Grad School Loans: What I Wish I Knew Before Borrowing $81,000

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I’ve taken out a total of $81,000 in student loans to pay for my education: $23,000 for my bachelor’s degree and $58,000 for my master’s. I’m finally about to pay it all off, and I’ve spent close to $100,000 when factoring in about nine years’ worth of interest.

It’s been a long journey and one that I’m excited to finish. People often ask me if I regret taking on so much debt to go to school, and I don’t really have a good, simple answer. In some ways, yes, I do regret it. In other ways, I don’t.

But there are a few things I wish I knew before taking on so much student debt. Specifically, my grad school loans, which sent me over the line from a manageable debt load into much tougher territory.

If you’re thinking about taking on more debt to go to graduate school, consider these five things I wish I knew:

1. The impact of grad PLUS loan interest rates
2. Dream schools are just a dream
3. Geography is a major factor
4. Wage stagnation
5. Life after school

1. The impact of Grad PLUS loan interest rates

I was fully aware of how much additional debt I was taking on with grad school loans, to attend my dream school, New York University. But I didn’t quite understand the impact of my grad PLUS loan interest rates.

My undergraduate loans were locked in at a low APR of 2.3%. My grad school loans? They ranged from 6.8% to 7.9%.

It wasn’t until I graduated and started making payments on my student loans that I realized how much I was paying just in interest alone. I did the math, and at its highest point, I was paying $11 per day in interest — that’s over $300 a month.

I hadn’t calculated how much interest I would pay over time in comparison to how much money I would actually make. After graduating, I struggled for a couple of years and didn’t make much more than $10 to $15 per hour in the nonprofit and arts sectors.

As a borrower, it’s important to do the math and truly understand how much you will pay in interest over time. It might be more than you thought — you can use our free interest calculator to find out.

2. Dream schools are just a dream

It’s not uncommon for people like me, who take on a large amount of debt to go to school, to be met with a certain amount of criticism. I was repeatedly asked why I didn’t go to a cheaper school.

My answer? I wanted to go to my dream school. My dream obviously came at a cost, but I was willing to pay the price. I was stubborn and no one could tell me not to pursue my dream. However, I realized the reality of attending my dream school wasn’t so dreamy after all. I got a lot out of my education at NYU, but it was a lot harder than I imagined.

Our judgement can be clouded by fantasy — we think a certain school can bring us legitimacy, talent and clout. But in the end, it’s just a school. Consider carefully the cost of your dream school and what price you might pay many years down the road. And know, too, that there are some great schools out there which might cost far, far less.

3. Geography is a major factor

Moving to New York City to attend graduate school felt like the right decision at the time. I was majoring in an arts-based field and would be in the center of the action.

But a few months after graduation, I moved across the country to be with my partner in Portland, Ore. I heard it was a creative city, but hadn’t anticipated how difficult it would be to find a job in the arts there.

Geography is an extremely important factor in your career and future earnings. Whether you decide to go to graduate school or not, consider how your location will affect your post-college career prospects.

Are there jobs in your field in the area? If not, will you move and to where? Will your new city have jobs available in your field? What is the average pay? Consider how the answers to these questions might affect your ability to repay your grad school loans.

4. Wage stagnation

Before attending graduate school, I had only worked in the nonprofit sector and never made more than $38,000 a year. I thought a graduate degree, and new grad school loans, was my gateway to a higher income.

I was sure that it would be easy to get a new job with higher pay. But right after the heels of the recession, I graduated and found myself making less than I ever had — and not for lack of trying. Having an obscure arts degree and moving to a smaller city had a major impact on my wages.

Just because you get a graduate degree — in any field — doesn’t automatically mean you will make more money or get a better job. In fact, I found that some employers considered me overqualified and wouldn’t even interview me. If you’re thinking of going to graduate school, consider:

  • The difference between what you are making now and what you could make with a master’s or professional degree.
  • The unemployment rate in your city.
  • The job competition.
  • Whether your desired job actually requires an advanced degree. If not, you may be better off with an internship or networking with the right people.
  • The opportunity cost of being out of the workforce for several years. In other words, if you’re making $40,000 per year, you’d miss out on $80,000 in wages to pursue a two-year degree full-time. Will you make enough to cover the loss of those wages and pay off your debt?

These are all considerations that should go into deciding whether grad school is worth the debt that you’ll incur (unless you can find a way to get that advanced degree for free or low cost).

5. Life after school

I was so singularly focused on going to my dream school that I didn’t really consider what life would be like after I graduated. I had neglected to think about everything else in my life, such as my relationship and passion for traveling.

Taking on so much debt didn’t seem like a big deal while I was in school. Once I was done and struggled to find a job, it stung. It affected other parts of my life, too.

If you’re considering going to graduate school, it’s key to consider what life will be like after you graduate. It’s hard to imagine and may seem a bit fuzzy, but think about what’s important to you and how an increased debt load from grad school loans will affect those areas of your life.

Taking on additional debt to go to graduate school is a personal decision. Before deciding either way, compare the pros and cons. Think long term, not only about your financial goals, but your life goals as well. You might find that the true cost of borrowing tens of thousands of dollars in grad school loans isn’t worth it.

Need a student loan?

Here are our top student loan lenders of 2021!
LenderVariable APREligibility 
1.04% – 11.98%1Undergraduate, Graduate, and Parents

Visit College Ave

1.13% – 11.23%*,2Undergraduate, Graduate, and Parents

Visit SallieMae

3.80% – 9.36%3Undergraduate and Graduate

Visit CommonBond

0.00%4Undergraduate and Graduate

Visit FundingU

1.05% – 11.44%5Undergraduate and Graduate

Visit Earnest

1.22% – 11.66%6Undergraduate and Graduate

Visit SoFi

1.15% – 11.01%7Undergraduate and Graduate

VISIT CITIZENS

1.24% – 10.34%8Undergraduate

Visit Discover

* The Sallie Mae partner referenced is not the creditor for these loans and is compensated by Sallie Mae for the referral of Smart Option Student Loan customers.

1 Important Disclosures for College Ave.

CollegeAve Disclosures

College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.

Rates shown are for the College Ave Undergraduate Loan product and include autopay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. Variable rates may increase after consummation.
 
This informational repayment example uses typical loan terms for a freshman borrower who selects the Deferred Repayment Option with a 10-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 8.35% fixed Annual Percentage Rate (“APR”): 120 monthly payments of $179.18 while in the repayment period, for a total amount of payments of $21,501.54. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary. This informational repayment example uses typical loan terms for a first year graduate student borrower who selects the Deferred Repayment Option with a 10-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 7.10% fixed Annual Percentage Rate (“APR”): 120 monthly payments of $141.66 while in the repayment period, for a total amount of payments of $16,699.21. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.

Information advertised valid as of 4/22/2021. Variable interest rates may increase after consummation. Lowest advertised rates require selection of full principal and interest payments with the shortest available loan term.


2 Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply.

3 Important Disclosures for CommonBond.

CommonBond Disclosures

Offered terms are subject to change and state law restriction. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900), NMLS Consumer Access. If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown.  If you choose to complete an application, we will conduct a hard credit pull, which may affect your credit score. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 0.15% effective Jan 1, 2021 and may increase after consummation.


4 Important Disclosures for Funding U.

FundingU Disclosures

Offered terms are subject to change. Loans are made by Funding University which is a for-profit enterprise. Funding University is not affiliated with the school you are attending or any other learning institution. None of the information contained in Funding University’s website constitutes a recommendation, solicitation or offer by Funding University or its affiliates to buy or sell any securities or other financial instruments or other assets or provide any investment advice or service.


5 Important Disclosures for Earnest.

Earnest Disclosures

  1. Rates include 0.25% Auto Pay Discount
     
  2. Explanation of Rates “With Autopay” (APD)
    Rates shown include 0.25% APR discount when client agrees to make monthly principal and interest payments by automatic electronic payment. Use of autopay is not required to receive an Earnest loan.

    Available Terms
    For Cosigned loans – 5, 7, 10, 12, 15 years. 
    Primary Only – 10, 12, 15 years

    In school deferred payment is not available in AL, AZ, CA, FL, MA, MD, MI, ND, NY, PA, and WA).


6 Important Disclosures for SoFi.

sofiDisclosures

UNDERGRADUATE LOANS: Fixed rates from 4.23% to 11.26% annual percentage rate (“APR”) (with autopay), variable rates from 1.22% to 11.66% APR (with autopay). GRADUATE LOANS: Fixed rates from 4.13% to 11.37% APR (with autopay), variable rates from 1.12% to 11.73% APR (with autopay). MBA AND LAW SCHOOL LOANS: Fixed rates from 4.30% to 11.52% APR (with autopay), variable rates from 1.29% to 11.89% APR (with autopay). PARENT LOANS: Fixed rates from 4.60% to 10.76% APR (with autopay), variable rates from 1.22% to 11.16% APR (with autopay). For variable rate loans, the variable interest rate is derived from the one-month LIBOR rate plus a margin and your APR may increase after origination if the LIBOR increases. Changes in the one-month LIBOR rate may cause your monthly payment to increase or decrease. Interest rates for variable rate loans are capped at 13.95%, unless required to be lower to comply with applicable law. Lowest rates are reserved for the most creditworthy borrowers. If approved for a loan, the interest rate offered will depend on your creditworthiness, the repayment option you select, the term and amount of the loan and other factors, and will be within the ranges of rates listed above. The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. Information current as of 4/1/2021. Enrolling in autopay is not required to receive a loan from SoFi. SoFi Lending Corp., licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. NMLS #1121636 (www.nmlsconsumeraccess.org).


7 Important Disclosures for Citizens Bank.

Citizens Bank Disclosures

Undergraduate Rate Disclosure: Variable interest rates range from 1.15% – 11.01% (1.15% – 10.24 APR)Fixed interest rates range from 4.18% – 11.70% (4.18% – 10.83% APR).

Graduate Rate Disclosure: Variable interest rates range from 1.89% – 10.66% (1.89% – 10.41% APR). Fixed interest rates range from 4.64% – 11.23%% (4.64% – 10.95% APR).

Business/Law Rate Disclosure: Variable interest rates range from 1.89% – 9.22% (1.89% – 8.50% APR). Fixed interest rates range from 4.38% – 10.44% (4.38% – 9.72% APR).

Medical/Dental Rate Disclosure: Variable interest rates range from 1.89% – 8.02% (1.89% – 7.72% APR). Fixed interest rates range from 4.28% – 9.24% (4.28% – 8.94% APR).

Parent Loan Rate Disclosure: Variable interest rates range from 1.97% – 7.06% (1.97% – 7.06% APR). Fixed interest rates range from 4.94% – 8.58% (4.94% – 8.58% APR).

Bar Study Rate Disclosure: Variable interest rates range from 4.44% – 9.58% (4.44% – 9.52% APR). Fixed interest rates range from 7.39% – 12.94% (7.40% – 12.83% APR).

Medical Residency Rate Disclosure: Variable interest rates range from 3.53% – 7.03% (3.53% – 6.76% APR). Fixed interest rates range from 6.99% – 10.49% (6.98% – 10.09% APR).

Variable Rate Disclosure: Variable Rates are based on the one-month London Interbank Offered Rate (“LIBOR”) published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month. As of June 1, 2021, the one-month LIBOR rate is 0.09%. Variable interest rates will fluctuate over the term of the loan with changes in the LIBOR rate, and will vary based on applicable terms, level of degree and presence of a co-signer. The maximum variable rate is the greater of 21.00% or Prime Rate plus 9.00%. 

Fixed Rate Disclosure: Fixed rate ranges are based on applicable terms, level of degree, and presence of a co-signer.

Lowest Rate Disclosure: Lowest rates require a 5-year repayment term, immediate repayment, a graduate degree (where applicable), and include our Loyalty and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. Rates are subject to additional terms and conditions, and are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.

Federal Loan vs. Private Loan Benefits: Some federal student loans include unique benefits that the borrower may not receive with a private student loan, some of which we do not offer.  Borrowers should carefully review federal benefits, especially if they work in public service, are in the military, are considering possible loan forgiveness options, are currently on or considering income based repayment options or are concerned about a steady source of future income and would want to lower their payments at some time in the future. When the borrower refinances, they waive any current and potential future benefits of their federal loans. For more information about federal student loan benefits and federal loan consolidation, visit http://studentaid.ed.gov/. We also have several resources available to help the borrower make a decision on our website including Should I Refinance My Student Loans? and our FAQs. Should I Refinance My Student Loans? includes a comparison of federal and private student loan benefits that we encourage the borrower to review.

Eligibility Criteria: Applicants must be a U.S. citizen, permanent resident, or eligible non-citizen with a creditworthy U.S. citizen or permanent resident co-signer. For applicants who have not attained the age of majority in their state of residence, a co-signer is required. Citizens Bank reserves the right to modify eligibility criteria at any time. Citizens Bank private student loans are subject to credit qualification, completion of a loan application/Promissory Note, verification of application information, and if applicable, self-certification form, school certification of the loan amount, and student’s enrollment at a Citizens Bank participating school.

Loyalty Discount Disclosure: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower or their co-signer (if applicable) has a qualifying account in existence with us at the time the borrower and their co-signer (if applicable) have submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, or other student loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI, and VT and some products may have an associated cost. This discount will be reflected in the interest rate disclosed in the Loan Approval Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan.

Automatic Payment Discount Disclosure: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their student loans owned by Citizens Bank, N.A. during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. Discount is not available when payments are not due, such as during forbearance. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account three or more times within any 12-month period, the borrower will no longer be eligible for this discount.


8 Important Disclosures for Discover.

Discover Disclosures

  1. The fixed interest rate is set at the time of application and does not change during the life of the loan. The variable interest rate is calculated based on the 3-Month LIBOR index plus the applicable margin percentage. For variable interest rate loans, the 3-Month LIBOR is 0.250% as of April 1, 2021. Discover Student Loans may adjust the rate quarterly on each January 1, April 1, July 1 and October 1 (the “interest rate change date”), based on the 3-Month LIBOR Index, published in the Money Rates section of the Wall Street Journal 15 days prior to the interest rate change date, rounded up to the nearest one-eighth of one percent (0.125% or 0.00125). This may cause the monthly payments to increase, the number of payments to increase or both. Our lowest APR is only available to applicants with the best credit. The APR will be determined after an application is submitted. It will be based on credit history, the selected repayment option and other factors, including a cosigner’s credit history (if applicable). If a student does not have an established credit history, the student may find it difficult to qualify for a private student loan on their own or receive the lowest advertised rate. Learn more about Discover Student Loans interest rates at DiscoverStudentLoans.com/Rates.
  2. Aggregate loan limits apply.

  3. Get a cash reward on each new Discover undergraduate and graduate student loan when you earn at least a 3.0 GPA (or equivalent) in any academic period covered by the loan. Limitations Apply. Visit DiscoverStudentLoans.com/Reward for terms and conditions. 

Lowest APRs shown for Discover undergraduate loans are available to the most creditworthy applicants, and include an interest-only repayment discount and a 0.25% interest rate reduction while enrolled in automatic payments.1