Graduate degree: Loan or save?


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So, Husband's job search isn't going very well so far and it looks like a master's degree is what he will be needing. He's tempted to work what he can for a few years and save up for a master's degree... but right now he's making 10$ an hour and I fear it will be years and years before we have enough money for his master's degree. But, of course, we all hate the idea of more student loans. We also hate the idea of still living like starving students as we are each nearing 30.

So, what are the pros and cons of taking out a loan to get the degree in the near future versus saving for awhile?

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I would take the loan so he can get a better job sooner, but it depends on some things. You can always pay extra on the loan later, and also during his time at school to reduce interest. You should calculate how much it will cost to get the master's degree and then use that to determine how long it would take for him to save enough money to do it at his current position. If it takes more than 3 years I'd say it isn't worth saving.

Edited by PrinceofLight2000
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Right now, your biggest asset and liability... is time. Time is more important than money. If you wait until you have the money... you may not have the time... and you'll be that much farther away from having the degree.

It's a shame that we need pieces of paper to show competence... but the sooner you have it... the easier it (might) be.

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So, Husband's job search isn't going very well so far and it looks like a master's degree is what he will be needing. He's tempted to work what he can for a few years and save up for a master's degree... but right now he's making 10$ an hour and I fear it will be years and years before we have enough money for his master's degree. But, of course, we all hate the idea of more student loans. We also hate the idea of still living like starving students as we are each nearing 30.

So, what are the pros and cons of taking out a loan to get the degree in the near future versus saving for awhile?

Can't he get help with education costs being a veteran?

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I'm in the student loan corner.

Period.

Always**.

Here's why:

- Student debt is classified differently than other debt (a few thousand in credit card debt is worse than tens of thousands in student loans debt. Shorthand: Banks & financial institutions expect that doctors/lawyers/other highly paid professionals to be carrying up to 6 figures in student loan debt.)... So it doesn't mess up your credit rating, or slow down your respectability.

- If you can pay it off over a long enough period of time... The interest is often at (or lower) than inflation. Making it interest free.

- The sooner one graduates, the sooner one starts making better money*. To use totally made up job/numbers... 40k per year prior to graduation. 100k after graduatiom. Graduate 2 years sooner = an extra 120k. The asterisk is assuming better pay after graduation (unlike my social worker friends, who make more at Starbucks than in practice for the first 3 years. But I digress). Just do the math, and see if you add money to your family, or subtract it, by what your salary is post graduation.

- something I forget. Argh. There's a 4th reason. It will come to me. Maybe. At 2am.

** Granted, if one can go entirely on grants and scholarships, or pay out of pocket... Awesome. But that sounds like neither you nor me.

_______

Slightly off topic... Make sure he meets with Student Family Services!

As part of the financial aid package, a childcare subsidy is usually included IF you schlep over and sign up for it (and ticked the box when applying for grants & loans).

I was a SAHM... Didn't need daycare per se... BUT that subsidy totally paid for my son's (pricey!) Montessori preschool. As students there was no way we could have afforded to pay for preschool that cost more than our rent.

Which is reason 4.5 (I WILL remember #4, darn it) for student loans... Childcare subsidies and other awesome family benefits are only part of the student aid package at most universities.

Q

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I'd do some industry research first and make sure the Master's degree is really necessary (there's a difference between needing the degree to do the job, versus an employer merely using the lack of a degree as a quick way to filter resumes--the latter can be overcome, frequently, by good networking).

I regret my student debt every day. And if you fall on hard times later, and have to declare bankruptcy--that student debt will never, ever go away.

Tread carefully.

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I'm in the camp of it depends. Depends on the cost/benefit, what is the expected pay level of the master's degree. In general, a Master's isn't going to get more than 70-80k (at the high end) starting out and that would be for in demand technical areas like some sort of engineering, prob. 60k for a regular Masters.

There are a lot of masters degree that just aren't worth the 20-30k a year needed. Generally speaking a rule of thumb for an investment is 5 years, i.e. if you can't make your money back in five years it is not worth it. So for example if the difference in the expected level of pay between degree and a master's is 10k then spending 50k over three years for a masters may not be worth it.

However, in this situation it sounds like the difference would probably be pretty great so the master's is worth it.

As far as the loans, if it is a technical degree many universities offer Graduate Research/Teaching Assistance (GRA/GTA) positions. Basically you get a reduced tuition rate plus you commit to work 20 hours a week either teaching or doing research and you get a meager salary. This works very well at the Masters level for technical positions. If one goes that route the amount of loans needed would be significantly smaller, if needed at all.

There are also plenty of on-line programs. Massive Open Online Course (MOOC) are starting to come into play, Georgia Tech has one for Computer Science (along side their distance learning program). Several other big-name colleges are starting to get into distance learning courses.

The bottom-line is that with all the technology out there today, it may not be necessary to go the traditional route of going to a university and being "college" students again with a huge amount of student loans. Technical programs offer plenty of flexibility to cut down on costs. . . liberal arts programs, well that's another beast and I'd look long and hard at if it is really worth it.

My guess is that you'll probably be able to find away around student loans, either completely or to where it's not that huge of a hit.

While student loans cannot be directly discharged in bankruptcy, if one knows how to play the game they can be "discharged" albeit indirectly-but it takes a little bit of planning and some might not consider using oh say credit cards to pay off student loans 100% ethical . . . . but then again I'm not sure how ethical it is that student loans can't be discharged (pick your poison . . . )

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I have my Master's degree and never regretted getting more education. I like what Skippy740 said in terms of time being your greatest asset right now. Student loans usually come with a low interest rate. For me, coming out of graduate school, I had almost $50,000 in debt. I currently have a 15 year student loan at an interest rate of about 3.5%. (There are a number of different loans, and different interest rates, but this is the average for me). I am paying about $275 per month for my student loans--essentially a car payment.

Was it worth it--absolutely. But I was able to get a job after graduating. We also lived very frugally (with a couple of children at the time) and also sought help from other people (including family members--of whom we have since paid back). It was a struggle for us, but I will always cherish those times with my wife. We had certain obstacles and we had to diligently work together in order to get through those circumstances. It made us stronger as a couple.

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I'd do some industry research first and make sure the Master's degree is really necessary (there's a difference between needing the degree to do the job, versus an employer merely using the lack of a degree as a quick way to filter resumes--the latter can be overcome, frequently, by good networking).

I regret my student debt every day. And if you fall on hard times later, and have to declare bankruptcy--that student debt will never, ever go away.

Tread carefully.

The industry is where it's tricky. Husband has his Bachelors' in Geology. At the time he entered the program, the job outlook was quite good. But it was also counting on people retiring, and the economy kicked that down. So now he and his old roommate of the same major are a tad stuck. There are some entry-level opportunities, but most careers are looking for years and years of experience or a master's degree. He is currently volunteering at a geology display and hoping to network with some of the venerable volunteers on the same project. Theoretically he should have more experience than he does (college internships and the like) but his Army career ate up most of that available time.

As for the veteran thing... we're looking into it, but he's not a veteran in the concept he's done the traditional active duty.

Thanks for your thoughts, all!

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As for the veteran thing... we're looking into it, but he's not a veteran in the concept he's done the traditional active duty.

Thanks for your thoughts, all!

Neither did my son. He was National Guard. But he still qualified for VA educational benefits.

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I'd go for the loan IF he's going into a field that will pay him more than he will take out in loans. So, no loans for English majors, take a loan if you are in science, technology, engineering, math or health. : ) Also, some masters programs have TA or GA (graduate assistant) positions that will provide full or reduced tuition and insurance, as well as pay for about 20 hrs a week work.

This is why you don't go to a fly by night school and you find the best school you can get into. The better schools generally have more scholarships/work opportunities.

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