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An early career psychologist with $385,000 in student loans who is requesting advice on the best way to eliminate the debt. This is really an overwhelming situation and I'm not sure what I would do if I was facing that kind of student loan.
 
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Ollie123

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That is significantly more than my mortgage. Which I wish was lower. For my dual income household. Where I am above the median salary for an ECP and still not the highest earner.

How do people do this?
 
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WisNeuro

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I imagine that someone stupid enough to rack up that kind of debt for a psych degree, is also stupid enough to get a job making less than half of what she should for a doctoral degree in the geographic region.
 

psych.meout

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Based on some of the limited information available, I think we can speculate a bit about what happened.

She said she's 29 years old and just finished 7 years of grad school. Thus, she must have started grad school at 22, meaning that she likely began straight out of undergrad.

Based on this and her insane level of debt, she must have gone to some unfunded program, probably because she either did not know better, did not pay much mind to costs of attending, or, more likely, was too impatient to get started to spend the time and effort necessary to make her competitive for a funded program.

And who knows, maybe this low paying job with a non-profit may be the best job she can get outside of private practice, possibly because she didn't get an APA-accredited internship. If she did get an APA-accredited internship, she would at least be somewhat qualified to get a VA job, which would pay substantially more than her current job while simultaneously qualifying her for the debt forgiveness program.

Regardless, she is probably also overestimating how much she will be able to earn in private practice, especially if she's just doing therapy and working against all the competition in a big metro area like Boston.
 
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PsyDr

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At first I thought the answer was going to be private psyd, middle class lifestyle in Boston using student loans, and an unwillingness to move for school/internship.

Then I looked up the mass school of professional psychology's tuition. You know what that place costs per year according to their website? $67k PER YEAR!!!!!!! ($44k/ yr + 15k/ye in living expenses+fees+books). Graduate in 5 years and that's $330k plus. Federal student loans are now at 6.8%, so by the rules of 7s, capital doubles every 7 years!

WTF!!!!!!!!!

I never knew fspp were that expensive.
 
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WisNeuro

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Of course, why not get a fake diploma that costs as much, if not more, than a medical degree when you will make a fraction of the salary?
 

MCParent

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At first I thought the answer was going to be private psyd, middle class lifestyle in Boston using student loans, and an unwillingness to move for school/internship.

Then I looked up the mass school of professional psychology's tuition. You know what that place costs per year according to their website? $67k PER YEAR!!!!!!! ($44k/ yr + 15k/ye in living expenses+fees+books). Graduate in 5 years and that's $330k plus. Federal student loans are now at 6.8%, so by the rules of 7s, capital doubles every 7 years!

WTF!!!!!!!!!

I never knew fspp were that expensive.
Well, look what you get with that price--a class size of dozens (so many opportunities to make friends! Squee!) and a 66% accredited match rate--I'll work really hard and I'm super sure I'll get an accredited internship. Plus it's Boston and you know that people can't wait to see a psychologist. I'll have em lined up around the block on opening day!

I wonder if I can make an amazon store and sell a rock that says "Clinical psych PsyD" on it. I think I'd have at least a few buyers.

Good lord.
 
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erg923

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Well, look what you get with that price--a class size of dozens (so many opportunities to make friends! Squee!) and a 66% accredited match rate--I'll work really hard and I'm super sure I'll get an accredited internship. Plus it's Boston and you know that people can't wait to see a psychologist. I'll have em lined up around the block on opening day!

I wonder if I can make an amazon store and sell a rock that says "Clinical psych PsyD" on it. I think I'd have at least a few buyers.

Good lord.
 
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ClinicalABA

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You know what that place costs per year according to their website? $67k PER YEAR!!!!!!! ($44k/ yr + 15k/ye in living expenses+fees+books)....I never knew fspp were that expensive.
They have a beautiful new building in one of the most expensive real estate markets in the country, so the model must be working for them!
 

WisNeuro

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They have a beautiful new building in one of the most expensive real estate markets in the country, so the model must be working for them!
It's a good business model, there will always be stupid, desperate people just waiting to be ripped off.
 
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LETSGONYR

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An early career psychologist with $385,000 in student loans who is requesting advice on the best way to eliminate the debt. This is really an overwhelming situation and I'm not sure what I would do if I was facing that kind of student loan.
Oof. Anyone else catch that she paused before responding to the, "Are you a doctor or a lawyer?" question? She knows she has MD debt without a job that will earn an MD salary.

I feel bad for her. Yes, she got herself into that position and should have been a more informed consumer, but still... that sucks. Geez. She better hope to win the lottery because I don't know how she'll earn her way out of that much debt.
 

Sanman

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There should be a sticky to this thread in the pays for profit area. I know MDs like this too (Caribbean grads that have trouble getting a residency) but even a terrible physician makes $100k. While her job does not sound bad, I would be applying nationally to rural or undeserved areas looking for a large paycheck for a few years. Hell, I took a rural job without that kind of debt. It's the same drive time as heading into the city, just in a different direction.
 

psych.meout

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There should be a sticky to this thread in the pays for profit area. I know MDs like this too (Caribbean grads that have trouble getting a residency) but even a terrible physician makes $100k. While her job does not sound bad, I would be applying nationally to rural or undeserved areas looking for a large paycheck for a few years. Hell, I took a rural job without that kind of debt. It's the same drive time as heading into the city, just in a different direction.
Dave Ramsey has other similar videos from physicians that I watched after the one in the OP.
 

Sanman

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Dave Ramsey has other similar videos from physicians that I watched after the one in the OP.
Oh I'm aware, I listen to him all the time. The difference is that he also has a video of a physician being offered $850k for a rural gig Vs $350k for a city gig. There are no psychologist stories like that. The irony is that he wants her to go into PP. Take someone that did that and make them financially responsible for a business, seems like a poor fit to me.
 
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When I was starting out in private practice and starting to make money I decided to pay off my student loan. I knew I could always sell my house if I needed to if I became sick or something but I could never sell my student loan. I owed 65 k, and didn't want to pay $305 a month or something forever. I ended up paying off my student loans in 2 years with decent focus, but I still had a nice life. I really can't imagine $385,000 in school loans, it would be hard to not feel defeated and paralyzed. I am into choice and responsibility but I do feel sorry for that psychologist. Even if she makes 150k and lives on nothing it will take her 5 years or so to tackle her debt. My debt was comparable to a porsche cayman, her debt is comparable to a house.
 
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I agree completely with Mr Ramsey's advice. She needs to go make some money. Double the salary, add another job, and try to get in an actual loan repayment program like NHSC. I will be getting another check for 20k in a few weeks. With the last three years that will mean 90k total. That can make a dent. I am actually starting to see some light at the end of the tunnel. 50k for a licensed psychologist is a joke. None of us should take that job.
 

MamaPhD

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Fellowships are in the $40s...so I can't imagine considering a job in the $50s.
Yeah, I cringed at that salary even more than the amount of debt.

I immediately felt bad for her when she highlighted the fact that she is going to live on campus. As if that's a big perk, literally living at work. And if it's like a lot of boarding schools in the Northeast, she's going to get treated like the hired help.
 

ClinicalABA

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Fellowships are in the $40s...so I can't imagine considering a job in the $50s.
That school pumps out dozens of grads a year, and many want to stay in greater Boston. Employers can find many generally trained psychologists that they can pay relatively little. There's a private practice psych on seemingly every corner in Newton/Wellesley. If she wants to stay in that area, she SOOL. Not sure why, William James "University" (formerly Mass School for Professional Psycholgy) doesn't put that in their marketing materials.
 

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Ughhh I have 8k from undergrad and won't have to take out any for grad school and I still hate it. My throat tightened up at the idea of 385K...I wouldn't go into debt for anything other than an MD and even then I feel like it would still stress me out :/
 
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The advice to go into private practice would be more sound if it didn't cost anywhere between $5k-$10k to start up. In large metropolitan areas, you might pay anywhere from $1000-$1600+ a month for an office for full-time lease...on top of your own rent. I feel bad for her because she will most likely need to take a crappy job to even save up for private practice costs....unless she and colleagues can go in on group practice together and each put up a portion of the funds. Very tough situation...I definitely feel for her.
 

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colleagues of mine that I know have this large type level of debt load (n of approx. 10), I've come to see similarities, and they all are doing three things. 1. income based repayment. 2. banking on PSLF 3. actually living quite well, because they've already made up their minds regarding not paying it back and just doing income based repayment. hahah one of them actually told me that even if PSLF doesn't come through, he's ok with getting it forgiven after 25 years, eating the tax bill, then declaring bankruptcy with it.
 

MCParent

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colleagues of mine that I know have this large type level of debt load (n of approx. 10), I've come to see similarities, and they all are doing three things. 1. income based repayment. 2. banking on PSLF 3. actually living quite well, because they've already made up their minds regarding not paying it back and just doing income based repayment. hahah one of them actually told me that even if PSLF doesn't come through, he's ok with getting it forgiven after 25 years, eating the tax bill, then declaring bankruptcy with it.
When I was like eight or nine, a friend told me his plan for getting rich. The founder of Wendy's, he said, dropped out of school and became wealthy. So, my friend also planned to drop out of school and by doing so become wealthy.

After reading your post, however, I now have a tie between that and your colleague's plan for "stupidest financial plan I've ever heard in my life."
 

psych.meout

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When I was like eight or nine, a friend told me his plan for getting rich. The founder of Wendy's, he said, dropped out of school and became wealthy. So, my friend also planned to drop out of school and by doing so become wealthy.

After reading your post, however, I now have a tie between that and your colleague's plan for "stupidest financial plan I've ever heard in my life."
Ah, yes, cargo cult get-rich-quick schemes.
 

mlwg1

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Dave Ramsey's disbelief at her debt/income situation is actually really validating, and how any normal person should react. I'm often baffled at how people who are deliberating on whether to attend a fsps talk about six-figure debt like it's nothing. This vid shows what life looks like on the other side of that decision.
 

Mad Jack

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There should be a sticky to this thread in the pays for profit area. I know MDs like this too (Caribbean grads that have trouble getting a residency) but even a terrible physician makes $100k. While her job does not sound bad, I would be applying nationally to rural or undeserved areas looking for a large paycheck for a few years. Hell, I took a rural job without that kind of debt. It's the same drive time as heading into the city, just in a different direction.
Actually a physician without a residency is qualified to do exactly nothing. If you don't match out of the Caribbean, you can't practice, so you've got the same career options as a kid out of undergrad with 400k in debt to show for it.
 

Mad Jack

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colleagues of mine that I know have this large type level of debt load (n of approx. 10), I've come to see similarities, and they all are doing three things. 1. income based repayment. 2. banking on PSLF 3. actually living quite well, because they've already made up their minds regarding not paying it back and just doing income based repayment. hahah one of them actually told me that even if PSLF doesn't come through, he's ok with getting it forgiven after 25 years, eating the tax bill, then declaring bankruptcy with it.
Nothing says "great financial planning" like declaring bankruptcy right before retirement.
 

Mad Jack

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I agree completely with Mr Ramsey's advice. She needs to go make some money. Double the salary, add another job, and try to get in an actual loan repayment program like NHSC. I will be getting another check for 20k in a few weeks. With the last three years that will mean 90k total. That can make a dent. I am actually starting to see some light at the end of the tunnel. 50k for a licensed psychologist is a joke. None of us should take that job.
20k doesn't even cover the interest she's accruing per year.
 

Harry3990

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agree that this is mind-boggling thinking about being in her position. I'm thankful to be a reasonably realistic person these days in terms of financial planning, but I sympathize because when I think back to the 22-year-old "emerging adult" version of myself, I easily could've fallen into a similar situation if I hadn't had parents and mentors who put some strong fear of student loan debt into me.
 

Sanman

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Actually a physician without a residency is qualified to do exactly nothing. If you don't match out of the Caribbean, you can't practice, so you've got the same career options as a kid out of undergrad with 400k in debt to show for it.
Mostly true, I knew one that worked at a medical device company and one at a pharmaceutical company. Most eventually match to something like family medicine in Kansas. That match rates for physicians are much better than those of psychologists at the bottom of the food chain.
 
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20k doesn't even cover the interest she's accruing per year.
True, but the loan repayment money gets paid directly to the principal. In my job, I make a multiple of what this young lady does, make payments on interest and principal over the year and get the extra untaxed money to directly pay down the principal. My first check was for 50k for the first two years. Of course it would be better to not have a lot of student debt and would have provided more flexibility and options, but when you do, you need to have a strategy to pay it down.
 
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Justanothergrad

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And in Boston too? As if she had extra housing money to throw towards somewhere expensive. Sheesh.

Everyone should watch that who is considering debt for graduate school. People are not financially aware.
 

123EW

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I am both embarrassed and panicked by my student loan debt, but it is now where near this individual's amount. She did say that housing was included in her $50k, but how good could that housing be? I plan on making an appointment with a financial advisor to figure out how to best tackle my loans. PSLF has never been on the table for me.
 
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Nothing says "great financial planning" like declaring bankruptcy right before retirement.
This is my generations mantra tho.


True, but the loan repayment money gets paid directly to the principal. In my job, I make a multiple of what this young lady does, make payments on interest and principal over the year and get the extra untaxed money to directly pay down the principal. My first check was for 50k for the first two years. Of course it would be better to not have a lot of student debt and would have provided more flexibility and options, but when you do, you need to have a strategy to pay it down.
Wait wut?

You have untaxed money going towards the principal? Can you explain that again?
 

Jon Snow

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Oof. Anyone else catch that she paused before responding to the, "Are you a doctor or a lawyer?" question? She knows she has MD debt without a job that will earn an MD salary.

I feel bad for her. Yes, she got herself into that position and should have been a more informed consumer, but still... that sucks. Geez. She better hope to win the lottery because I don't know how she'll earn her way out of that much debt.
I'd say her best ways out are:

- shack up with someone that is willing to pay all bills. Devote 100% of her salary to loans. Figure 35K take home ish, it will take her 15-20 years to pay off. . . depending on how bad the interests rates are. Idiot.

- needs to increase her income, substantially. Stick with the above strategy and try to kill this in 10 years. Figure she's 30. That would give her 25-30 years to address retirement.

- 6 figure loans for a typical psychologist is a serious burden.
 
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PsyDr

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I'd say her best ways out are:

- shack up with someone that is willing to pay all bills. Devote 100% of her salary to loans. Figure 35K take home ish, it will take her 15-20 years to pay off. . . depending on how bad the interests rates are. Idiot.

- needs to increase her income, substantially. Stick with the above strategy and try to kill this in 10 years. Figure she's 30. That would give her 25-30 years to address retirement.
Assuming none of her loans are private, her interest rate is 6.8%. Maybe a 20 year term. Rule of 7s says principal doubles every 7 years at 7% interest. Payments would be 2100.00/month. A pay check without state income tax for $55k would be $1500.00. At $85k, the paycheck is $2200.00.

Imagine living off of $10k-$26k until 50 years old. Your debt to income ratio would prohibit you from ever owning a home (not that you could save up for a down payment anyway). No retirement savings,can't pay for your kids college, screw luxuries. What happens if you have a stroke at 65 and you can't work?

Imagine earning $55k and then getting hit with the debt bomb from the $250-300k being forgiven and then having that declared as income by the IRS... you'd owe them what? Like $100k in cash plus fees? At 40. I dunno what the IRS charges in interest and fees, but I'm pretty sure it's not great.
 
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Temperance

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Imagine earning $55k and then getting hit with the debt bomb from the $250-300k being forgiven and then having that declared as income by the IRS... you'd owe them what? Like $100k in cash plus fees? At 40. I dunno what the IRS charges in interest and fees, but I'm pretty sure it's not great.
For balances not paid in full, the interest rate is the federal short-term rate plus 3%, and the additional percentage changes quarterly. However, interest compounds daily. That's not going into late payment penalties that still apply monthly because the full amount due was not paid on time. All of that adds up quickly.

Classes on financial literacy really ought to be mandatory.
 

Jon Snow

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Assuming none of her loans are private, her interest rate is 6.8%. Maybe a 20 year term. Rule of 7s says principal doubles every 7 years at 7% interest. Payments would be 2100.00/month. A pay check without state income tax for $55k would be $1500.00. At $85k, the paycheck is $2200.00.

Imagine living off of $10k-$26k until 50 years old. Your debt to income ratio would prohibit you from ever owning a home (not that you could save up for a down payment anyway). No retirement savings,can't pay for your kids college, screw luxuries. What happens if you have a stroke at 65 and you can't work?

Imagine earning $55k and then getting hit with the debt bomb from the $250-300k being forgiven and then having that declared as income by the IRS... you'd owe them what? Like $100k in cash plus fees? At 40. I dunno what the IRS charges in interest and fees, but I'm pretty sure it's not great.

Yep. It's basically undoable without a benefactor. Amongst the worst kind of debt you can have. Not dischargeable in bankruptcy. Hence, why argue that these programs are predatory.
 

Sanman

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Assuming none of her loans are private, her interest rate is 6.8%. Maybe a 20 year term. Rule of 7s says principal doubles every 7 years at 7% interest. Payments would be 2100.00/month. A pay check without state income tax for $55k would be $1500.00. At $85k, the paycheck is $2200.00.

Imagine living off of $10k-$26k until 50 years old. Your debt to income ratio would prohibit you from ever owning a home (not that you could save up for a down payment anyway). No retirement savings,can't pay for your kids college, screw luxuries. What happens if you have a stroke at 65 and you can't work?

Imagine earning $55k and then getting hit with the debt bomb from the $250-300k being forgiven and then having that declared as income by the IRS... you'd owe them what? Like $100k in cash plus fees? At 40. I dunno what the IRS charges in interest and fees, but I'm pretty sure it's not great.
Most people I meet on income based repayment really do not consider the tax burden when the loan is forgiven. That is where the hurt is.
 
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