Since you all were so forthcoming about whether or not you’re better off than your parents, I thought maybe I should also start a conversation about debt, particularly as acquired while earning a non-professional master’s or doctoral degree. (So, basically, anything but JDs, MBAs, DDSs, DVMs, and the like.)
I wanted to start this conversation because I think there’s a lot of confusion out there. For instance, in Pannapacker’s column in Slate (yes, him again — sorry), he speaks of “$40,000 to $100,000 in loans,” but to me, that sounds like a wildly exaggerated range for academic graduate programs and might apply more to the M.D. than the Ph.D. (Or perhaps he’s counting undergrad? It’s not really clear to me.) On the other hand, I think too many people tell students “Oh, but graduate school pays *you*” and leave out the fact that it can pay very little and that you might still end up taking out loans to make ends meet. I think the truth is probably somewhere in between those extremes, somewhere at the lower end of Pannapacker’s range. But maybe I’m wrong. Maybe I’m in the privileged minority. Tell me in the comments how much in loans you took out in graduate school and why (to cover everything? to make ends meet?) and whether or not that was on top of undergrad loans.
I’ll start (though I obviously don’t expect as much detail in your comments). I was lucky to start graduate school with no undergraduate loans — my parents took on all the loan burden and the rest of my college costs were paid for by a combination of money given to me by my paternal grandmother over the years (that paid for fully a 1/4 of it, I believe), money I’d earned working during high school and college, my parents’ cash funds, and my oldest sister’s contributions (which she really didn’t have to do and I’m still really grateful for).
As for graduate school, I had funding for the entire 8 years I was in graduate school, from 1994-2002 (first year fellowship, 3 years of TAship, 2 years of RAship, and two dissertation fellowships), but I still took out loans to make ends meet when I qualified for subsidized Stafford Loans (the ones that didn’t accumulate interest until I graduated). At the end of those 8 years, I had about $40,000 in debt, 30K in Stafford Loans and 10K on my credit card (more on that below). Now, I don’t consider that a great deal of debt, considering that it meant that I lived in a very expensive city — Los Angeles — on about $20,000 a year, on average (an average of $15,000 in stipend or TAship, plus $5000 borrowed one way or another). Here’s where that money went over the years:
- Fees. Grad programs don’t tell you this, but a lot of the public ones cover tuition and give you a stipend (or pay you as a TA), but don’t always pay for “fees.” I had my fees paid for when I had fellowships, but not when I had TAships or RAships. In the University of California system, this is the thing they can sneakily raise and still say they haven’t raised tuition. Depending on the year while I was in graduate school — they go down when you’re dissertating — they could be about $300-$600 a quarter. They’re more now.
- Summer. I got two summers of work from my university; otherwise, I was on my own. Since I always *hated* the hustle for summer work and thought that my time was always worth more than I was paid for whatever kinds of short-term work was available, I generally took out loans to live on over the summer and worked on things like studying for my qualifying exams, brushing up on my foreign languages, doing pre-dissertation research, writing my dissertation prospectus, and reading all the theory I felt immensely behind on. Plus, I didn’t have a car for five years, which made it difficult to find jobs I could *get* to easily.
- A car. OK, after five years of living in LA without a car, I was going a little mad. So I used some student loan money to buy a seven-year-old Honda Civic I know this sounds a little frivolous, but that car allowed me to take a paleography course at the Huntington Library (where I could not have gotten without a car — not from where I lived, anyway), so I feel like the government-subsidized money was still allowing me to pursue my education. And financially it ended up making sense because eventually, months before I was leaving LA, that car was totaled after an accident and good old GEICO gave me almost as much money as I paid for it — which I then used to pay off debt. (OK, I lucked out here. I probably shouldn’t have taken out loan money that I’d still be paying back now to get a car I haven’t driven since 2002.)
- Paying off credit card debt. I was always carrying a balance (more on what I spent *that* on, in a minute) on my credit cards, but I also continually moved it (yes, singular) around to get the best interest deals. So if a card offered me 0% interest for a fixed term, I’d take it, and then move it to the next card that offered me the same deal when that first term was up. (And generally, I was trying to whittle it down, too.) Eventually, if I hadn’t paid it down and there were no more credit card deals, I’d pay it off with a Stafford Loan so that I wouldn’t earn interest on it, at least for the time being. So yeah, now I’m still paying off some of it, but at a lifetime fixed rate of 3.25%. (I consolidated my Stafford loans in my first year of paying them off, back when all these great deals were being offered.)
All of the above pretty much accounts for the 30K in Stafford loan money. As for the credit card debt I was left with, I might have “consolidated” that with a Stafford loan, too, but the year I applied for it (my first or second dissertation fellowship year), I was told I didn’t qualify. I never could figure out how that worked, since I qualified when I was making $18K as a PhD-Candidate TA, but not when I had a measly $12K dissertation fellowship. Weird.
Anyway, here’s a quick list of where most of that credit card debt came from:
- Books. Lots and lots of books. I was better than some people I know — most of my dissertation research was from library books — but I always bought everything for every seminar and many of the books on my exam reading lists so I could mark them up.
- Travel. Conferences cost a lot, even when the department kicks in $500. Conferences overseas cost a *heck* of a lot. And you know what? They don’t pay off *that* much. If I had it to do over again, I’d be pickier about the conferences I went to, but some were necessary — such as the two years I interviewed at MLA. For the record, I am totally on board with all the calls for doing away with the conference interview and using Skype in its place.
- Conference-worthy clothing. I wasn’t profligate in my clothing spending, but I generally needed a new suit (or set of professional separates) every year because a) I kept going to freakin’ conferences! and b) I kept changing weight (both up and then down — it was in graduate school that I started running marathons).
- Um, marathon entrance fees. And shoes. Lots and lots of running shoes. And running clothes. OK, running is not the most expensive sport in the world, but it’s not the cheapest. But I considered it a mental health expense.
- Vet bills. I had a cat who predated my decision to go to graduate school. Her regular care and feeding went into my monthly budget, but extraordinary bills went on the credit card.
- Replacing the timing belt and the catalytic converter on that damn car.
Some of these things I might have been able to afford outright if I hadn’t insisted on living alone. But I did. I tried living with a roommate for the first two years, but then got my own place. For the sake of my sanity and happiness and ‘time to degree,’ I needed a place to myself, where I could set up my quiet work area somewhere other than my bedroom.
Anyway, I paid off that credit card balance in the first 2 1/2 years of being an assistant professor (I made a tiny dent in it my first year out, as a part-timer). I made it the priority, since it had a higher interest rate than the student loan, and made a payment plan to have it paid off by a certain date. And now I’m down to under $20K in the student loans, too, having upped the amount I pay on those after having paid off the credit card debt.
I think I’ve done pretty well — I don’t have a problem with debt, per se, I’m managing it well, and my credit score ROCKS because of it. But I’m one of the lucky ones — I got a tenure-track job in a place with a reasonable cost of living, so even if I weren’t living with Bullock, I’d be doing all of this. (And we’re DINKs, and all of that.)
What about you? What’s your debt load like (and why — if you wish to say) and how are you managing it?