Let's Talk Debt

[kb6]

20 hours ago, went_away said:

You are completely correct in your assessment. The inescapable conclusion is that the elite (public affairs) grad school market is completely out of synch with career outcomes. 

The only people I know who don't occasionally question their decision to pursue this degree are those whose parents footed the entire bill. 

I think the other issue is that if you haven't lived in DC, a lot of these post-IR master's jobs sound a lot more glamorous than they are. For example, World Bank jobs are being discussed in another thread. I remember thinking that sounded so prestigious before starting at SAIS. Now I have a zillion friends who work there, and with one exception they're cycling through a series of short-term contracts with no benefits, complaining about the instability of temporary positions, the frustrations of bureaucracy, and how they're not sure whether their work is having any impact. The World Bank is basically a depository for non-American SAIS grads who can't get work sponsorship in the private sector, and most of my friends working there know it and slightly resent it. 

[went_away]

3 hours ago, kb6 said:

The only people I know who don't occasionally question their decision to pursue this degree are those whose parents footed the entire bill. 

I think the other issue is that if you haven't lived in DC, a lot of these post-IR master's jobs sound a lot more glamorous than they are. For example, World Bank jobs are being discussed in another thread. I remember thinking that sounded so prestigious before starting at SAIS. Now I have a zillion friends who work there, and with one exception they're cycling through a series of short-term contracts with no benefits, complaining about the instability of temporary positions, the frustrations of bureaucracy, and how they're not sure whether their work is having any impact. The World Bank is basically a depository for non-American SAIS grads who can't get work sponsorship in the private sector, and most of my friends working there know it and slightly resent it. 

Amen to that. Welcome to 1-3 month STC's (short term contracts). It's the 'glamorous' life of a temp worker. Veterans' preference will do FAR more for one's career prospects than an elite international affairs degree. 

Those who do the best coming out of these programs have a strong combination of things working in their favor. First they are probably quite successful BEFORE going to a top grad school. This means they come from a well-off family that values education and they were able to go to a top undergrad (think University of Chicago or U Penn). Next they joined the military as an officer and/or had a series of very elite level internships at top institutions. They likely also have family friends/acquaintances who are high level executives in the federal government, diplomats, or a Senator or Member of Congress. By the time they go to grad school they are already well on their way with a solid career assured to them. 

Others working low-prestige jobs see these glittering examples of success and think a grad degree on its own will get them there. Sadly, that's really not the case and most will struggle. Doing well is a result of a long series of good choices, fortunate breaks, family wealth (in most cases), and big investments in yourself. 

Edited April 17, 2017 by went_away

[ExponentialDecay]

Vet status will do shit for you in international government.

On 4/16/2017 at 4:48 PM, kb6 said:

The only people I know who don't occasionally question their decision to pursue this degree are those whose parents footed the entire bill. 

I think the other issue is that if you haven't lived in DC, a lot of these post-IR master's jobs sound a lot more glamorous than they are. For example, World Bank jobs are being discussed in another thread. I remember thinking that sounded so prestigious before starting at SAIS. Now I have a zillion friends who work there, and with one exception they're cycling through a series of short-term contracts with no benefits, complaining about the instability of temporary positions, the frustrations of bureaucracy, and how they're not sure whether their work is having any impact. The World Bank is basically a depository for non-American SAIS grads who can't get work sponsorship in the private sector, and most of my friends working there know it and slightly resent it. 

Daamn is Gandhi liberating India in this post? Because it sure is salty. You call it a depository, but the G-4 is worth ~20% of your annual salary plus avoiding the H1B bloodbath, on which the risk premium is punishingly low, especially in this administration.

Know before you go is all well and good, but what really grinds my gears is public servants who act like they're doing the world a huge fucking favor. The UN institutions and affiliated organizations have a lot of problems work environment-wise, and the least protected employee classes are treated abominably unless they have someone in power who is willing to advocate, but let's be real, working in international organizations has undeniable positives, which may not be so positive for one person as they are for another, but if they aren't, why stay in the field? Do something else. The world is your oyster.

Edited April 17, 2017 by ExponentialDecay

[went_away]

5 minutes ago, ExponentialDecay said:

Vet status will do shit for you in international government.

Daamn is Gandhi liberating India in this post? Because it sure is salty. You call it a depository, but the G-4 is worth ~20% of your annual salary plus avoiding the H1B bloodbath, on which the risk premium is punishingly low, especially in this administration.

Know before you go is all well and good, but what really grinds my gears is public servants who act like they're doing the world a huge fucking favor. Like, am I really supposed to believe that there are people out there who are stupid enough to think that public sector work isn't a, competitive to get, b, low-paid, c, bureaucratic af, d, endless, coglike, frequently boring and seemingly pointless? The UN institutions and affiliated organizations have a lot of problems work environment-wise, and the least protected employee classes are treated abominably unless they have someone in power who is willing to advocate, but let's be real, who would choose an STC or even an STT gig over some unpaid small-change NGO? Everyone, people. How many CVs do you get in your inbox? I get a shit ton. Mostly from people who have contracted before. Who are these people who are going into policy programs hoping to get a job making the big bucks in the private sector, especially if they are international? I have never met one. If they exist, they are pursuing an exceptionally dumb strategy.

What I don't understand is how people go into this field with their eyes open and then whinge about features they knew about going in. If you're complaining about how you could be pimping it up in the private sector but your ~*calling and concern for the world or whatever is keeping you here, please, the door is that way, there's a queue of people eager to take your spot. There are legit people out there who enjoy designing policy, who have left lucrative fields in which they were successful so they could do policy full-time, and who aren't just phoning it in (and also a lot of people who are phoning it in, which the public sector is way more amenable to than private industry fyi, which explains the presence of 99% of your time-waster friends). Working in international organizations has undeniable positives, which may not be so positive for one person as they are for another, but if they aren't, why stay in the field? Do something else. The world is your oyster.

I think it's shades of grey and am not sure anyone really disagrees here. Know before you go, do your due diligence, have a plan, etc.

My basic point is that full-freight tuition prices at elite public affairs grad schools - and the level of financial aid given out - is inconsistent with expected career earnings and job stability, much like how many have viewed law schools since 2008. My other point is that there's more than one way to skin a cat and that an elite master's degree is not the most sure-fire way to break into the field.  

One of those more 'surefire' ways of breaking into international and public affairs types of jobs is by being a veteran.  

When I talk about veteran's preference I am, of course, speaking about US federal government jobs and about federal government contracting in which there is an explicit preference. Being a veteran is also a traditional background for top-tier consulting and investment banking and given how business works in DC is a great background for any number of other private sector jobs, much like how being a former staffer on the hill is a great background for being a lobbyist. 

[kb6]

4 hours ago, ExponentialDecay said:

Vet status will do shit for you in international government.

Daamn is Gandhi liberating India in this post? Because it sure is salty. You call it a depository, but the G-4 is worth ~20% of your annual salary plus avoiding the H1B bloodbath, on which the risk premium is punishingly low, especially in this administration.

Know before you go is all well and good, but what really grinds my gears is public servants who act like they're doing the world a huge fucking favor. The UN institutions and affiliated organizations have a lot of problems work environment-wise, and the least protected employee classes are treated abominably unless they have someone in power who is willing to advocate, but let's be real, working in international organizations has undeniable positives, which may not be so positive for one person as they are for another, but if they aren't, why stay in the field? Do something else. The world is your oyster.

I'm from the US and don't work for the World Bank, so this is not personal bitterness. I'm just repeating what friends have said after a beer or three.

Perhaps I've gotten a bit carried away, but I think it doesn't hurt to counter the narrative a lot of these schools push that signing away your life to Navient is no big deal because you're going to be changing the future of the world with your prestigious and deeply meaningful multilateral job. I came out of SAIS with a relatively low level of debt and on the whole think it was worth it - I would not have my current job or salary without it. But I don't think I'd feel the same if i had 120k in debt, and could never in good faith tell someone to pay sticker unless he/she's independently wealthy.

[MaxwellAlum]

On 4/15/2017 at 8:00 PM, kb6 said:

I have some friends who took on 6-figure debt loads, and it's a gigantic weight on their shoulders that will have major ramifications on their lives for decades to come. Think - living with roommates into your mid-30s, racking up credit card debt because you're short on cash when having to make that $900 payment each month (which basically just covers interest), having to make salary the #1 consideration in the job hunt (which sucks when you're getting a degree that qualifies you for some awesome but lower-paid jobs at non-profits and advocacy organizations), not being able to fly to friends' weddings or take vacations, etc.

I agree with most of what you said in your post, kb6.  I don't think taking on six-figure debt for an MPP is a smart idea.  However, for the sake of those folks with six-figure debt, I will say I personally know several people in this situation who are definitely not living with roommates in their mid-30s or racking up credit card debt.  They are on income-based repayment plans, which allows them a lot of flexibility in terms of saving, career choices, etc.  Yes, they run the risk of making payments for 25 years/forever, but that basically means they are 10% poorer than they would be without the debt (current income-based plans allow you to pay a maximum of 10% of your income above poverty level).  Not the best outcome, especially for a degree that you could get for much less money at a different school or with aid, but hardly the nightmare situation that some describe. 

Folks, if you are racking up credit card debt because of your federal student loans you need to get on an income-based repayment plan immediately.  It makes zero sense to pay 15% to 20% interest on a credit card to pay down loans with a 7% rate.

[Surfbordt]

Casually following this thread and thinking about how much debt I'll be in after I graduate from Fletcher (sighs).....

[parkjun888]

Well, I've pretty much accepted the will of the gods and signed my name on a dotted line to a school that is WAY too expensive for me. Hopefully my soul will not languish in hell forever. Don't think of this as "debt", think of it as an "all-in" at a Hold'em game

[kb6]

10 hours ago, MaxwellAlum said:

I agree with most of what you said in your post, kb6.  I don't think taking on six-figure debt for an MPP is a smart idea.  However, for the sake of those folks with six-figure debt, I will say I personally know several people in this situation who are definitely not living with roommates in their mid-30s or racking up credit card debt.  They are on income-based repayment plans, which allows them a lot of flexibility in terms of saving, career choices, etc.  Yes, they run the risk of making payments for 25 years/forever, but that basically means they are 10% poorer than they would be without the debt (current income-based plans allow you to pay a maximum of 10% of your income above poverty level).  Not the best outcome, especially for a degree that you could get for much less money at a different school or with aid, but hardly the nightmare situation that some describe. 

Folks, if you are racking up credit card debt because of your federal student loans you need to get on an income-based repayment plan immediately.  It makes zero sense to pay 15% to 20% interest on a credit card to pay down loans with a 7% rate.

Yes, I definitely know people taking advantage of IBR to make their day-to-day lives manageable - as far as I'm aware, there are no SAIS grads sleeping under a bridge! But with the exception of those who qualify for PSLF, I think a lot of them are going to feel pretty bitter when that massive tax bill comes due in 20-25 years. Depending on the loan amount, IBR might not even cover the interest payment, allowing the total amount owed to actually increase over time...

Again, my intention is not to make people feel bad about the debt they've already taken out, but more to warn prospective students who haven't yet signed the dotted line.

[datik]

21 hours ago, parkjun888 said:

Well, I've pretty much accepted the will of the gods and signed my name on a dotted line to a school that is WAY too expensive for me. Hopefully my soul will not languish in hell forever. Don't think of this as "debt", think of it as an "all-in" at a Hold'em game

 

Well, I think that its a fine decision if you consider that you are getting the degree because it will lead you to opportunities that are an end in itself rather than getting rich. And also, that you must be financially thorough for the next decade.

[MaxwellAlum]

16 hours ago, kb6 said:

Yes, I definitely know people taking advantage of IBR to make their day-to-day lives manageable - as far as I'm aware, there are no SAIS grads sleeping under a bridge! But with the exception of those who qualify for PSLF, I think a lot of them are going to feel pretty bitter when that massive tax bill comes due in 20-25 years. Depending on the loan amount, IBR might not even cover the interest payment, allowing the total amount owed to actually increase over time...

Again, my intention is not to make people feel bad about the debt they've already taken out, but more to warn prospective students who haven't yet signed the dotted line.

Agreed.  Taking out much more than $100k is a big risk in this respect.  At $100-$120k in loans, a person's income-based payments will probably at least cover the interest or most of it after 5-7 years of salary growth in a good government job. If you're anywhere near $200k in total student loan debt, you're really looking at a balance that will grow significantly over 25 years on a public sector salary and an income-based plan, and that's going to result in a massive tax hit in the absence of public service loan forgiveness.  The interest will make it really tough to make a dent in a balance like that.  There are options for dealing with tax hits (installment plans, a personal loan/home equity loan) but it's still a huge cost, for a degree that probably didn't increase your income much.

[kb6]

On 4/20/2017 at 1:27 PM, MaxwellAlum said:

Agreed.  Taking out much more than $100k is a big risk in this respect.  At $100-$120k in loans, a person's income-based payments will probably at least cover the interest or most of it after 5-7 years of salary growth in a good government job. If you're anywhere near $200k in total student loan debt, you're really looking at a balance that will grow significantly over 25 years on a public sector salary and an income-based plan, and that's going to result in a massive tax hit in the absence of public service loan forgiveness.  The interest will make it really tough to make a dent in a balance like that.  There are options for dealing with tax hits (installment plans, a personal loan/home equity loan) but it's still a huge cost, for a degree that probably didn't increase your income much.

Yeah. I also think it's really easy to dismiss money concerns when you're applying for these programs in your early-to-mid-20s.

$60k/yr sounded like a ton of money to me when I decided to go to SAIS. At that point, I was happy to be living with roommates in a cheaper city in a building with no laundry facilities. Socializing usually meant going to friends' houses or a dive bar.

I actually started closer to 70k after SAIS, but it didn't really feel like that much after higher rent in DC, loan payments, having to buy a fancier work wardrobe, increased "adult" expenditures (like my parents no longer occasionally paying for stuff, getting half a dozen wedding invitations every year, and socializing becoming more expensive now that the default is dinner/drinks at nicer restaurants), etc. And now that I'm pushing 30, I'm starting to have thoughts like - will I ever be able to afford a condo, let alone a house? Will I ever be able to have kids, and if so, will I be able to help them with college considering I'll be paying off my own loans until my late 30s? (Now imagine that question for people who go on 25-year repayment plans)....

Edited April 25, 2017 by kb6

[datik]

Do you guys think that taking 30K debt for going to HKS is worth it? (This with a willingness to work in the private sector)

 

[went_away]

43 minutes ago, datik said:

Do you guys think that taking 30K debt for going to HKS is worth it? (This with a willingness to work in the private sector)

 

Probably yes.

[MaxwellAlum]

5 hours ago, kb6 said:

I also think it's really easy to dismiss money concerns when you're applying for these programs in your early-to-mid-20s.$

Yes, this is so important. Before grad school I used to feel likeI had so much extra money I could save on a very low salary living in a tiny room in a shared house with four other people and not going out much and rarely to restaurants.  Now I am 32 and my sigificantly higher salary feels much more constrained.  I spend more money for all the reasons you mentioned and I'm more aware of how much I need to set aside for retirement and for a down payment for a house.   Don't make the mistake I did of thinking that you'll be able to pay off your $50k in loans in 3 years by throwing half of your take home into your loans.  Unless you are getting help from other sources, you're going to want that money for something else.

[SvetaV]

Does anyone know whether as an STC at the Bank one qualifies for the Public Service Loan Forgiveness or is enrolled in said program as an STC? Not sure STC contracts hold the necessary 'employee' status for PSLF.

[MaxwellAlum]

Unfortunately, I don't think the World Bank qualifies as an employer for PSLF.  The text below is from the studentaid.ed.gov website.  I recommend anyone thinking about PSLF read their materials on PSLF carefully.

"Does employment by a foreign government or international, intergovernmental organization (such as the United Nations, Organization for Economic Cooperation and Development, Organization of American States, North Atlantic Treaty Organization) qualify for PSLF?
No. Only U.S. federal, state, local, and tribal government organizations, agencies, or entities are qualifying employers for purposes of PSLF. However, if you work for a U.S. delegation to an international, intergovernmental organization, such as the U.S. mission to the United Nations, your employment qualifies because your employer is the U.S. government."

[_kita]

13 hours ago, SvetaV said:

Does anyone know whether as an STC at the Bank one qualifies for the Public Service Loan Forgiveness or is enrolled in said program as an STC? Not sure STC contracts hold the necessary 'employee' status for PSLF.

No on the contracting piece either. For a lot of these details check here

I’m employed full-time by a company that is doing work for a qualifying PSLF employer under a contract. However, the company that I work for is not a qualifying PSLF employer. Does this employment qualify for PSLF?
No. You must be employed full-time by a qualifying employer. This means that many government contractors won’t qualify for PSLF.

[MaxwellAlum]

2 hours ago, _kita said:

No on the contracting piece either. For a lot of these details check here

I’m employed full-time by a company that is doing work for a qualifying PSLF employer under a contract. However, the company that I work for is not a qualifying PSLF employer. Does this employment qualify for PSLF?
No. You must be employed full-time by a qualifying employer. This means that many government contractors won’t qualify for PSLF.

My understanding is if you are an independent contractor (e.g. not a Deloitte employee working in DHS facility) you can still qualify for PSLF.  You need to work at least 30 hours per week to be considered full-time, and if you had two jobs that add up to full-time, then that counts as well.  With World Bank STCs, the problem is the World Bank does not qualify as a public service employer.

http://www.holdfasttodreams.org/busting-myths-pslf-and-independent-contractors/

[_kita]

@MaxwellAlum Yes, you are correct. I was misreading the contract and didn't realize that the World Bank was the one cashing the checks! Contracting agencies are mostly for-profit, so those' contractors are out of luck. Independent contractors can qualify if they're being paid by an appropriate PSLF employee.

[Guest]

On 4/19/2017 at 12:56 PM, parkjun888 said:

Well, I've pretty much accepted the will of the gods and signed my name on a dotted line to a school that is WAY too expensive for me. Hopefully my soul will not languish in hell forever. Don't think of this as "debt", think of it as an "all-in" at a Hold'em game

1

Ha, same. Tuition alone wouldn't be the worst thing in the world if you didn't have to worry about high living expenses (*cough* Especially in the DC Metro area in regards to rent).

[LifeOnMars]

For what its worth, I chose to go to Berkeley over HKS/Fletcher/other more expensive schools largely because of the money, and I don't regret it at all.  

This all may be premature given that I'm only 1 semester in, but I really doubt I'm going to be thinking, "Man, I wish I was in more debt" when I graduate.    I think it's more likely that I'll be thinking "Good thing I don't have to get a really high paying job to pay off all these fucking loans; I think I'll go work at XYZ place where I think the work will be really interesting and fulfilling" or even "Why don't I take a few months off to travel/work on some other project that may yield career benefits down the road, since I don't have to worry that much about money?"  And anyway, it's definitely still possible for me to get a job at the UN or some other brand-name international organization if I want to go that route (or the federal gov't or world bank or whatever toots your snoot).

Choosing schools was a difficult decision and caused me a lot of stress at the time (money, but also pressure from family, location, personal connections, etc), but now that it's all over, I'm glad I went for the cheaper, almost-as-prestigious option.  HKS sounds fancy but really costs A LOT more.  Fletcher was more well-suited to my international interests, but also cost a lot more.  Berkeley also looks pretty damn good on a resume, and there's a ton of international stuff going on outside of the policy school that I've been able to plug into.  I figure that I'll have to work a bit harder while in school to make international connections, but that's definitely worth the difference in tuition costs.  

Also: What could you do with the money you won't be using to pay off your loans?  Saving tens of thousands of dollars and avoiding extra pressure/less freedom during some of the prime years of your youth is worth a lot.  It's worth more to me than being able to say I went to HKS or whatever, and unless you have your sights set on fairly specific types of positions, the outcomes are not so different among most top schools.  Your job prospects will depend a lot on what you do (internships, extracurricular projects, etc), not only on what school you went to.

That being said, I am not as "ambitious" as a lot of people with regard to my career goals.  In fact, I hate even thinking about the term "career goals," and would rather have an interesting and varied life than a fancy consulting job or whatever.  Your willingness to take on loans should depend partly on how much the degree will help you get to where you want to go, of course... But there are many routes to the same destination, and if you don't really know where you're going, it's foolish to spend too much getting there.

Just one more perspective....

Edited December 4, 2017 by LifeOnMars

[LifeOnMars]

Just to update my post above, I'm now half way done with the program and have ZERO regrets about not taking on more debt to go to a fancier-sounding school. School has been less exciting/inspiring than I was hoping it would be, and if I had taken 50-70k in loans and was still feeling this way, I'd be pretty damn pissed off about it!

[Nico Corr]

Simply put, the debt in most cases isn't worth it. 

[HelloItsMe]

This seems like an important thread to bring to the top since some folks on her are considering taking out huge loans to go to get an MPP/MPA. 
 

I personally am going to the school that will cost the least. So far, my options will be around ~25-30K max over two years. How are some of you deciding where to attend relative to the amount of student loan debt you may potentially be in?