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Ask Money

Graduate school and debt

Chris Farrell Sep 14, 2010

Question: I finished my undergraduate degree in the fine arts and had approximately 12,000 in student loans. I’ve paid off several thousand dollars of that and am starting graduate school in educational administration. I anticipate financing my graduate education with student loans and am anticipating 30,000-40,000 in debt. This makes me feel uneasy and I want to see if you think this will be a financial mistake. Noah, Seattle, WA

Answer: It’s good to worry about taking on debt, especially these days. Your answer will come from a combination of numbers and judgment. It’s important to run the figures and, armed with these calculations, weigh whether the potential career return is worth the debt risk. We get far too many calls and emails from people who took on too much debt getting an advanced degree.

Don’t get me wrong. Graduate school enrollment has soared with the bad economy. It can be a sensible strategy since a graduate degree can pay off in a higher salary and a bad economy is traditionally a good time to pursue an additional credential.

Hopefully the degree will open up opportunities for a richer, more challenging career as well as a fatter paycheck and better benefits. But we want to avoid a career of debt servitude, too.

The first thing I would do is figure out what kind of salary you’ll command with the higher degree. This is probably too basic information for you, but the Bureau of Labor Statistics has a write-up of the occupation’s prospects here. What kind of money and benefits you’ll potentially earn depends on what you plan on doing with the degree. There are different pay scales and job descriptions, say, whether you end up an administrator at a K-12 public school, a private community college, or a 4-year public university.

I looked at Payscale’s information on elementary and secondary school administrators and it looks like an advanced degree could get you a salary range between $55,000 and $85,000.

I would also talk to as many people in the field as possible to see what really happening in your region or area. Many districts are cutting back on their education spending, but in some parts of the country it’s largely a cyclical effect reflecting the weak economy. However, some areas will see a longer term downshift in overall spending even after the economy starts growing faster and tax revenues increase.

There’s is no substitute for actual on-the-ground information. The graduate school can be a resource, too.

I have a couple of other quick thoughts about money. What is your budget? Where can you clamp down on spending to limit how much you borrow? Are there resources in the community, from debt forgiveness to community internships that might defray some of the cost of getting a degree? The debt you’ll take on to get a degree probably means you won’t be buying a home for a long time. You’ll be investing in your career rather than a home. Are you okay with that? Would it make sense to wait a year, save like mad, and borrow less a year from now?

Once you’ve gone through the numbers there are the intangibles to think about, from what kind of life you want to lead to what type of work is satisfying to you. Are you comfortable taking the risk?

You’ll then know the answer to your question about debt. Good luck.

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