The elephant in the room: Taking on debt for IR

[ajl]

Making financial spreadsheets can be good therapy, and yours does make it a little easier to be pragmatic about what can be a pretty emotional decision.

I did the same thing, but with a different approach--assumed the worst, that I'll be doing unpaid internships, going to the most expensive school, and taking $120,000 in loans.

Here is my breakdown of repayment options, either a standard 10-year amortized, a couple of income-based repayment options, and just getting it paid ASAP.

Feel free to paste the formulas into your own, hopefully using much smaller numbers!

[OregonGal]

Including take-home pay is a good idea to gauge the monthly impact on finances! I believe I shall steal that idea. As it is, right now my estimates are worst-case with (hopefully) overly pessimistic tuition inflation rates, though I should perhaps include a line-item for the expenses of a 3-month unpaid intenrship that requires relocation to DC.

[grtheman]

I talked with a current FSO (a career track I'm very interested in, for the decade after grad school anyways), and he said that he took out about $40,000 in loans, and that that was an appropriate amount for his career path, even saying that he would have been comfortable with a little more. That put me at ease, because I am looking at a similar debt burden. My biggest worry right now is trying to figure out how not to borrow too much for living expenses in DC. I feel bad asking my parents to support me for 2 years at my age, but they could likely offer a lower interest rate than a commercial bank!

[senatorsmith85]

OregonGal--you're planning on staying in the suburbs if you go to SAIS, right? $800 for "room and board" by which I assume you're including food is downright impossible in NW DC including Columbia Heights, Shaw, Petworth, and the other affordable neighborhoods.

[rose1]

I've seen some shared houses (3 bedrooms) for less than $2,000 in DC. Personally, the room and board up on DC websites aren't very accurate for me because I share a room with my significant other and we still have other roommates. Living with him makes living AND eating costs SIGNIFICANTLY cheaper. Maybe Oregongal has a similar situation or just knows what works for her.

[chesirecat]

I echo the sentiments of other in saying that this little group therapy session has helped to talk me off the edge a bit.

My profile wasn't fantastic. I made the mistake of going to undergrad at a place that prides itself on grade deflation, only have 2 years of work experience, and scored 159 on the Quantitative GRE. However, I ended up getting in to Sanford (14K/year), SIS (2k/year), and Ford(10k/year).

All of these programs would guarantee at least 80K in debt... but I do have an alternative. I could attend the Clinton School of Public Service at UALR for >$5K in total debt. The school is so new that it doesn't have any established reputation (and I've never seen it discussed here), but in terms of academic opportunity it seems to allow for a good deal of creativity and international experience.

Similar to grtheman, I've had my eye on a FSO career since high school. I have a good deal of Mandarin experience and an academic background in foreign policy. However, I don't have international experience due to a lack of means. I've worked 60+ hours a week since high school to finance my education. For someone like me, is considering the Clinton School reasonable? I'd be free to focus all of my attention on academics for the first time in a decade, and since the degree offered is a Master's in Public Service (MPS) I'd have the option of reapplying to IR programs in 2 years with a much improved application.

Any thoughts?

[lecorbeau]

I talked with a current FSO (a career track I'm very interested in, for the decade after grad school anyways), and he said that he took out about $40,000 in loans, and that that was an appropriate amount for his career path, even saying that he would have been comfortable with a little more.

Well, when you have absolutely no housing expenses indeed it's safe to assume you could get away with much, much more debt than that!

Similar to grtheman, I've had my eye on a FSO career since high school. I have a good deal of Mandarin experience and an academic background in foreign policy. However, I don't have international experience due to a lack of means. I've worked 60+ hours a week since high school to finance my education. For someone like me, is considering the Clinton School reasonable? I'd be free to focus all of my attention on academics for the first time in a decade, and since the degree offered is a Master's in Public Service (MPS) I'd have the option of reapplying to IR programs in 2 years with a much improved application.

Any thoughts?

The FS takes people from all kinds of academic backgrounds. In my view it would be wholly unnecessary to go to graduate school only to go back again to get an MA in IR. But as per your dilemma, this is obviously a choice that you alone can make. Having said that, I took a cursory look at the Clinton School curriculum it doesn't seem bad at all for a budding FSO/State employee ("further their careers in the areas of nonprofit, governmental, volunteer or private sector service work" + there's that "international public service project). Of course if you really want to study IR in-depth, then you should consider your other options more seriously (but no one here will argue that 80k is not a lot of debt!). All in all, personally, I'd go to AK because of the $$ and knowing that it would in no way hamper my chances at a spot in the Foreign Service or other government-related job. Just make sure you do WICKEDLY cool/relevant things during the summer as I'd imagine Little Rock is not necessarily a known hub of international diplomacy!

[AndreaAce]

I have a similar problem. My top choices are Ford and Wagner. Ford gave me $0 financial aid, I'm still applying to some external fellowships but I'm not counting on them and I'm still waiting on Wagner. I also got in to the Hertie School of Governance in Berlin, that is offering me half the tuition, leaving the 2 years in 13.500 EUR (about 18.000 USD). I like the school but it is new and its prestige is nowhere near U MIch or NYU. Also it doesn't have a concentration in social policy that is my area of interest. On the positive side, there is the possibility of doing the second year in SIPA, LSE or Science Po but is not something you can count on (only 10% of the class manage to do the dual degree).

I don´t know what to do, should I go to Ford or Wagner with 80k or more in debt (I have 25k from a local fellowship), go to Berlin and hope I get into the dual degree with SIPA or defer to next year and find other sources of funding even though I'm ready to do my masters this year?

[maeisenb]

OregonGal--you're planning on staying in the suburbs if you go to SAIS, right? $800 for "room and board" by which I assume you're including food is downright impossible in NW DC including Columbia Heights, Shaw, Petworth, and the other affordable neighborhoods.

I've seen some shared houses (3 bedrooms) for less than $2,000 in DC. Personally, the room and board up on DC websites aren't very accurate for me because I share a room with my significant other and we still have other roommates. Living with him makes living AND eating costs SIGNIFICANTLY cheaper. Maybe Oregongal has a similar situation or just knows what works for her.

Not sure where you've seen 3 bedrooms for less than 2k a month anywhere in the general vicinity of SAIS, as that would be pretty much impossible. If you're living with your SO, then sure that's quite doable as you could have a 1 bedroom English basement somewhere for 1400 or so (which is still on the low end). I think SenatorSmith was just trying to be as up front and honest as possible with rent costs, so that maybe OregonGal could factor in higher expenses is all.

[lecorbeau]

I have a similar problem. My top choices are Ford and Wagner. Ford gave me $0 financial aid, I'm still applying to some external fellowships but I'm not counting on them and I'm still waiting on Wagner. I also got in to the Hertie School of Governance in Berlin, that is offering me half the tuition, leaving the 2 years in 13.500 EUR (about 18.000 USD). I like the school but it is new and its prestige is nowhere near U MIch or NYU.

If I were you I'd take Hertie in a heartbeat. It's on its way to being a top-ranked school, and from a personal standpoint you can't beat living in Berlin (which is a MUCH cheaper, and arguably more fun, city than NY!) for two years. If you can swing improving your German then all the better.

[lbjane]

A word on FS jobs. Like lecorbeau points out, you can afford more debt if you're not paying rent for a large part of your career. If you get a job that does not include housing, those loan payments have a much bigger effect on your monthly budget. Second, while it's great to work toward a goal, understand that every year thousands of people start the FSO hiring process, only about 400-700 are hired a year, and hiring has slowed due to budget issues. So, it would not be wise to base your budget assuming that you'll become an FSO. Again, definitely work toward it, but you shouldn't count on it unless you get a Pickering or Rangel fellowship going in to grad school.

[msn]

OregonGal and ajl, thanks so much. My head has been reeling ever since I got my acceptance letters because whenever I try to crunch the numbers I start to feel overwhelmed.

@OregonGal I'm also considering UC SD but I am also uncertain about going so far from DC and family (I live in NY). I'm also waiting to see if I get any funding. Still waiting to hear from BU about funding as well.

I got absolutely nothing from American Unversity and I really don't want to go 100,000+ into debt.

[charlotte_asia]

Not sure where you've seen 3 bedrooms for less than 2k a month anywhere in the general vicinity of SAIS, as that would be pretty much impossible. If you're living with your SO, then sure that's quite doable as you could have a 1 bedroom English basement somewhere for 1400 or so (which is still on the low end). I think SenatorSmith was just trying to be as up front and honest as possible with rent costs, so that maybe OregonGal could factor in higher expenses is all.

It's possible, if you're north of Mt Vernon Square, around the Howard area. If you want a slightly safer neighborhood that's a big further out, the Capitol Hill area (north of F street and/or east of 10thish street), Columbia Heights, Petworth area, U Street, etc will all have places within that price range. I used to rent a large 3BR house with two other roommates for $2100/month. We could have definitely gotten something a bit smaller for under $2k. I also know folks who share a room with significant others and have other roommates as well and cut costs that way.

[cali]

I've been following along for a bit now, freaking out just as much over finances and how I'm going to decide on schools myself. I'm incredibly lucky to have gotten into so many great schools (I honestly didn't think I would get in anywhere), but now it's time to start making some serious decisions.

I've been crunching the numbers too, so I thought since everybody else is adding their models, I would throw mine in as well. Here's the link, and note that I've already dropped off American from my list because there are other schools I got into that are better and cheaper than American.

I hope you guys find this helpful, and if you have any advice on how to decide between these, I'd really appreciate it. Oh yeah, I'm also planning to concentrate on economics and finance in emerging markets. I keep hearing how SAIS is so well known for this, but in the long run, after loan fees and interest, is it worth $37k more than Fletcher? And $65k more than GW???

[Chipembere]

BUMP

[state_school'12]

Thanks for sharing your work you guys. Are you planning on deferring payments while in school? I put together my repayment schedules, and forgot about that. Doh!

[cali]

Don't loan payments start 6 months after we graduate? Or are you thinking undergrad loans?

[state_school'12]

Yeah, but the interest accrues while you're in school on Stafford Unsubsidized and Grad Plus loans.

[cali]

Of course. I got around calculating that in my template by just pulling in the aggregate values from the FAFSA site's loan calculator.

[OregonGal]

For all those with questions about living costs in the DC area--sorry, I've been away from the comp on a mini-cation (and came back to news I didn't get funding from UCSD >.<)

My breakdown of costs is based on my current living situation, in the suburb of Silver Spring. I am in a 3-bedroom apartment, 5 minute walk to Silver Spring Metro, 5 minute walk to a bus line that takes me direct downtown to my Americorps placement. We pay less than $2000 a month for an older apartment, including utilities, in a large well-managed complex in a safe neighborhood. That monthly number has my current cellphone/internet/cable costs. It is not at all a hypothetical--believe me, I know how expensive DC can be from my housing search when I first moved here. If I went to SAIS, it'd be 25 minutes away by bus which is perfectly fine by me.

@state_school'12--I didn't count in interest aggregation on my first sheet, of costs comparisons, though I did include loan fees. My repayment calculator includes interest, I'm fairly sure, though I'll double-check that. As it is, just based on how much interest I accrued on my unsubsidized undergrad loans...In the grand scheme of a $100K+ education it's just a rounding error.

@msn--this may sound a bit callous but... I don't really factor distance from family & friends anymore into my job/school decisions. That's a luxury not often afforded when they don't live in a hub for IR organizations, and a career in IR or the Foreign Service will mean getting used to living a long ways away from family. So far I've managed to go home every Christmas, but that record won't hold forever. As it is, I've yet to find an IR position (other than an unpaid internship) locally, so each of my jobs has taken me across the country (or the Pacific) from my family. Do I miss seeing my family and friends, or regret missing out on important events in their lives? Of course, but I knew that this was the trade-off for an international career.

[JayLovesAfrica]

I got into the two schools that I REALLY REALLY wanted and now I'm in a bit of a predicament. I got into SIPA, no funding, and GWU with 20k which means 10k per year. My parents have offered to contribute a maximum of 40k per year (I know, I know...) which means I could, potentially, graduate from GW with no debt at all. SIPA, on the other hand, is crazy expensive -- the sticker price is 70k, which of course you can reduce somewhat when it comes to living costs. But Columbia's tuition and fees...yikes. It got me wondering whether that Ivy League name is worth the extra cost. I'm not scared of taking out loans but going to GW means I probably won't have to worry about them at all, putting me in a pretty damn fortunate situation when I graduate. But then...SIPA.

I'm being really childish, aren't I?

Edited March 29, 2012 by JayLovesAfrica

[rose1]

Actually sitting down with a spreadsheet and looking at expenses is pretty sobering. How the hell am I going to be able to afford to pay these back?? It will take 25 years to pay these off at a rate I could afford. By that point, I will pay double what I took out thanks to interest accruing. I don't know whether the sum is so large at any school that I might as well just go to the expensive one I want or if I should be running in the direction of the cheapest school, even though it's still way out of my price range. Dang.

[ajl]

Actually sitting down with a spreadsheet and looking at expenses is pretty sobering. How the hell am I going to be able to afford to pay these back?? It will take 25 years to pay these off at a rate I could afford. By that point, I will pay double what I took out thanks to interest accruing. I don't know whether the sum is so large at any school that I might as well just go to the expensive one I want or if I should be running in the direction of the cheapest school, even though it's still way out of my price range. Dang.

Seriously, I feel that. But you managed to get into some killer programs, the best of the best, so take advantage. The Public Service Loan Forgiveness option (which, as far as I know, will apply to ANY gov't or NGO position) will really make life pretty livable. And it might get much better:

http://www.usnews.com/education/blogs/student-loan-ranger/2012/03/21/learn-what-the-student-loan-forgiveness-act-could-mean-for-you

The numbers are giving me an ulcer, too, but enough people in my life (some who had taken out 200k for law school or over 100k just for undergrad) assure me that it's doable. You're just not filthy, stinking rich until after your hair has begun prematurely graying. Let's not worry ourselves out of what could be one of the best opportunities we'll ever get. Probably.

[haplessdreamer]

I'm in a similar bind. Got into Harvard KSG, Stanford IPS, John Hopkins SAIS, UCSD IR/PS, Columbia SIPA. No funding at any of these schools. :'(

I'm starting to worry about the enormous debt burden that I'm about to undertake.

I currently have a stable job making in the mid-40ks with my BA but the job has no career advancement. My passion has always been in IR and I want to work in DC, State Department, NGOs, international development, etc.

Cost of these schools: $80k for 2 years tuition + $20k for living costs... so realistically $100k in debt. It could be a little lower at $50-70k if I get a second year teaching assistantship.

Expected median income upon graduation: ~$60k.

I can stick with my current job and make over $60k in 5 years.

Or go back to school for 2 years, get $100k in debt, and make $60k to start and potentially advance faster than with just a BA.

Do you guys think it's worth it to get in that much debt? Or should I ignore the masters and try to see if I can get a career started in IR without the need for a masters?

Edited March 29, 2012 by haplessdreamer

[rose1]

The public service loan forgiveness option only applies to direct federal loans. Im only eligible to take out $20,500 a year in those. I'm going to need to take out at least $100,000 in loans total, which means most of my debt will be private.

It's good to hear that others facing this kind of debt are surviving though!