What can I do to not freak out about student loan debt?
July 10, 2007 5:49 PM   Subscribe

What can I do to not freak out about student loan debt?

Through a very roundabout way, I found myself in an Master degree program (studying social work). I keep having anxiety attacks about how much money I will owe after graduation (including my undergrad degree, it's approaching 100,000).

I am not completely certain that clinical social work is the career for me...however, the profession is so broad that I hope to find a niche. I have considered dropping out of the program, but some people tell me that having a Master's degree will open up doors and that since I'm halfway through I might as well finish. However, if I cut out now I will save a lot of money (although I'll be a "quitter").

I really don't want to quit school but I also don't want to regret my choice to go back to school. I'm going to feel really dumb if I graduate and find myself in a worse situation than I was before because I'll owe so much.

I feel that my education has been personally rewarding and that I've grown in many ways. For example, I have learned to communicate much more effectively than ever before. What I'm struggling with is not knowing whether having this degree will benefit me in the long run when it comes to my future profession.

Please give me your thoughts on the value of an MSW when one does not wish to become a traditional social worker. And also how burdensome will this level of debt be (I'll have federal subsidized and unsubsidized loans). Perhaps some of you are already making these sorts of payments and can give me your perspective on how you determined the value of your education. Do you regret going back to school? Are you in a profession that's totally different from your degree? If so, did your degree help you or hurt you?
posted by mintchip to Education (23 answers total) 6 users marked this as a favorite
As I understand it nearly all Master's programs are only 2 years, and you're halfway through. Is one additional year really going to stack that much more debt on top of what you already owe?

Maybe you can find ways to cut your expenses this year so that you can take on less debt. Housing is always expensive -- perhaps you can move in with a friend or even your parents? Depending on what city you live in that could save you $5k or so.

I'd also like to point out that social workers are not the best paid careers anyway, so maybe this is a good thing. Odds are pretty good that on average you might actually make more by not going into the field. :-) You will have excellent skills, and just having a Masters makes you a desireable candidate in a lot of ways. You should focus on figuring out how to integrate the knowledge you're getting now with the things you love and care about.
posted by Deathalicious at 6:13 PM on July 10, 2007

I am not able to offer any direct advice on your situation.

When you make the decision to continue or not, decide it on it's own merits without worry that you will have the word "quitter" branded on your forehead forevermore. Those laser removal services are great these days. If the only value that remains from this program is not being a quitter, it's time to quit.
posted by yohko at 6:14 PM on July 10, 2007 [1 favorite]

What kind of salaries are people graduating from your program earning, who going into the kind of jobs that interest you? National averages for MSWs can be found via google (example) but that will probably vary hugely between locations and types of jobs.

An online loan calculator suggests that at an interest rate of 5% and a 30 year repayment plan, your $100k of loans will cost you about $550/month. Not trivial, but definitely affordable on a salary at the higher end of the range in the link above. It's a similar amount to a car payment plus insurance -- so you might not be driving any high-end cars for some years to come, but you should be able to feed and clothe yourself quite adequately.

Assuming that you have maybe $70k in loans already, and your last year will cost you $30k, you could say that finishing your degree will add something under $200 to your monthly loan payments. I'd bet that having a masters will be worth more than $200/ month in additional income and other opportunities. So I'd say that the math is in favor of finishing.

But if you want more time to think, there is a lot to be said in favor of taking a year off, working in the field, and hopefully coming back to school in a year more excited and motivated. (And ideally, you will have saved enough money while working that you won't need to take out such staggering loans in your final year.) And if you decide not to continue, don't feel like you are forever branded a miserable quitter -- Cheney flunked out of his graduate program, and it doesn't seem to have hindered his career prospects.
posted by Forktine at 6:28 PM on July 10, 2007

I was there. In the end, OK ten years or so, it will probably seem a lot less. (Inflation is your friend.)
posted by caddis at 6:29 PM on July 10, 2007

I've got debt on that scale from pharmacy school. Once you're done you can consolidate your loans and if you consolidate over a long term the monthly payments are not as terrifying as you may think. I'm guessing in the range of $500/mo but that is a guess. I've been happy with nelnet as my lender.

Also, inflation is your friend. You have a lot of years ahead of you to work. Your salary will go up over time. $100k is not going to look like as much money 10 yrs from now. Consolidate at a fixed rate and concentrate on developing good habits. Consistency is the most important thing when it comes to money - if you just pay a little more than the minimum payment every month, eventually the whole debt will get paid off. Even if you only start out paying $10 or $20 over. Just develop the habit.

Don't drop out! You don't have that far to go, and it doesn't sound like you want to drop out.
posted by selfmedicating at 6:37 PM on July 10, 2007 [1 favorite]

I graduated with what was for me, given the field I chose, a substantial student loan debt. I've finally whittled it down the final loan to only about $3000 over the past 11 years, and have one loan completely paid off.

First, I say don't make your decision about what to do with your life because of what you might owe coming out of school. My career is the only thing that I can do that makes me truly happy. My education wasn't cheap, and, no, I don't make alot of money. That said, I learned more than I ever thought I would ever need to know about my chosen field and working in this business than I'd have ever learned if I didn't go to the school I chose. In fact, now that I think about it, I'd have gone to a more expensive school AND taken on more debt to have an even better pedigree than I do. Like it or not, certain pedigrees open doors that others will not. Certainly a masters degree in your field will afford you greater options. And, as you say, you're halfway home already.

If you do take on the debt and finish your degree, just know that student loan debt is manageable. If you can't pay initially, you can always defer them for up to two years (this may have changed, but that was the term when I was initially out of school.) Also, if you do run into financial hardship, you can always request a forebearance period during which you won't have to pay on your loans. When I was first starting out, I believe you could request and receive forebearance for a total of two years, IIRC, in six month blocks. You should know, though, that the principle still accrues interest when you're not paying it down; the interest rate, however, is relatively low. Also, you can opt to consolidate your loans and make lower monthly payments at a higher interest rate, or choose a graduated payment plan. It's do-able, it's just a debt you'll have to get used to paying every month. And you will. And sometimes you'll get lucky and find yourself flush with cash. When that happens, send a big chunk to the student loan company to whittle away at the principle. Oh, and ALWAYS pay on time, every month. It's a good way to establish good credit which will help you further on down the road.

Just be honest with yourself about what will make you happy. There's no shame in leaving the program now if it really isn't worth it to you. Just avoid making any decisions about the rest of your life based on a fear, and certainly not fear of debt. Debt can be managed alot more easily than unhappiness with your life choices years from now.
posted by TryTheTilapia at 6:42 PM on July 10, 2007

I have heard that a pretty good rule of thumb is that you shouldn't borrow more (total) than you expect to make your first year out of school working in your field.

Now, I don't know many social workers who make 100,000k, but (1) Caddis may be right, and has lived through it and (2) people with an MSW are always in demand.

My main concern would be the the high burnout rate in social work, but that may only be traditional social work.
posted by 4ster at 6:42 PM on July 10, 2007

Urk. Let's see, you're going over $100K in debt to enter into a career where the starting salary is around $30K and the maximum salary is perhaps $50K.

$30K gross means a take-home pay of perhaps $23K.

$100K in debt at, let's say, 7% interest means you have to pay $7K each year in interest, plus whatever you can to reduce the principal debt. If you can pay $10K in a year, you'll reduce your principal debt to $97K.

So, if you can spend about 43% of your take-home pay to pay down your debt, leaving only $13K to house, feed and clothe yourself, you'll pay about 3% of it off in the first year. Keep that up, and you'll have it paid off in 25 years or so. 25 years of living somewhat below the poverty line.

Actually what will happen is you won't be able to live on $13K. So you'll pay less on the debt. You won't make payments, they'll start hounding you, the debt will start getting larger rather than smaller, etc. So you start applying for deferrals. The interest accrues, and now you're $120K in debt rather than $100K, after paying tons of money for a couple of years. And it goes downhill from there.

YES, YOU NEED TO QUIT NOW. A Master's in social work simply doesn't pay enough. It's not worth any additional debt. It is no doubt true that an MSW will open up doors. However, if those doors only pay $30K, it's not worth it for them to be opened.

(To previous responders: there are VERY REAL economic issues here. It is NOT the correct answer to just say finish and then figure out what to do. Many previous student loan threads have talked about being crushed under much less debt than $100K. If your expected income is high enough - heart surgeon - then it may make sense to take on a lot of debt. If your expected income is low - social worker - then it absolutely does not. The laws in the United States are such that student loan debt is normally not discharged even in bankruptcy. This debt may haunt the poster for his/her entire life.)
posted by jellicle at 6:51 PM on July 10, 2007 [2 favorites]

I think your question is not just about the debt but also whether you really want the MSW. Is it worth both the time and money? It would be good investment to do some more research about what types of nonclinical jobs are out there - can you find some options that you could excited about. Places to look
- your college career office (make sure you get someone familiar with MSW, not the usual undergraduate counselor
- see if you can access the alumni network. find people with interesting job titles, call them up and ask them about what they do and how they got there.
- two links to information about careers in social work: The Social Work Career Center and the BLS
posted by metahawk at 6:52 PM on July 10, 2007

Can't give you financial advice, but can relate somewhat to the debt situation.

As for non-traditional(?) MSW options: I know two 'non-traditional' (at least in attitude) social workers. One is a counsellor who has her own practice and works at a hospital as well. She found the intervention business to be too intrusive. The other works with disadvantaged kids within the school system. And, hey, there's always academia....
posted by solongxenon at 6:54 PM on July 10, 2007

Response by poster: I'm the original poster. To add more facts and figures...I can expect a starting salary in my location of around $42,000, and my loan burden will be a bit less than 100,000 (approx. 85,000).

What I don't know is whether I can get a higher starting salary in *another* sort of job if I choose to not do social work...and whether having an "unrelated" Master's degree will help me get a better job than I might otherwise get at the Bachelor's degree level. Because if I can get a higher starting salary in a better, non-social work position with my Master's degree it might be worth it. If I can't, then it might not.
posted by mintchip at 6:58 PM on July 10, 2007

A former roommate of mine had $100K in student loans and was making $35K/year. At her interest rates, the loan payments were 3/4 of one paycheck. I couldn't handle that, but she could. What do you typically pay for rent? How much is that?

Another follow-up question: how much is this last year of school alone going to cost you?
posted by salvia at 7:25 PM on July 10, 2007

Response by poster: My final year in school will cost about $30,000.
posted by mintchip at 7:37 PM on July 10, 2007

Response by poster: Another thing that I forgot to mention is that I could move home for a year or two after graduation in order to wipe out the debt and/or save a lot of money for a down payment on a home. However, I would be really unhappy living at home. I guess I'm saying that there may be other options for me. I just hate to feel that going to school might limit my future options as opposed to broadening them.

Thanks to everyone who has read so far for your patience with this frustrating issue!!
posted by mintchip at 7:50 PM on July 10, 2007

Your profile doesn't say where you are, but if you're Canadian you might be amused by this.
posted by flabdablet at 8:36 PM on July 10, 2007

Not sure where you live, but in my area, the average MSW salary might be around $63k.

A master's in social work might not be the most money-making graduate degree out there, but you could parlay it into something, I'm sure. For example, you could work at any kind of consulting firm in the social/public policy sector. Starting out as a research assistant and moving up from there, you could probably do pretty well. In my field (healthcare consulting), I've seen people with no work experience plus a master's get promoted in less than a year.

Your debt will be tough to manage, but I think the master's is worth it... (but is there any chance you could transfer to a cheaper school? Few will care where your degree is from unless it's from Harvard.)
posted by acridrabbit at 8:37 PM on July 10, 2007

I'd finish the program. A lot of employers (including those who do not have degrees) see dropping out of any program as a sign of a quitter. And the money you've spent so far is a sunk cost. So the question is whether it's worth spending the $30k to finish the program.

$30k at 7% interest for 30 years works out to around $2400 a year. That's not very much. Even if you had to achieve your return on investment in 10 years, that's about $4200 a year. You may not recoup that cost in the first 5 years, but I bet you will in the next five.

Perhaps having an MSW does not translate to higher pay. However, the skills, mental framework and even contacts you have now will most likely help you in your career. You're going to approach things differently. Maybe not today, maybe not tomorrow, but eventually the level of thought you've had to work at will shine through.

And there are opportunities that may unfold because of your degree. For example, when you have a few years of experience, you may be able to teach for $75 an hour at night school. And you may be able to do some freelancing for the same rate. If you had two years where you taught 3 hours a week and freelanced for five hours a month, you'd make more than $30k. And that's at a paltry $75 an hour.

I have invested $100k in my undergraduate and graduate degrees. This has allowed me to move up in my career more quickly. And my degree's credibility has meant that I can charge a lot more than my competitors. Sometimes, it just means that I get work when others don't. People like to see the masters. It's also opened doors for me to teach. I've only been teaching for a year or two, but I've already earned enough to make back the first year of my graduate tuition. And the "mark up" on my consulting has certainly paid for the rest and then some.

Everything you have spent so far is a sunk cost. Your concern is only the money in front of you now. Perhaps you can find a TAship, RAship or campus job to help offset the expense. But I think you'll make back $30k during your career.
posted by acoutu at 8:51 PM on July 10, 2007

Are there scholarships available to you? Financial aid? Unless you can find a way to figure out how to finish your program without borrowing, stop. Do NOT borrow another $30,000 until you figure out what you want to do with your life. You can always borrow $30,000 next year, but you can't cancel out the debt once you take it on, except by slowly and painfully paying it back.
posted by croutonsupafreak at 10:52 PM on July 10, 2007

My concern is, are you truly having anxiety attacks? I have anxiety, and I know that if money trouble is on my mind, it has in the past actually sent me into having full blown anxiety attacks. I just recently had to drop out of undergraduate school because of a combination of not really wanting to be in college and not being able to afford it any more. Once I got over the hard part- actually dropping out of school, I find that I have much less anxiety. You really need to think about what it is that you want to do, and if the money is worth it to you. I decided that I was ok with my decision, and now I feel a lot better. With my student loans, I also have six months after being out of school to start making payments. In six months, you should definitely have enough time to work will all of your lenders and figure out how you're going to start paying back what you owe. I'm also going to live at home at first, which I won't really enjoy either, but it will save some money.

The very best advice I can offer is telling you that you need to to sit yourself down and really really really think about what you need to do for you- your mental health, your happiness, and your goals. It's hard to decide what you want, and my family is very academic, so this was especially difficult for me when I decided what I wanted to do. Your mental health really is key to your happiness though, and if thinking about paying student loans, even if you have this degree, makes you go into panic attacks, you should probably think about what is really going to make you happy.
posted by its just me at 10:56 PM on July 10, 2007

I don't think the question is "do you finish?" -- I'd say that's a given ("yes"). But to me the question is "do you pay full price or somehow find a discount?"

I see the years I paid full price for grad school (the first two of four) as "man, that was dumb!" I wished I'd gotten serious about finding cheaper ways to get through school earlier, because as soon as I looked, I found some, and my expenses got cut by about 80%. Could you work more? Get tuition covered by a student teaching job? What if you went to your favorite professor and said that the tuition was really making you think of dropping out for a while, and are there any good ideas s/he has about that? I apologize if these are obvious suggestions -- you've probably thought through a lot of these ideas.

It sounds like some people here have more distance on their schooling, so they may know that in the long run, it's no big deal. I'm speaking as someone who's been living with the same concerns you are -- I'm about 2-3 years out of school and trying to get my finances together. Student loans are not the big deal I thought originally, but I still think that you're getting up in the range where they might be a bit more of a concern. And since 1/3 of that is still open to negotiation, well, I'd try to hold the line as close to where things stand already as possible. It sounds like you're looking ahead to the years of planning to buy a house, etc, and you're right that another $30K in loans would slow that effort up.

Have you tried just working out your post-school budget -- what you'd make, what you'd be spending on rent etc, and looking at the situation that way?

One additional thing to keep in mind is that interest rates now are not as low as they were a few years ago, so some people who think loans are really no big deal at all may have locked in their interest rate at less than the rate of inflation. Consolidated loan rates now are in the 6%-7% range, which is, well, higher -- you'd earn less interest in safe investments, so you'd probably want to at least consider paying off those loans in full before doing other things like saving for a downpayment.
posted by salvia at 11:02 PM on July 10, 2007

Oh, and P.S. I dropped out of a continuing program. (I got one degree & dropped out of a second.) I view dropping out as one of the best decisions I've made in a long time. I know a fair number of other happy "quitters." Some people regret dropping out, but for some of us, it meant doing what really felt right. And even more people that transferred or took time off, as part of really smart long-term planning. It's different for everyone, so I'd recommend just doing what is right for you.
posted by salvia at 11:11 PM on July 10, 2007

i've gotten a lot more zen about my student loan (and other) debt lately. between my partner and i, we still owe about $50000 in student loans (this is after paying towards them every month for the last 5 years). eh. it's just money. it really is. i'll pay it off eventually. i think in the new world of overpriced education, that's the view you must take.
posted by misanthropicsarah at 6:39 AM on July 11, 2007

I can't comment on how much having a MSW will affect your earning power. I can comment on the "quitting" aspect.

I dropped out of a Ph.D. program to pursue a masters in a very different field. When I made that decision, there were people who said to me, "you've already spent a couple of years in the Ph.D. program - surely you could get a masters' in that field with less than a years' additional work."

I ignored those people, and went straight into the program in my new field. It was among the best decisions I ever made. The experience I picked up in my Ph.D. program has been valuable to me many times since. Not having the masters in my old field has never seemed to harm me. Count me as one of the "happy quitters."

A lot of employers (including those who do not have degrees) see dropping out of any program as a sign of a quitter.

Who says a potential employer would have to know? You have an undergraduate degree--that goes on your resume. Have you had any relevant jobs while you were in graduate school? Those go on your resume too. You don't have to say they were part-time jobs on your resume. (Pre-emptive anti-strawman: I am not saying to lie on your resume and claim they were full-time jobs. And if asked in an interview, answer truthfully. But you probably won't be.) That you spent time in a masters' program but didn't get a masters doesn't have to be on your resume, if you think it would harm your chances.

I don't know whether you should stay in the program or not, but don't stay in solely on account of fear of "being a quitter." In my case, I prefer to think of it as "cutting my losses," and as such was an entirely respectable decision.
posted by DevilsAdvocate at 9:32 AM on July 11, 2007

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