Debt and Income
I. Expectations
It is important that prospective students have a solid understanding of the economics involved in pursuing doctoral training in psychology. Being a psychologist offers a host of employment options, though not all paths are created equal.
II. Debt
II.I. Undergraduate
Recently, the Federal Reserve has released data showing that student loan debt has surpassed credit card debt for the first time in our country (g19, 2012). There is a common belief that educational debt is “good debt”, but many financial planners would disagree with you. Unlike credit card debt and residential mortgages, student loan debt is next to impossible to discharge once you acquire it, and it will follow you wherever you go. BusinessWeek wrote a great article that takes a closer look at student loan debt:
40% of college borrowers delayed major purchases
27% of college borrowers moved in with their parents
24% of students said their debt affected their career choice
14% delayed marriage because of debt
As of 2008, the average 4 year college student graduates with over $25,000 in debt (Student Debt, 2011). On average, 62% of graduates from public universities, 72% of graduates from private non-profits, and 96% graduates from private for-profit universities have student loans (Quick Facts, 2010). The rate of growth for education debt has exploded in recent years. From 2004 to 2008, average education debt has risen 24%, with the greatest increases coming from private nonprofit and for-profit universities (Quick Facts, 2010).
The Federal Reserve Bank of New York (2011) found that $580B of the $870B in student debt owed in 2011 was held by students under 40 years old. The current student loan debt is now over $1T, with $119B of that being borrowed just in the past year (CFPB). The vast majority of this debt has been a more recent phenomenon, as only 7.4% of people at least forty years old have outstanding student loan debt (CFPB).
III. Debt for Psychology Graduate Students
The Association of Psychology Post-doctoral and Internship Centers (APPIC) survey internship applicants (i.e., students entering their last year of graduate school) each year. In 2011, they found:
"Debt accrued to date as a consequence of attending graduate school in psychology, including tuition, fees, living expenses, books, etc. Includes all forms of debt; does not include undergraduate debt or debt that is unrelated to graduate training.
Ph.D.
Median = $ 40,000
Mean = $ 53,160
S.D. = $ 58,932
Psy.D. Median = $ 120,000
Mean = $ 123,787
S.D. = $ 70,013
NOTE: Mean debt load for Ph.D. students has increased by $2,043 (4.0%) since 2008, while Psy.D. students have experienced an increase in debt of $14,253 (13.0%) in the same time period.
Percent of internship applicants with:
It is important that prospective students have a solid understanding of the economics involved in pursuing doctoral training in psychology. Being a psychologist offers a host of employment options, though not all paths are created equal.
II. Debt
II.I. Undergraduate
Recently, the Federal Reserve has released data showing that student loan debt has surpassed credit card debt for the first time in our country (g19, 2012). There is a common belief that educational debt is “good debt”, but many financial planners would disagree with you. Unlike credit card debt and residential mortgages, student loan debt is next to impossible to discharge once you acquire it, and it will follow you wherever you go. BusinessWeek wrote a great article that takes a closer look at student loan debt:
40% of college borrowers delayed major purchases
27% of college borrowers moved in with their parents
24% of students said their debt affected their career choice
14% delayed marriage because of debt
As of 2008, the average 4 year college student graduates with over $25,000 in debt (Student Debt, 2011). On average, 62% of graduates from public universities, 72% of graduates from private non-profits, and 96% graduates from private for-profit universities have student loans (Quick Facts, 2010). The rate of growth for education debt has exploded in recent years. From 2004 to 2008, average education debt has risen 24%, with the greatest increases coming from private nonprofit and for-profit universities (Quick Facts, 2010).
The Federal Reserve Bank of New York (2011) found that $580B of the $870B in student debt owed in 2011 was held by students under 40 years old. The current student loan debt is now over $1T, with $119B of that being borrowed just in the past year (CFPB). The vast majority of this debt has been a more recent phenomenon, as only 7.4% of people at least forty years old have outstanding student loan debt (CFPB).
III. Debt for Psychology Graduate Students
The Association of Psychology Post-doctoral and Internship Centers (APPIC) survey internship applicants (i.e., students entering their last year of graduate school) each year. In 2011, they found:
"Debt accrued to date as a consequence of attending graduate school in psychology, including tuition, fees, living expenses, books, etc. Includes all forms of debt; does not include undergraduate debt or debt that is unrelated to graduate training.
Ph.D.
Median = $ 40,000
Mean = $ 53,160
S.D. = $ 58,932
Psy.D. Median = $ 120,000
Mean = $ 123,787
S.D. = $ 70,013
NOTE: Mean debt load for Ph.D. students has increased by $2,043 (4.0%) since 2008, while Psy.D. students have experienced an increase in debt of $14,253 (13.0%) in the same time period.
Percent of internship applicants with:
No debt
Debt <= $50,000 Debt >= $100,000 Debt >= $150,000 Debt >= $200,000 |
Ph.D. = 24%
Ph.D. = 62% Ph.D. = 21% Ph.D. = 8% Ph.D. = 3% |
Psy.D. = 8%
Psy.D. = 16% Psy.D. = 70% Psy.D. = 38% Psy.D. = 17% |
III. Income.
It's important to understand the wide variety of incomes that psychologists can make after graduation. Fortunately, the APA collects a lot of data on income for psychologists. The results of their most recent (2009) survey are here. So, for example, the median income for a psychologists starting out in academia (an assistant professor position) in a psychology department was $57,000. For a psychologist working as a therapist (called "direct human services" in the tables), the median income for someone just starting out is $57,500.
The tables on the Workforce Studies can be used to help you inform your decisions about graduate school. If you anticipate accruing a lot of debt, it will be important be sure you're planning on entering an area of psychology that has the potential to let you pay back that debt. Financial experts suggest that people should not take on debt in excess of about 36-39% of their income (for an income of $57,000, this would be about $20,000). You can see more information on income and debt from online sources, such as bank web pages here, and financial report publications here.
It's important to understand the wide variety of incomes that psychologists can make after graduation. Fortunately, the APA collects a lot of data on income for psychologists. The results of their most recent (2009) survey are here. So, for example, the median income for a psychologists starting out in academia (an assistant professor position) in a psychology department was $57,000. For a psychologist working as a therapist (called "direct human services" in the tables), the median income for someone just starting out is $57,500.
The tables on the Workforce Studies can be used to help you inform your decisions about graduate school. If you anticipate accruing a lot of debt, it will be important be sure you're planning on entering an area of psychology that has the potential to let you pay back that debt. Financial experts suggest that people should not take on debt in excess of about 36-39% of their income (for an income of $57,000, this would be about $20,000). You can see more information on income and debt from online sources, such as bank web pages here, and financial report publications here.