How much school debt can you carry?

Avatar for poorboy2011
iVillage Member
Registered: 10-02-2011
How much school debt can you carry?
8
Fri, 08-23-2013 - 2:36pm

I'm trying to help a friend. She is in a master's program for psychotherapy. She only has one year to go, and she feels she has to drop out because she can't afford it. A part of the issue may be that she doesn't want to get into debt. Given the earning potential of a therapist with a master's degree in the US, how much debt do you think she can carry? Is there a financial guiding principle for this?

Avatar for mahopac
iVillage Member
Registered: 07-24-1997
Fri, 08-23-2013 - 4:20pm

I don't think anyone can say what debt load someone else "should" take on.  However, my first concern is her field.  In my state and in many others, a Masters in Psychotherapy does not lead to a job where insurers and third party payors will pay you - in fact, by itself it doesn't lead to a job at all.  You need a PhD, PsyD, EdD, or MSW.  This was the biggest reason my husband didn't pursue a career in psychology - he wasn't interested in the MSW route and we couldn't afford for him to take 7 years to become a PhD psychologist.

Community Leader
Registered: 08-25-2006
Fri, 08-23-2013 - 7:07pm

Good question, PB. 

I would think that somewhere there would be some general guidelines.  I know you have to be careful.  So many people are paying on school loans and not making what they had hoped. 

It really is all relative.  I didn't go to college, but I was able to buy a brand new house at the age of 26.  Go figure. 

Serenity

 

Serenity
iVillage Member
Registered: 04-16-2008
Fri, 08-23-2013 - 8:25pm

The rule of thumb is, and it is JUST a rule of thumb, that one should not have more debt than the average annual starting salary of the chosen profession.

You would also want to ask what kind of life-time earning potential she has without the degree vs. the cost of debt (principal plus interests) and possibly increase the life-time earning potential.

Lastly, home ownership and school debt (and higher education) are not mutually exclusive. 

Avatar for poorboy2011
iVillage Member
Registered: 10-02-2011
Fri, 08-23-2013 - 8:54pm

I don't know the field of psychotherapy, so it's harder for me to offer my friend advice. I saw my law/med friends got deep into debt in a way I'd never recommend for the humanities (don't borrow whatsoever for grad school in the humanities!). But I'm not sure what is workable for the mental health/social work field. It seems like such a waste to drop out with only one year left.

iVillage Member
Registered: 04-16-2008
Sat, 08-24-2013 - 1:11am

Pass this link onto your friend:

http://nhsc.hrsa.gov/loanrepayment/

They always have need for physicians, but often for mental health professionals as well.  While some of the "under served" areas can be quite remote from civilization, often hospitals in metropolitan areas that serve indigent population would qualify as "under served". 

iVillage Member
Registered: 11-14-2008
Sat, 08-24-2013 - 4:09pm

How much you can carry and much you should carry are two different things.

I agree with the rule of thumb that you should not take on more than starting salary in the first year you can earn. However this is hard to swallow if you only have one year left. You have to do the math.  It will also depend on your friend. Realistically a person will have to pay back large sums over 10 years. What are her plans in the next 10 years? Marriage, children? A house? So many things to consider. How much more will she be able to make as a salary with this one extra year she gets. Can she go part time or save up for each course and finish over time?What are the options?

Avatar for poorboy2011
iVillage Member
Registered: 10-02-2011
Sat, 08-24-2013 - 5:55pm

Thanks for the link, Demontespan! That might just work!

@Karen: these are good questions. I'll pose them for my friend to ponder. I don't know what her answer is, but I am guessing that she is willing to give up children & a house for what appears to be her calling. (I also felt the same way ages ago, but now I wish I had become a lawyer.)

It seems to me that she can probably finish the degree without borrowing more than the rule of thumb. I'm urging her to get some employment data and salary figures. She needs to do some calculations. I also conveyed to her Kelly's concern about the worth of her degree, and apparently the states she wants to live in licenses therapists with master's degrees.

Community Leader
Registered: 08-25-2006
Tue, 08-27-2013 - 2:22pm

I am curious what your friend ends up doing though.  I suppose it depends if that Masters is going to help her earn more, or not. 

All I can say is I am strictly using grant money right now for these first two "years" of school.  No loans so far.  If I get into a position where a loan is the only way, I honestly don't know what my decision would be. 

I know a lot of people move on with their 4 year degree and wait and see if they need a masters, or not. 

Good topic!

Serenity

Serenity