by: The Debt Shrink
In grad school they didn’t teach us about repaying student loans. They also didn’t teach how much we could expect to earn after we graduated.
Fortunately, during undergrad I attended a seminar by current grad students about applying to grad school. They recommended we ONLY apply to programs that offer both tuition waivers and stipends. Yes, such programs are more competitive, but the extra efforts to get more lab experience, present posters, and earn high GRE scores to get in could save a hundred thousand dollars or more. This was the best advice I received!
Student loans can be a median of $160,000 for PsyDs, which is significantly higher than the median Clinical/Counseling PhDs ($76,500) and Research and other PhDs ($72,500). However, there are no significant differences in pay between the two degrees. Furthermore, most early career psychologists say they earned less money than they had expected (Doran et al., 2016).
In 2017, the median salary for psychologists was $77,030 ($75,090 for clinical/counseling/school psychologists, $87,100 for I/O psychologists, $97,740 for other psychologists) (US Dept of Labor Statistics).
I had a baby while on internship, and was the sole provider for my family of three while on post-doc. Luckily, I did graduate from a PhD program with tuition waivers and I worked as an RA. However, I still took on debt, which I had to start repaying six months after graduating!
During my two-year post-doc, I kept my expenses as low as possible. Although I was making twice as much money, I continued to live as if I were an intern and threw all the “extra” money I was making toward my loans. When I started a staff position, I made nearly double the salary as I did during post-doc. However, I still continued to live as if I were an intern. Within three years of graduating, I had paid off my loans (without any forgiveness or repayment plans)! Five months after that, I had enough for a down payment on my house. I’ve had my home for 5 years, and plan to have it paid off in another 2!
I know that after 30 years of hard work and living like a student, you will be eager to finally be making money. But if you are able to keep your expenses at near-student levels during post-doc and your first few years of your career, your future-self will thank you!
If you are having difficulty getting by on your grad school or internship stipend, what are the reasons?
Do you live in an area with a ridiculous housing market and rents have skyrocketed? If so, seriously consider getting a roommate (or two). Aim for rent to be <30% of your annual income.
Do you own more car than you can afford? If so, consider selling it (even if you have to pay to get out from under it). Aim for car value to be <50% of your annual income.
Are your food expenses taking a big part of your salary? If so, this is a really easy category to cut back on. Some families manage to spend only $100 per person per month for food, but you don’t have to be that extreme.
Do you have debt but continue to engage in “luxuries” (e.g., salon services, gym memberships, gourmet coffee). If so, remind yourself that you have negative net worth and look for free or inexpensive alternatives. You’ve literally been taking out a loan to pay for your gym membership. Remember, “I can charge it” isn’t the same as “I can afford it.”
Even if you’re facing a mortgage-sized student loan payment, it is possible to repay it!
For more tips, check out my personal finance blog geared toward psychology trainees and early career psychologists: The Debt Shrink.
References:
Bureau of Labor Statistics, U.S. Department of Labor (2018). Occupational Outlook Handbook, Psychologists. Retrieved from https://www.bls.gov/ooh/life-physical-and-social-science/psychologists.htm
Doran, J. M., Kraha, A., Marks, L. R., Ameen, E. J., & El-Ghoroury, N. H. (2016). Graduate debt in psychology: A quantitative analysis. Training and Education in Professional Psychology, 10(1), 3-13. http://dx.doi.org/10.1037/tep0000112