Financially Crippling Loans

[kbui]

I was doing some math (or as I refer to it in my personal statement, "quantitative analysis"), and I just realized something horrific.

If we get into our choice of Public Policy programs at a private school, the grand total of direct and indirect costs for two years would amount to approximately $140,000.

Now, if we are "fortunate" and get all of it in subsidized and unsubsidized loans, which have a current and respective 4.29% and 5.84% annual interest rates, with a standar payment plan, we would have to pay at least $1,100 a month for 15 years (180 months) to be able to pay it all off--with a total of $201,000 once we're finished!

Now, I don't know what type of career you want to get into after an MPP/MIA/MPA/MPx degree--but is it worth it?

Please, take caution my fellow GradCafenians. I am strongly reconsidering the way I approach graduate school after this intensive post-graduate quantitative analysis experience.

Edited December 4, 2015 by kbui

[Ben414]

Your calculation in total repayment is probably low given that federal interest rates will likely increase in the upcoming years.  Plus, I'm not sure what % you gave to subsidized versus unsubsidized, but the vast majority will likely be the latter.

Regardless of the exact number, I completely agree with your conclusion.  There aren't many situations where even HKS is worth that money, even with public loan repayment plans which are too constrictive for my preferences.

[went_away]

1 hour ago, kbui said:

Please, take caution my fellow GradCafenians. I am strongly reconsidering the way I approach graduate school after this intensive post-graduate quantitative analysis experience.

As you should. No way the salary from a career in government or a nonprofit justifies paying full sticker price for two years at a private graduate school - all while forgoing income. Tuition and expected earnings are WAY out of whack at top schools of International Affairs and Public Policy. 

Edited December 5, 2015 by went_away

[hedong123]

What a shame. 

When this sort of career path is your dream but you don't qualify for any funding...I think about how badly I want this but then I think about the mountain of debt that it'll create...

Let's face it, it's only worth it if you're wealthy or if you secure a decent level of funding.  Paying sticker price doesn't make sense financially.

[StyLeD]

It's quite expensive, yes. @kbui, you seem to have been competitive for past scholarships and can apply for things like SOROS, Pickering/Rangel to help allay some of the costs. Some lesser-known programs are incredibly generous. I don't think Denver Korbel has ever had a Pickering fellow, and programs such as Middlebury's Institute of Int'l Studies at Monterey will provide significant aid to fellowship recipients. Columbia SIPA will provide partial matches as well. You should contact the Fulbright/Boren offices to see whether or not there are similar "unofficial" deals offered to your cohort.  

In general, going 100k+ in debt is never a good idea unless you have a job waiting for you. When calculating my own expenses, I promised myself not to take loans beyond what I expected to make in salary for my first year. 

[sp108]

It is what it is man. I am doing it because I find my current career track less and less enjoyable.  Life is short.  Most of that time is spent working.  I want to join a program because I want to do something enjoyable during the day.  Make a difference in some positive way.  Find new meaning to a career.

[kbui]

16 hours ago, StyLeD said:

It's quite expensive, yes. @kbui, you seem to have been competitive for past scholarships and can apply for things like SOROS, Pickering/Rangel to help allay some of the costs. Some lesser-known programs are incredibly generous. I don't think Denver Korbel has ever had a Pickering fellow, and programs such as Middlebury's Institute of Int'l Studies at Monterey will provide significant aid to fellowship recipients. Columbia SIPA will provide partial matches as well. You should contact the Fulbright/Boren offices to see whether or not there are similar "unofficial" deals offered to your cohort.  

In general, going 100k+ in debt is never a good idea unless you have a job waiting for you. When calculating my own expenses, I promised myself not to take loans beyond what I expected to make in salary for my first year. 

@StyLeD I'll have to take a look at those programs. I am currently in the application process for the Pickering and Rangel, so I hope that works out. Or else, it is just not financially smart to get an MPP degree.

And do you have a Rangel or Pickering? It seems like you got a lot of funding for Columbia (congratulations!). I'd love to know what I can do to help get more funding for that program also. I'm applying for some smaller fellowships, but nothing too substantial.

[kbui]

1 hour ago, sp108 said:

It is what it is man. I am doing it because I find my current career track less and less enjoyable.  Life is short.  Most of that time is spent working.  I want to join a program because I want to do something enjoyable during the day.  Make a difference in some positive way.  Find new meaning to a career.

I hope things work out. What program are you currently in, and what do you hope to do after graduation?

[shrimps]

Oh man, I think a lot of us on GradCafe are terrified of the prospect of being saddled with crippling student loans for degrees that prepare us for careers where we might not be able to pay them back.

I'll echo @StyLeD here and add that I found it incredibly helpful when coming up with my list of schools to scroll through past "Decisions" threads on this forum and look for patterns in which schools are more likely to give funding. Places like CMU, USC, and U of Chicago, for example, are awesome programs that also sometimes half or even full tuition scholarships. I cast a wider net than I originally planned on because I wanted to increase my opportunities for funding. I'm feeling the full weight of all those applications now, but I'm hoping that in the end, it gives me more options and financial flexibility.

Finally, it's important to remember that while you can look up tuition, estimated costs of living, percentage of students that receive scholarships, etc., but you can't know how much each program would really cost you personally unless you apply and see what the offer is. @kbui, it sounds like you are applying to a shorter list of schools than most. While we're getting close to the deadlines, there's totally still time to crank out a few more essays and ask your recommenders to send those letters to just a couple more places if you find programs you're excited about.

[kbui]

@shrimps I saw that you are applying to several programs from another post that you made, and that we both applied to HKS. I hope we both make it!

I'm very excited at the prospect of being back in school and advancing my career with graduate school, and I'm praying to the good Lord that I get funding to doing so. I've been thinking about the whole process and how much potential I have in just two years, but then I also wonder if I'm too idealistic of what post-graduation looks like.

Thankfully I didn't wrack up a lot of student debt in college (even though I took five years and got two bachelor degrees), but after reading the stories on studentdebtcrisis I am mortified of taking out loans to invest in a dream of a bright future (which some other people did also, but it ironically turned out dark and dim).

Don't get me wrong though, I'm very optimistic when it comes to our future. It's just I'm a bit more realistic now about the issues.

[MaxwellAlum]

I agree it's not smart to take out six-figure debt for a public policy masters.  A huge reason not to is that you can still get a great job in the field without going to HKS or SIPA.

That said, to be clear, $100,000 in federal student debt, while definitely not a good idea, does not have to be financially crippling.  Income-based repayment programs make loan payments on this amount of debt reasonably manageable.  You will never have to pay $1,000 a month on a $40,000 salary thanks to these programs (which only apply to FEDERAL loans, and not to private student loans), although you can if you want to.  The problem is that you will likely never be able to pay it off yourself.  You may get forgiveness after 10 or 25 years (depending on which forgiveness programs are still available), but there is no certainty of this.  In the meantime, your balance may grow if you can not cover the interest that accrues every month, and you will be taking hundreds of dollars out of your monthly income to make loan payments, for at least a decade and probably more (Public Service Loan Forgiveness is likely to be eliminated by Congress, at least for future borrowers).

Some people are able to pay off lots of debt on a modest salary by living frugally.  But if you are in your late 20s already, by the time you graduate it's likely you'll want to start getting serious about saving for retirement and buying a house.  On a public sector salary, it is not possible to do all of these things while also making extra payments on your student loans (and don't forget that accruing interest makes it extremely hard to make a dent on six-figure debt).  So the reality is that you'll likely be making affordable, but significant payments on your loans for a very long time.  If you feel that's worth it to you, it can be done, but for most people the benefits are not worth the costs.

[kbui]

@MaxwellAlum Beautifully rationalized.

I think other than just purely the cost, the network and social benefits of going to a top tier university is also a significant factor for me. I went to a mid-sized college without a name outside of Minnesota, and I am ready to open up my networks so that I can help future students in my own state if they wanted to connect with leaders from different fields in different states. I know that when I was growing up, there weren't many mentors around besides academic ones who were also white and didn't look like me, so this is an issue that keeps me moving forward in my career and education.

I am ready for a bigger challenge than just working at a non-profit (which I greatly enjoy), and it seems like an expensive big name graduate school education is the key, so I'm just reasoning out if it's worth the cost if I don't get substantial fellowships. Which, from the board, it is clear that it indeed is doable if I'm ready to make the sacrifices, but it won't be the best financial decision in the short/mid/long-run.

[MaxwellAlum]

22 hours ago, kbui said:

@MaxwellAlum Beautifully rationalized.

I think other than just purely the cost, the network and social benefits of going to a top tier university is also a significant factor for me. I went to a mid-sized college without a name outside of Minnesota, and I am ready to open up my networks so that I can help future students in my own state if they wanted to connect with leaders from different fields in different states. I know that when I was growing up, there weren't many mentors around besides academic ones who were also white and didn't look like me, so this is an issue that keeps me moving forward in my career and education.

I am ready for a bigger challenge than just working at a non-profit (which I greatly enjoy), and it seems like an expensive big name graduate school education is the key, so I'm just reasoning out if it's worth the cost if I don't get substantial fellowships. Which, from the board, it is clear that it indeed is doable if I'm ready to make the sacrifices, but it won't be the best financial decision in the short/mid/long-run.

If I were you, I would at least apply to non-Ivy League schools with strong public policy programs (University of Michigan, University of Chicago, Carnegie Mellon, Cornell, and of course my alma mater Syracuse University come to mind).  If you are focused on IR, the Fletcher School is a good option.  It looks like you are a very competitive candidate that would easily get a nice funding package from one of these programs.  It may be you get that dream scholarship to SIPA.  But I know that I did not fully realize how debt-averse I was until I received an offer from a great school that would have required me to take on $100,000 in loans.  Suddenly, I was like, "Nope."  I was glad that I gave myself multiple options and ended up with less than half of that in debt (for a dual degree!).

Edited December 8, 2015 by MaxwellAlum

[maplesyrup88]

As a current first year who put a LOT of time and thought into the financial aspect when applying last year, let me share one little nugget of advice: It may be obvious to some, but it took me a while to realize that we should NOT take the programs' cost of attendance at face value. I applied to the same DC schools as many others, and when I was doing my debt calculations I originally went by their published cost of living, but it turns out these numbers are pretty inflated. That is to say: GW assumes you will live alone in Foggy Bottom, SAIS assumes you'll live alone in Dupont Circle, and Georgetown assumes you'll live alone in Georgetown, AKA 3 of the most expensive areas of DC. I eventually figured out that with wise living choices (splitting rent with roommates; choosing a cheaper zip code) I could probably pay 10k less PER YEAR than their cost of living calculations. This helps even out the playing field against schools in cheaper areas (Fletcher being prime among them). You could say the same about NY-area schools and possibly others. Of course, there's nothing you can do about the tuition being higher at these schools, but just keep in mind that living expenses can be more malleable.

Why do the DC programs and others inflate living costs? It's well intentioned: by doing so they increase the amount of Grad PLUS loans you can take out to help fill in any shortfall, since federal law dictates that you cannot borrow more than the cost of attendance. So they are giving you the flexibility to take out more loans in case you need them. But it should be made clear that they are using the upper limit of their range for living fees, not the average or typical living fees borne by students.

So if you're using the 140K figure, you could conceivably pay more like 120k. Not a game changer, but hopefully helpful for some. Personally I still wouldn't pay that much, but for those lucky enough to get at least some scholarship funding, thinking about how much you could save on living expenses helps close the gap a bit.

Good luck everyone!

[CurrentJackson]

Hi @kbui, for the reasons you mention I suggest looking very closely at programs that fully fund a large portion of admitted students, like Yale Jackon or Princeton WWS.

[kbui]

On December 17, 2015 at 10:40 AM, CurrentJackson said:

Hi @kbui, for the reasons you mention I suggest looking very closely at programs that fully fund a large portion of admitted students, like Yale Jackon or Princeton WWS.

If the stars do not align this year, I will try next year. I will pump up my application with more public service leadership experiences through using my new position with a large non-profit here in Minneapolis. And does Yale Jackson fully fund a large portion of admitted students? I haven't heard or read anything about it yet.

[CurrentJackson]

On 12/21/2015 at 9:32 PM, kbui said:

If the stars do not align this year, I will try next year. I will pump up my application with more public service leadership experiences through using my new position with a large non-profit here in Minneapolis. And does Yale Jackson fully fund a large portion of admitted students? I haven't heard or read anything about it yet.

@kbui, Sorry for the delay in responding. Yes, my experience is that many of the admitted students are offered funding.