Crushed by debt

When Noelle C. Turner, PsyD, graduated from Indiana University of Pennsylvania two years ago, she didn't just have a doctoral degree in clinical psychology. She also had a whopping $212,950 in student loan debts.

By the time she finishes paying off those loans — if she can ever achieve that goal, with her salary now at just $55,000 a year — interest will have brought the total amount due to three-quarters of a million dollars.

"People think that because they get a degree in psychology and have those letters behind their names, they're going to make ‘doctor money,' but we don't make anything like that," says Turner, now an assistant professor of criminal justice at the State University of New York's College at Brockport. "I'm the working poor. I'm one or two paychecks away from living in my parents' basement."

Turner's not the only one. According to the Pew Research Center, a record one in five U.S. households now has student loan debt. In 2010, 19 percent of households had outstanding student debts, more than double the 9 percent in 1989 and a big jump from the 15 percent in 2007 just before the recession.

Psychology graduate students are experiencing the student debt crisis firsthand. Almost 90 percent of PsyD graduates and 61 percent of PhD grads are in debt when they finish graduate school, according to APA's 2009 Doctoral Employment Survey, the most recent data available. And psychology graduate students may be especially susceptible to debt. With assistantships, fellowships and grants less common in psychology than in other social sciences and the life sciences, psychology graduate students are often forced to pay their own way through school.

Recognizing the financial drain on psychology graduate students, APA and APAGS are working to educate them about the salaries they should expect to earn after graduation. They're advocating for lower student loan interest rates. And they're offering tips on how students can achieve their goals without going bankrupt.

"After 12 years in school, one might assume I'd be able to own a home, have children, live the American dream," says Turner. "But the loans are overwhelming."

Racking up debt

The APA survey reveals that debt levels vary significantly depending on the kind of program graduate psychology students choose. PsyDs have the most debt, according to the survey. The median debt that PsyDs take on in graduate school is $120,000, while the median debt for psychology PhD students is $50,000. That's on top of whatever debt students took on as undergraduates.

The subdiscipline students choose also affects their debt level. Seventy-eight percent of graduate students in clinical, counseling, school and combined psychology programs have grad school loan debt, with a median debt of $80,000. In comparison, just 48 percent of graduate students in other psychology programs have debt. For those who do, the median grad school debt is $32,000.

"Debt isn't bad. This is an investment in your future," says Nabil H. El-Ghoroury, PhD, associate executive director of APAGS. "But that debt should be proportional to the salaries students will be earning when they get out."

Financial aid calculators, such as the one at FinAid, recommend allocating 10 percent of income to debt repayment. That means that students with a $750-a-month loan payment, for example, need to earn $90,000 a year to handle their repayment comfortably.

Before taking on debt, says El-Ghoroury, students should review psychology salary data. According to APA's employment survey, the top five highest-paid categories for 2009 psychology doctorates were $80,500 for clinical psychology in the criminal justice system, $75,000 for applied psychology in consulting firms, $73,332 for applied psychology in all settings and $71,000 for educational administration and clinical psychology within Veterans Affairs medical centers.

But most salaries for full-time, non-postdoc jobs are in the $60,000 range. For recent PsyD grads, for instance, the median salary is just $60,000. For PhDs, it's $65,000.

Competing for support

What's causing all this debt among psychology students? One big factor is psychology graduate students' tendency to pay their own way, says Garth A. Fowler, PhD, associate executive director for graduate and postgraduate education and training in APA's Education Directorate.

Graduate students in all disciplines typically have three funding sources, Fowler explains: drawing on savings and loans, working as a teaching or research assistant in exchange for tuition and other support, or getting paid through grants or other external funding that faculty members receive.

But in psychology, nearly 50 percent of all psychology doctorates — both PsyDs and PhDs — report that loans or their own funds were their primary source of support, according to APA's employment survey.

That suggests that psychology students' other options are limited, says Fowler. "There are only so many teaching assistantships that a university can give out and only so much grant money psychology faculty might be getting," he says.

In short, there's a mismatch between the number of psychology graduate students and the amount of funding available to support them, says Todd Raymond Avellar, a fourth-year counseling psychology student at the University of California, Santa Barbara. That's the situation he finds himself in.

"The counseling psychology department doesn't have an undergraduate major, so there are not enough teaching assistantships to go around for graduate students," says Avellar, the APAGS member-at-large for membership recruitment and retention. "Although my department is very supportive in furnishing students with some kind of support, I'm not guaranteed anything, so I have to scout things out from quarter to quarter."

Even when students do receive assistantships, as Avellar did last summer and this semester, they're only part-time.

Given his undergraduate loans, Avellar could amass up to $100,000 to $120,000 in loans by the time he finishes his degree. That's on top of the loans his parents took out on his behalf.

Uncertainty about how much his debt load could grow affects his personal life, from living with multiple roommates to comparing himself to students who have funding to feeling perpetually guilty about adding to the burden of his already financially strained parents. Financial considerations have also affected his academic career. He spent his first three years as an undergraduate at a community college to save money, for example, and now feels he needs to "race out of grad school as quickly as possible to reduce debt."

Avellar isn't unique in feeling stressed by his financial situation. A study by El-Ghoroury and colleagues published in Training and Education in Professional Psychology® last year found that debt and other financial issues were No. 2 on the list of both student stressors and barriers to self-care, just after academic responsibilities or pressures.

But student debt doesn't just hurt students, says El-Ghoroury. It also hurts psychology as a whole, he says.

"Psychology is enriched by having students from all types of backgrounds," says El-Ghoroury. "It would be a real loss if graduate study became too unaffordable for some students."

That's already happening, says Avellar, who believes departments should limit the number of students they admit to those they can support and seek creative solutions such as private donations from community members. Graduate education is becoming a luxury item, says Avellar. He points to the federal government's 2012 decision to eliminate graduate students' eligibility for subsidized student loans, a decision that will hit low-income students the hardest.

The result, he says, will be that graduate school becomes the domain of students who already have the most advantages, such as wealthy parents. "There are many bright students out there who have just as much potential as I did but have parents who have even less money than mine do," says Avellar, whose mother works as a preschool teacher and whose father worked in a factory before becoming disabled.

That limits psychology's progress, says Avellar.

"If you are not able to support the best and brightest and most diverse of students, you're not going to get different perspectives," he says. "You're not advancing the field; you're just keeping the status quo."

Of course, not all students from less-privileged backgrounds will be deterred by the prospect of debt, says Eddy Ameen, PhD, assistant director of APAGS.

"Students may be thinking, ‘I'd like a viable future, so I'm going to spare no expense in the pursuit of my degree,'" he says. "It's not just a deterrence issue; it's also a piling on more debt issue."

Finding solutions

Solving the student loan problem will be difficult and complex. At the individual level, says Fowler, students need to educate themselves about debt before they take it on.

That means making informed choices, he says. For example, after receiving an offer to study in a particular program, a would-be grad student might want to think about the cost of living in the area or ask about employment outcomes of the program's graduates.

Students should also consider whether their future salaries will comfortably cover the debt they're assuming, says Fowler.

"Be very finance-oriented," he says. "Think about what your return on investment will be."

An APAGS infographic called "The Debt We Carry: Financial Literacy for Current and Future Psychology Doctoral Students," available at www.apa.org/apags/resources, offers data plus additional tips, such as determining your federal loan debt via the National Student Loan Data System, being wary of private loans and trying to pay interest as it accumulates rather than adding it to the principal loan amount.

Students can also explore repayment options at Federal Student Aid. The federal Income-Based Repayment plan, for example, reduces monthly payments for those in financial hardship. The program has slashed Noelle Turner's monthly payment from $1,600 to $500. Because she teaches at a state school, she is also eligible for the Public Service Loan Forgiveness program.

Of course, students can't solve the student loan problem on their own. That's why APA is also taking action on the legislative front. During the congressional debate on student loan interest rates last summer, for example, APA sent out an action alert that generated more than 4,000 letters to Congress from psychology graduate students and others.

The result was a partial success, says Jennifer Smulson, senior legislative and federal affairs officer in APA's Education Directorate.

"While graduate students weren't put back into the subsidized pot of money, interest rates did go down from what they were," she says. The Bipartisan Student Loan Certainty Act of 2013 lowered federal student loan interest rates to 3.9 percent for undergraduates and 5.4 percent for graduate students this year.

APA is now focused on the reauthorization of the Higher Education Act. APA has urged Congress to enhance Federal Student Aid and other consumer education resources and restore graduate students' eligibility for subsidized loans, among other recommendations.

For APAGS Chair Jennifer M. Doran, a third-year grad student at The New School in New York City, the problem is more systemic.

"Anyone who wants a doctoral education should be able to get it, without sacrificing all the other things in life or even not being able to pay for their own groceries," says Doran, noting that some students in her program are forced to rely on food stamps to get by. "It's a societal problem."

Rebecca A. Clay is a writer in Washington, D.C.

Further resources

Need money?
  • A resource listing some of the off-the-beaten track ways of helping to fund your graduate studies.
  • Watch an interview with Noelle Turner from the upcoming documentary "Facing Student Loans: Sentenced to Debt," by sociologist and filmmaker Beverly Yuen Thompson.
Further reading