Paying for school/accepting loans

[schoolpsycher]

I'm about to start my grad program in a couple weeks, and I'm trying to decide how many loans to accept for this year and am having a slight nervous breakdown/reconsidering my decision to even go to grad school. I already have about $22,000 in loans from undergrad that my family has been helping me start paying off for the past 2 years.

 

My grad school program costs $14,000 a year with in-state tuition, and I'll also need money for cost of living in a relatively expensive major city. I was offered about $20,000 in loans for this year, and I REALLY do not want to take that much. I will be working part-time for the first year as most of my classes are offered at night, but I'll still be a full-time student. My family recently determined they can't help me as much as we originally thought, and I have a younger brother starting college in a year. I'm going to school to be a school psychologist (which probably won't ever make a TON of money), so I'm unsure how many loans is reasonable to have. I can apply for the loan forgiveness program where my loans will be forgiven after 10 years working in a public service job (which would include being a school psychologist, in addition to 2 years I already have as a preschool teacher). 

 

How many loans do you think is too much to take out considering my career path and how many loans I have from undergrad? Any other suggestions to pay for school without much/any family help? My program unfortunately barely offers assistantships this year, and I haven't been able to find one. It's hard to get excited for school while being so worried about paying it and being stuck in so much debt.

Edited August 14, 2014 by schoolpsycher

[themmases]

In general it's not a good idea to have more in loans than you expect to make in a year in your new career. If you're going into a field where it's at all likely that you will have a lengthy job search, a move to a less desirable area with lower cost of living and lower wages, or having to accept a job outside your field, then it's wise to be even more conservative.

 

According to the BLS, psychologists working in school settings have an annual mean wage of $71,840, and people working in the broad field of clinical, counseling, and school psychologists have a median annual wage of $67,760. More detailed information by geographic area is available in their report: http://www.bls.gov/oes/current/oes193031.htm#(2) but I couldn't easily find the expected pay for a new graduate. It's safe to assume that a new graduate would be making below the median wage, though, unless they also brought some other very in-demand skill.

 

PSLF and similar programs are nice, but IMO no one should go into school planning to depend on them. Student loan debt is at crisis levels in the US, it's projected to keep accumulating, and many existing loans probably cannot be repaid. In a stable political system, it would be likely that some change would occur before a given student loan debt could be discharged-- some repayment schemes last 25 years! And the political situation in the US, including around education financing, is not stable. Some change to these programs is likely, especially if large groups of graduates make it to the end and start being able to write off much of the principal of their debt all at once. There is no way to know whether student debt will change for the benefit of student debtors in general or you in particular. Also, under the terms of PSLF your past employment may not count for discharging grad school loans: https://studentaid.ed.gov/repay-loans/forgiveness-cancellation/charts/public-service

 

General things you can do to earn money include finding freelance/side employment (especially if you have quant or language skills), seeking a related full-time job (perhaps at your school) that would give you a tuition benefit to cover at least some of your schooling, and seeking out jobs that allow you to study while providing coverage so you can work more than you would otherwise be able to. As for spending less and borrowing less, talk to your school financial aid office and see if they will allow you to adjust your loan amount during the semester. You could try borrowing the minimum you think you'll need, and adjust your loan amount back up later only if you truly need the money. Grad students save money on housing by living with roommates or family, or sometimes by getting jobs at resident advisors in dorms. If you've never made a budget before, try using an app like Mint that will integrate your old spending information and tell you how much you've historically spent on different things.