Graduate School Loans – Should You Avoid Education Debt?

Graduate School Loans - Should You Avoid Education Debt?Should you go into debt to pay for graduate school? A reader named Shana recently wrote in with the following question about taking on student loans to further her education and set up a future career in counseling:

I recently graduated from college with a B.S. in Psychology. I have no student loans. I have $4, 600 in credit card debt. I also have $2, 500 loan on a motorcycle, but my dad bought it from me and is making the monthly payment of $114.00. With the economy the way it is, however, I may have to take it back. I have no rent payment since I live at home, but I also don’t have a job right now, so finances are tight.

I’m looking at going to graduate school to become a licensed counselor, but I’m really wrestling with this decision. My dream is to go to graduate school, and considering all my gifts and passions, as well as my desire to continue learning, this school in particular is perfect. However, my finances are in rough shape, and I’d have to take out $60, 000 in loans to go to this school — and counselors don’t get paid a whole lot.

In short, this school would be a great experience, but then I would owe all this money, and it would just weigh over me like a stack of bricks. There is another program in England where I could go to for three months to learn, read, grow, get to know people in a community setting, etc. I’m really torn over this decision. My heart is drawn toward this grad school, but I can’t ignore the possible impact on my finances.

I’ve edited this for brevity, but it’s clear from what she wrote that Shana is strongly drawn toward a graduate education, and to this school in particular.

Scholarships and grants

I would start by asking whether you have done any research into the types of scholarships and/or grants that are available to someone in your position? I’m willing to bet that a little digging could produce some great results.

By the sounds of it, neither you nor your family are wealthy, so there’s a good chance you would qualify for grant money or a scholarship of some sort. Be sure to do your homework in this area.

Work your way through graduate school

You said that you are currently unemployed. What if you were to go to graduate school part-time while working? Robert Espe, a staff writer over at Debt Free Adventure, worked his way through school without taking on any education loan debt… Robert is but one of many who go this route, so it’s definitely possible to make it work.

Career salary and education debt

Another important point to consider is whether or not your aspiring career will pay a salary commensurate with the cost of the debt you are about to incur.

You mention wanting to be a counselor, and express some concern over the earning potential of this sort of position. The salary ranges for counseling positions differ quite a bit. For example, according to, the U.S. national average salary for a Licensed Professional Counselor is $35, 000/year, for Academic Advisors the average is slightly higher at $40, 000/year, and Chemical Dependency Counselors average an even higher amount of $46, 000/year.

To help put this in context, my wife is a school counselor with a graduate degree. After graduation, she secured a position with compensation in the high $30k/year range. Eight years out of graduate school she still owes over $34, 000 on her education loans and has been paying the entire time (with no deferrals or forbearance).

I should also note that education debt is a much bigger deal than the student loan people make it out to be… Just ask anyone who is currently repaying their loans.

Although I’m not a counselor, I am a working professional earning a decent salary. Ten years out of college I still have $31, 000 in education debt. While I deferred payments for a few years, the burden is still very real. You indicate a strong dislike for debt and even mention that a graduate degree is not a necessity for your career path. If I were you, I would give strong consideration to alternate options.

In summary

Whatever you do, make sure you spend ample time considering the debt before jumping in head first, as most students do. If I were you, I would use the existing bachelor’s degree to secure a position in the field, then establish a savings plan for future education costs. Save money first, then go back to school.

If nothing else, securing any available scholarship/grant monies and working your way through grad school will help lessen the blow of the education debt burden you need to take on.

Ultimately, taking on the debt is a personal decision. Since the graduate degree is not necessary (or appears not to be based on your reference to another, shorter program in England) I would advise against borrowing to make it a reality. Taking on unnecessary debt is never (or at least very rarely) a sound financial decision.

Your thoughts

What do you think? Should Shana quit worrying about the debt and secure student loans? Are there any useful bits of advice that I failed to mention that can help Shana with her decision?

25 Responses to “Graduate School Loans – Should You Avoid Education Debt?”

  1. Anonymous


    Look into graduate assistantships at your school, look into any free aid.

    Start applying for this aid with your application. If your school doesn’t give you any, don’t go there no matter how good it looks. You will regret this later in life.

  2. Anonymous

    I’m the writer of this post….

    Also, I’d be debt-free by the time I went to graduate school (Fall of 2011). With about 2,000 in savings. And I’m 25 if that helps at all.

  3. Anonymous

    I’m the writer of this post….

    I now have a full-time job that pays 35,000 a year working with at-risk youth. I love the job- I’m learning a lot and having fun. I’m also getting a lot of positive affirmations from co-workers as well as the youth I’m working with. This affirms that the counseling field is right for me. It’s also where my heart is.

    And still, I can’t stop thinking about this graduate school. It fits right along with my passions and interests. It also takes an approach to psychology that fits my worldview. And it’s located in Seattle!

    But still, it would be 525 per credit @66 credits= 35,000 for tuition. Not including living expenses, books, practicum etc.

    I have researched many, many, many graduate schools and invested several toilsome hours in analyzing what I want. This school is what I want and any other school would be me settling. It’s just the money…

    What are your thoughts?

  4. Anonymous


    Good luck! I think your’e making a good call. And I don’t want to say anything against flirtation. I spent a lot of time flirting with the woman I’ve been married to for the past ten years. Flirtations can blossom and transform into the foundation of your whole life.

    H Lee D,

    Granted. But you don’t have to provide therapeutic services on a professional basis to get some kind of exposure to the work. Let’s say you’re interested in serving at-risk youth populations. You can volunteer with Boys and Girls Clubs right now–and do a lot of good in the world in the process. Even in fields like medicine, law or engineering there are opportunities to volunteer or intern. Sure, you’re not going to perform the surgeries or design the bridges, but you can get a taste for the career, make contacts and earn valuable experience. I’m always amazed at the number of people who open restaurants or coffe shops and have never worked in one!

  5. Anonymous

    I’m the one who wrote this question.

    Bruce- Jeesh, thanks for the bluntness. Really, seriously appreciate it. Your right- flirtation and passion is different, and not worth 60,000. I’ve got a job in the field now- so we’ll see where that takes me as far as grad school goes.

    Oh.. but it was 60,000 for a masters program INCLUDING all additional costs (housing, car, bills, food etc) tuition, books, practicum. But yes, I still get the point over your comment. And I think there’s much truth to what your saying.


  6. Anonymous

    @Craig: I agree with most of your post, but in most (all?) states, you can’t be a licensed social worker or counselor or provide any type of therapeutic service without a master’s degree.

  7. Anonymous

    Borrowing money for education is a financial proposition. We make bad decisions when we start talking about dreams and passions and so forth. Almost all of the time, we can find ways to support our dreams and passions that do not involve $60,000 of debt. And I’m going to be blunt here in talking about the person in question: you don’t know what your passions are. You have a Bachelor’s degree in a field that you are really attracted to. That’s not a passion; it’s a flirtation.

    Diving into massive debt for–let’s be honest–a minimal change in your career earning potential is the financial equivalent of a drunken Las Vegas marriage. Except that those can be annulled, and student debt doesn’t get discharged this side of the grave.

    You need to take a job–at _anything_–spend a little time outside of the classroom, and see if you find yourself spending your free time reading journal articles and books on Psychology. Follow a few blogs and get active in the comments sections. Do some volunteering with organizations that serve the kinds of populations you’d like to be a counselor to. Check in with yourself in six months or a year and see if “passion” is still the right word.

    If it is, go anywhere that will give you a teaching or research assistantship. No three month program in England is worth sixty thousand dollars. (You could put together a “program” of you own, somehow or another, for a fraction of that. I happen to know this because I did it myself.)

    I _beg_ you to read Thomas Benton’s column “Just Don’t Go (Part II)” and anything else you can find from him. He’s talking about humanities, not social science, but, believe me, a lot of it applies:

    A lot of people just sort of “flow” into graduate programs because they’ve done really well in school, they don’t know how to handle being suddenly out of the structured, feedback-intensive world of academics, the “real world” is big, confusing and uncaring, and it seems like the obvious “next step.” It’s a big mistake for a lot of people. Please take the time to look seriously at your options.

  8. Anonymous

    Avoid debt! Avoid debt! Work your way through. Get scholarships. look for tuition reimbursements from your work.

    The debt is a chain. Work for a year, pay off your debts.

    Then look at working while going to school. When I went back for my MBA, I found (for the most part, not all) the kids who came straight from undergrad to be immature and unable to interact on a professional level. Most of the exceptions were those who worked while in school. Think of it as Business 501.

  9. Anonymous

    While I am in complete agreement with the concept of working first, I also know it is very difficult to find jobs. A young, inexperienced college grad normally has problems getting that first job, but in this economy…

    Seeking scholarships is also a great idea. The competition for those has increased. It is tough getting money.

    I’m currently back in school because I couldn’t find employment, even with a masters. Do your homework first. Make sure there are entry level jobs in the field. You don’t need a masters to ask “do you want fries with that.”

  10. Anonymous

    I went to graduate school for a similarly degree-requiring and low-paying helping profession. I ended up deciding to go straight from undergrad and was lucky enough to get scholarships that reduced my final debt burden significantly.

    It ended up working out for me, but if I were to do it again, I would have taken a few years to work first. I think it would have made the more abstract parts of my classes more meaningful to have more experience under my belt. I would also have come out with less loans and had a better sense what going into debt meant after several years of real paychecks. For me, although the degree was really necessary for my eventual career, my desire to start grad school was fueled more by my fear of “not knowing what I would do if it wasn’t school.” It would have been braver for me to have delayed.

  11. Anonymous

    Not to dismiss advanced degrees, but going into serious debt for one or two is a very serious matter, and choosing one that will not lead to a significantly higher income post-degree is a bit self-indulgent.

    I went from 25K or so jobs to 90K a year with my MS, which was an accelerated, intense one-year program that cost $18,000 (plus another $15,000 for a year of living expenses). I could only work a few hours a week as a TA, so I had to rely on savings and loans to get me through. It was totally worth it. My income nearly quadrupled. I paid off my loans within a few years. I thought it was a huge risk at the time, taking a year off and moving across the country, but I’m sure glad I did it.

    Think long and hard about this. Pursuit of knowledge is always a good thing, but outside of academia the present value is limited to what it can offer an employer. Taking on $60,000 of debt for a $30,000/yr job cannot produce a viable outcome.

    For the letter-writer, there must be numerous programs for counseling/social work at state universities that will not cost $60,000. I can however state that “reputation” schools can have a significant effect depending on one’s industry. So find a cheap, good program. They must exist.

  12. Anonymous

    I don’t know if Shana plans to use her degree as a licensed counselor for a public service job, but if she did, this Congress has enacted the Income-Based Repayment program that currently allows borrowers to cap their monthly federal student loan payments at 15 percent of their discretionary income. Under new provisions passed in the budget reconciliation bill this weekend, it would lower this monthly cap to just 10% for new borrowers after 2014.

    It may not help make this short term decision, but could be something for the something further down the road.

    More info here –

  13. Anonymous

    I was the one who posted this question!

    Thanks for all your well thought out answers.

    I ended up getting a job and moving states. It’s working with at-risk youth and using my psych degree. I’ve decided to stay with this job for 16 months and then go to the grad school of my dreams. That’ll give me time to pay off debt and have a good amount in savings. I’ll also work while going through schooling.

    Once again, thank you to all of you and Matt Jabs for helping me through this.


  14. Anonymous

    I agree with the others. Get a job somewhere related to the field first. Preferably try and find an employer that will help pay tuition. $60k sounds expensive. I’d shop around for other schools.

  15. Anonymous

    An MSW (social work) is generally more versatile and opens more doors than an MC (counseling), for whatever that’s worth. You can do therapy with an MSW but you can’t do social work with an MC.

    I agree that $30K/year is too much to pay for grad school. See if there’s another in the area with lower tuition.

    I agree that a job is necessary.

    Check on campus. When I went to grad school, there were a whole host of jobs available that gave full or partial tuition reimbursement. I took a TA position in the psych department, teaching a class I wasn’t entirely comfortable teaching, but I was qualified, and it paid for that semester.

    I had no car while I was in grad school. It saved me a lot of money and a lot of troubles. I bicycled or took the bus most places (Phoenix didn’t have a train at the time), and friends were willing to do occasional rides as needed. In addition to no car headaches, I got exercise every day and didn’t need to build it in to my schedule. Biking actually was faster than driving and trying to find a place to park, then walking to the building.

  16. Anonymous

    If an advanced degree isn’t required to get a job in her field, then I would get a job first, as many have mentioned. Determine whether or not you’re as in love with the field as you think, and whether an advanced degree will result in an advanced position with an advanced salary.

    I’m also of the opinion that if you’re going to go to school and you’re drawn to one in particular, then go to it. School can be far too miserable to not enjoy where you’re going. But go in with your eyes open, and don’t complain about the consequences of your choice. That’s the part that gets me.

    And don’t assume that you’ll necessarily be able to work while in school. Depending on your schedule, labs, practicums, etc., it may not be feasible to have a job on top of it. For instance, I was able to work while in law school, and my fiancee was able to work the first 2 years of medical school. The last two years he was in rotations, up to and over 80 hours a week, and working on top of that just wasn’t going to happen. It just wasn’t. If it’s not practical to work part or full-time while in school, that needs to also factor into your decision whether to go now or later.

  17. Anonymous

    I think you are facing two decisions here, one is to go to graduate school and become a licensed counselor. The second decision is whether to go to “this” school which will cost $60,000. I think that going to graduate school and becoming a licensed counselor is a great career move, it is in line with your passions/gifts ect and will give you greater job security in the future. However, $60,000 sounds like a very expensive school to me. A more expensive school may have a great sales pitch, but I think with a little research you will be able to find a more affordable school which will also help you fulfill all your dreams.

  18. Anonymous

    My personal bias would be to avoid debt, especially if it does not lead to an occupation where you can quickly get out of it.

    An alternative may be to study material on-line related to her field of study until she has the financial means to afford a formal education.

    Another option is to inquire at the school whether they have a policy of auditing the classes for free (without the official credit). Many institutions allow you to audit a class (participate without paying) as long as there is an open spot. This would not necessarily lead to the degree, but would allow you to gain knowledge in your area of study. Later, you can pay to take the classes for credit if desired (which should be an easy grade since you already know the material)

  19. Anonymous

    I wouldn’t borrow $60k if the salaries Matt describe are accurate.

    Between my MS and my BS, I’m $80k in the hole. Right now, I’m on “reduced” payment plans and I’m still paying $420/mo! When my payments have to step up, I fully expect to pay $650/mo… and I make $70k/yr!

    If the writer will end up living in a high cost of living area, her finances are going to hurt that much more. In my case I figure the “big city premium” + student loan debt requires me to earn an extra $17,000 each year. (That’s gross income, ’cause remember, what you make and what you take home are two very different things.) So really, if I could live in a cheaper town and not have any student loan debt, I could make $53k and feel no difference in my lifestyle.

  20. Anonymous

    I’m on the “get a job in the field” bandwagon. I know too many people who did school straight through and then realized they didn’t like the profession. Plus, for a psychology degree you’re going to have to do a practicum, and having professional contacts in the field will get you a way better practicum.

    One argument for going straight through is that the job market is so awful right now. And that’s a big argument – taking your first job in a recession affects your salary for your whole life. Stepping out the job market for a few years right now might be a good career move that makes up for the cost.

    I actually have a friend who just finished a masters in psychology and is now going for his PsyD. He found a great part-time job in the field while he was in school, but it hardly paid at all. It did allow him to combine his practicum requirements with paid work, though, which saved a ton of time.

  21. Anonymous

    Also, check into graduate assistance positions at the University. The best way to work and go to school is to work AT the school! Some schools even offer a tuition discount or rebate to staff members.

  22. Anonymous

    I would work and pay your way as you go. Some employers will actually help pay for schooling or a portion of it. Going into deep debt is not a good idea. You could also look into being a graduate assistant …I think these folks get discounts on tuition. As a last resort, just take a class at a time and pay as you go.

  23. Anonymous

    I would really try to avoid the 60k debt by any means possible. Having that huge loan to pay back will probably have some kind of an effect on your career choices. Working through school is a solution that can boost your resume and keep your education from being a financial burden.

  24. Anonymous

    My personal opinion is that Shana should get a job within her field first – Get some experience and save some money while doing so. While working, she can take a class (or two) each semester if there is a university nearby. Maybe it won’t be the university of her dreams, but credits will transfer! (she should double check that – as *some* credits won’t transfer, but most do). This way, she gets valuable work experience, and can make progress (even if at a snail’s pace at first) towards her master’s degree – if that’s what she really wants. And, she can pay for those classes with the cash she earns from her job (and it’s quite possible the job will help pay for classes).

    But I’ll qualify my opinion by saying that’s what I did. Yeah, it took me 5 years to get the same masters degree that most people only took a year to get. But so what?!? I did it, and I did it without borrowing a penny! And since I had an extra 5 years of work experience by the time I got the master’s degree, I made LOTS more money than my classmates with no experience but an internship! Shana, you can do anything you put your mind to. Remember the old saying – “how do you eat an elephant?” –>”One bite at a time!”

    edited to add – I also had two itty bitty kids when I went back for the master’s degree. So if shana has no kids, surely she can knock it out faster than I did!

Leave a Reply