Less Debt or Better Program?

[leon32]

I'm planning on going into public service but I'm afraid of banking on the 10 year repayment scheme. If I were to lose my job and be forced to work in a non-public service position, or if I have kids in the next ten years or something, I'm not sure what would happen..

 

From my understanding of it, you can still use the income based repayment plan whether or not you are in public service, and it is 10%-15% of your after tax income depending on the plan, which should be manageable. For me, it is not really the idea that it will get forgiven that is attractive (although nice) it is the idea that the first 1-3 years out when my salary will be the lowest it will make the monthly payments reasonable, and after I've worked my way up some in terms of promotions and raises then I can concentrate on paying it off.

[ir_gradstudent]

I have read opinion pieces calling for phasing out the "100% loan forgiveness" program and replacing it with something that is capped at paying back something like a max of $30k remaining loans. Would a change like this retroactively affect all of us? 10 years is a long time to be in that limbo.

Edited March 18, 2015 by ir_gradstudent

[kaseyleigh]

Exactly. You aren't necessarily going to have to pay $1200 a month, with the different repayment options (which are for everyone, not just public service). There are income based repayments, and you could pay it out over 25 years too. That is a super long time, but your payments could be relatively low. $100K over 25 years is about $333 per month. My roommate right now has a substantial amount of law school debt, but she is paying it over 25 years so she pays almost the exact same amount a month that I do currently (about $220 per month). She is able to put away a ton of her salary already. I don't absolutely love the idea of paying things off over 25 years, but the hope is that by that time my salary will be substantial enough that that little payment a month will just automatically be taken out without even really noticing. Right now I have probably the lowest salary I will ever have in my life, but that $220 a month just gets taken out automatically a month and I don't even really think about it. So, I think it's do-able.

[hikarizx]

Exactly. You aren't necessarily going to have to pay $1200 a month, with the different repayment options (which are for everyone, not just public service). There are income based repayments, and you could pay it out over 25 years too. That is a super long time, but your payments could be relatively low. $100K over 25 years is about $333 per month. My roommate right now has a substantial amount of law school debt, but she is paying it over 25 years so she pays almost the exact same amount a month that I do currently (about $220 per month). She is able to put away a ton of her salary already. I don't absolutely love the idea of paying things off over 25 years, but the hope is that by that time my salary will be substantial enough that that little payment a month will just automatically be taken out without even really noticing. Right now I have probably the lowest salary I will ever have in my life, but that $220 a month just gets taken out automatically a month and I don't even really think about it. So, I think it's do-able.

 

As I'm sure you know, the lower the monthly payments, the higher the interest. So while it's probably doable, the extra amount you pay in interest definitely adds up. So I guess it just depends on your financial priorities. 

 

Do you think it's worth doing the better program, though? I mean, I basically have a free option.. as far as rankings go I'm probably looking at top 20 vs. top 50 for the state school. I'm not sure how much it matters with the MPP/MPA program.

[hikarizx]

I have read opinion pieces calling for phasing out the "100% loan forgiveness" program and replacing it with something that is capped at paying back something like a max of $30k remaining loans. Would a change like this retroactively affect all of us? 10 years is a long time to be in that limbo.

 Right? There are also opportunities for GA/TA positions at schools, but I won't know if I can get one until after I'm already enrolled. It's so hard to plan ahead when you don't know that information.

 

I'm hoping they find a way to reform student loans but unfortunately it's not happening in time for me! 

[kaseyleigh]

As I'm sure you know, the lower the monthly payments, the higher the interest. So while it's probably doable, the extra amount you pay in interest definitely adds up. So I guess it just depends on your financial priorities. 

 

Do you think it's worth doing the better program, though? I mean, I basically have a free option.. as far as rankings go I'm probably looking at top 20 vs. top 50 for the state school. I'm not sure how much it matters with the MPP/MPA program.

 

You're right... to me, it would probably be worth it to pay more in the long run, but have low monthly payments so I can still do all the things people have mentioned, like buy a house, have children, etc. I don't really want to bank on the public service loan forgiveness, either... it will just be nice if it eventually happens.

 

It's hard to say whether it is worth doing a better program, though. You said your state program is still a good program, though it may not have the exact program you want. I would say research the fully-funded program more and see if you will be able to get the kind of internships you want, the kind of employment you want after you graduate, etc. If you are fully funded, but you always regret it because you end up getting a job that isn't at all what you wanted and you never get to do what you want to do, then it might be worth it to go to a different program. I think that your state school could be what you make of it, though, so as long as you hustle and do everything you can to set yourself up for success, it would certainly be really nice not to have any debt!

[chelaylay]

Is there anyone not willing to bet on IBR and loan forgiveness? A lot can happen politically in 10 years. When I talk to current students who blithely tell me this and then say they're taking out 80-100k in loans it freaks me out.

 

I also hate the idea of stretching the payments beyond 10 years and paying more interest. Even 10 years sounds long! I'd finish paying at 38. Paying a mortgage, and child care, and presumably saving for retirement and your kids' college AND putting 10-15% of your income towards loans does not sound fun.

 

I guess I'm a pretty debt averse person though. I am questioning whether I should go back to school now or reapply/save more, even with offers that require me to take out what would add up to my post-grad starting salary, which most people consider to be a good standard. When I budget that out it still feels high. Seeing how fast interest adds up on my undergrad loans has made me more cautious.

 

[hikarizx]

You're right... to me, it would probably be worth it to pay more in the long run, but have low monthly payments so I can still do all the things people have mentioned, like buy a house, have children, etc. I don't really want to bank on the public service loan forgiveness, either... it will just be nice if it eventually happens.

 

It's hard to say whether it is worth doing a better program, though. You said your state program is still a good program, though it may not have the exact program you want. I would say research the fully-funded program more and see if you will be able to get the kind of internships you want, the kind of employment you want after you graduate, etc. If you are fully funded, but you always regret it because you end up getting a job that isn't at all what you wanted and you never get to do what you want to do, then it might be worth it to go to a different program. I think that your state school could be what you make of it, though, so as long as you hustle and do everything you can to set yourself up for success, it would certainly be really nice not to have any debt!

 

That makes sense. Thanks! I have undergrad debt as well as a car loan so it would be different if I was starting from 0 but I'm not..

[Guvutnick]

You're right... to me, it would probably be worth it to pay more in the long run, but have low monthly payments so I can still do all the things people have mentioned, like buy a house, have children, etc. I don't really want to bank on the public service loan forgiveness, either... it will just be nice if it eventually happens.

 

It's hard to say whether it is worth doing a better program, though. You said your state program is still a good program, though it may not have the exact program you want. I would say research the fully-funded program more and see if you will be able to get the kind of internships you want, the kind of employment you want after you graduate, etc. If you are fully funded, but you always regret it because you end up getting a job that isn't at all what you wanted and you never get to do what you want to do, then it might be worth it to go to a different program. I think that your state school could be what you make of it, though, so as long as you hustle and do everything you can to set yourself up for success, it would certainly be really nice not to have any debt!

 

I pretty much feel the same way. I graduated with about 36k in undergrad debt about 3 years ago, and it's down to 29k now. I worked overseas for a few years, and saved roughly 20k while making minimum payments. I could have thrown more money at the loans, but I'd rather have that money for a) loan payments after grad school (they shouldn't be that high with IBR and the like, but just in case, I can absorb a few months of high payments) b ) potential relocation costs (I wouldn't be surprised if I ended up working outside of the country, and the last thing I want is to scramble for money or borrow from parents to get the tickets/apartment/etc.) c) emergencies.

 

I was fortunate enough to obtain some a not-insignificant fellowship, but I'm still looking at adding 60k~ (providing there are no TA/RA/additional fellowships) over the course of the next few years. Is it ideal? Of course not. However, it's just extra motivation to hustle for any TA or research positions that become available.

Edited March 18, 2015 by Guvutnick

[hikarizx]

Is there anyone not willing to bet on IBR and loan forgiveness? A lot can happen politically in 10 years. When I talk to current students who blithely tell me this and then say they're taking out 80-100k in loans it freaks me out.

 

I also hate the idea of stretching the payments beyond 10 years and paying more interest. Even 10 years sounds long! I'd finish paying at 38. Paying a mortgage, and child care, and presumably saving for retirement and your kids' college AND putting 10-15% of your income towards loans does not sound fun.

 

I guess I'm a pretty debt averse person though. I am questioning whether I should go back to school now or reapply/save more, even with offers that require me to take out what would add up to my post-grad starting salary, which most people consider to be a good standard. When I budget that out it still feels high. Seeing how fast interest adds up on my undergrad loans has made me more cautious.

 

For me I'm not necessarily worried about it for political reasons, but I'm not really willing to bank on it. I wish there was something more concrete. I think everyone knows there needs to be significant student loan/college cost reform but it just hasn't happened yet...

[hikarizx]

I pretty much feel the same way. I graduated with about 36k in undergrad debt about 3 years ago, and it's down to 29k now. I worked overseas for a few years, and saved roughly 20k while making minimum payments. I could have thrown more money at the loans, but I'd rather have that money for a) loan payments after grad school (they shouldn't be that high with IBR and the like, but just in case, I can absorb a few months of high payments) potential relocation costs (I wouldn't be surprised if I ended up working outside of the country, and the last thing I want is to scramble for money or borrow from parents to get the tickets/apartment/etc.) c) emergencies.

 

I was fortunate enough to obtain some a not-insignificant fellowship, but I'm still looking at adding 60k~ (providing there are no TA/RA/additional fellowships) over the course of the next few years. Is it ideal? Of course not. However, it's just extra motivation to hustle for any TA or research positions that become available.

 

Would you have chosen a less expensive program if you had the option? Just wondering since that's what I'm trying to figure out.

[kaseyleigh]

For me I'm not necessarily worried about it for political reasons, but I'm not really willing to bank on it. I wish there was something more concrete. I think everyone knows there needs to be significant student loan/college cost reform but it just hasn't happened yet...

 

Maybe someone in this exact forum going into policy will be the change! 

[ZebraFinch]

I'm strictly in the "less-to-no debt crowd. I was extremely fortunate to not have any undergrad debt (I went to a little-known, but excellent school that gave me free tuition after the first year because I was in the Honors Program, and tuition at the school is so low I could pay it all with Pell Grants in my first year). I studied abroad with the Boren scholarship. 

 

Having no undergrad debt has put me in an excellent position now, because I'm able to afford graduate certificate programs at better-known schools (those as well I've paid out of my own pocket even if they're costly). I've made a decision that I will not attend grad school for fall 2016 unless I get significant funding from a school. If that doesn't happen, I will take a year to get more work experience, study more for the GRE's, and generally work towards getting a profile that will be competitive for funding opportunities.

 

Now, I could afford to go this fall even without funding, and I can afford making loan payments in the future, but here's why I won't, even if I had gotten into a top brand-name school; no program at any school guarantees a job. I want to be in the Foreign Service. I worked at FSI for a while and had the chance to converse with some of the people who chose the A-100 class for that year. They explicitly stated they are looking for candidates who did not go to the traditional IR schools. There's too many of them, so you'd have to stand out some other way. I looked through some of the profiles and what they all had in common was a lot of professional experience (degrees from all over the place though) and either foreign language skills or extensive military experience. So, although I applied to those traditional schools.... I'm not getting in massive debt to attend one of their programs. I'd rather get professional or international experience some other way and try again another year.

 

And also, I guess this is the biggest factor for me, stuff, horrible, finance-destroying stuff happens. I'm very diligent with money but got struck with a previously undiagnosed medical condition as an undergrad that left me paying thousands and basically left me without any type of savings for a few years. The thought of going through that again AND having 80k in loans (and possibly a mortgage, kids, etc) gives me chills.

Edited March 18, 2015 by ZebraFinch

[kaseyleigh]

I pretty much feel the same way. I graduated with about 36k in undergrad debt about 3 years ago, and it's down to 29k now. I worked overseas for a few years, and saved roughly 20k while making minimum payments. I could have thrown more money at the loans, but I'd rather have that money for a) loan payments after grad school (they shouldn't be that high with IBR and the like, but just in case, I can absorb a few months of high payments) potential relocation costs (I wouldn't be surprised if I ended up working outside of the country, and the last thing I want is to scramble for money or borrow from parents to get the tickets/apartment/etc.) c) emergencies.

 

I was fortunate enough to obtain some a not-insignificant fellowship, but I'm still looking at adding 60k~ (providing there are no TA/RA/additional fellowships) over the course of the next few years. Is it ideal? Of course not. However, it's just extra motivation to hustle for any TA or research positions that become available.

 

Are you planning to work full time and go to school full time for grad school?

[Guvutnick]

Would you have chosen a less expensive program if you had the option? Just wondering since that's what I'm trying to figure out.

 

All things being equal, I would have. Unfortunately, due to a letter of recommendation snafu, I don't have any other offers to use as leverage for more aid. My only other options would be to try go to school abroad at lower ranked programs with a more limited alumni network, or burn through the savings trying for internships or language programs in order to hopefully get more funding the next time around. I'm 24 at the moment, so while that's an option I'd prefer not to.

 

Are you planning to work full time and go to school full time for grad school?

 

The only jobs I'd want to take during grad school would be work-study, or the previously mentioned type of positions. I want to put as much effort as I can into my grades and forging relationships with the faculty in hopes of getting additional funding for year two. Aside from that, I might do something low-key like tutor English online.

[hikarizx]

I'm strictly in the "less-to-no debt crowd. I was extremely fortunate to not have any undergrad debt (I went to a little-known, but excellent school that gave me free tuition after the first year because I was in the Honors Program, and tuition at the school is so low I could pay it all with Pell Grants in my first year). I studied abroad with the Boren scholarship. 

 

Having no undergrad debt has put me in an excellent position now, because I'm able to afford graduate certificate programs at better-known schools (those as well I've paid out of my own pocket even if they're costly). I've made a decision that I will not attend grad school for fall 2016 unless I get significant funding from a school. If that doesn't happen, I will take a year to get more work experience, study more for the GRE's, and generally work towards getting a profile that will be competitive for funding opportunities.

 

Now, I could afford to go this fall even without funding, and I can afford making loan payments in the future, but here's why I won't, even if I had gotten into a top brand-name school; no program at any school guarantees a job. I want to be in the Foreign Service. I worked at FSI for a while and had the chance to converse with some of the people who chose the A-100 class for that year. They explicitly stated they are looking for candidates who did not go to the traditional IR schools. There's too many of them, so you'd have to stand out some other way. So, although I applied to those traditional schools.... I'm not getting in massive debt to attend one of their programs. I'd rather get professional or international experience some other way. 

And also, I guess this is the biggest factor for me, stuff happens. I'm very diligent with money but got struck with a previously undiagnosed medical condition as an undergrad that left me paying thousands and basically left me without any type of savings for a few years. The thought of going through that again AND having 80k in loans (and possibly a mortgage, kids, etc) gives me chills.

 

Thank you for the information. I appreciate seeing the different perspectives and I think it's interesting they told you in that field they're looking for people NOT in the top programs. I'm also very considerate of the "stuff happens" factor. I haven't experienced anything like that, but it's true that you never know! 

[twilighttown23]

 

USC (as far as I know, this school ranks the highest among the four in public policy) offered me half-tuition scholarship which still ends up with about 20K/yr.

 

Duke Sanford School offered me 20K scholarship + assistantship = 22K/yr

 

Cornell offered me 10K scholarship =21K/yr. 

 

And today, Uni. of Minnesota Humphrey School offered me non-resident tuition waiver + 10K =7K/yr.

 

 

Above are the yearly tuition fees (leaving out living expenses) 

 

 

 

The only thing I am most worried about is the reputation of each school. 

 

So is it true that the ranking of each program matters more than the reputation of the school? (USC->Minnesota=Duke->Cornell is the current ranking, but this may be slightly wrong)

 

I was pretty sure that was the case but in recent weeks I've read that Cornell and Duke will be an advantage to getting a job in the US. 

To be honest, I am kind of afraid I'll be stuck in Minnesota forever.

 

I want to get your advice on how employers in the US general (it's very broad, I apologize) react to the reputation of universities and how that will affect my career.

 

I also want to get some advice on anything, ANYTHING on graduate schools, jobs related to policy, or any of the universities above. 

 

 

@LYJ, there were a few professors I had during undergrad (in the south) who had MPP's from Minnesota. You definitely will not be stuck there!