Just Say Dough

Forget Jim Cramer. Nobody gives financial advice like Charles Dickens’ Mr. Micawber: "Annual income twenty pounds, annual expenditure nineteen nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery." Alas, like so many of us, Mr. Micawber dispenses advice rather than acting upon it. However in these economic days, if you are applying to graduate school or in graduate school, take his advice to heart. The most important “placement” decision you’ll ever make is to stay out of debt.

Cancerian to the hilt, I tend to claw my way to the bottom line. But I will never, ever forget the one month not long after I graduated when I held the rent notice in one hand and a student loan bill in the other and knew I had hit the Micawberian wall. I ache now as I picture the growing number of men and women across the country and the world who are living my comparatively insignificant experience every day, all day. So few can gulp, breathe deeply, pick up the phone, and call home for help, as I was able to do.

So how do graduate students end up in debt and why am I arguing that, among other things, such debt is a placement issue? First, as many of us know from past or present experience, exorbitant loan payments and credit card bills dictate desperate choices when you’re applying for jobs. Second, given the salaries that most tenure-track and especially contingent faculty members make, once you are employed you will be so swamped by financial hardship and its emotional corollary — terror — that it will be hard to do anything well.

The 2008 College Board “Trends in Student Aid” report posted on the Sallie Mae Web site offers at least a glimpse of how indebted you can be by the time you finish a Ph.D.

Since 2000, sixty percent of undergraduates have left school with an average student loan bill of nearly $23,000 (“Trends,” 11). In graduate school, pain in the arrears goes from bad to worse. The average student collects another $20,000 of debt (“Trends,” 2). As if those figures aren’t worrisome enough, the Nellie Mae site says that the average outstanding balance on graduate student credit cards is $8,600. For graduate students over 30 the figure swells to $12,600.

An even grimmer picture comes into focus if we look at debt in relation to disciplines. According to the recently posted Humanities Indicators Project of the American Academy of Arts and Sciences, the heaviest burdens lie in wait for graduates who will earn the least, even those who succeed in finding permanent positions. While noting that debt for humanities graduate students averaged $14,000, the study adds that around 23 percent of the total number of graduate students in the humanities incurred over $30,000; 14 percent owed $50,000 or more (“Humanities Indicators,” II-16).

Probably too obviously, I’m not an empiricist, much less a statistician. I generally raise an eyebrow at “averages” (especially of “full-time equivalents” versus humans), in part because I’ve read too many salary reports claiming the average faculty member makes over $100,000. (At Iowa, English professors’ salaries are “averaged” with salaries in the medical school. You see the problem.) But even though these averages tell us little about individual cases, they reveal how deeply in debt many of us are when we go on the job market. If you’re headed into a biotech or business future, maybe that kind of debt is an investment. For someone in the humanities, it’s a boondoggle. In any case, one of the many facets of graduate debt is the pressure it places on job seekers and the newly hired.

What might change if those of us who are teaching graduate students thought of graduate debt in relation to the placement process? I’m not ready to go as far as two recent provocateurs, but I think we all need to read them with a willingness to confront graduate debt rather than with the quick dismissal their orneriness and their more outrageous proposals invite. Mark C. Taylor’s recent New York Times op-ed, “End the University as We Know It,” stoked Facebook fires by shoveling accusations. American graduate programs, he writes, “produce a product for which there is no market (candidates for teaching positions that do not exist) and develop skills for which there is diminishing demand.” Returning to a frequently made charge that graduate students have become part of the assembly line in an undergraduate knowledge factory, he urges a complete restructuring of graduate education. The titles of two pieces by Thomas H. Benton (a.k.a. Professor William Pannapacker), a columnist for The Chronicle of Higher Education -- “Just Don’t Go” (parts 1 and 2) — sum up his advice to anyone considering graduate school in the humanities. Still, he offers important, frank information and a good reading list, and his advice and the books he notes deserve serious consideration.

The extreme positions these writers take offer a bracing alternative to many faculty conversations about graduate student debt. I’ve been informally surveying faculty groups at conferences and in meetings (wherever I can corner colleagues) about how they would advise undergraduates who want to apply to graduate school — specifically in relation to debt. Most discourage their own undergraduates from applying to graduate school in all but the most well-paying arenas but continue to cherish and therefore to build their/our graduate programs. We express horror at the reported size of debt, mutter guiltily about its potential effects, and then we admit students for whom we have no aid.

As faculty members we have a responsibility to insist that prospective graduate students look honestly at the available compensation, such as teaching or research assistantships, along with grant and fellowship offers. We need to help students assess how far these will or won’t go to cover the costs of graduate school as well as rent and food. Many faculty members across the country are bracing up to that responsibility right now as their programs face budget cuts, or they should be. All of us are getting a crash course in stringency, and even those fortunate enough not to be thrust into crisis mode are reviewing the situation.

It seems increasingly clear that if we on the admissions side are going to continue to admit students into our programs, we have a duty to have a frank conversation with each student about a financial plan. How can we admit students without funding unless they can show that they have independent means? We’re unused to saying “no” and fearful of being patronizing. We tend to share a distinctly American embarrassment when it comes to asking questions about money. We’ve got to get over those attitudes. How, in good conscience, can we encourage anyone except the independently wealthy to enter our programs unless our universities can provide funding? To be more direct: how can you (or I) justify purchasing anything right now if we don’t have the requisite “cash money” (that emphatically doubled southern phrase)? That includes graduate school.

On the other hand, if you are on the entering side of this equation, that is applying to graduate school, the buck finally stops (or stacks up) with YOU. Ultimately, you must confront the debt threat rather than hoping that things will vaguely “get better” once you’re ready to go on the job market. What if you’ve been admitted to several programs, and one has offered a fellowship or teaching assistantship or combination thereof? The offer includes tuition and health benefits. When I was making such decisions, I regretfully rejected offers from exciting programs that couldn’t provide enough to cover my bills.

Do the math and be honest with yourself about the answers. If the numbers square, at least you’ll be in a position to see if this is what you want to do while still living within your means. Sadly, you need to factor into your equation the drastic changes in higher education that have shifted so many teaching positions to short-term positions with low pay, no benefits, and no job security. In many disciplines, your future prospects simply will not allow you to repay debts. Until faculty, administrators, parents, state governments, and donors decide that higher education is valuable enough to justify the resources we need to build strong, resilient faculties, those are the “career” realities graduate students face.

Even if you think you can live on the funding you are offered, remember that you’ll still face additional financial challenges on a daily basis. You’ll also need to budget time as well as money. Departments are under increasing pressure to expedite students’ “time to degree.” In the past, students were told that they would get five or six years of funding, but departments’ need for instructors meant that in reality, teaching assistantships could be extended far longer. Those days are over. Anyone entering graduate school today will need to work closely with an advisor to plot a course right through completion of the dissertation. Your only hope of staying out of debt is to finish your thesis before the five or six years of funding come to an end. As soon as you finish course work, you should meet with your university’s grants staff and start applying for external grants, including dissertation fellowships. (More on this in a future column.) At the same time, you’ll need to plan for the contingency that if you do need additional time to complete your dissertation you will need to fund yourself for that year. You might have to find some kind of a job that leaves time for writing (very challenging). In all honesty, your financial plans will also need to take into account the likelihood that you will be on the job market for two or three years after you graduate. (More about this in a future column too.)

Suze Orman I’m not, but I do believe each of us has to make changes to get past the sense of entitlement that led to so many bad financial decisions in the recent past. Hoping I don’t sound like the Monty Python crew’s brilliant "Four Yorkshiremen skit" (definitely worth three minutes of levity in the midst of this unhappy conversation), I do feel grateful that as a community, my graduate school friends collectively lived very simply. Of course, we had fewer temptations, but lots of us lived without cars, TVs, and lattes. I had sometimes absurd summer jobs from camp counselor to temp anything to library clerk, but so did many of my friends. That is to say we lived on budgets very close to the bone. One crisis could still tip you over into debt, but most of us didn’t settle into a life of debt as the norm.

In other words, I organized my life around the assumption that if I was going to indulge myself in going to graduate school (that’s how I saw my choice) the price was that I had to take the budget dealt to me and try hard to live on it. Figuring out how to stretch and sometimes supplement a small income was excellent training for the two years I held a temporary position as I continued to look for a place in academe. I know that good luck kept me healthy and in one position or another; I know without the generosity of my parents in that frightening month when I was short that I could have gone bust. So mine is hardly a tale of excellent judgment or financial acuity.

The point of my statistics and stories, instead, is that unless your program offers funds sufficient to live on and you have a back up plan for emergencies, you need to think hard about your future. “Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery." Graduate school isn’t a career; at best it’s a step toward a career. If you lose your footing and slide into debt — a slippery slope too often greased by depression and anxiety -- you’ve lost your place before the placement process begins.

I would be grateful to hear of creative solutions graduate departments are finding to help students both stay out of debt and get out of debt.