Financial Advice

I Don’t Think I Can Afford the Degree I’m About to Pursue

Question:

Dear Steve,

I have a Bachelors and a Masters. Combined I owe a remaining 27K.

I am switching careers and attending a massage therapy school. Because I have a Masters I am going to have to pay pay full tuition. The tuition will be all but covered by federal student loans that I am going to take out. 31k for this program by the end of the next 18 months. I will have an outstanding balance of about $350 per month to pay out of pocket over what my loans will cover while I’m in school.

I will not be able to cover the additional $350 of tuition costs out of pocket over what my student loans will allow. So it looks like I will have to take out personal loans to cover the last portion of tuition and books. What is my best option? Sallie Mae personal loans? Some other provider?

What should I elect in terms of fixed versus variable interest rate so I don’t get screwed in the future?

Thank you so much for your help.

Ariel

Answer:

Dear Ariel,

Why?

You are about to embark on a journey to more than double your student loan debt and pursue an new field. Are you even confident you will earn enough as a massage therapist to deal with your newly minted $58,000 in debt?

I’m all about the starving student but when you are guaranteed all this student debt and you can’t even cover the incidental costs of attending. It sure feels like you are setting yourself up for failure.

My hope is you are the rare gem who finds a better way forward and does not let this debt bury you. In fact you may have already considered a federal student loan income driven repayment plan for when you graduate. But keep in mind, those plans will inflate your student loan debt. They are not miracle solutions. See Why Income Based Student Loan Payments Can Be a Terrible Trap.

I’m all about future success but you already have two degrees and have not found that path yet. I’m not saying you should not pursue this dream but I am suggesting that a bit more evaluation of the math might paint a different picture on what will or won’t add up.

What we do know for certain is you are trying to borrow yourself deeper into a darker hole by trying to borrow more money to cover the $6,300 in other expenses you will need to pay over 18 months. And since you don’t have the money to pay the $350 you’d probably have to borrow more to make the monthly payment on the way. So what will your debt be up to then, nearly $70,000? And what is the plan if during those 18 months you have surprise expenses and purchases? More debt on credit cards or more loans?

You should always try to follow your dream but which dream will it be; deeper debt or financial freedom?

The median annual pay for a massage therapist is $45,000 a year if you have a year or less of work experience (as of the time of this publication). Will that be more or less than you could earn with your current degrees?

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So what is the current plan, borrow enough to live month to month? And what happens if for some reason you don’t or can’t finish?

Steve Rhode
Get Out of Debt GuyTwitter, G+, Facebook

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This article by Steve Rhode first appeared on Get Out of Debt Guy and was distributed by the Personal Finance Syndication Network.

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