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Q&A: Should I Take Out Another Student Loan For My PhD?

Should you take a loan to get additional schooling? It’s a tough decision. First things first you need to figure out if the extra degree is worth it? Will it provide enough additional income to cover the costs of school, extra interest on your existing school loans, and the lost income while you are in school. If you decide it is worth it, then you need to decide if you should borrow more money to make it happen.

Should I Take Out Another Student Loan For My PhDOccasionally I publish answers to select readers’ money questions. I welcome your opinion in the comments. Send questions to david@moneyunder30.com.

Q: I am 27, married, and my husband and I have a combined student loan debt of about $100,000. It’s daunting to type that out. I have a Master’s Degree in Social Work and my husband is in graduate school for Occupational Therapy. (Yes, I know we’ll never be wealthy).

I was accepted into a PhD program for Public Health; it’s fully funded plus a very small stipend. I will likely start in the fall and my husband and I will both be in school for about two years before he graduates. During those two years we’ll make a very modest combined income of $1,500 a month; not enough to live on.

We only have $10,000 in savings. Should we draw down savings to supplement our income for the next two years (it should be enough) or take out an additional student loan for living expenses? Or is it just stupid to be going back to school at this point? –Katherine

A: $100,000 is a lot of student loan debt. Unfortunately, it’s not uncommon. In fact, undergrads who graduated in 2010 had average student loan debt of over $25,000.

For you, the bad news is it will take a long time to pay those loans off. The good news, hopefully, is that you and your husband will have degrees that should be in demand for years to come even if the fields are’t especially lucrative.

Of course, whether or not to pursue your PhD is a tough question to answer on financials alone—you’ll inevitably be emotionally involved in the decision.

To determine whether or not the degree is worth it, you should consider not only how much (more, hopefully) you’ll earn over your lifetime with a public health PhD versus a master’s in social work, but also the job prospects for graduates of your program. Is there a chance you’ll spend many years on the PhD just to take a master’s level social work job anyway? Remember that during that time you won’t be earning money and the interest clock on those existing student loans will be ticking. 

If you decide to go for the PhD, I would take out another student loan for living expenses rather than draw down your limited savings.

If that seems strange, remember that you’re counting on that $10k to make ends meet for two years. What happens, then, if you face a big unexpected expense? Most likely, you’ll turn to credit cards at a much higher APR than a student loan. It’s always good to have a little bit of cash in the bank. And, if you need to move after your PhD, you’ll have some money to do that. (This is similar to why I recommend people save and invest before making extra student loan payments.)

You may be hesitatnt to take out another loan with $100,000 of debt already, but remember that money is already gone. Hopefully your PhD program will provide better lifelong earning prospects than you have with your current degree, and because the program is paid for, a small loan for living expenses should be a good investment in your future.

That said, if your career prospects upon graduating with the PhD are iffy or the potential jobs do not pay much more than you could currently earn, however, I’d take a long, careful look at whether the degree is a good idea.


Published or updated on March 2, 2012

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About David Weliver

David Weliver is the founding editor of Money Under 30. He's a cited authority on personal finance and the unique money issues we face during our first two decades as adults. He lives in Maine with his wife and two children.


We invite readers to respond with questions or comments. Comments may be held for moderation and will be published according to our comment policy. Comments are the opinions of their authors; they do not represent the views or opinions of Money Under 30.

  1. PhD MD says:

    This is clearly an advert for online universities, etc. Unless you are in one of the top 2 programs Harvard or Johns Hopkins no you should not go into debt for this. It isn’t worth it, the risk is very high and the reward is extremely uncertain. You should focus on your career and moving up. In later years if you are in a management or administrative position you could probably easily find a part time PhD program and end up teaching after your career, etc. (when you have savings, a good pension, etc. all your student loans paid off, own your own home and have it mostly paid off, etc.).

    Too many people try to self-actualize through a PhD and end up deeply in debt … for what … bragging rights … ego … take a pass on this is my advice as someone who went to medical school and simultaneously earned a PhD. It has worked out for me, but that MD/PhD combo is a different thing entirely than a stand alone PhD.

  2. Linda says:

    I see that someone had mentioned something about getting a student loan to help pay their living expenses. I would like to know how I would go about getting a student loan to help with my bills while I am attending school, it seems that when I apply for my Pell grant and student loans every year that the school seems to get all of the money to handle and I end up only getting a bit of stipend to help with small things needed. How do I go about having that money sent to me instead of the University that I attend. Would this be a separate loan that I might have to apply for or does the school have to give it to me if I ask for it.. I feel that the school is taking full advantage of the situation on the money that I receive through grants and loans and I need to understand how that works as far as getting more money to help with my bills. I can’t get a straight answer from them of course, I always seem to get a different answer from them when I start asking about the grants and loans. Don’t get me wrong it is a good school when it comes to education, it is just not a good school when you want answers in the financial field. Maybe they need to be more educated on this matter so that they can give me honest and correct answers to questions asked. If anyone can help me with this it would be much appreciated. So many questions and not enough answers, confusion has set in… Thanks!

  3. Paul Ahlers says:

    Deciding to pursue more higher education is complicated. There are a lot of things to consider. Taking on more debt just makes it that much more complicated. How about one person works while the other is in school? After one person graduates the other can go back to school if they still want to.
    Debt never helps.

  4. Jamie says:

    Well I commend you for taking a good hard look at this before diving in. I fear that with the amount of debt you are already in that you would be subjecting yourself to a lot of risk, considering if anything unexpected happened, that $10,000 over the course of two years for you AND your husband, could quickly be drained. I agree with a few others who suggested that you hold off on your Ph.D until your husband is finished, that way you at least have his income as opposed to completely draining your entire savings, while you are in school. If you think you can’t wait then know that you are in for quite a ride (and a tenuous one at that) but I wish you the best of luck whatever you decide!

  5. amber says:

    This is a great problem to think on – I’m glad I don’t have to choose.

    I guess I lean towards you continuing to work while hubby finishes school, then reapply and devote yourself to your Phd while he begins his career. This may land you in different cities for a few years, but that to me seems wiser/safer than betting that 10K will cover all the unexpected expenses for 2 people for 2 years. As a converse to what others have said, you are already so far down, why add more dirt? do not take out new loans.
    Keep in mind as you decide:
    *What is your ultimate goal for the Phd? Is it required to get where you want to go?
    *What are your goals outside of work? When and if children come in the mix, how would you balance this? Another reason why splitting up the career/study paths from the timetable of your husband is valuable. You can have a baby and continue working on Phd while he takes on more childcare roles. If you are both still in school, doing this would be much harder.
    *As others have mentioned, be wary of the no-work experience trap. No one will take advice or directions from an “expert” who hasn’t been working in the field at the very least several years.

    I am not enough in the loop to know, but I thought student loan interest went on hold if you were enrolled in school? Was this a recent change?

    Good luck!

  6. Mark says:

    $1,500 per month is very little for a combined income, even in school. If you do go for the PhD you are going to need to work on the side. I don’t have your full story, but I am slightly suspicious you haven’t been working as much on the side as you should have throughout your education.

  7. Being that far in debt – I’d be tempted to not go back to school… and move on with working and life. At that age, getting married and having children is likely just around the corner, and ideally you’ll want your student loans paid off within the next few years. It’s hard to say whether getting the PhD will REALLY benefit you much further – but you can guarantee that it’ll add to your debt (or at least decrease your potential earnings) and delay your start into the workforce.

  8. Kathy says:

    I can understand how two undergraduate educations plus two master’s degrees set you back that much (especially if you live on the coasts). Based on the Occupational Handbook, “Median annual wages of occupational therapists were $66,780 in May 2008. The middle 50 percent earned between $55,090 and $81,290.” I have a few friends who are Occ Therapists, and they earn around $80K (of course this will depend on where you live). Getting your PhD in public health will definitely open more doors to you than a social work degree. However, if you don’t have experience in your new field, you likely will have to start at the bottom (and you very well may be considered overqualified for those positions). Managers look for a balance between education and experience. I would strongly advise against going straight through school without relevant experience. Perhaps, you could get a job in your field until your husband graduates, and then start your program while he’s earning money. Possibly your new employer will have some tuition assistance, and you could take a few classes while working.

    I also graduated with some student loans, and I decided to work for three years, pay them off, save money, and have my employer pay for at least part of my master’s degree (the full degree if I stay once my loans are paid off). Either way, I won’t be a full-time student again until my husband and I have enough money to cover my education and our living expenses.

  9. Drew says:

    Beyond the obvious ROI question, I would also question the timing. Wouldn’t it make more sense to wait until your husband finishes school and lands a job? That way you might be able to get through your program with out taking on additional debt. The pHD program will always be there. Just a thought…

  10. Real question is how much ROI can you expect from this loan. Are there other ways to fund the school. You have to look at the big picture to come up with right answer.

  11. Honey says:

    (no subsidized loans for GRAD school, anyway. Undergrads still get them.)

  12. Honey says:

    There is no such thing as a subsidized student loan any more, the deal that was struck when the debt-ceiling was increased did away with them. She should wait, work, and save every penny while hubby is still in school and then reapply at that point, if she’s still set on it.

    • K. says:

      This! Subsidized loans for grad students are no more as of June this year. I think it would be wise to continue saving for a year or two and pay for living expenses during the PhD through savings.

      Also agree that Katherine needs to take a long look at the ROI, and also factor in the lost years of full-time work she’ll miss by becoming a grad student again.

      Just based on this letter, I would say going back is generally a bad idea.

    • Linda says:

      Hello K. I see that you said that there is no such thing as a subsidized loan anymore, I have not been told about this from the University that I attend, I attend school as we speak and I have a subsidized and a unsubsidized loan right now. I have been going to school since 2008 and they have not taken that away from me. Thank you for that information I will be checking into that to see if I will still be getting mine. Maybe it depends on where you go to school, whether it be a college or university, I on the other hand I go to a online University, so maybe that makes the difference.

      Maybe that could be something that this couple could look into while looking for solutions or answers, if wanting to further their education, I don’t know if it would cost the same but could always look into it just to find out. Online schools aren’t that bad and I think that you get just as much education as you do if you had to go to the University itself. I like it because I save on driving cost, time lost with family, and I can do it my own pace. I believe that my Master degree was worth the money spent and getting it in only 18 months was great.

      I also think that they are brave, strong individuals that are making a difference in the life’s of others and that they enjoy what they are doing, if they can make a difference in others peoples lives than why is so hard to see that they just want to better themselves in order to maybe help a different group of people then the people that they are dealing with now, and there is nothing wrong with that. Maybe a move is in the picture for them, there are states where the employment and wages are much higher than where they reside now and that can always be another option that I would consider if that situation was me. As long as they are happy and are doing what they feel is right and enjoy then I say do what you feel is right and give it thought, just remember that we all have opinions and that is just what they are and nothing more. Good luck in your decision in what you do, hope you find what you are looking for and you are very happy doing it.

  13. Sara says:

    I wouldn’t draw down the savings or take out student loans. $10,000 spread out over two years and two people is something you guys could make up by each getting a part-time job working just 10-ish hours per week at a part-time entry level retail or restaurant job. Sure, it’d be tough while you’re both in grad school, but not running up your debt any further should be a priority worth that sacrifice.

    I also agree you should look HARD at the potential ROI of the PhD. Unless the program is incredibly prestigious and really will bump up your salary a lot upon graduation or guarantee an excellent job, then it’s not worth it. You are deeply in debt already and aren’t looking at large salaries to make up for it at any point in your career. The two years of additional school won’t just cost an extra 10K – it costs two years of salary, plus the costs of deferring starting the payback on your existing student loans. At 100K debt, you’re already looking at monthly payments of $1,200 for 10 years. I don’t mean to come across as harsh, but that is pretty serious debt that can never be discharged in bankruptcy and can’t be sold (like a house), so you need to really need to consider all the future sacrifices you’ll have to make to figure out whether this program is worth it (besides just the 10K you need to live on).

  14. I can’t speak to whether or not you should get the PhD, although my general impression is that a PhD in public health may open more/higher-paying job opportunities for you than a master’s in social work. You already have so much in loans and if you are considering only taking out about 10% more that doesn’t seem like a big cost to greatly increase your employability. I agree with David that it’s risky to draw down your savings during this period.

    Two thoughts about reducing loan load (for you or your husband):
    1) Are you permitted to do any internships during the PhD? Some internships pay at far greater rates than stipends and could help with your expenses throughout the rest of the year.
    2) If you think that $10k could properly supplement your income over two years, that means you only need about $400/mo in additional income (assuming you don’t make enough to pay any taxes). Does your contract permit you any outside work? My PhD program prohibits having an outside job, but they pay us a relatively liveable wage. I know many PhD student in other types of programs have part-time jobs so they don’t have to take out as much in loans. Making an extra $100/week seems pretty manageable so if you can do that without impacting your performance in your program I would try that.

    You can still take out the loans and if you are disciplined and don’t use them, just pay them back before they come due at the end of your degree (assuming they are subsidized).

  15. KG says:

    If the PhD program is with a public university and lasts as long as the typical science PhD (say, 6-7 years), then (assuming her student loans are subject to IBR) she should enroll in the IBR program. After ten years of government work (a TA in a PhD program at a not for profit university should qualify as govt work), her loans are wiped off the books with no negative tax incentives.

    • NN says:

      Since she already has a master’s in the same field, she would probably have an additional 3 years for PhD program. The typical PhD program is 5-6 years depending on if you had to get a master’s (2-3 years).

      • Honey says:

        It took me 6 years to get my PhD and I came in with an MA. In the field where I advise PhD students now, 6-8 years post MA is not uncommon.

  16. tom says:

    $100,000 in student loans for Social work and Occupational Therapy?!

    Are these people serious?

    It doesn’t matter what they do at this point, they’ve sufficiently buried themselves in student loans for the next 10-20 years.

    It’s too little too late at this point, but why the heck did they think that taking out that much for those degrees was a smart decision?

    This is the problem with our country right now. Running up ridiculous student loan tabs without even considering future earning power. These people had no business taking out those loans to begin with.

    So, at this point, to heck with it; take out the loans. You’re buried now, what’s another 6 inches?

    • NorthernVirginia says:

      I concur. I see it so much that people flee into PhD’s without considering whether it’s actually wise for them to do so.

    • Jen says:

      Shame on you for bashing someone who is looking for guidance. Don’t take out your anger at “the problems with our country” on her.

    • Jessica says:

      Wow, what a comment. Ever stop to think that perhaps they are decent people who have aspirations to help others? People who go into social work don’t typically do it for the paycheck (trust me, I know since my husband is one). Rather, they go into the profession knowing they will be paid poorly, but will make an impact on the lives of others. Not everyone wishes to live by the dollar.
      I would disagree about *that* being the problem with our country. I would say the problem with our country is that a person working to make our world a safer, better place for the future generation get a wage that is nearly unliveable.
      Based on your comment, it sounds as if you think that people going into those fields of employment shouldn’t be able to take out large student loans. From my professional experience, I have noticed that so many times the people who go into those admirable fields of employment are people who lived difficult, struggling family lives. Obviously, such people wouldn’t have a support system to aid them through college.
      I don’t know the situation of the person who posed the question, but I do appreciate her contribution in the field of social work.

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