How Would You Advise a Family Member Who Wanted to Go to Grad School, Spend a Fortune

[Frugal]

I have a family member, younger than myself, who is trying to go to grad school this summer, in only a few months. This person has a stable full-time job, and is young. They have been out of school with their Bachelor's of Science for about two years this winter. I have this quandary...I really, really, really would like this family member to reconsider the value of keeping a stable, full-time job with potential for advancement (IN THEIR CHOSEN FIELD, which can be hard to find when you are just coming out of school in this economy), **instead** of: taking out about $60,000 for the next 3-plus years to fund a graduate education. They are able to live at home, and save up a lot of money to pay off existing student loans, while working full-time. It seems an ideal situation, and really is not that bad.

I have given all my arguments against greater loan debt to this family member whom I am close to. However, they want to get the terminal degree so they can practice in their field. Without going into more specifics, I was hoping to get peoples' opinions of this. Is it wise to take out student loan debt in a massive way to reach a certain career goal, if doing so is your only way to fund your education, and you have no other resources to get through grad school?IF there is potential that you will earn a high enough salary to eventually pay back the debt?

Oh, and part of the reason I am against this is I had the chance to acquire additional massive loan debt and go overseas for a graduate program, and turned it down due to how much loan I would have to take out. No regrets for doing so, and would like to help my family member avoid the same mistake and so very much debt...I have no regrets about not going into further debt when I had the opportunity to do so.

For the sake of anonymity, I don't want to share what field this person wants to go into for grad school. Thanks.

p.s. For those of you who might think I just should not worry about it, I would really like to give this person advice before they make their final decision. I know I don't control what they do, but they will listen to my advice.

[clintdavis]

The major deciding factor for me would be the projected break-even point. In other words, how much more money will she be earning per year once she finishes the program vs. what she is earning right now. If she will earn an additional $20k per year, then it will only take her 3 years to pay back the loans (if she stays disciplined). That might not be a bad deal.


The biggest consideration here is the presumption that she will be able to land a higher paying job once she finishes the program, or quickly advance with her current employer. There are a lot of people who have gotten caught up in the promise of higher income, only to find the reality was much more elusive. I would make sure she is seriously considering the potential benefits and the potential risks of moving forward with the loans and the grad program.

Thanks for sharing!

[jpg7n16]

IMO it's a cost/benefit analysis.

Yes $60k is a lot of money, but if you use it to get a degree to earn $60k/year more than you're currently making, then it's well worth the risk IMO.

Then you must consider any lost wages in addition to the costs of school. How long would the program take? Would he/she be able to keep working during that time? Quantify how much 'lost income' and add that to the costs of schooling.

So that's the real question: imagine he was 'buying' an increase in salary - is it worth the price?

If $60k of school (and $40k lost wages) buys a $5k raise, that'd take over 25 years to break even (after interest). Prob not worth it.
If $60k of school (and $40k lost wages) buys a $10k raise, that'd take 10+ years
If $60k of school (and $40k lost wages) buys a $40k raise, it'd take 2.5-3 years
etc.

I think you get the point.

And that's how I'd look at it. Then it becomes a simple math problem - where either the numbers make sense or they don't. (I would not incur $60k of debt for a $5k raise, but would in a heartbeat for a $50k raise)

[MonkeyMama]

Agreed with the others. It depends on what the payoff is and the risk factors. How guaranteed is that increase income? How likely is it that they will follow through, finish school, and be happy in that career?

I would personally be extremely hesitant to borrow $60k for almost any degree, and I think it's fair to voice those concerns. Without knowing the specifics and probably not being familiar with the field, it is hard to say. There are certainly cases where it pays off, but I think it is always a bit of a gamble.

[disneysteve]

I agree that it really depends on the value of the higher degree. 60K isn't so bad if it really advances the person's earning potential. If all it does it get them more letters after their name, then forget about it, but if it boosts income for the next 40 years, then go for it.

[snshijuptr]

Also does she need the degree to advance in or join a career path that she loves? She might be able to work while pursuing her degree. In fact she should. This enables her to graduate with both a degree and relevant work experience. Finally she should be committed and realistic about the social and work requirements of graduate school. She might have to delay plans to have children or get married to focus on the degree, or not.

[Frugal]

It is in the medical field generally, but not an M.D. Here's the problem I see: there is no guarantee of any job placement in this field when she gets out. Jobs are very competitive, and while there are openings, it is not always easy to find a position right away (as several of her friends have already found out after graduating).

I personally would never take on further debt at this point in my life, but you can only do so much when someone else is involved. Yes, it would delay getting married and starting a family for this person, but then, many careers do.

[Joan.of.the.Arch]

If it is a Masters or PhD that would be for medical research, there is a lot of job competition out there. For certain positions she would even be in competition with people who have only a Bachelors but who have much experience.

If it is for clinical work, her prospects might be better, but again experience can be a big factor, too.

If it is for medical social work, or medical management I would guess that her job prospects are fair and pay runs a broad range.

Lab work for patients? Those people seem to stay on a long time so that jobs don't become available through attrition so much, but there may be expansion in that job market still. Not sure.

But at least for medically related fields, she should be able to research her job prospects and potential pay in a realistic way before committing to an expensive grad school.

If she's capable of doing any of this work, she should be capable of doing her research to see whether grad school is worth it. And for some people it definitely is worth it. Perhaps it was not for you, or for some others you know, but that will not necessarily be the case for your sister.

[snafu]

it is kind of you to try to have the family member look at her wish for a Doctorate with her eyes wide open and aware of the risk factors.

It took DH 10 years to make up lost income for the academic year & 3 summer schools to obtain a PH D. He requested and was granted 'Educational Leave' for the academic year and relinquished all holiday time. He avoided student loans by taking a T.A. + grant + scholarship. We were able to manage expenses on my income. Is there any way she could do at least some course work via 'distance education' [on-line] offered by most universities? She would be able to continue employment and use vacation and unpaid leave for required classroom hours.

Another choice would be to defer for a year and save as much as possible to fund her dream.

[LivingAlmostLarge]

Depends. Does she need it for doing something she loves? I don't think you should stay in a field you don't like if you can switch.

[Carbin]

The biggest consideration here is the presumption that she will be able to land a higher paying job once she finishes the program, or quickly advance with her current employer. There are a lot of people who have gotten caught up in the promise of higher income, only to find the reality was much more elusive. I would make sure she is seriously considering the potential benefits and the potential risks of moving forward with the loans and the grad program.

[elessar78]

I think they have to look at what their goals outside of their career are too. My wife now wants to be a SAHM, but she has a Master's so is it a little wasteful not to have a career? We've done the next best and she has a part time position. Whereas my sister has an MBA and is a SAHM with no desire to move back into the work force.

[Frugal]

I agree with Carbin. This is why I myself did not go to grad school. There is never a guarantee of a job when you get out with any degree, and sometimes hard work searching for one simply does not pay off in reality. Effort is not always equal to results.

This family member, it appears, is going to still go to grad school anyway. Not a lot more I can do. Just hope they make the right decision. And yes, it would be hard for this person to advance from the job they are in without the grad degree in the medical field.

[Hector]

I came across an interesting article:
Peter Thiel: We’re in a Bubble and It’s Not the Internet. It’s Higher Education.