Entering grad school with credit card debt

[i_like_mango]

Hi all. I'm sure I'm not the only one with this problem and would really appreciate some tips/suggestions on what to do.

 

Now that the applications/admissions stuff is pretty much over, I've been dealing with another problem. Basically, I want to attend an awesome PhD program for fall 2015 in the US that is providing tuition waiver and full TA/RA stipend. The thing is, it's been a few years since finishing undergrad and life events have caused me to accumulate about $10k in credit card debt with some not so nice interest rates. I was hoping that I'd be able to fill out a FAFSA and take out some nice subsidized loans to cover everything, but I just realized that subsidized loans are now only available to undergraduate students. Federal unsubsidized loans are available, but they have current interest rate of 6.21%. This rate is definitely better than what I've currently got going on, but it does mean that over the (hopefully only) 6 years I'll be accumulating more than $4k in interest to take out a $10k loan. Is it worth it?

 

I mean, I'm going to be as frugle as I can in the next few months, but most of what I save up until the start of grad school will probably go towards moving costs and housing security deposit + costs. One option that I'm coming with is to defer attendance for a year. This will give me enough time to pay off the debts and build some savings (I'm thinking at least an emergency fund) for my time in grad school. Another part of me thinks that the cost is totally worth it. I won't be six figures in debt like some other folks and afterall, a dream deferred is a dream denied.

 

What do you guys think?

 

edit: I'm sort of feeling that $14k of debt is maybe not that much to deal with after grad school? I'd like to get some feedback since I'm guessing that this stuff is relevant to other people in worse positions.

Edited April 10, 2015 by i_like_mango

[Cheshire_Cat]

Have you been accepted to a Ph.d for 2015?  The application season is over.  Obviously 6.21% is better than 18-22% that credit cards charge.  However, I would also try to pay down on the loan while in school.  Also, think about how much you will be making before the Ph.D, and how much you will be making afterwards.  If you are making 30k now, and 70k then, then it is probably worth the 4k in interest because one year deferred would cost you around 40k (well, a little less than that, because you can assume you will get paid more as you gain experience, but I'm making it easy)  But if you are making 35k now and will be making 40-45k when you get out... then it may not be worth it. 

Anyways, that's just something I'd look at.  I'm sure if you are physics you can probably figure out how to apply that to your exact situation.

[i_like_mango]

Thanks for the reply. The point you make about having higher earning potential after grad school makes sense... if I choose not to do the post doc route. But, I guess that's not something to worry too much about right now.