debt and choosing a field

[Grimnir]

Yeah so I made a mistake regarding my loans. I had no financial knowledge when I was 17 and applying to schools and just trusted my parents to do the right thing for me financially. It didn't work out that way. That's in the past. Not really, but no point in whining about it. But it is going to affect my future career decisions....

 

Thus I have two options at this juncture...

 

Option 1) I wanted to get a PhD in psychology (specifically quantitative psychology) but given the amount of loans I have, I am questioning whether it is the right decision to let these loans accumulate interest for 5 or 6 years (the majority accumulate interest, a few of my federal loans don't). I've calculated I'm going to accrue about 3500 in interest a year while they are deferred. So the possibility exists I will accrue 20k in interest. Depending on my stipend level I may be able to pay half or all of this by saving 150 to 300 a month and being extremely frugal.

 

Option 2) I can try to find jobs in business that pay more now, and pay down my loans and either find an employer to pay for graduate school or attend part-time while I work and not accrue any debt.

 

I have a  BS in Psychology from a public ivy and I graduated cum laude, but most of my job experience is in research although I did work for one business for an internship. I was thinking I might be able to find an entry level job doing market research or low level finance work.

 

Any advice would be greatly appreciated....

Edited July 8, 2014 by Grimnir

[juilletmercredi]

Well, the thing is that your loans would accrue interest regardless of whether they were in deferment or not.  They will be accruing more interest, of course, since you are not repaying.  FinAid.org's cost of interest capitalization calculator says that a $50,000 loan that is deferred for 6 years without repayment would accrue about $20,400 in interest.  But in the end, you're only paying about $8,000 more than you would've paid without the 6 years of deferment - because you have to subtract out the interest that would've accrued anyway during the 6 years that you were in repayment.

 

So really, it's up to whether you think that extra $8,000 in accrued interest is worth the PhD.  Honestly, a PhD in quantitative psychology is a useful degree both inside and outside academia - it's the subfield I wish I had gone into (I didn't know it existed in college!) and quantitative psychologists are in pretty high demand.  Inside academia there are more job listings than there are quant psych PhDs; outside academia, you could work for data science firms or educational testing and measurement firms or as a quant, all of which are pretty lucrative fields.  I'm doing a quant postdoc now to try and make the transition; my mentors are quantitative psychologists who have started a methodology center focused on applying advanced statistics to social science methods and they are typically supported by serving as the analytical consultants on people's grants.

 

Also

 

Option 2) I can try to find jobs in business that pay more now, and pay down my loans and either find an employer to pay for graduate school or attend part-time while I work and not accrue any debt.

 

If you want a PhD in quant psych, you won't be able to do this most likely.  You can't attend PhD programs part-time (most PhD programs, anyway; any reputable program in quantitative psychology wouldn't allow you to attend part time).  You also wouldn't need an employer to pay for your PhD - I haven't heard of this happening, but most quant psych programs are funded anyway.