There is a crisis with the cost of graduate school. Before more students are priced out of furthering their education, we need to find a solution to this crisis. Over the past four months, I have personally consulted on over $44 million in student debt, and I am a student loan consultant.
The major professional occupations are compared to the cost of the education to see how they stack up.
So the big question: Are student loans worth it?
img alt=“” class=“float-end ms-1 mb-1” decoding=“async” height=“75” Before making a commitment, it is important to consider which form of financing would best suit your needs and goals. I hope my categorization is a wake-up call. I want others to reflect on how they can improve their categorizations.
1. The manageable amount of student debt that you have a hope to repay over a 10-year period is the first category. The interest savings can be significant if you are able to pay off your loans sooner.
2. The second category burdens you with so much debt that you probably would be better off just getting an undergrad degree and going to work. If you choose the wrong program, you could end up with less money in the long run.
3. The third category has a serious chance of ruining your financial future and should come with a warning label along with the admission letter. It is important to take the time to consider all of the options and choose the right college or university for you.
I will rank these jobs according to ease of paying back student debt. To pay off student debt, it is important to consider the long-term financial implications of each job.
First: The Manageable
Most professions that graduate with debt to income ratios below 2 are covered by the Manageable category. Medical, legal, and engineering fields are included in these professions. The debt is still difficult for this category, but it is imminently doable. Anyone in this category can pay off their debt with the right budgeting and extra effort.
There are few professions that are capable of such rapid debt repayment. Debt repayment is much easier for pharmacists because of their secure, steady income. A typical pharmacy client leaves school with about $150,000 of loans and has a salary in the range of $110,000 to $130,000. The salary is very competitive compared to other professions.
If they work for a private-sector employer, they can easily get a lower interest rate on their debt with a private lender. Refinancing can be a great way to save money on student loans, and if you have qualifications, you may be eligible for even more favorable terms. If they work for a not for profit employer, they can track their progress toward the Public Service Loan Forgiveness program and pay a fraction of the cost of their education. The PSLF program can help reduce student loan debt and save money on pharmacy school.
A lot of mistakes are made by pharmacists with their loan repayment strategy. The loan repayment strategy needs to be reviewed regularly to make sure mistakes are caught and corrected quickly. Many people either pay the loans back on the government’s artificially high-interest rates or they don’t use the program while working at a not for profit. If they manage their loans well, there are attractive options for paying back debt.
The group benefits from a short training period for a high value skill. The group can quickly enter the job market with a competitive advantage. The PA’s Smaller income-based payments allowed the initial $125,000-150,000 loans they borrowed as of graduation to grow. They have been able to keep their debt burden manageable while continuing to pursue their goals. Since many PA’s start out making a lot of money, they can start paying off their debt while their friends are still in school. Physician’s assistants would do well to get rid of their debt quickly. The debt can be paid off faster if the interest rates are low. In terms of ability to service their educational debt, Physician’s Assistants are better off than most. They get to experience a variety of different tasks and challenges that allow them to gain valuable skills and knowledge that can be used in other areas of their career.
The ranking doesn’t mean that all MBA’s are good investments. Before committing to a program, it’s important to do your research and assess the potential return on investment. Most of the debt is manageable compared to other programs so I put the degree in this spot. This degree will give me the skills and knowledge to advance my career, while also keeping my debt manageable. Most of the people I work with have $70,000 to $100,000 in debt and high middle manager salaries of $80,000 to $90,000.
Is that level of the business world possible without an advanced degree? The answer is yes in many cases. Make sure the answer is right for you by doing your own research. At least graduate business programs care about starting salaries for students. Prospective students can make a more informed decision if they look at the starting salaries of graduates. People who attend business school want to make more money and invest in their ability to earn more. There is less time to build up a large amount of debt since most programs are two years. A shorter program may be the best way to reduce debt. The time it takes to repay the loans is easy. It’s not hard to imagine why the salaries of MBA graduates are so high. They pay off their debt with a private company and get a lower interest rate. They want to improve their credit score by staying within their budget and making all payments on time.
Second: The Burdensome
The occupations in this category were once the top of the economic ladder of the middle class. The middle class has always been a source of pride and strength for many countries around the world. Some people who get degrees to practice these professions make a lot of money. Many people who don’t have a degree in these fields can still make a living. Some people are saddled with too much debt and don’t know what to do with it. Debt can be a difficult burden to bear, as it is an unfortunate reality that many people have to face. This group likely has a debt to income ratio between 2 to 4 once they are a couple years out of school making ‘real money.’
It is difficult to place physicians in this spot. I help a lot of doctors get set up on the program, in which they will pay 20% to 40% of the true amount they borrowed. The ones who go into private practice often have enough money to pay off their debts in less than five years. I think this would be the most controversial placement. I have seen many physicians that are better off than the best off, and I have seen some that are in terrible shape. Regardless of profession, the financial stability of healthcare professionals varies greatly.
You have a 3-year to 10-year training period after med school where you’re earning $50,000 to $70,000 as a resident or fellow. Once a physician completes their residency or fellowship, they can expect to make more money. Many of the doctors I work with start out with hundreds of thousands of dollars in debt once they start paying it off. It can take several years to pay off this huge financial burden. This is not a big deal for a private practice dermatologist. They have done it many times before.
This is a crushing burden for a primary care physician in private practice who mismanaged their loans. Financial resources are available to help physicians get back on their feet. Many physicians would have a hard time paying back their loans because of the absence of the PSLF program. The amount of student loan debt for physicians is an issue that could become a burden for many. The categorization is the right one since the new Republican government is likely to end the days of the PSLF. If you think you might be eligible for the program, it’s important to act quickly so you can take advantage of it before it’s gone.
As with physicians, you’ll find examples of top law school grads who leave school with $200,000 in loans but get a $170,000 associate job at a The law firm has power through the debt. The attorney at the Big Law firm believes they can help you eliminate your debt. That is not the norm. We should try to break down these tendencies.
The typical lawyer I see has $200,000 in law school debt and went to a top 100 program. While still paying off their student loans, he or she is struggling to make ends meet.
Most of my lawyer clients work at a small to mid-sized practice making $60,000 to $80,000 a year, although I have several working in Biglaw just looking for help with shopping for a refinancing deal. Many of them are just starting out in the legal profession and need guidance on setting up their own practice. I have seen the reality of the job market in the legal field, with many bright folks stuck in jobs they could’ve gotten with their undergrad degree because of job market saturation. Recent graduates can’t find meaningful work in the legal field that uses their skills and experience.
So if you want a lifestyle without significant financial stress, don’t become a lawyer unless you go to a low-cost regional school or a top 20 school with the near certainty that you’ll have the grades to get a Biglaw job.
Financial stability used to come from dentistry. It is a path to entrepreneurship or bust. A typical dentist client has $400,000 in dental school loans. Paying back these loans can make it hard for dentists to focus on growing their practice.
The majority of new dentists depend on government income driven repayment programs for their financial survival, compared to their typical starting salary of $120,000. New dentists need to understand the nuances of these programs for their own economic well-being. It is true that some dentists have done well for themselves, but it is not the norm. It is possible to build a successful career as a dentist with hard work and dedication.
The ones who make the most of their dental education buy a practice for $300,000 to $750,000 and eventually earn $250,000 to $300,000 after they pay their business loan. Quality care and services to those in need may be a benefit to the local community.
The income can go up to $300,000 to $350,000 once that note is gone. This additional income can be used to invest in other areas of the business and increase profits even more. The solo practitioners dentist is getting rarer by the year, but these folks repay their loans over time. Large corporate dental practices are replacing solo practitioners.
Corporate dentistry has spread everywhere and new graduates are likely to start out as associates at a practice they have no ownership stake in. Many will remain employees. They are more comfortable with the security of a steady job. The dentists start out at $120,000 and rarely make more than $180,000. Depending on the type of practice they join, the earning potential of dentists can vary a lot.
The dental school debt is growing. One of the most expensive professional degrees available is the dental school graduate’s debt burden. The dental field is a poor investment if you don’t want to run your own small business. Before making any major educational investments, it is important to be sure that this is the career path for you, as it takes years of education and training to become a dental professional. I think 15% to 25% of graduating dentists would default in the absence of the REPAYE, PAYE, and IBR payment options. Many dental students would not be able to manage their student loan debt without these payment options.
Third: The Potential Future Wrecking
The graduate programs place students in the most precarious financial situations. These programs often require a lot of personal financial investment in order to be completed. The clients coming out of these programs often have high debt to income ratios. Fortunately, there are many other options available to those who have struggled with debt that can help them get on the road to financial success. Some people owe more than 8 times their mid-career salary. The phenomenon shows no signs of slowing down.
These are clients that I have helped. I’m proud to have had the chance to work with them and to see the positive impact that my services had on their lives. Occasionally someone will go to a more affordable program and come out with a manageable debt load or have parental financial support that limits the cost of their education, but that is getting harder to do every year as these programs relentlessly increase tuition.
It is at risk of becoming a profession of the well to do. It is important that steps are taken to make a career in veterinary medicine accessible to all. According to anecdotal stories, the average affluence of a vet student’s family continues to increase. As vet school enrolls increases, this trend is likely to continue. It is easy to see why from my client statistics. Several dozen veterinarians have an average debt load of $300,000. If they are employees, their typical starting salary is around $70,000.
Most veterinarians receive horrible treatment under student loan policy because of the high debt to income ratio and limited not for profit jobs available in the field. The student loan debt crisis has caused many veterinarians to struggle financially and feel powerless to repay their loans. Since the IRS considers private sector student loan forgiveness taxable income, veterinarians have to save hundreds of dollars a month just to cover the future tax penalty on their loans. It is important for veterinarians to take advantage of any available tax deductions in order to offset the cost of their student loan forgiveness.
They have to put 10% to 15% of their discretionary income into loans. The loans are used to pay for higher education. They have to include their spouse’s income in the calculation. Other sources of income may be taken into account when determining the ability to make payments. They will increase their joint tax bill by a lot if they file taxes separately. Couples should consider the financial implications of filing their taxes together.
I have had veterinarians ask me if it would be possible for them to get a legal divorce but remain functionally married because of their student loans. If you want to be a doctor, you should either have rich parents or be aware of your debt and how it could affect you and your family for a long time. It is important to take into account the financial implications of pursuing this career path before committing to it.
My usual client has a modest income of $60,000 to $70,000 and a lot of debt. One client left the field. It’s a pity to see that, as so much effort had gone into preparing for the event. None of the chiropractors with student debt that I have spoken with have been in great economic shape thanks to their student loans. They are struggling to find ways to pay off their loans and build a successful career in the field. Not even one.
That doesn’t mean that there isn’t a way for a Chiropractor to repay their loans, it just means that the field is charging more for the education than the degree. The potential to earn money in the field should not be seen as an indicator of the quality of the training or the cost of the education.
The other fields have at least some floor on compensation, but there is no requirement to visit a Chiropractor. Chiropractors also have among the highest default rates of any professional program because of the financial strain the graduates face. Under the government repayment programs, most chiropractors need to pray for a federal rescue. Private loans and other alternative financing options are being explored by many chiropractors.
For Profit Graduate and Professional Schools
There is an easy rule of thumb for people who don’t have educational debt. You won’t have to take out student loans in the future if you start saving for college now. If you want to be a doctor, dentist, lawyer, or any other profession, you need to apply. Take relevant classes inhigh school and look into programs that will help you reach your goals. Don’t go to a for-profit graduate school. Make sure the school you choose is accredited and highly respected in the field of study, if not, don’t go. The majority of the consults I have done involve loans from for-profit grad schools. The impact of predatory loans on people’s lives is heartbreaking.
The federal repayment programs like REPAYE, PAYE, and IBR have led to a proliferation of these institutions. The repayment programs have made it easier for students to manage their student loan debt, so they can pursue higher education. If graduating students can pay 10% of their income no matter how high their debt, why not increase your tuition to sky high levels and accept everyone to maximize profits? There are ethical implications to consider, but this could be a viable strategy for universities.
If you go for profit, add 50% to the typical costs for the degree program. Before making a decision, be sure to do your research and understand the hidden costs associated with for-profit degree programs. I have seen veterinarians with hundreds of thousands of dollars in debt, associate dentists with hundreds of thousands of dollars in debt, and other sad stories. Professionals who have worked hard for their education and training are struggling financially due to high debt levels.
Luckily under the current government programs, there are strategies to use that don’t involve bankruptcy, but it’s clear to me that for-profit grad schools overstate the value of their degree. Before investing in a graduate degree from a for-profit school, it’s important to be aware of the potential pitfalls. If your dream job requires a professional degree and the only school that accepts you is a for-profit college in the Caribbean, my suggestion is to work for another year, bolster your resume, and apply to cheaper schools. You can still work while pursuing a degree in your field if you take online courses.
There Are Always Ways to Save on Student Debt, But the More You Owe the Fewer Your Choices
I don’t know what the federal student loan policy will look like in 10 years, but I know that owing less is always better. You don’t have to worry about congressional policy or executive orders. There will be no need to stress about the changes to the obscure government program that forgives student debt for employees of 501c3 organizations.
I was 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 I was proud of the fact that I could make a difference. When I help clients make a strategy to repay their student debt, I can often exceed what they were doing before. This can result in a shorter repayment timeline and thousands of dollars saved. I help smart people who were taken advantage of by graduate schools come up with a plan to pay back their loans and save money. It’s rewarding to see them make progress towards their goals and have a brighter financial future.
If you don’t have a lot of money, the best jobs requiring student loans are the ones that involve a 3 to 4-year degree from a for-profit grad school. What is your student loan story? I don’t have student loan debt because my parents paid for my college tuition. Let us know what you think in the comments. Please let us know if you have any questions or feedback.
Learn More: Read our in-depth post on How Student Loans Work.