Student Loans and Professional Degrees
September 27th, 2007 by Ana
Right now there is a bit of a debate going on at the My Total Money Makeover forum about whether or not a person should take on student loans to go to law school. This has sparked a lively debate, with the diehard Dave Ramsey fans saying “no student loans for anything!” and others (like me) who want to get that professional degree saying to save up what you can, apply for every bit of scholarships and grants possible … then if there is still a shortfall to take the smallest student loan possible.
Now let me start out by saying I believe no one should take on student loans for any undergraduate degree. With some planning and a budget, undergraduate tuition and even the outrageous prices for college textbooks can be easily saved up, as long as you don’t try to do a private college. I know this because I am doing it.
While my plan is to go to pharmacy school next fall without needing student loans of any type, I am thinking hard on the old army saying: “Hope for the best but prepare for the worst.” Therefore, in preparation for the worst case scenario, hubby is selling his 2005 Chevy Colorado and we will be saving up over $20,000 for the first year. If the absolute worst happens and I don’t get Pell grants, we will need to take on a small student loan, but the vast majority of the tuition will be funded by us.
Some of the most interesting anti-student loan comments in the debate are from people who actually did use them for their professional degrees. Some are still paying for their degree years and years later, with loan debt tallies ranging from $30,000 up to over $100,000. And just yesterday Dave Ramsey took a phone call on his radio show from a guy in Florida who had $275,000 in student loans alone! Then the caller admitted he wasn’t even working in the career he took all those loans to get … and makes only $35,000 a year.
This is a very sticky subject, and I am hoping to get through and be able to ask the man himself about the whole how to pay for a professional degree when you are not yet financially independent to the point you can cash-flow it. The biggest sticky point for me is this pharmacy degree will more than TRIPLE my personal income earning ability, and quadruple our household income. That’s a huge jump which seems to make it worthwhile to actually be worth going into a LITTLE debt again. So inaddition to trying to call Dave today, I am going to throw this debate out here in the public forum. Comment away!
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September 27th, 2007 at 12:17 pm
The problem is how do you KNOW you will be working in the field for which you are getting the education.
Too many people decide to stay at home, or totally change careers and are stuck with these humongous student loans…
September 27th, 2007 at 12:23 pm
Michael, that is a very valid point. I do know I will be working in my field when I graduate in some form…there just isn’t much else to do with a PharmD LOL My mother earned her BPharm back in 1992 (last class that allowed a BPharm, after that it has been PharmD to get the RPh). My mother has been urging me to go for the PharmD ever since at least 1991 when I graduated high school. However, there are many professional degrees where you don’t get any guarantee of a job offer, which is one of the points of debate over at MyTMMO.
September 30th, 2007 at 6:30 am
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September 30th, 2007 at 7:01 am
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October 4th, 2007 at 2:56 pm
I wish I would have thought about the cost of college while I was going, I didn’t even consider the price tag - I know I could have saved $15-$20 thousand dollars, if I knew then what I know now - I guess that is what learning is all about.
I don’t know that I can agree that EVERYONE should pay cash for an undergrad degree, I think most could make it happen if they wanted But really, I think it comes down to priorities - In all likelyhood it will take longer if you are paying cash, especially if you right out of high school trying to save thousands for each semester.
I think some would rather have a little debt and be finished sooner, and obviously some would want to do it all cash. (the sooner you are finished, the sooner you can get a job to pay back the loan) -I think it just comes down to personal preference - just my opinion on it - thats what comments are for, right?
October 4th, 2007 at 9:37 pm
I admit I don’t care much about Dave Ramsey given that I’ve never had consumer debt and have always lived somewhat below my means; so I am not his target crowd. Cudos to him for helping people get out of debt and live within their means, but some of the things I read about him in these blogs seem a bit extreme.
This is one of these things. I wonder how Dave Ramsey expects people to become doctors, for example? There is no financial aid for medical schools, and even state ones are really expensive. If everyone follows his advice, only kids of rich parents will become doctors. The vast majority of doctors graduate with a huge amount of debt, so without student loans, Americans will have to go abroad to study medicine. This is just an example, I am not a doctor, but I have friends with children in medical school.
As to undergrad student loans go, not all of them are the same. Subsidized loans are not the same as private loans. With subsidized loans the interest is usually very low, even lower than what bank pays on CDs; state or government/state pays interest while a student is in college and for a few months thereafter so the amount doesn’t grow. If a student who has subsidized loans goes to graduate school, the government or state continues to pay interest until a few months after graduate school. These loans are a good deal for those who can qualify. Private loans are bad news and are to be avoided, but for some people they may be the only way to get education. A lot depends on one’s profession too. Getting private loans and then spending a few years trying to decide what to study or choosing a profession with no job prospects doesn’t make much sense. Getting loans to get a profession that would lead to a high paid job is quite another matter. I agree that choosing a state school if one cannot afford private school makes a lot of sense. There are several very good state schools too.
October 5th, 2007 at 8:24 am
I think professional degrees are usually worth the cost and taking a loan for them is allowable. It is an investment in yourself, and that is your most important asset.
When you are getting your pharmacy degree, you know very closely what you will earn when you graduate and it is very easy to do an ROI anlysis. It may be difficult for some other professional jobs because the potnetial earnings vary by a wider spread, but you can usually make a good estimate.
Take the loans if you need them, but do everything in your power to minimize the costs so you borrow the smallest amount possible.