Tag Archives: financial literacy

Public Service Loan Forgiveness – Success!

There was no way for me to become a psychologist without taking out student loans, so my first day of graduate school was a blend of exhilaration about pursuing my vocational calling and dread over committing myself to loans that were much larger than any amount of money I had ever earned. Four years later I had a graduate degree, a network of inspiring colleagues, a postdoctoral fellowship, and six-figure debt.

I am now debt-free, thanks to successful completion of the Public Service Loan Forgiveness (PSLF) program, and writing to share my story in case it helps others. PSLF is designed to provide debt relief to individuals who work in public service jobs, including many of the career paths that psychologists pursue. After making 120 qualifying payments, the remaining student loan balance is forgiven.

As a psychologist in the Department of Veterans Affairs (VA), my employment met the certification requirements for PSLF, and I paid into an income-driven repayment plan, picking the best option for me from among the PSLF repayment types. Since my payments were income-driven, the payments increased over time as my income increased. I started paying during my postdoctoral fellowship, when my income was lower, which was a wise decision.

The paperwork, in my experience, was straightforward. There was no need for a lawyer or financial adviser. I worked for the VA (at two different locations) the entire time, which meant my paperwork was simple. Once per year, I completed forms to verify my income level. I filed my employer certification paperwork twice during the 10 years (once with each VA location), and then submitted the application for loan forgiveness at the end. I believe that the current recommendation is to file employer certification paperwork every year. Please check the PSLF website for official guidance.

Because of Temporary Expanded Public Service Loan Forgiveness (TEPSLF) funding, I also received a refund of several thousand dollars. My first four student loan payments did not originally qualify for PSLF because I paid into the default loan repayment option, which was not a qualifying repayment type for PSLF. Thanks to TEPSLF, those initial payments were counted retroactively as qualifying payments, and thus my four final payments were refunded. When considering PSLF, make sure to check the official website for rules about which repayment plans qualify.

The monthly payments, though income-based, were significant and on par with my rent and monthly daycare bill. The amount I repaid came close to the amount that I borrowed, but because of interest, even after 120 payments, I had barely made a dent in the principal. Without PSLF, I was looking at another 15 years of paying back graduate school loans. PSLF has been life changing for me and my family. While the PSLF program honors the importance of public service rendered during the repayment period, the post-loan forgiveness stage allows even more freedom for values-driven career decisions.

My graduate education at The Wright Institute, focused on a clinician-to-society social justice model, has been invaluable and worth every penny. Because of the excellent instruction, empowerment, and role modeling I received in graduate school, I went on to develop a yearlong social cognition rehabilitation group for military Veterans with histories of traumatic brain injuries and psychological trauma that has been adopted at multiple VA medical centers nationwide and published in a peer-reviewed journal. I received funding for an Institutional Courage Initiative to study experiences of institutional betrayal and institutional courage among Veterans and VA health care providers, in an effort to improve the quality of care for Veterans and strengthen employee engagement. The PSLF is a gift of a lifetime that has allowed me a career focused on making the world a better place, while having the financial security to build my own life as well.

There are many reports in the media of the failures of the PSLF program, but for me it was a success. It worked for me, and it can work for you too.

Kelly McCarron, PsyD

Editor’s Note: For more information on repaying your student debt, check out the APA webinar: Public Service Loan Forgiveness: How You Can Get It and Why We’re Fighting to Preserve It or visit the Department of Educations’ page on Public Service Loan Forgiveness (PSLF).

Second Editor’s Note (updated 2/27/20): We learned via the New York Times that some people who may have been misled or misinformed by their loan servicer in pursuit of PSLF have been successful in using a little-known recourse called the Federal Student Aid Feedback System.

It’s Time to Tell Congress We Need Fairer Graduate Student Loans

Once the thrill of being accepted into a graduate program wears off, the reality of how to finance graduate school sets in. Right now we have an opportunity to make our voices heard and cut unnecessary costs quite a bit.

postgrad-image

What’s the issue? For nearly 50 years, both undergraduate and graduate students were eligible for the Federal Direct Subsidized Loan Program with the goal of making all levels of post-secondary education accessible to students with financial need. In 2012, however, changes in the Budget Control Act eliminated eligibility for graduate students. In other words, graduate student borrowers could no longer get subsidized loans, like Stafford loans. As a student taking out these loans, your interest is now accruing from day 1.

This change has increased the cost of borrowing significantly and may be putting graduate study out of reach for many students with financial need, especially underrepresented groups. We’ve reported elsewhere on our latest data about psychology graduate student debt. As a result of increased costs, 75% of graduates delay saving for the future, 67% delay saving for retirement, and 57% delay purchasing a home (Stamm et al, 2015). Similarly, graduates may delay starting small businesses like independent practices as a result of their debt burdens. (Additional background is here.)

At the same time, the United States faces numerous health shortages and research voids, and so our choice is often to meet these national needs is to attend graduate school, despite the costs.

What’s our opportunity to act?  In December 2015, Representative Judy Chu, Democrat from the 27th District of California, introduced legislation that would restore the eligibility of graduate students for the Federal Direct Subsidized Loan Program.

Representative Chu’s legislation would amend the Higher Education Act to restore the eligibility of graduate students to the Subsidized Loan Program, and lessen the significant debt burden that many students incur while pursuing advanced degrees.

APA is calling upon graduate students, educators, psychologists, and supporters to take immediate action.

What can I do? 

  1. Click here to tell Congress to support graduate students by asking your representative to cosponsor H.R. 4223.
  2. Fill out your contact information and our system will generate an email to your Representative today, asking them to cosponsor H.R. 4223, “the Protecting Our Students by Terminating Graduate Rates that Add to Debt Act,” (POST GRAD Act).
  3. Add a personal note or story to the letter. If you need to overcome writer’s block, read this veteran’s story about his advocacy for bringing back the subsidy.
  4. When you’re done, post about your advocacy efforts on social media and share the link to this blog post with at least five people.

This legislation is an important step toward ensuring students have access to graduate level study, so take action now! Send a message to your Representative and ask them to cosponsor H.R. 4223.  

Editor’s note: APAGS is extremely grateful to the Education Advocacy Team at APA for their efforts in getting this bill on Congress’s radar, drafting our support language, and mobilizing people in person and electronically.  Now it’s your turn!

Debt. Loans. Repayment. Terms likely to make any of us feel like….

Source: Self-portrait by user BrittneyBush on Flickr. Some rights reserved.

What can you do about your debt? Let us walk you through it. (Source: Self-portrait by BrittneyBush on Flickr. Some rights reserved.)

…. and rush to click to another, safer page (Facebook!).

But whereas you can easily defer paying off your debt while still in school, you should not defer thinking about your debt and engaging in ongoing financial planning.

As in all cases, knowledge is power. Having access to accurate information about average debt loads and starting salaries is critical to ensure that you plan appropriately and have the best chances of managing your educational debt.

The cost of higher education continues to increase — not just in psychology but for most graduate student borrowers. Case in point: In 2012 the federal government stopped subsidizing student loans for graduate students, but we’re working on getting that subsidy restored through a bill introduced US Rep. Dr. Judy Chu! These increasing costs, compounded by the ever-escalating cost of living, are resulting in larger debt burdens for psychology graduate students.

Graduate Debt in Psychology: A Quantitative Analysis (Doran, Kraha, Reid Marks, Ameen, & El-Ghoroury) offers an up-to-date and comprehensive look at current debt and income levels among graduate students and early career psychologists (ECPs).

Here are some data highlights from the paper:

Debt Loads

  • The average debt for graduate students currently enrolled in a graduate program was $100,603.79 (Mdn = $80,000.00, SD = $77,623.76), with projected final debt loads of $129,717.56 (Mdn = $110,000.00, SD = $92,694.51).
  • Graduate students reported that they anticipated a final average debt load of $141,078.07 (Mdn = $120,000, SD = $97,811.72), including their debt from both undergraduate and graduate study.
  • Students seeking a Psy.D. degree (M = $173,239.29, Mdn = 160,000.00, SD = $78,711.10) reported higher levels of anticipated final debt than students seeking health-service Ph.D.’s (M = $111,590.14, Mdn = 76,500.00, SD = $96,561.01) and research/other Ph.D.’s (M = $68,684.21, Mdn = 72,500.00, SD = $43,977.33).
  • Early career psychologists reported that their final cumulative debt load (undergraduate and graduate) was an average of  $108,127.11 (Mdn = $98,000, SD = $73,817.32), which included debt from undergraduate and graduate study.

Income Levels

  • Early career psychologists reported that their average first year income was $63,260.85 (Mdn = $60,000.00, SD = $19,408.75).
  • They also reported an average current income of $74,577.83 (Mdn = $72,000.00, SD = $29,701.54).
  • 43.3% of ECPs indicated that their current salary was lower than what they expected to make at this stage of their careers.

Impact of Debt

  • Nearly half of all respondents experience significant financial stress.
  • As a result of education-related debt, graduate students delay retirement planning (65.7%), buying a home (62.5%), having children (49.3%), and getting married (31.8%).
  • ECPs also delay saving for the future (63.4%), retirement planning (56.7%), buying a home (42.5%), and having children (32.7%).

While this information can be overwhelming, it is important to keep track of your debt load and make sure you are informed about average salaries in your subfield or area. But how?

  • First, read our paper for full details.
  • Then, use student loan calculators (for example) to help you figure out what your average monthly payment will be based on your total debt and interest rate, so that you can plan accordingly.

If this article has made you fret about debt, don’t despair. We have compiled a few resources to help you learn more about managing your debt, loan repayment, and financial planning.

There are steps you can take at any point to begin to manage your debt. So break through that resistance, do your research, and start planning!

And just in case this article has caused you any distress (and you wish that you had followed your initial impulse to instead return to Facebook), please let us help you regulate yourself with a charming cat photo:

Source: A Geeky World. Some rights reserved.

My debt will never find me. (Source: A Geeky World, Some rights reserved).

Editor’s Note: This article is written by Jennifer Doran and Laura Reid Marks, co-authors of a major peer-reviewed analysis of graduate debt in psychology published this February. The same study made the cover of Monitor on Psychology’s April issue.