High Income, High Debt: Not All It's Cracked Up to Be

This is a cautionary tale for those of you who are interested in pursuing moderately high-income careers and financing them primarily with student loan debt. As I'm sure you already know, you need to be relentless in your pursuit to decrease your student loan debt through any means possible. On top of that, you know how important it is to attend your lowest cost, in state school. This becomes even more vital when faced with triple-digit debt of graduate school. If I had to do it over, I would not even consider attending a private, or out-of-state institution for graduate school. I would simply do everything in my power to get accepted into a program with in-state tuition or reciprocity, or pivot to a new career. The main reasons boil down to diminished incentives for high income employees, and negligible benefits for student loan repayment.

Let's look at the high-income component first. There are varying definitions of high income, but generally, individuals earning a gross income more than $100,000 to $120,000 per year are considered high income. With several high earning healthcare jobs, it's easy to surpass those thresholds in your second or third year of employment. On the surface, that sounds great. Many students are working hard through their 20s and early 30s to get to that exact moment, and are willing to forgo the benefits of things like investing early in a 401k (because they're still in school), and deducting their student loan interest payments. Even after taxes, many people in this income range are taking home around $70,000-$80,000. That's definitely more than enough to live off of.

The biggest thing to consider are your future student loan payments. Let's assume that profession degree cost you $250,000 in student loans to obtain. Repaying those loans at the 10 year rate leads to a monthly payment of $2,840, or $34,000 per year. Subtracting that from your after tax income, since student loan payments aren't tax deductible, leaves you with an after student loans income closer to $40,000-$50,000. There's nothing wrong with that annual income. The problem is that many of these students aren't even getting to that income level until they are close to 30 years old. An income of $50,000 a year is completely attainable with a 4 year degree, and only tens of thousands in student loans.

Don't spend 4 years in graduate school, and 10 more years repaying huge amounts of student loan debt. Trust me, it's not worth it. You'd be better off working in a field you love, and working your way up a company, investing along the way. In 14 years, I'm sure you'll be able to amass a wealth of assets, which are much more valuable than a high income which is also heavily taxed.