HELLLP! MSW: a lot of debt, a lot of lot of debt, or a some more debt

[ceeceeareee]

I have been offered admissions to three pretty amazing programs...

 

University of Houston, NYU & USC (they are ranked in reverse order in my mind as well as by world news)

 

I have about 22k worth of student loan debt from my undergraduate degree which will continue to accrue more and more interest, and here is my issue: These programs don't tend to offer a lot of scholarships, as they are surely limited. I have received some financial assistance from all of them but not enough to really even make a dent in my overall debt post-masters.

 

I'm looking at like 80K-90K after it's all over from UH, roughly 30K more to go to NYU & then you know like 70K more to attend USC. The numbers ARE frightening. However, with a concentration in mental health/systems of recovery from mental health, I'm looking at a lot of debt no matter what.

 

The larger problem here stands as is: My starting salary will be highest in CA (39K for entry level social workers), my debt will also be highest in CA, I will never be able to pay off the total amount of debt from ANY of these schools so in fact, I have come to the conclusion that my starting salary in whatever place is actualized to irrelevance- even in the best of circumstances, after 10 years I will have only stopped interest from accruing. I'm pretty much stumped here because as a Social Worker, there is the option to pursue loan forgiveness after 10 years if you work for a nonprofit or government agency full-time.

 

In my mind, I'm just trying to get these ducks all in a row before I just go balls to the wall and say hey, you know, I'm going way under even at the cheapest of the three universities and I'll be committing myself to the loan forgiveness program even there, so why not just go balls to the wall with loan debt and go to the school my heart is REALLY longing for (USC). As I'm frightened of the prospects of committing myself NOW to something that is 10 years down the road, I feel like I don't have a choice where that is concerned because I'm pretty much SCREWED into massive amounts of debt no matter where I choose to attend. I pretty much just want to know others' thoughts on this/if anyone else has been dealt similar cards.

 

XOXO Royally screwed, but I'm still following my heart.

Edited April 12, 2013 by ccrede1

[selecttext]

If you are committed to living well below your means for the first years after graduating, you can pay off a large chunk of that debt.  You might consider working part time during your masters.

[Cactus Ed]

Six-figure debt for a Master's in Social Work?

 

Just, no. No.

[selecttext]

Do you need a masters to do social work? If the debt forgiveness is a realistic possibility, why not?

[ceeceeareee]

You need a masters to perform psychotherapy. period, point blank. we are not talking about public advocacy, we are talking about licensed clinical social work. "just no, no" really isn't an answer here. I don't have a choice. I cannot perform therapy with a BS in psychology, no one can. Nor can I get a decent paying job.

 

and yes, 100% debt forgiveness is possible - it's called "Public Service Loan Forgiveness" & it's relatively new. it's designed for those who work in public service/for a nonprofit who have a high debt to income ratio.

Edited April 12, 2013 by ccrede1

[ceeceeareee]

i will be working part time, most likely with work-study & an unrelated side job.

[Cactus Ed]

There have to be more economical programs out there that can get you the same 39k/year job. I just think that kind of debt vs. that kind of starting salary is reckless. Following your bliss is one thing, but yikes. I get that these schools are prestigious and all, but falling victim to the siren sounds of acceptance from the likes of NYU and USC is, in my opinion, dangerous.

[ceeceeareee]

Sure, if you call "more economical" being forced to take on 10k+ from University of Houston in tuition/fees annually plus another 16 to 20k for living/gas/food/misc expenses annually for two years, totaling my entire debt to a rough 70-80k overall after interest has accrued & i'm actually IN repayment. i don't know if you have done your research, but UH is one of the cheaper choices & yet it's still not even fiscally possible for me to have even made a dent after paying on that debt for 10 years with a salary for 40K - i'd only have kept the interest at bay & be back at square one with the original principal borrowed. 

 

my only choice is PSLF, continuing my education, period, is a fiscally "dangerous" choice, but in reality- what the hell am i going to do? work as a receptionist for the rest of my life making $8.50 an hour? No, i would rather drown in student debt.

 

The question here is not whether or not I'm going to do it, the question is do I remain conservative and max out debt at one relatively cheap school and drown or do I go all out and max out debt at an expensive school and still qualify for the same debt repayment programs based on my salary under ICR & IBR and the loan forgiveness program?

Edited April 12, 2013 by ccrede1

[ceeceeareee]

if you've got it, I'm open to thoughts - not judgments.

[Cactus Ed]

OK, I can be more explicit since my thoughts were probably needlessly oblique: go to the cheapest option. Houston is your best bet.

[bamafan]

It also seems like you're pretty set on following your heart regardless of the financial hardship, so I'm a bit confused as to what you even want from the rest of us if not our opinions. Some people gave you their thoughts, and you reacted somewhat aggressively. If you're not open to other people's opinions and judgments, why did you ask for them? Thoughts and judgments are necessarily inclusive when it comes to opinions on your situation.

 

As for your situation, if and only if you're sure you will qualify for debt forgiveness, why not go the route of your dreams and go to USC? But if you're not sure that you'll be able to do this, save the money. As you mentioned, it's not like your salary will be any different regardless of where you went. 

 

Are you sure there aren't any grants you could get to finance your education, rather than just loans? Also, as long as you're in school, debt does not accrue interest. If you're really worried about the debt also, why don't you defer a year and work -- even if you only pull in 30-40k, that puts a huge dent in your debt, and more importantly, the eventual interest.

Edited April 12, 2013 by bamafan

[selecttext]

Anyways, you have to consider life time earnings, not just entry level salary. If an MS will improve your life time earning potential, then of course it makes sense to take on the debt- especially in light of the debt forgiveness program. By the way, your responses here were very defensive - certainly not the level headed and empathetic response i would expect from somebody wanting to be a clinical social worker.

Edited April 12, 2013 by selecttext

[dunkeaters]

A big factor is obviously how much income you think you could gain from going to the more prestigious schools. I don't agree at all with the strong aversion to debt, its a cost like any other cost and should be treated as such. If you take out 80-90k in debt, you could end up paying 200-300k for it over the course of a lifetime. Significant obviously, but not an absolute deal breaker. If the more prestigious school could get you 10k more per year, that difference would easily pay for the difference in debt. It's just a matter of how much income difference you think there is, if any, and how much the difference in debt will end up as a difference in cost (I'm guessing, to a rough degree, that each extra dollar of debt is roughly two extra dollars in lifetime cost). 

 

If the loan forgiveness program is a reliable plan (is it guaranteed given a certain amount of years of social work? Or is it something you have to apply for?), that would significantly reduce the cost of debt. 

[juilletmercredi]

You can, indeed, get a decent paying job with a BS in psychology.  There are many people who do it, and you wouldn't make much less then you would as a clinical social worker.  But that is besides the point - you want to be a clinical social worker, so you need the MSW.  That's indisputable.  And most MSW programs don't offer much student aid, so your choices are limited to taking out student loans.

 

Public Service Loan Forgivenness is not 100% debt forgivenness.  You pay on your student loans to 10 years and then after that, the government forgives the rest of the debt.  This only applies to federal student loans (so you have to borrow PLUS loans) and you do have to pay taxes on the amount that is forgiven.   Also, you'll be eligible for income-based repayment and/or Pay As You Earn repayment plans.  PAYE limits your monthly payment to 10 percent of your discretionary income.

 

I checked out USC's tuition - for the MSW full-time, it's $45,000 a year.  That's $90,000 over two years.  Assuming that you also need to borrownabout $25,000 a year in living expenses, that's about $150,000 in student loan debt, which comes to like $170,000 with your prior debt.  Under the PAYE plan, assuming you only make about $40,000 a year, you will pay about $194 a month towards your student loans, which is quite manageable.  Of course, the payments will be adjusted upwards as you make more money.  So let's say that after 10 years you are making $60,000, your student loan payment will be $360.

 

The problem is, I can't find a reliable calculator to find out how much will be left after that.  Assuming that your income stays flat for 10 years and you only pay $200 a month 120 times, that's only $24,000.  If your interest is 8.5%, over 10 years your loan will have grown to $253,000, so $225,000 will be forgiven.  Even if you only have to pay about a third of that in taxes, that's still $75,000 in taxes that you'll owe.  It will, of course, be less as your salary goes up.  But even if you paid $360 over the life of the loan, that's only $43,000, which would still leave $210,000 to be forgiven and around $70,000 in taxes that you'll owe the year that your loan is forgiven.

 

If you went to UH, you'd only spend $20,000 over two years + $40,000 in living expenses for a total of $60,000.  $80,000 is far more manageble.  Your tax burden would probably be around $20-30,000 after the 10 years are over.

 

Also, it's only true that your debt doesn't accrue interest if you are in school if you have subsidized loans.  Graduate PLUS loans are no longer subsidized, so the ones you borrow in year 1 will accrue interest beginning when they are disbursed.  Also, if your undergrad loans are unsubsidized, those will accrue debt throughout your program (as mine have done over the past 5 years of my PhD program, yikes!)

 

So basically, the only place that this will actually make a difference to you is in 10 years when you are paying off the taxes.  Your tax burden is likely to be 2-3 times as much with the USC option than with the UH option.  Whether or not you care about that, or whether or not that makes a significant difference in picking USC over UH, is up to you.

[ceeceeareee]

The tax was lifted with legislation made in 2012, so those having loans forgiven no longer owe the taxes on the amount forgiven after that 10 years under the PSLF option (this being said, it IS now 100% debt forgiveness- which is nice). However, I haven't heard of this "PAYE" plan, so you did bring some light to the subject. 

 

I appreciate the feedback. 

 

Also, to the effect that I was "defensive"...

 

Anyways, you have to consider life time earnings, not just entry level salary. If an MS will improve your life time earning potential, then of course it makes sense to take on the debt- especially in light of the debt forgiveness program. By the way, your responses here were very defensive - certainly not the level headed and empathetic response i would expect from somebody wanting to be a clinical social worker.

 

I feel the need to qualify that statement with a very simple retort. I am not an LCSW, I won't be for another five years, and even if I was - who gives you, "bafaman", the right to determine whether or not I am level headed/empathetic based on electronic correspondence you've had with me one time? 

 

I was flippant, but this is stressful. Not everyone is looking at 80-90K plus debt after graduate school, and bearing that in mind, though this is the route I am voluntarily pursuing, I was hoping that I would get more insight - not a response such as... "just no, no". Trust me, given the option, I would be going the route of a program that was fully funded and also able to provide me living expenses. 

 

I will speak also to the effect that I was HOPING others in a similar situation to mine might read the thread and have empathy for my circumstances. I was not expected to read responses shortly after posting that sent me the message that my route toward this degree is unacceptable and stupid.

[misskira]

I understand the problem of a profession where a masters degree is required for low pay.  Hello social worker, meet teacher.    It sucks.  I have a huge debt for a relatively low pay.  However, I love my profession and it's worth it.  I don't have anything to add, just my empathy.

[bamafan]

Also, to the effect that I was "defensive"...

 

 

I feel the need to qualify that statement with a very simple retort. I am not an LCSW, I won't be for another five years, and even if I was - who gives you, "bafaman", the right to determine whether or not I am level headed/empathetic based on electronic correspondence you've had with me one time? 

 

I was flippant, but this is stressful. Not everyone is looking at 80-90K plus debt after graduate school, and bearing that in mind, though this is the route I am voluntarily pursuing, I was hoping that I would get more insight - not a response such as... "just no, no". Trust me, given the option, I would be going the route of a program that was fully funded and also able to provide me living expenses. 

 

I will speak also to the effect that I was HOPING others in a similar situation to mine might read the thread and have empathy for my circumstances. I was not expected to read responses shortly after posting that sent me the message that my route toward this degree is unacceptable and stupid.

 

Okay, first off, you can't type because it's "bamafan", as in a fan of Alabama. Second, you misattributed a quote to me as I didn't even say those things, someone else did. Third, I said, after trying to give you some financial advice, that you were "somewhat aggressive", which you were then to the above posters and are being now.

 

No one has at any point said that your path is "unnacceptable and stupid". If you want empathy, you should have said so, but instead you asked for advice, which I, and many others, have tried our best to give. I certainly have not at any point tried to disparage or discourage you, and I honestly wish you the best. We gave you our thoughts, as well as useful suggestions. Maybe you didn't get anything meaningful out of our comments, but that's not because we were being rude or unhelpful, but rather because you chose not to appreciate what we said.

 

Try not to be so offended and hostile to strangers on the internet, so much so that you didn't even bother to check who actually said what. This in and of itself lends weight to your behavior and response not being quite so "level-headed". 

[Purplescarves]

This is tough. I think mainly because it's so emotional. I was torn last week about my decision, so I can understand. I imagine you also need to decide pretty soon, which adds to the stress. The prospect of not making the 'right' decision is scary. What helped for me was to slow down. It may sound over the top, but I created a spreadsheet. That was when I started to see things very clearly. I feel very confident with my decision now.

 

Prior to that, I was lost in the giddiness from all of the acceptances. It's so crazy how much my gut instinct was thrown off. Before I started the application process, I was adamant that I would select the least inexpensive school, mostly because of what I've come to know about MSW programs. Yet when I got the acceptance letters, I was lost in the clouds thinking about what could be. Fortunately, I found my way back and I've chosen the most cost-effective route.

You are probably racing against time, but I would suggest trying to figure out the answers to some questions to help clarify your options.

• Where do you want to live for the next ten to fifteen years? Can you picture yourself in these different locales? Can you visit the schools and cities to confirm your predictions? This is huge for several reasons: the licensure process, building a professional network, and standard of living. Most professionals in the field would recommend that you attend school in the locale that you plan to work in. You do build a network while in school and you want to be able to use it. Also, you don't want to bounce around from state to state and have to repeat the licensure process each time. Finally, while the average starting salary of a social worker might be higher in LA, you also have to consider that the cost of living is also higher. You don't want to choose a school based just on the 'prestige' and then wind up hating the city. NY, LA, and Houston are vastly different experiences, without even taking into account the school's own culture.
• Can you defer your acceptances? Can you work for a while and save up some money and pay down your undergraduate loans? Are you willing to gain some social work experience now to be more competitive for scholarships in a couple years? You are not royally screwed, it's just the path that you have chosen to take. You can get a decent paying job with a BS. It may not be psychotherapy, but it could be close. I only have a BA and I have a job that pays about on par with what the average social worker makes. I also work within the mental health field. I don't do advocacy, I do direct service and I see the difference it makes with my clients daily. I am far from a receptionist.
• How successful are these schools with job placement? What career services are offered? Will you be unemployed for a long while after? Having limited social work experience prior to the MSW does make this more likely.
• What coursework is available? Does it align with your goals?
• What do current students think about their courses? Is it on par with what they expected? What about alumni? Is the 'prestige' opening doors for them compared to other grads they know? Are they getting higher salaries compared to other grads?
• Are you willing to limit your employment opportunities to non-profits and government agencies? What if something happens and you wind up not getting the loan forgiveness? It's not a complete guarantee. 

Like you, my goal is to be able to provide psychotherapy (amongst several other services). When I found out how expensive MSW programs are and how limited scholarships can be, I too was pretty disheartened. Yet there will always be hurdles to get to where you want to be. It rarely, if ever, is a clear path. So I called on friends, mentors, and even complete strangers to strategize. Taking on a large amount of debt just wasn't in the realm of possibilities, so I hatched a plan to make the MSW possible for me. While I wanted to go back to school right away, I had to be patient and put in some hard work. I've busted my behind to get promotions, new and challenging work responsibilities, and essentially craft myself into a very competitive MSW candidate. It worked and I'm really proud of myself.

 

I think the reason you may have gotten some responses that you don't like is because you painted your options in such extreme black and white terms. You used language like 'only choice', 'a lot of debt no matter what', 'I'm pretty much screwed', "dealt similar cards'. In a way, you victimized yourself. Yet you are in no way a victim. This isn't your only choice. You don't have to be in a lot of debt. There are several career paths and various iterations of mental health work. You have chosen to limit yourself to one. No one is forcing you to go to grad school right now. This doesn't have to be tragic. You have options, even the option to go to a fully funded program with living expenses. You say you are open to thoughts, not judgements, but you seem to have made a lot of your own judgements. This doesn't make you or them 'right', I'm just making observations and the main thing I see is someone who is incredibly distressed.

 

Breathe. Slow down. Think. I think you are courageous for posting your question here and being open to advice. This is a great time to utilize your healthy coping strategies to clear your head, re-ground, and rise back up.

 

[potential_phd]

Have you considered looking into IBR (income-based repayment) as an option and using that to help your choice?

[juilletmercredi]

potential_phd, OP has already mentioned IBR and ICR and we were talking about the different repayment plans - that's kind of what her question is, whether or not it matters whether she chooses a less expensive or more expensive school because under IBR she will be paying the same amount regardless and under loan forgiveness she will only pay for 10 years and then the rest will be forgiven.

 

OP, without getting into the other issues here - 

 

You sound like you are pretty set on going to USC (or maybe NYU).  My take on the way you've presented is that since IBR and loan forgiveness are options it won't really matter how much you borrow.  And if you truly work in jobs that are considered public service for 10 years (assuming that you never change fields or get burned out and decide to do less patient care and more community/nonprofit management or something), it really may not matter for you.  I'm assuming that someone who wants to pursue an MSW is going to want to work these kinds of jobs for at least the next 10 years.  I wasn't aware of the new law making PLSF untaxable, so that removes the last barrier and if you qualify for it, you will be paying the exact same amount on your loans regardless of whether you borrow $60,000 or $150,000.

 

So go to USC, if that's where your heart really is.

[muro0901]

All you can do is make the decision that you think is going to ultimately lead to your happiness. Once the decision is made you just need to be able to live with the consequences. I made the decision to attend USC this fall over other less expensive institutions to get my master in public administration. I understand the debt load that I will be taking on and am comfortable with it because I believe that a degree at USC will drastically improve my marketability and career outlook, but more importantly it will make me happy. I too hope to take advantage of the loan forgiveness program, but know that if I do not qualify for some reason I will still be able to pay off my debt. It may not be easy, but again I believe this degree will get me where I want to go. Good luck in making your final decision.

[ceeceeareee]

[veets]

You can, indeed, get a decent paying job with a BS in psychology.  There are many people who do it, and you wouldn't make much less then you would as a clinical social worker.  But that is besides the point - you want to be a clinical social worker, so you need the MSW.  That's indisputable.  And most MSW programs don't offer much student aid, so your choices are limited to taking out student loans.

 

Public Service Loan Forgivenness is not 100% debt forgivenness.  You pay on your student loans to 10 years and then after that, the government forgives the rest of the debt.  This only applies to federal student loans (so you have to borrow PLUS loans) and you do have to pay taxes on the amount that is forgiven.   Also, you'll be eligible for income-based repayment and/or Pay As You Earn repayment plans.  PAYE limits your monthly payment to 10 percent of your discretionary income.

 

I checked out USC's tuition - for the MSW full-time, it's $45,000 a year.  That's $90,000 over two years.  Assuming that you also need to borrownabout $25,000 a year in living expenses, that's about $150,000 in student loan debt, which comes to like $170,000 with your prior debt.  Under the PAYE plan, assuming you only make about $40,000 a year, you will pay about $194 a month towards your student loans, which is quite manageable.  Of course, the payments will be adjusted upwards as you make more money.  So let's say that after 10 years you are making $60,000, your student loan payment will be $360.

 

The problem is, I can't find a reliable calculator to find out how much will be left after that.  Assuming that your income stays flat for 10 years and you only pay $200 a month 120 times, that's only $24,000.  If your interest is 8.5%, over 10 years your loan will have grown to $253,000, so $225,000 will be forgiven.  Even if you only have to pay about a third of that in taxes, that's still $75,000 in taxes that you'll owe.  It will, of course, be less as your salary goes up.  But even if you paid $360 over the life of the loan, that's only $43,000, which would still leave $210,000 to be forgiven and around $70,000 in taxes that you'll owe the year that your loan is forgiven.

 

If you went to UH, you'd only spend $20,000 over two years + $40,000 in living expenses for a total of $60,000.  $80,000 is far more manageble.  Your tax burden would probably be around $20-30,000 after the 10 years are over.

 

Also, it's only true that your debt doesn't accrue interest if you are in school if you have subsidized loans.  Graduate PLUS loans are no longer subsidized, so the ones you borrow in year 1 will accrue interest beginning when they are disbursed.  Also, if your undergrad loans are unsubsidized, those will accrue debt throughout your program (as mine have done over the past 5 years of my PhD program, yikes!)

 

So basically, the only place that this will actually make a difference to you is in 10 years when you are paying off the taxes.  Your tax burden is likely to be 2-3 times as much with the USC option than with the UH option.  Whether or not you care about that, or whether or not that makes a significant difference in picking USC over UH, is up to you.

Hey that is really helpful advice, i am just curious where did you find these calculators or how you got those figures? it would be really helpful for me to do when weighing my options as i have not considered taxes portion of my debt. thanks!

[juilletmercredi]

I use Finaid.org for loan calculations.  It's pretty simple, but it gives a good rough estimate.

[tony m.]

my ex recently got her MSW from CSU, Sacramento. she had a few options, as we looked at them we discovered the actual MSW was more important in this field than where she got it from, as most counties were phasing out lower level non-MSW positions. she was working with a county that allowed her to get her MSW as part of a 3 year program, but ultimately she ended up leaving that county and entering the 2 year MSW program. she was able to get a stipend of 1800.00 a month that was forgivable if she worked for two years in in a county that received title 4E funds. unless you have your heart set on these schools and only these schools, there are little options for getting into this field w/o large amounts of debt. hope this helps.