Thursday, October 1, 2015

Blog CXCVIII (198): Should You Take Out Debt to Finance a Ph.D. in History?

The answer to that question really should be an unqualified, "No." Reality, though, is a bit more complicated.

Karen Kelsky, a tenured professor in anthropology at the University of Oregon and then the University of Illinois, directed attention to the debt issue when she decided to conduct a crowdsourcing survey on her website. Kelsky left academia and is now an academic consultant. Her project drew a stunning number of responses due in part to news coverage of it in Slate, The Atlantic, and The Chronicle of Higher Education. According to the story in The Atlantic Ph.D. debt is "the dirty little secret of the ivory tower."

"I thought it would be illuminating to create a crowdsource document that solicited information about how much people owed," Kelsky told the Chronicle. "I was amazed and startled as the numbers started to come in."

That is putting it mildly. The inputs are depressing. It is not uncommon in this study to see students $50,000 or $100,000 in debt. A professor with a Ph.D. in psychology wrote:
I am currently working as an assistant professor in upstate NY. I make $55,000 a year. I am presently on the IRB program with the hopes of getting Public Service Loan Forgiveness in 10 years. However, that clock hasn't even started. My loans have been in forbearance since I graduated. I am currently trying to pay off credit card debt that I accrued for living expenses while in graduate school so I can pay my $500 a month student loan payment. Rather than saving for a house, I will spend the next 10 years saving to pay the taxes on the balance of my loans that will be forgiven. As most of the money from my loan payments will only cover interest I will likely have around $170,000 left on my loan balance when it is forgiven. Unless something miraculous happens I will never be able to save enough money to pay the taxes on that debt forgiveness. I honestly don't know what I will do. I just try to take it one day at a time.
The financing of grad school comes from loans, credit cards, and family financial support. The support from family general comes from two sources: a working spouse, and/or parents/grandparents. People had parents offering loans, paying insurance, buying plane tickets for the holidays, or making car payments for them. One respondent noted that his parents still bought his clothes until he turned 32. Other grad students compensated a little by working part-time, or by having roommates. One recent graduate, said he was still living like a 20-year old even though he was in his early forties. I know that feeling.  I was living in a fraternity house when I went to my high school ten-year reunion. A fact I did not share with anyone at the reunion. What is painfully clear is that graduate school for most is not feasible on fellowships and teaching assistant positions that many graduate students have. "You end up with the message that graduate school is only really financially feasible if you have family resources to fall back on," Kelsky remarked.

Students are using these loans to finance their degrees but also day-to-day living. Often times these expenses include car repair, unexpected health and dental care, tuition and day care for children, rent, travel, and unusual events like weddings.

This type of funding is highly, highly irresponsible. When you owe money at this level, it has enormous long-term ramifications. It forces people to put off having a family, and makes buying a car or a home extremely difficult since they probably will not qualify for a new loan. A reduced standard of living also affects your family. Paying for dance classes, or summer camp, or college for your children becomes difficult, if not impossible. Heavy loan loads limit vacation opportunities and even makes going to conferences and research difficult without a generous grant. A friend of mine who finished off his Ph.D. with credit cards and is over $50,000 in debt and had to stay in a job he disliked even when he had another offer which was in his main area of training, with a lighter work load and at a better school because he could not afford the moving expenses and could not afford to take a slight reduction in pay.

To be blunt: if you have to go into debt a lot that is probably a sign from the universe that a Ph.D. is not for you. Going a $100,000 into debt for a MD is one thing. A physician is going to earn enough to pay off that loan, a Ph.D. in history will not, ever.

But I qualified my answer at the beginning of the essay. Sometimes debt is necessary. I took out two loans for fairly small amounts. One allowed me to earn my MA. Then, five years later, I took out another one to finish writing my dissertation. Even then, it took ten years to pay off the debt. If you find yourself looking at debt as a way to finish, then you need to look at the average yearly income for an individual in your field. That must be your absolute ceiling of debt. (After you go past a full year's salary--and given today's job market assuming one can get a job is a big if--it becomes unlikely that you will ever pay off the debt.)  Even then it should probably be a lot less.

The entire Kelsky survey is available here.

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