Ask Money

Graduate school debt

Chris Farrell Mar 5, 2009

Question: I’ll be starting veterinary school in the fall, which means that over the next four years I’ll take on something like $150,000 in debt. This will be mostly in the form of subsidized and unsubsidized Stafford loans, with rates in the neighborhood of 5 to 6%. My question is, is this an awful time to take on this kind of debt, or is it the perfect time? I haven’t heard a single thing in all the coverage of the current crisis about how this might affect current student borrowers. Sarah, Portland, ME

Answer: At the moment, the federal government’s focus when it comes to higher education seems to be twofold. First, make sure that there is enough loan money available for students, especially undergraduates and, second, to direct more financial support for college to low income families though a combination of more generous grants and tax benefits.

The downturn in the economy is unusually scary. But I don’t think it’s a terrible time to borrow and invest in your education or a perfect time.

Instead, I would go back to the fundamentals. What you’re facing is the classic graduate school question: Do my future job prospects, measured in terms of career satisfaction, income and job security, justify taking on all this debt? Medical school students, law students, MBAs, MFAs, PhDs, future veterinarians like you and anyone else thinking about earning an advanced degree needs to weigh the income-in-the-future versus the debt-burden-to pay-down trade-off. Is there a good chance that you will earn a sufficient return on investment to pay down the debt within a reasonable period of time? What’s the downside, and is the risk worth it to you? Those are the questions to research.

That said, it’s smart to get more education and improve skills during an economic downturn. Hopefully, the economy will pick up before you get your professional credentials and get a job as a vet.

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