The elephant in the room: Taking on debt for IR

[OregonGal]

Yes, if you look at a school's total COA budget it usually includes line items for tuition, campus fees, insurance, housing and food, transportation, books and supplies, and personal expenses.

[CML55]

Great thread!

I'm not enrolling in a IR program, but the info here is quite helpful!

Like others, I know how competitive funding is, so I am extremely thankful for any financial aid.

Yet, I worry about how future goals will be affected by this choice.

Right now I'm trying to decided between funded American and (probably) unfunded GWU.

I would love insight from others!

My major hangups:

1. Reputation worth the cost? I already have a professional degree (law), but escaped with relatively little debt because I chose the "lower ranked, more funding" route. Because of the field and competition, not having the name recognition would def be a disadvantage if I wanted to find a traditional job. While I don't regret that decision per se, I am quite apprehensive about that the same strategy may be unwise here. Someone mentioned that the obsession with rankings is more prevalent in professional degrees, but it seems from posts that public affairs/government/IR students are quite concerned with it to, leading me to think it matters quite a bit now and down the road.

I keep trying to Google DC perceptions of schools, but with the exception of Georgetown, I find wildly different answers.

2. NGO/government jobs care about rep? Someone made a point that these employers don't care as much about the name brand of the school. Has anyone else found this to be true? It makes sense with certain federal jobs, but it seems name recognition would go a long way for others, esp. jobs on the Hill.

Any insight would be most welcome!

Also the budget breakdowns are great.

I *tried* to start a thread about DC budgets, but to no avail :/

[OregonGal]

I think that those two factors are often thought about and discussed on this forum, and for good reason. Because those are the "intangibles" that's why in the original thread I tried to break down the financials as much as possible. One thing about AU vs GWU is the class schedule and relative cost--living expenses will be the same but at least at the Elliott School (don't know about the Comm program) it's significantly cheaper tuition than the other private DC universities. So while you may be receiving some (a lot?) of funding from AU you'll want to break down the relative COAs to make sure it doesn't just bring it to parity with GWU.

1. Part of the reason that there are vastly varying differences between the DC schools is that each program is different, so practitioners of different fields are going to have different opinions. Some of these schools tend to feed into private sector, others public/NPO. The obsession with name/ranking is I think because of all the intangibles that come with that "brand" recognition: the networking opportunities, the resources, the career services staff. I've met alumni from these programs (admittedly the successful ones who show up to admissions info sessions) who brag about helping fellow alums find positions within their firm or organization so it's definitely a factor in your employability. Also, within private firms more than public/NPO, if they're going through a hundred resumes they may just not bother to look at the one from Podunk U in favor of one from a top 20 school because of the implied quality of education/training/skills development at a top 20.

2. I can address this one a bit better: my boss is a HKS MPP graduate, so I ended up talking over my choices with her when I got my admit decisions back. Admittedly I took this with a grain of salt because she is an HKS graduate, but she doesn't think there's a lot of added benefit from the name brand schools in the NPO/public sector. NPOs don't tend to target high profile school candidates because they're more in need of someone with a specific skill set; most are small enough that they can't afford to hire someone based simply on their pedigree. The main factor there would be the level of skills development within their program as displayed on their resume, and in that area there's potentially not a ton of difference between #6 and #15 (UCSD San Diego has a great skills dev program which they highlight as a top 20 school, as does GWU, JHU-SAIS, etc as top 10s).

Now, there's government jobs and then there's government jobs. A bureaucratic position, i.e. one posted on USAJOBS etc that is hiring on the GS scale within X Y or Z agency, may have a certain amount of behind the scenes maneuvering and resume-slipping involved but not a ton; that's where the name brand doesn't matter as much, because the system is set up to try and limit the amount of patronage and influence on hiring. On the other hand, you mentioned jobs on the Hill--those are not in that group of points-based hiring systems. Those are congressional staffer positions and the like, and for those I'd say there's an outsized number of name-brand alumni--my boss has a couple of alumni friends from HKS who work up there either for committees or individual congressmen, my cousin's alumni friend from Georgetown Law helps write tax law in committee, etc. I don't think you can lump Administration/Congress positions in with federal agency positions, because they operate off of different hiring systems and different cultures, so to speak. Even the unpaid senate interns are usually the younger relative/friend of a friend/donor of the congressman, or go to a name-branded school in DC or within that congressman's district/state.

[understatement700]

I think what Oregongirl said makes a lot of sense. I'd also say, this is all a very personal decision. Everyone can tell you about what they heard about this or that school etc etc but in the end you're the one who's done the research and it is YOU who is making the investment (in time and money). I'd really recommend looking into if alumni from your prospective program are doing work similar to what you want to do. Odds are if they are (even without their alumni connections) you'd have a better chance of getting there too one way or the other. If they really are dominating a certain sector so much more than a comparable school then it might make sense to pay a certain amount more for that school. I can see the pragmatism in that.

Maybe some will disagree with me but I'm also gunna go out on a limb here and say that IR schools are not like law schools. The different IR programs have their niches and jobs generally pay about the same regardless.

[haplessdreamer]

The outlook is terrifying to me:

Loan Balance: $122,000

GradPlus Interest: 7.9%

Loan Term: 30 years

Monthly Loan Payment: $886

# of Payments: 361

It is estimated that you will need an annual salary of at least $106,404.00 to be able to afford to repay this loan. (average median salary post-SAIS is 60k... ) This estimate assumes that 10% of your gross monthly income will be devoted to repaying your student loans. This corresponds to a debt-to-income ratio of 1.1. If you use 15% of your gross monthly income to repay the loan, you will need an annual salary of only $70,936.00, but you may experience some financial difficulty.This corresponds to a debt-to-income ratio of 1.7.

With a loan term of 30 years, you will still be repaying your debt when your children enroll in college.

* * *

I know each person's decision is personal, but do you guys see any hope or solace? Is an MA from SAIS worth the debt or justifiable?

I have 3 options:

1. Stay at my current job and SAVE for 1 more year. I make about 45k now. Can probably save 15k if I really scrimp and scrape.

2. Take the 122,000k plunge and pray that my long term trajectory will be good enough to justify the debt.... Anyone have any experience 5-10 years out of school? What were your salary trajectories like 1 year, 5 year, 10 year out? Have you successfully paid off your loans before your kids enter college?

3. Marry rich. sigh...

I plan to work part-time during the school year but this will only offset my costs by ~$13000 a year.... this still leaves $100k... more money than I've ever borrowed or had in my life....

I'm really torn and am not sure if I can justify this debt.... It's agonizing and sobering to think of the future... I can understand the justification behind 100k+ loan for a JD, MBA, or MD... but what are the earning potentials, on average, for MA in IR at the top schools?

Any advice or insight would be appreciated....

[lbjane]

You're right that it's a very personal decision whether or not to take on that kind of debt. Some people do it and manage, but I wasn't comfortable taking out a lot of debt for an MPAff degree when I knew that my interests were in the government and non-profits sectors. If you're interested in consulting, the extra debt for the SAIS name might be worth it.

If you're interested in government or NGO work, it gets more complicated. There is the Public Service Loan Forgiveness program, but you're still on the hook for 10 years of payments when your salary will probably be at its lowest. You also don't know what you'll do after you graduate, whether you'll be eligible for the program, or whether the program will still be the same in 12 years after you finish your degree and make 10 years of payments. Some employers have student loan repayment programs, but again, it depends on where you're employed and you probably don't know where you'll land after grad school.

In federal government work, going to SAIS will not really affect your salary since salaries are usually determined by some equation of work experience + degree level = GS Grade X, Step Y, and for salary determination it doesn't matter at all whether you got your degree from SAIS or Unknown State U. I also don't really think that going to SAIS will really open a ton of doors in federal hiring that aren't open if you go to a lot of other schools. Federal employers will recruit at a wide range of schools and accept resumes from a lot of other schools, too. In my work as a federal employee, I work with and have met federal employees that went to a wide, wide range of schools.

In the NGO/non-profit sector, the SAIS name can definitely open doors, but again I don't think that it'll make much of a difference salary-wise. Probably not enough to cover an $860/mo loan payment.

A big part of the reason why I chose LBJ was because I knew that I would graduate with little to no debt. As it worked out, between working, savings, cheaper cost of living in Austin, financial aid, and so on, I graduated debt free, which is an incredible freedom. I got a great job in the federal government after graduation, started out earning about $55k/yr after graduation which is pretty standard for someone with a masters and a couple of years of experience. 55K in DC without children is manageable, but if I had kids and my spouse was not working, it could be tough. I earn more now, but a big loan payment would certainly still affect me financially. Since I don't have student loan payments, I'm able to save a lot more towards things like retirement, a down payment on a condo, etc. It's also nice to know that I could leave my job and take a lower paying NGO job that interested me without having a huge loan payment hanging over me. Again, it's very personal, but I really like not having debt and I don't feel like my career options or career trajectory have been hindered by going to LBJ and not one of the top DC schools.

It's ultimately a personal decision, since everyone has a different tolerance for debt, but I generally don't think that a lot of debt is advisable or necessary for most MPP/MPA/IR grads since salaries are not usually that high. I also think that the name of the school, while not irrelevant, is not as important in the public and NGO/Non-profit sector as it is in the private sector. So, paying big bucks for a name brand is not as important as it might be for law schools or MBA programs. For example, a person that I met at an admitted student day for LBJ when I was trying to decide where to go ultimately turned down LBJ to go to HKS. We now work for the same employer, doing the same job with the same promotion potential, and my salary's actually a bit higher because I had a little more work experience before being hired. He has a ton of debt that he's trying to manage, but I don't.

I also think that, if you don't have a good match between program fit and financial aid, it is worth taking another year to save money, work on your application package and/or research other schools. If you got in to top ranked program X with no funding, chances are good you'll get in there again or at least in to a similar program if you apply later. In the mean time, you can do things to improve your application package like trying to boost your GRE, improve your resume, improve your statements of purpose, etc. You can also consider casting a wider net when you apply to schools the second time around because maybe you can get in to slightly lower ranked school Y with decent funding and have similar career prospects after graduation.

[flyers29]

lbjane nailed it.

[OregonGal]

Hey guys,

So I've been busily working on my debt repayment spreadsheets at work instead of my actual job (lol). Here's the updated versionof my cost breakdown-- I revised my estimate of cost increases because the UC system has announced a projected 6% tuition increase for the next academic year, and then I was conservative and projected 7% the second year of school.

Then I started looking at my student loans, and I was actually figuring out the total amount wrong--I forgot that while my unsubsidized loans are deferred for graduate school they keep compounding. So I figured out what my undergraduate loans will be using the compound interest formula and realized that for my $15000 undergraduate debt I figured compounded daily, within the two years + grace period I'm going to accrue almost as much in interest as I have paid off on the loan principal since I graduated >.< It also let me see how much I'll need to put aside in order to pay off that interest before it capitalizes again.

Finally, I decided to start thinking about how aggressively I wanted to pay back my debt and the various scenarios (ie, living costs and salary). So the third sheet shows what my take-home pay would be (after taxes, Medicare and SSI deductions) at various localities and salaries with the various payment plans, to see how much extra I would have for savings, retirement plan, etc. The final little table in the bottom corner is if I decide to "snowball" my debt and retire it at an accelerated rate, showing how quickly I could pay it off depending on how aggressively I overpay monthly.

What the last spreadsheet has helped me look at is what pay scale I need to be aiming for based on the location in order to not quite live like a starving graduate student, hopefully have a studio or 1-bedroom, and be able to pay down my debt. It's also reinforced the compounding effect of scholarships and TA tuition remission on how much debt I will accrue and how that will affect my future standard of living.

Edited June 1, 2012 by OregonGal