aid offer in the same envelope as the estimated cost of rent in student housing).
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I have $60K in student debt without even the benefit of a masters, just my own stupidity in undergrad (Go to the school offering me a free ride? Of course not. I’ll go to the ONE school not offering me a scholarship).
You live, you learn, etc. I’m finally seeing a light at the end of the tunnel for one set of loans. The other set? *sigh*
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Good article.
I’m always curious about the reasons people attend grad school. I’m 28 and have watched many of my high school classmates go to school…some of them are still in school at age 28/29!
Granted, there are some jobs that require grad school, but overall, I see a lot of people just “default” to grad school.
I always wonder why, when there are so many opportunities to start your own business and/or work in a small business, people continue to get degrees instead–and fall farther into debt to do so.
I realize this is a bit offtopic, but it’s long been of interest to me.
-Erica
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@26 DeL,
Here are a few tips I’ve picked up along the way to save money in grad school. I do many things, but these ones are grad-school specific:
1. Don’t drink. There will be social events, there will be booze. Drink water. It’s free and you won’t wake up with a headache or a dent in your wallet.
2. If public transportation is included in your tuition fees, make the most of it. Alternatively, walk or bike anywhere that you can.
3. Ditch cable. And if you have a cell phone, ditch home phone. Sign up with Skype for long distance calls – free and fabulous.
4. Participate in any research studies available on campus (these are usually in psychology departments)to earn some extra cash. At my school, tests run about 50 minutes and pay $10. Alternatively, if you can sign up to be a Simulated Patient (I’m sure your husband could tell you more about that). For those that don’t know, essentially you act out real symptoms for med students who then “diagnose” you. These can pay very handsomely. And for anyone that watches Seinfeld: “That’s it! They gave me ghonorrhea!”
5. Apply to every single bursary/grant that even remotely applies to your work. These are time consuming, yes, but worth it. Example: I applied for a grant from a European company (I’m in Canada) who has only ever given money to European students. I was not expecting to win, but I figured, what the heck — and I won!
6. For entertainment, create a special interest group. About eight of us (all couples) created a “wine club”, and each month we pick a grape variety, and every couple brings one bottle of wine of that grape variety. We take turns hosting (whoever hosts also takes care of snacks for that evening), and we end up getting to try four different kinds of wine for the price of one.
7. Also for entertainment, check out local community offerings. My town has great festivals in the summer that cost nothing to attend.
7.(b) There are also school-sponsored talks going on around campus all the time, so find out what you’re interested in and attend. They’re free, they’re informative, and they can also be great networking opportunities.
8. Ask professors for money, especially your supervisor. Let them know that you’d be interested in doing any work for them; if something comes up (and they like you), they’ll let you know.
9. Let people know that you’re willing to teach. Create a network for yourself among contract faculty (I say this because my friendship with one invariably led me to a job that he turned down and recommended me… from there, I’ve taught two other classes, plus designed one of my own). Alternatively, apply for every teaching position that you would be eligible for. You won’t get them all — you may get none — but teaching any course will give you much-needed experience and extra money.
10. Save the best for last: finish on time (or sooner). The longer you take to finish your degree, the more out-of-pocket expenses you will have, most notably tuition.
Hope that helps! If you’ve thought of any, please share
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Maturity=Realizing the simplicity that comes with the easy loan, requires steadfastness, discipline and hard work in paying back.
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how much more quickly would you finish graduate school if you spent your time working on your degree rather than working for extra money?
you may be extending your time living on a crappy stipend by trying to tackle your loans that aggressively. US PhDs take long enough already, and stipends are lean. not that a postdoc salary is worlds better, but you have a lot more doors open to you.
just something to consider. my PhD took 5 years of 150% time-effort (60+ hour work weeks, and during the last few months i exceeded 100 hours per week.) had i directed a lot of my focus elsewhere, i could see that having extended to 6-7 years.
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Leigh– I think if you do work for extra money it’s important to do something that furthers your career. Research assisting or TAing (in moderation) for example, can help you get a job later, teach you skills, or could lead into coauthorships and less stress as a first year assistant prof.
I also know some people that did relaxing jobs that they could earn money at when their brains were otherwise dead (student advising, for example). I felt that the volunteering I did outside of graduate school helped me stay centered (though I didn’t start until late in my graduate career), which helped dealing with getting the dissertation done. Definitely a good point about not working so much you can’t actually get the degree finished in time. But work isn’t all bad.
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This is exactly why I didn’t even consider going to school after I got a good enough diploma. Completely bypassing the whole debt to your eyeballs and eating noodles.
Went straight to work, saved up (and stayed completely out of bad debt), invested and hopefully retire around 30… Without paying out the nose for a shiny piece of paper that says I know stuff. I know that I know what I know, and I don’t need a piece of paper to remind me (if that makes any sense).
Good luck to all of you who are going the school route. I have a buddy who got a tech BA, and was very poor after graduating for a few years with 60k in debt, until he landed a job overseas that started paying very generously (Afghanistan tech contractor). But then again, who wants to be in BFE just to make ends meet.
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@33 – I went to grad school for a career-related degree after having been out of school for give or take a decade. I was able to turn that ~$25K out-of-pocket investment into a $15K/yr raise plus increased benefits including a defined benefit retirement and lifetime insurance in retirement. The extra money is helpful, but the real benefit comes after I retire.
My spouse will have retirement benefits in one system, I’ll have them in another, so hopefully we’re spreading our risk.
Anyway, that’s why I went to grad school.
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I could relate to this post as well. I did not have any loans as an undergrad (national merit scholar) but have about $100K in student loans from my MA and PhD. I went straight through (started my MA when I was 22 and my PhD when I was 24) so I really didn’t understand how tough it was going to be when I graduated. I have some credit cards, too, so I’m on the 30-year repayment plan and currently paying interest-only on the student loans (though I will switch to a different payment plan once the credit cards are paid off, which will be this year, hooray!).
My boyfriend took out some loans for undergrad but paid them off before starting law school…he graduated from that with $100K in student loans and $50K in credit card debt (you’re not allowed to work while in law school, they will kick you out if they find out you have a job). So things are going to be a tight squeeze for awhile.
In retrospect I would’ve done things differently as far as budgeting, but I did my grad school because I LOVED it, in answer to someone above who wondered why people go…my MA is in creative writing and my PhD is in rhetoric and composition. I make $40K/year. My boyfriend makes $92K/year, but his credit card payments are much higher.
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i personally view my doctorate as a piece of paper that says i have some glimmer of an idea how much i DON’T know.
and i get to list three extra letters after my name on my CV. woo.
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Kudos to Andrea the author of the article. But I find the comments equally interesting.
JD: It would be interesting to do an educational profile survey of your readers to know the # of PhD, Grad, Undergrad, HS diploma readers you have. Is there a corelation between advanced degrees to personal financial education?
To the point of this article & comments – chosing to pursue what you enjoy has an associated cost to it. If it is a PhD or Grad degree in some obscure field that is not going to pay for itself then Uncle Sam, President Obama or your fellow neighbours are not/should not be responsible for your debt!!
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Congrats on getting such a big part of the student loan out of the way! Those types of loans are like financial cancer because if you (god forbid) go into bankruptcy they can’t be absolved. The loan interest itself could eat you alive.
I admire that you set up a budget and really went to the mat to get that stuff done, and I hope that are extremely grateful that you have a husband that is behind you and can support you through this.
Honestly though, I don’t think a person could erase a loan like that without outside help be it family, etc. I know TONS of people who don’t have a significant other and their loans are eating them alive even though they are dutifully setting a budget and trying to pay it off.
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#42 “Is there a corelation between advanced degrees to personal financial education?”
In the Health and Retirement Survey, there is a correlation between financial literacy and educational attainment.
I’m very confused by the statement at the bottom, “If it is a PhD or Grad degree in some obscure field that is not going to pay for itself then Uncle Sam, President Obama or your fellow neighbours are not/should not be responsible for your debt!!”
Nobody is paying for graduate student debt (except possibly the university with the graduate program or other sources of scholarship) except the debtor. You can’t even discharge student loan debt through bankruptcy court. Am I missing something?
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@34 Dotty dot dot- Thanks so much for the tips! I especially like the one about letting professors know that you’re available to do extra research work for $…will also help with the resume-building.
@42 JaM – Most (I’m willing to bet 95%) PhD programs come with a full-tuition scholarship, stipend, and health insurance. I don’t plan on incurring any more debt…@44 Nicole is right – no one bails you out from your student loans.
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@DeL – not in this economy. I work for a department that has 4 PHD programs and do all the admissions and financial aid…only the top 10% of our incoming class is offered tuition, stipend, and health insurance. The other 90% are on their own dime, and it’s becoming increasingly common.
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thank you for sharing your experience. can you be more specific as to how your husband is supporting you? from your 36K earnings what additional expenses would you have to cover if you were not dependent on him?
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@#27
“Now that I am debt free I have been meeting/dating guys just out of masters/phd programs at great schools (a good catch right?) but they have huge debt so I lose interest in planning a future together. How does this affect how you all date?”
Wow. So, in essence, it doesn’t matter what kind of person they are emotionally, intellectually, if you’re both compatible, life goals, if they have a bright future, if they have student debt, drop’em like a hot potato?!
Jeez, I hope when you do find someone that they don’t make any kind of debt (business, student loan for a better career) from trying to make a better life or out the door they go!
In my grad days I dated some very intelligent, wonderful women who were working on their PhD’s in various fields, and even though for reasons here or there it didn’t pan out (lifestyle choices, personality incompatibility) the LAST thing I ever though about was their debt load.
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sure, in some fields the programs offer tuition and stipend benefits. the tuition benefits are taxable (in my case, it came to about $45k/year!) health insurance is awful (i took on $11k in student debt to pay off the hospital one year.) and if you’re working as much as you *should* be toward your degree, your effective pay rate is about minimum wage.
also, many stipend contracts come with the provision that you cannot seek additional employment. you are expected to devote full effort to completing your program so that you’re not wasting time doing other stuff, delaying your graduation, while on their funding. they hate that in a big way where i came from.
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#49 If your tuition reimbursement is taxable then your school is doing it the wrong way. It hasn’t been taxable since the 1990s. Has that changed recently (if so I’m surprised I haven’t heard about it)? And student health insurance in MA is amazing– much better than what I’ve got now. ETA: Just checked my graduate school– they still say on their tax page that the tuition scholarship portion is not considered income.
#45 Re: stipended graduate programs– this depends a LOT on your field and the institution. In my class of ~30 only one person did not have at least tuition reimbursement. I wouldn’t recommend anybody take on debt for a PhD program. If you’re not getting funded, it’ll be awfully difficult to get one of those elusive tenure track jobs once you finish. (The idea being that fields with high demand also have more funding for students, and students with funding have an advantage over those without.)
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