Like many nurses, I was seeking a profession where I could help people. I began my career in 2006 as a critical care nurse. In 2011, I transitioned to a nurse anesthetist (CRNA), and today I primarily focus on pediatric anesthesia. I finished graduate school with a ton of debt and worked a lot of overtime to pay it off. I was at a place in my life where I wanted to learn everything possible about personal finance. I want to share what I’ve learned with you.
Pursuing a graduate degree in nursing such as an MSN, DNP, or PhD will open the door to a whole new part of your career—opportunities for advanced responsibilities, more autonomy, and increased income. If you are considering an advanced degree, there are a few key factors to help you determine what is best for you.
Career advancement
Whether you have always known that you wanted to advance your nursing career or are newly considering continuing your education and practice, there are many paths you can take. For example, do you want to write prescriptions, make a diagnosis, place central lines, deliver a baby, become a researcher, or lead a department? Most nurses who regularly perform these tasks are advanced practice nurses. If you are unsure what the right career path is for you, take advantage of shadow opportunities in the fields that interest you the most—this will help you make a more straightforward decision on which degree to pursue. In addition to a broader scope of practice, there are some key financial considerations to ensure you come out of school with a manageable amount of debt.
Debt-to-income ratio
The financial benefit of the advanced nursing degree you pursue must be greater than the cost to obtain it. In other words, the increase in salary you experience from your new job should justify the amount of debt you accrue during your training. The easiest way to understand this balance is by performing a simple calculation called your debt-to-income ratio. When you are choosing between different schools for your degree, compare the total amount of debt required by each program and divide that amount by the income you expect when you are done.
For example, if the expected debt from a school you are considering would be US $85,000 and you expect your income to be US $105,000, then the calculation would look like this:
Debt/Income = $85,000/$105,000 = 0.8
If your expected debt-to-income ratio is less than 1.25, your debt payback plan is straightforward:
- Refinance your loans once you graduate.
- Pay extra every month until the loans are gone, which can be done without sacrificing a comfortable but conservative lifestyle.
- In addition, since you are not reliant on federal loan forgiveness or grant programs because your debt-to-income ratio is manageable, you have ultimate flexibility on where you work.
If your expected debt-to-income ratio is greater than 1.5, things get a little more challenging. This ratio means you are going to end up borrowing 50% more than your future expected salary, which results in your monthly loan payment after school being so large that the only reasonable way to eliminate your debts while still living a reasonably comfortable lifestyle is by pursuing loan forgiveness and grants. Where you work will likely be limited by the agency providing the forgiveness or grant.
The importance of school choice
Where you choose to go to school has a greater impact on the amount of debt owed than any other factor. If you decide to go to an expensive program, you could end up borrowing as much as an extra US $100,000. On the flip side, if you go to an inexpensive program with a high drop-out rate, a low pass rate on boards, and difficulty placing their students for clinicals, that isn’t a good thing either.
To achieve a good balance, apply to a diverse group of schools; this will allow you to make the best choice and compare the reputation, location, practice environment, and cost. One essential thing to keep in mind is that where you go to school has minimal impact on your income after training, so be careful not to overborrow without a plan in place.
Aside from school choice, the following are ways to reduce the overall cost of your training.
1. Reduce the amount you borrow
Working during school, taking advantage of tuition benefits (remission) at your employer, and receiving scholarships or grants are the biggest ways to reduce the amount you need to borrow during school. Make sure to research what is available through the specific schools you are applying to and the state where you will study. Then, expand your search to the national level.
Saving up money while working prior to school is a reasonable idea; however, most would benefit from starting school sooner, as the rate at which you can save up money on an RN salary is likely less than the rate at which you will be able to pay back your loans after you start earning your new higher income. One of the only exceptions is if you are taking advantage of one of the many highly lucrative travel nurse assignments available throughout the country right now and saving all the additional income before school.
2. Reduce the amount you need to pay back
Suppose you anticipate a large amount of school debt, and you are flexible with exactly where you would like to work after graduation. In that case, the following loan forgiveness and grant programs should seriously be considered:
- Public Service Loan Forgiveness (PSLF)
- Nurse Corps Loan Repayment Program (LRP)
- National Health Service Corps Loan Repayment Program (NHSC LRP)
The commonality between these programs is that to qualify to have a large portion of your loans forgiven or paid off, you must work for an employer that meets their requirements for a specific amount of time. For example, PSLF requires 10 years of service while the others require two to three years of service. Qualifying employers are usually government institutions, nonprofit hospitals (501(c)(3), tax-exempt), and critical shortage facilities.
Some individual states and employers have loan forgiveness available as well in exchange for your service. With whatever program you decide to pursue, the key is that you have carefully read the details of the program so you maintain your eligibility and complete the paperwork correctly. In addition, make sure to double-check that where you plan on working meets the program's criteria you are following.
Bottom line
If you are mindful of the financial considerations of pursuing an advanced degree in nursing, it will pay off both in your career and finances. An advanced degree will give you the ability to contribute to your patients, institution, and the field of nursing in a way that may not be possible at your current level of training. The key is that the amount borrowed for your training is worth it—an increased salary while working in a role you love.
Matt Soladay, CRNA, MSN, is a pediatric nurse anesthetist. He is the creator of www.ScrubsMoneyLife.com.