Friday, June 3, 2011

The graduate student lifestyle

There's a stereotype about how graduate students live.  Eating nothing but ramen, riding their bikes everywhere, and generally being as cheap as possible.  I've certainly heard stories of my own parents' graduate school days of living on as little as possible featuring cold apartments in the winter, junky old cars, and buying everything they owned from thrift stores or getting it for free.  As I've mentioned before, I'll probably be adhering way more closely to this sort of lifestyle than the stereotype of an MBA grad while I'm in school (and let's be honest, probably well beyond that too).

But it seems to me that this fabled grad student lifestyle might be going the way of the dodo.  I have a lot of friends in graduate schools that live really comfortably with regular trips to bars and restaurants, a fair amount of travel, nice weddings, newer cars, and more.  This is a lot more expensive than the stereotypical budget, but I'm fairly certain that stipends for PhD's have barely kept up with inflation and I know that the cost of a professional degree has grown faster than inflation.  So what's going on here?  Are parents bankrolling a professional lifestyle for their pre-professional children? Are students bankrolling their current consumption levels with student loans?  I think that for professional school students it's mostly the latter and for other graduate school students it's more the former.

But business school students are sort of a special case here.  An MBA is one of the few degrees where it is nearly requisite to have held a full time job before attending.  So business school students have acclimated to having a certain amount of income and liberty to spend for their lifestyles.  It's also possible that they will have substantial savings to bankroll their way through school or that an employer will bankroll the experience for them.  In 2007-2008 about 40% of MBA students received employer tuition assistance, with an average benefit of $6,271.10 according to FinAid.  So in most cases employers only bankroll a small portion of the cost of an MBA, not enough to allow the student to support a six-figure lifestyle. So putting savings aside, MBA students are largely using student loans to finance their lifestyles in anticipation of a job after graduation that will easily cover their loan payments, lifestyle and more.

What happened to the idea that you could work your way through school? Heck, what happened to living cheap while you were a student?  I can't help looking at Pepsi's Indra Nooyi's description of working nights for grocery money and thinking that would a pretty uncommon sight on campuses these days.  Maybe it was uncommon in her day too, I don't know.  All I'm realizing is that I was raised in a family of scientists expecting a graduate school experience very similar to my parents' and an MBA is so not the same. 

What do you think?  Are graduate students less able to work their way through school since costs have risen faster than wages so they just finance it all?  Is the stereotypical graduate student lifestyle a thing of the past?

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  1. Although I've never been to grad school, I think most finance their education through debt.

    Fewer people actually get help from their family, and employer-assistance only pays for a small chunk of the cost.

  2. At the university I attended grad students were paid for research in a lot of cases. Also, made money teaching labs or tutoring. Personally, I ran a lab, graded papers and worked a part time construction job in during the school year.

    I don't think it is impossible to get through without debt it is just a matter of the student being properly educated about debt and having the work ethic to stay focused.

    Another idea might be that the school they are attending is too expensive, not all universities are priced the same. Just because your heart is set on a certain university doesn't mean it is the best or smartest choice.

  3. Though I made it through grad school full time, I think it might be getting unworkable for many people these days. In this case, maybe it's becoming the play yard for those who have the financial means already, through parents (or self-made)? Ramen noodles can only go so far toward helping keep expenses low and money going toward repaying debt!

  4. As a grad student myself- I see two dichotomous experiences taking place for today's students...many of the students I know (here in Illinois) are on foodstamps and are living frugally and working at least part time. They may or may not have substantial student loans but seem to (try) and live within their means and make the most of their dollar.

    On the other hand, I know plenty of students that are living off loans with little/no concept that they're living off of borrowed money. While they realize the economy sucks, I think they assume they'll be able to handle the debt after graduation and take as much money as is offered by their loan institution. Their budget is based upon however much money they've been allotted and don't think that they should be living lean now in order to more efficiently pay off debt when it comes due.

    That seems to be the trick of debt- it's very easy to not understand the magnitude of a number, especially when that number is higher than you've ever earned and you don't have to pay on it for a few years.

    I'm fortunately not in any debt, but I am struggling to balance out my finances as I finish my MA degree so that I don't spend more than I truly can afford in the long term.

  5. Wanderer, Squirrelers, and Shannyn - It's great to hear others' experiences with graduate school living. I also think it's possible but becoming more difficult to work your way through graduate school.

    Shannyn, I've definitely seen many students who just take the school's budget in loans and don't question it.

  6. In the last 20 years, those wages for grad students has not increased much past inflation there has been a major change. By law graduate students are not employees if they work as TAs or research fellows, meaning we now pay less in taxes and the school pays for health insurance. That can make a major difference.

  7. Hi! I am a graduate student without a T.A. because the university I have been attending has been making continuous budget cuts for the last two years. I have had to finance my schooling with debt. Luckily, I will have my master's program finished by next spring. Even more luckily, I live in income-based housing, and because I am only a full-time student, my rent is really low and my utilities are included. Plus, it helps that students and faculty at the university I attend ride the city buses for free. I do realize that I will have to pay back those loans, and I do realize that it may, in fact, be impossible to pay back those loans. However, i am planning to apply for Ph.D. programs while starting work on my thesis. Additionally, I have people who have seem very helpful and who, I believe, I can work with. Furthermore, a few people I know told me that I may not necessarily need a T.A. while earning a Master's. So, I don't know ... I try my best to be frugal, I rarely go out, and I take care of myself the best I can. At any rate, your opinions are greatly welcome and appreciated!

  8. Anonymous - Thanks for sharing your experience! Sounds like you're keeping your expenses to a minimum. Good luck with your applications for PhD programs, hopefully you're next university will have the cash to fully fund you!

  9. My PHD friends have arguably more disposable income than my working friends. At least here in the UK, PHD students don't have to pay income tax or council tax. They can time holidays around conferences abroad, which are paid for by their departments.

    I think university experiences have changed. Whilst there are certainly students who live beyond their means, it isn't impossible to live comfortably.

  10. Harri - Fascinating! It's great to hear an international perspective. I don't know how PhD students' earnings are taxed in the US...

  11. Unfortunately, PhD students pay normal income tax just like everyone else in the States. However, especially in the sciences, stipends can exceed $25K, and they can be close to $30K at the best programs. Some universities also have subsidized housing, which helps a lot, although there isn't usually enough to go around.

    Anyway, it's not exactly a Wall Street lifestyle, but it's definitely possible both to be self-sufficient and to have a few creature comforts on that kind of income -- especially with no kids to support.

  12. 60naranja - Thanks for filling us in!