I thought I'd chime in here. I'm nearly done with fellowship and the licensure process, and so I'm on the market for a full-time job... I would never, ever, do it over again.
I really did everything I was supposed to: I went to a top college and went straight through to a top graduate program. I was fortunate to be fully-funded, graduated debt-free, and even saved up a bit of money. I worked as fast as I could to finish, published and did great externships with leading experts, and finished 10 years of education (4 college + 4 grad + 1 internship + 1 fellowship). I got speciality training, since specialization was said to be the secret to success, and I am basically struggling to find a full-time job that pays decent.
The Job Market (aka good luck finding a job, even if you can stomach the poor pay)
The job market is terrible right now, and only getting worse. The reason that so many psychology students are desperately turning towards the VA is because most hospitals and HMOs don't hire psychologists anymore (e.g. Kaiser in So. Cal.) or have largely replaced us with MSWs/MFTs. The supply is also exceeding the demand so much, that most places are looking for people with several years post-licensed experience in that role, so they don't need to train you. So after 10+ years of education/training, you are still deemed unqualified for a $65K-$75K job.
In private practice, most patients never care where you went to school, and now that many are going to unaccredited internships and can't work for federal jobs, the private practice market is becoming even more flooded with PsyDs/master's level therapists since that is the only place they can work. Furthermore, the comments by psychgeek about full-time clinical practice above, about having to work late hours and be emotionally drained, are a scary turn off to most.
The VA is not a Sanctuary (aka don't assume you can just work for them, and you will sell your soul if you do)
Everyone sees VAs as the last vestige for psychologists, but this is only because the government is subsidizing these jobs for now. This will slowly disappear due to the VA now allowing MSWs and LPCs. I would also not hang your hopes on a VA if you want to be in a major metropolitan area, because the number of new grads are flooding the market now, they are getting 50-100+ applicants per position. Most of the time, an opening only pops up when someone retires/dies/moves or new funding for a niche program comes through. Much of the time these positions are either unadvertised or go to people who already work there, former colleagues, or fellows who are in the right place at the right time. I would have thought that after working in multiple VAs for years with sparking credentials, I could easily find a job. Not so. It is tremendously frustrating to work your butt off, and realize that it is not a 'meritocracy' at all. Don't just assume you can get your degree and work for the government, unless you're lucky or willing to move to less-desirable areas.
Working at the VA is also a giant bureaucratic mess, you work with a very unrepresentative sample of society, and your pay/level will not move up much, so there's a lot of downsides you're trading in for 'security.' Psychology was my passion in undergrad, and while I do find some of my work rewarding, working for the VA is very draining and very much a 9-5 'job' that most people are glad to come home from. I sit through 3 hour meetings about nothing relevant, work with Axis II colleagues that cannot be fired (not to mention the patients), and do silly requirements because everyone is paranoid about 'central office' and losing their job. If I wanted that kind of gig, I would have taken a corporate job that pays much better and don't have to deal with so much distress and dirty work.
Psychiatry (aka even if you don't care about being rich, you will appreciate the opportunity/flexibility)
Considering most psychology students take at least 6-7 years to licensure, plus another 1-2 years of research, doing psychiatry does not take any longer. Psychiatrists make about 3x as much as us (which I knew), but I didn't realize that earning potential also has other benefits. I never was motivated by greed, but I didn't understand that it's not just about earning power, but about job opportunities and flexibility, which we lack.
As a psychiatrist, you basically get recruited for jobs anywhere you want, my friends graduating from residency have headhunters calling them for 30+ openings. I am currently hunting and begging for jobs that require relocation for that $65-75K. Furthermore, as a psychiatrist, you can work for 1-2 days/week and make just as much as a psychologist. With your free time, you can spend time with your family, do pro-bono work, go fly fishing, etc. For those of you who say they would hate doing medication management all day, you could do that for 1-2 days/week to pay the bills, and then do psychotherapy 3-4 days/week if you really wanted. As a psychiatrist, you have much more flexibility in how you spend your time and the job opportunities and pay is bountiful. Demand for psychiatry is only going up, while demand for psychology is going down the toilet. If you absolutely love mental health and can't imagine doing anything else, even if you like psychotherapy, become a psychiatrist or psychiatric NP.
Comparable Fields (aka psychology provides the worst investment : outcome ratio, particularly for good students)
I went to an Ivy-League undergrad, and watched my friends go into business, law, and medicine. I want to add to Jon Snow's comments: While there is no guarantee/job security in the business/law fields, what is different is that if you are bright/hard-working and go to a top-15 business or law school, there are large corporations that will hire you every year for $135-160K + large bonuses. Yes, not everyone can get these jobs, but most of my friends have. Thus, if you are in the top 10%, you will do well. When things don't, you can always jump ship go work for a different company. Certainly if you have the intelligence/work ethic to get into a fully-funded PhD program, you could have. I had better grades that most of my friends in college, and they have established their careers and are doing quite well, buying houses, unlike me. I lived quite frugally for the last decade, and never cared about the 'finer things,' but you need money to buy a house in a big city, and it is ridiculously expensive. For you fellow idealists: money won't make you happy, but it will put a roof over your head.
The problem is that in psychology, even if you are the top 10% or even top 1%, there are no "companies" or group practices in the private sector that recruit the best and brightest. The VA or most Hospitals do not really care where you went to school as long as it was decent and APA-accredited. Many of my colleges went to no-name schools or counseling programs, and make the same pay as me. In fact, lots of these people do better since they specialized in a small niche (TBI/polytrauma) and have more experience than you when such an position.
I actually made more money when I was 20 years old (halfway through college) during a corporate summer internship than I do now 8 years later as a fellow. I was never expecting to get rich in psychology, but I didn't expect that getting higher education would DECREASE my earning potential. I am also now considered 'overqualified' to do anything, since I have lots of education and no real-world translatable work experince.
Prestige/Respect (aka the general public and medical professionals will not respect you, you are not a "real doctor")
Speaking as male here, this is a terrible profession to be in as a straight male. Psychology has gone from being a male-dominated field to one that is 95% female/gay male in new graduating classes. I never minded this originally, but you really are an outcast, since most men will not work in an emotionally-difficult and poorly-paying job. Furthermore, the predominance of women has largely eroded the earning power since women will traditionally accept less pay and part-time positions.
While I'm all for gender equality, males in society traditionally still bear the brunt of being the breadwinner and supporting the family. In the dating market, being a psychologist is seen as 'less than' since women know you don't make money. When I go to alumni events or mixers, everyone is surprised and curious that I became a psychologist (when I could have done other things). Because PsyD program are allowing everyone to become a psychologist, your acquaintances will know poor students or their 40+ year-old second-career Moms who are getting the same degree you do. They don't recognize the difference between a fully-funded PhD & Alliant/Agrosy, and so they lump you together with those people, which degrades your credibility.
Furthermore, in multidisciplinary settings, while you may wear a white coat are considered part of the 'team,' you are seen as 'less than' the physicians, and often just seen and treated like a mid-level provider to deal with the patients that they don't want to deal with. Being a psychologist collaborating with other providers is great on paper, but in the real world, your job duties look a lot more like a social worker, and we are also being replaced by 'life/health coaches' nowadays if you are paying attention to changing trends.
I'm all for intrinsic motivation and I don't hang my self-esteem on others, but there is a real-world practicality about others respecting you and what you do, and being able to provide for the people you love. Sadly, that is far from the case.
Final Thoughts (aka goodbye psychology)
I have busted my butt for the last decade of my life. My CV is stellar and I have nothing to show for it, with no job offers,and just entering a field that is only going to get worse in the decades to come. As a result, I am actively looking to leave psychology and transition back into the business world. Caveat emptor, I would never, ever recommend this field to anyone, and particularly the bright and hardworking since it is an exercise in learned helplessness. Psychology is a sinking ship, get off the boat while you can.