(Nabil El-Ghoroury): Okay, welcome everyone, and thank you for joining us today. My name is Nabil El-Ghoroury and I am the Associate Executive Director of the American Psychological Association of Graduate Students, known as APAGS here at APA, and I will be your moderator today. I am excited to be hosting the first of what we hope will be many more webinar as part of a new member-only content series which we are calling PsycIQ. The purpose of PsycIQ is to provide APA members with meaningful content on issues of importance to them, such as student debt and career. Our hope is to provide a helpful insight on these topics and spark constructive conversations through future webinar, blog post, and podcast. Our goal is that members will take what they learn from the series and apply to their lives and careers. So stay tune for more to come.
Today, we’ll be talking about the current student debt crisis as related to andimpacts graduate students, post docs, and early career psychologists. As many of you know, debt is a major issue for thousands of graduate students across the country. In fact, it’s a perennial problem for psychologists and APA members, and it’s an area where we hope to generate an on-going conversation. But first, let me lay out some facts. Today, student debt exceeds of 1 trillion dollars in the United States. And graduate students shoulder roughly 40% of that total, even though they make up just 14% of the entire student population. A 2014 report from the New America Foundation founded that the average graduate student debt for those pursuing a variety of Masters in professional degrees was $57,600, a huge burden for those just beginning their careers. As head of APAGS, I have developed a number of survey on graduate student debt and its impact on APA members, and the numbers are concerning. According to a new survey that I just did with APA members, early career psychologist report having an average of $80,000 debt. Others are even worse off. The same survey found that graduate students who went into a health service provider field are shouldering $95,000 debt. And PsyD students graduate reported $138,000 in debt on an average.
In some cases, debt is causing psychologist to delay major life events, such as buying a home, purchasing a car, saving for future and retirement, getting married and having children. And yet, despite the heavy debt burden, the majority of psychologists, if given the option, would choose to pursue a graduate degree in psychology again. Given these facts, it’s no wonder that many of you are feeling stressed. And that’s why we’re here today, to discuss the potential ways to manage this challenge.
I now like to introduce our panel of student debt experts, who’ll help shine some lights on this issue. First up, is Dr. Matthew Soldner, a Principle Researcher of American Institutes for Research. Previously, Dr. Soldner served as a senior technical advisor with the Department of Education, National Center for Education and Statistics. Matt’s researches had focus on financing postsecondary education, and federal student aid programs. After Matt, we will here from Dr. Mary Bell Carlson. Dr. Carlson is a financial behavioral expert, and the Principal of Silverbell Solutions, L. L. C. The client center financial consulting firm based in central Virginia. Dr. Carlson earned her PhD in Kansas State University in personal financial planning, with an emphasis in financial therapy, and she holds both the certified financial planner and accredited financial counselor designation. Our final presenter will be Kaitlin Pitsker, a staff writer with Kiplinger’s Personal Finance Magazine, based here in Washington DC. Kaitlin writes about higher education for Kiplinger’s, and had written extensively about alternative student loans, re-financing student debt, and student loans management tools.
Welcome, and thank you all for joining us today. We are delighted to have you. I’d now like to turn the conversation over to the panelist themselves, who will each have about five minutes to talk about student debt, and share some other professional research, reporting, and observations. After these brief presentation, we’ll have a Q&A session, drawing from the questions you may submitted throughout the webinar. To submit a questions, just type a note in the chat window in the right side of the screen. First up is Dr. Soldner. Matt.
(Matthew Soldner): Thanks, Nabil. Good afternoon all, my name is Matt Soldner, I am currently a principal researcher at the American Institutes for Research, one of the nation’s largest behavioral and social science research firm. But as Nabil said, in a prior life, I worked for the U.S department of Education researching how students and families pay for college. And so this is an issue that’s near and dear to my heart and I’m glad to be here today.
Let’s go ahead and get started. So I don’t have to tell any of you that the annual cost of doctoral education is substantial, and that tuition and fees aren’t the half of it, literally. Students with assistantships and traineeships are still likely to be looking at annual non tuition cost, in access of $20,000. And so it likely comes as no surprise to you that on the next slide, we’ll see that many doctoral students report annual loans of nearly that amount. You’ll see that for the most recent year that we have data, the average annual federal loan amount is $18,300 and that adds up. Most psychology programs take 5 years to complete, and you’ll see that this national estimate nearly $92,000 is well within the bound of the data that Nabil just told you about in his survey. And, as his data demonstrated, that number can climb much higher.
And so the question really is, what does repayment looks like with this kind of debt. And so on this slide, you’ll see that I’m contrasting two repayment scenarios just to kind of gets our head into this topic. Based upon a borrower total indebtedness here in this first column, I’m assuming that the borrower has multiple loans, and they’re taking the opportunity to consolidate these loans into a single obligation. Now, the second column, standard plan, assume a fix repayment amount monthly. In contrast, the income driven plan in the third column adjust your monthly payment based on your earning, and here I’m using these example, that a student whose starting salary is $55,000 net gross overtime. Now in the standard plan, you’ll see you’ll always know how much you’ll be paying, and how long you’ll be paying it. The amount is listed there. And for consolidation loan, repayment can be spread across actually 30 years. Under the income driven plan, the amount starts lower but rises as you earn more. And by the end, you’re paying much more than the standard plan, though you may be able to stop payment sooner.
In the final chart on the next slide, I offer a simple estimate of how much your earning need to be to support various debt payment amount. Now, median earning for psychologists are around $70,000, meaning that monthly payment much over $550 start to become a real problem. This is about the payment of a $90,000 student loan under the standard plan. If your debt is higher, or if your income is lower, you absolutely must be thinking about an income based repayment plan. Now finally, I want to offer you a few tips based on what we’ve been doing here at AIR, related to advising students and families about making smarter educational choices. Now, while you’re still in school, the goal is to do everything possible to minimized cost, while maximizing return. It goes without saying that if your tuition and fees aren’t fully covered through remission, finding a way to reduce those cost is an absolute priority. Often, we find that graduate students foreclose their search for these opportunity prematurely. Particularly, for large campuses, look everywhere. Student services offices often have assistantship. And some, like the resident life, may also provide subside housing. Obviously do all that you can to complete quickly, and finally on this slide, be willing to think outside the box. Now, you may see yourself working in an academic setting, but consider trying experience in oppose to be in other context, like private industry, or large consulting firm, they may offer better return. And second, take every opportunity you have, to develop skill that are adjacent to your training, and are marketable. Many employers will pay a premium for a quantitative skill, and firms of all type need external consultants who are skill as trainers.
On the next slide, a few tips for early career psychologists. There are a variety of Loan Forgiveness program you can apply to, if you work in certain field or certain sectors, and Kaitlin will talk a bit more about them in just a minute. Once you’ve graduated, you may feel like your options are limited, because your debt is fixed, but they aren’t. It’s simply ups the ante for introspection creativity.
First, we recommend spending some time being clear on your marketable skills, because you’re training programs that’s providing many. Second, be willing to explore all avenues, inside and outside psychology to find the best match for your skills. Last but not least, the worst thing you can do is to delay getting help. The websites that I’ve listed here operated by the Department of Education will help you locate the company service in your loan. If you are in trouble, or if you are about to be, please call them. Increasingly, students loan are simple part of life, but I want you to keep in mind that repayment is possible, and all of us are here today to help you think more about that. Thanks.
(Nabil): Thank you very much. Matt, quick question. What is the common misunderstanding about student carrying heavy debt loans?
(Matthew): So, Nabil, I think, especially within folks who have very high loan balance, there’s a sense of, kind of, just an inability to do anything to make the loan payment sustainable, but there’s simply one option. But I want to let you know a little secret of debt, is that both loans servicers, and if they come to it, debt collectors, are incentivize to get you back on track, often by negotiating terms that can be very favorable for, to you. So even if the amount seems very high or you’re tracing into difficult territory, reach out to the folks who are contacting you, because they have a reason to want to get you back on the best financial footing they can.
(Nabil): Thank you very much, Matt. Next up is Dr. Mary Bell Carlson.
(Mary Bell Carlson): Thanks, Nabil. I want to spend some time today talking cause I know several people on the call have already probably felt some of these feelings that you’re seeing in front of you. Overwhelming, frustrated, or just don’t even know where to start. And so I wanted to spend a little bit of time today talking about some of the effects that debt causes and beyond student loan debt, this could include, usually credit card debt, or other personal debt that individuals take on.
So, let me give a few minutes here, just kind of chat about that. One of the highest, researchers showed, that one of the highest correlation between debt and feeling is depression and anxiety, specifically. So those who struggled to pay off their debt are twice more like to experience mental health problem, including depression and anxiety. And a study had found that 30% of people with high debt experience severe anxiety. So keep that in mind, not only for yourself, but also with clients. Sometime that’s a good question to ask those who are feeling depression and anxiety. Maybe some of the symptoms aren’t problematic from financial situations.
Another feeling often that can come along with debt is resentment, and this often is showcase for partners. Either blame each other, possibly once come into the debt with, or in the relationship with more debt, or a lost job, not making enough money, or potential spending habit that may have led to that debt. And then there’s resentment that go takes place in between the two partners. Studies actually have shown that money arguments are the top predictor of divorce. It goes beyond even just cohabitating relationship, it also includes employers who sometime, individuals will feel that they are resented because they’re not paying them enough, even family members or friends who maybe don’t have the same struggles that you feel that you have. And then also parents, who maybe didn’t explain the effects of debt, or even potential counsel at school, student loans counselors that you cannot look back without regret, often denial, and often with denial I call this the ostrich with head in the sand where you just want to go away, so you completely ignore the problem, which might feel good for the moment, but to be honest, in the long run, it increases your late charges, your interest rating increases, payment just don’t go down due to some of these problems.
We’ve talked about stress, obviously go hand in hand with anxiety, in fact, stress comes from debt can eliminate all happiness that you get from spending money in general, not just spending on debt. And 64% of graduate students had said that they constantly are concerned over their debt and interfere with their optimal functioning, and that was a study by the APA. Others feel anger and frustration, especially with unforeseen events that trigger part of the debt, potential things like, medical issues, job lost, and divorce. Regret is another feeling that you wish you had applied for more scholarships or financial aids, or understood the loans better while you’re in school but now you haven’t and you don’t know what to go on. And then finally, the last three are shame and embarrassment, and fear. Shame coming from the fact that it’s a taboo topic that we don’t want to talk about already, so it’s embarrassing to have that. In fact, creditcard.com suggest that 85% of respondent are hesitant to talk about their specifically credit card debt, but I’ve even seen it into individuals who don’t even bring up the idea of student loans as well. And then finally fear, and some of the causes that come from that.
So I wanted not to stay on the negative but let’s do all the positive, what’s happen when you do have a release from debt, and this, by the way, is not just for student loans, but any kind of debt. There’s a feeling of accomplishment, you’ve got freedom, relief that debt is paid off, and those negative effects including self-esteem that could potentially be low, or high stress and anxiety, are eliminated as well as the worry that goes along them. So we see, and study have shown that there’s a mental and physical improvement in health of both aspect once that debt is paid off. Others also have better financial behaviors, which is something I studied in my dissertation, is increase financial behaviors are especially indicated on, the biggest predictor was past financial behavior. So that’s something to keep in mind, especially those who’re in school, as I have mentioned before, if you can live on a very limited budget now, you’ll do yourself a… many favors in the future, because you’re teaching yourself to live with a budget. Even though there’s many constrains, keep within that limited budget, don’t take out more than you need. And if you get more than you need in that month, by all mean you can take it back. So keep that in mind for improved mental and physical health.
So you’re probably thinking “where do I even begin”. Sometime you get so overwhelm that you want to start “where do I even begin”. And I recommend, and I think from a profession that you’re going into, the biggest thing is talk about it. Don’t keep it inside, don’t bottle it up. But either have a discussion with yourself or a trusted friend, or a partner, with your spouse, whoever that trusted person is, and really open up and start to communicate some of those feelings related to debt and money in general, because it… as you … I indicated earlier that it’s not just the debt, that it’s the spending behaviors and habits and patterns.
So I’ve written here some ideas for you to discuss with your partner or your friend, and sometime these are just take a good look in the mirror to yourself, what does money mean, why is it important, where did these ideas come from, did it come from parental, did it come from memory in your past, did it come from something that was traumatic in your life. And I’ve seen that played out time and time again, as we adults, as you would see with other maybe indication or other significant event in individual lives, those things continue to play out for many years to come.