The debilitating debt of graduate school includes hidden costs that most people don’t consider even later in life after graduation.

Many academics have a deep sense of nostalgia for their days of TA poverty, where living on ramen and cheap beer shared in the company of good friends in the same boat got us through until the next measly paycheck. We have an equally deep resentment for the huge bite that loan repayments take from our well-deserved and much-delayed faculty salaries. But the unacknowledged costs of graduate school add up to a substantial amount of cash, yet no one ever includes these costs in any ROI. When you compare the cumulative financial drain of graduate school to the financial gains of other professional careers, it’s boggling.

Professional expenses begin before you have a job

First, consider the predictable professional expenses: books (not textbooks, but books you need to read to stay current with your field): journal subscriptions, memberships to professional organizations, travel and registration fees for conferences. Academics need to spend money on these, and the expectation this expense increases as the job market gets more competitive. Few of these costs are subsidized by academic departments.  Take conferencing. Professors often wax nostalgic about piling in a ton of students in one hotel room and packing a rental car to overflowing all in the name of academic pursuits. For those bodies in the moment, it’s pure hell. The forced intimacy can be fun or it can kill relationships. Either way, graduate students bear the cost of these expenses. Compare this to, for instance, lawyers. Most law firms pay for training, many pay for the bar exam or review courses. Even in difficult economic times, companies pay for the professional development of their employees. So, this is one hidden cost of graduate school.

Welfare check spending patterns

Second, in my experience, the constant need to juggle money forces graduate students into making bad decisions and habits, which they sit comfortably with because the consequences are deferred. The worst choice: Graduate students often take out the maximum of student loans.

The other worst choice: Living from student loan to student loan. This is like living from welfare check to welfare check in hyperdrive. The “first of the month” syndrome is exponential when stretched to “first of the semester.” It makes for bad money management practices. You buy your new computer in September and live on ramen in December.

Other financial problems include living on credit cards during the summer because summer teaching is sketchy. Using credit cards to fill in the gap in between semesters when the first TA paycheck is delayed, which always happens. Credit cards wear thin and people don’t consider the long term consequences of maxing out multiple cards to manage the lean times. That’s when the “first of the month” graduate student welfare check cycle begins anew.

Between loans and credit cards, by the time you graduate, you’ve accumulated an avalanche of debt. My monthly student loan payment is at least the equivalent of a car payment, if not rent.

Now that Obama has passed new financial aid laws, I will now have the opportunity to pay off my loans before I retire. Prior to this new law, my debt would have followed me into my seventies. I have always been thankful that your student loan debt dies with you.

The consequences of debt accrual….

Another unacknowledged consequence of taking out student loans in graduate school, while necessary to survival, is that you develop a false standard of living.  In your mind, you’re living on a TA salary. In reality, you’re living on a TA salary+loans+credit cards, which is inflated. Assuming you get a job out of the gate, so you finally do get that economic bump of a real job, you won’t feel a difference after deducting several hundred dollars of loan repayments from each monthly paycheck. Often, this perpetuates the bad spending habits of living beyond your means. After all, you worked hard and now you’re entitled to a better standard of living. You deserve a new car, better furniture, nicer apartment.

Then there is the delayed effect of postponing things that need regular attention. Medical and dental care are the most pressing. Few graduate students have benefits. Though universities have decent student health centers for colds and birth control, longer term health care gets neglected due to expenses, and that often impacts people later in life. For instance, when you postpone dealing with cavities until you need major dental work, you face lifelong, costly dental consequences. For example, I postponed a cavity until I required a root canal and crown, which I couldn’t afford, so I had the tooth pulled. Over the long run, that causes greater problems because teeth shift. Most dental policies have a “missing tooth clause,” meaning they won’t pay for a bridge or an implant once a tooth is removed as a previous condition.So, it’s a domino effect of problems.

….while your friends accrue equity

There are also some cumulative effects that result from living in poverty that your college classmates don’t experience as they advance in careers and accrue equity. So, assume the average time students take to earn a PhD is ten years. Assume that you escape the student loan game, and that you are frugal and financially cautious as you pursue your degree. Now compare the financial gains of a graduate student to their college classmates.  There are several financial drawbacks.

First, graduate students live in a transient state of near-poverty. They move constantly, to cheaper apartments, to cooler rent houses, to larger places where they can share costs with roommates. This transient life is accompanied by slogging around shoddy hand-me-down furniture, toxic press-wood bookcases from Walmart (or Target if you’re feeling profligate), and “soft” furniture from garage sales (soft means that it falls apart at the slightest move, and is therefore not easily transportable to your new digs). Compare this to college classmates who began purchasing quality furniture, the type that lasts a lifetime, within a couple of years of graduating.

Similarly, college pals have bought their first house long before the average graduate student, which means graduate students are far behind their peers in accruing equity. Even if the housing market is a bust in today’s economy, owning property — your own home — is the foundation of building wealth in this country.  And if disaster strikes, you can borrow money against that equity.

Most significant, though, is retirement.

Depending on the university, graduate students don’t pay into social security. For ten years.

Moreover, for ten years, graduate students do not pay into retirement.

Building retirement funds early is crucial to financial security later in life because retirement funds grow exponentially (like yeast, they say).  So academics accrue no social security and they suffer from a weakened retirement fund. Tragically, so many academics (like me) put their retirement in TIAA-CREF, and now face a depleted nest egg. People console themselves by saying it will grow again, but if you remember the yeast principle, that’s a lot of lost funds. Between minor but ongoing expenses, the accumulation of debt, and the lost time on accruing equity, graduate school costs much more than we realize.

Is it worth it?

Graduate school is a wonderful, challenging, intellectually invigorating experience. The academic lifestyle for grad students and later for academics gives us great control over our time and freedom over how we work. It’s liberating. This is a huge benefit when compared to working in the veal-fattening pens of a corporation. Most academics would probably say that this reward is well worth the deep financial costs. But now that the PhD applicant pool has far outgrown the available jobs, and so many academics are faced with a transient, impoverished life of adjuncting and visiting positions, I can’t help but wonder whether or not it’s worth it for many people.

When people ask me if they should go to graduate school, my answer today is very different than from ten or fifteen years ago. If you have money, don’t mind a low standard of living and a life of transience, then the life of the mind can be a fabulous lifestyle. But now more than ever, people should weigh the costs carefully.

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