Question Wednesday
Nicole Dieker

I’m wondering how other people on The Billfold have decided that going into debt for graduate school was a *good* financial decision. I work at a top tier university and have been accepted to a very specific niche part-time graduate program in my field there. They’ll pay for a lot of the tuition, but for reasons I can’t really go into right now, I *might* be working somewhere else for my second year of the program (which means I would lose the tuition assistance). That means I might end up with $41,000 of debt (two federal Stafford loans at 5.31% interest). That scares the heck out of me. I make $50,000 now (so does my husband). I don’t know if I can advance further in my field without a graduate degree. So, I feel like I must do this, but I’m also pretty scared of taking on that amount of debt. I’m 33 years old and that would really slow us down as we work towards progress on other financial/life goals. On the bright side, by the time I graduate, that would be our only debt (we’re paying off one $13,000 undergraduate loan now at 4.5% interest, but we have an aggressive plan to finish it off before payments for my graduate loans kick in). So, how did other people decide the ROI of graduate school was worth it?

Derbel, I personally advocate for the snowball method. It’s worked wonders for me and my husband. It feels great to get something outta the way and then that monthly payment is GONE, which means you have some more breathing room *and* you can roll that payment into your attack on the next debt target. I understand the math behind focusing on the highest interest rate, but I was never able to trust that the “good times” of having enough to pay more than the minimum would last long enough to wipe out the biggest loan. For me, it made more sense to have short(er) term goals. Then, if we were suddenly no longer experiencing “good times,” at least we had lowered our monthly payments.

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