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Choosing between Higher Education, Loans and Family





This is a column by regular contributor Clark.

A friend of mine who holds a Masters in International Studies had a dilemma a while back about whether to pursue her dream of getting a doctorate from Switzerland’s Graduate Institute of International and Development Studies now or take care of immediate concerns and put off the degree until later.

The friend in question has nurtured her dream to study in Europe for a long time and has a passion for the subject as people who go for doctorate degrees should. She got married while in grad school and became a mother within the last year. While she was pregnant, she discussed her goal again with some of her friends, including me, at a get-together and being the personal finance enthusiast, I chimed in with my money-related thoughts. I had questions about her financial situation and learned that she and her husband had student and credit line loans totaling ~$35K. Her husband makes a decent income and she was on the verge of completing her schooling at that time. They were renting and, except for the car payment, had no other consumer debt. Below are some of the areas we touched upon.

1. Income. Since the husband (though willing to move) may not be able to make as much money if they relocate, they’ll have to make do with her scholarship/aid (she was confident in getting one). I do not know about employment opportunities for people on spousal visas in that country but I guessed it was not going to be easy.

2. Loans. With a baby to care for and loans to repay, it seemed prudent (to me) to take care of immediate concerns. Finding a job in Canada and working to pay off loans aggressively was a good solution. If the dream lives on after a few years, then they’ll have an option of going overseas with loans repaid and hopefully some savings to support them. The kid could get international exposure at a young age and they could decide how they want things to go from there (settling or returning).

3. More Debt. They may need to borrow money if they are relocating immediately to cover initial expenses (there was no emergency fund per se, despite this not being an emergency situation).

4. Relationships. Maintaining a long-distance relationship by letting the husband take care of the loans and the baby (with help from her parents and in-laws) was an option but she, unsurprisingly, rejected it immediately.

5. Unfulfilled Dream. There was a possibility that the dream may never materialize as other things take precedence.

Some friends were opposed to putting off the dream/passion. They suggested talking to the lenders about deferring student loan payments, selling off the car, borrowing from parents to pay off the credit line, and going to live (study) the dream. My friend did not give any indication as to which side she was leaning and we parted ways. After months of limited contact through a few emails including a mass one about the birth of her girl, we met again. She mentioned that she’ll be starting a new job in the fall and added that she had two offers – one, a temporary position for a year with better pay and the other, a permanent one with lesser pay; she had chosen the permanent one. There was an element of sadness about the decision and I realized that familial and financial considerations had taken precedence. She said that she had no immediate plan for the higher education and will let life take its course for the next few years.

I’m going to go ahead and say that the dream may have disappeared forever (I hope I’m wrong). It is not impossible that she may pursue it in a few years but chances have dimmed considerably. Do you think there was a lack of proper planning in her case? I do not have experience with delaying student loans. So, I am wondering under what circumstances a borrower can seek deferment of student loan payments? Does it matter if it is a federal or private loan?

Have you let any dream/passion take a backseat to concentrate on other things? Do you think you will chase it at a later date?

About the Author: Clark is a twenty-something Saskatchewan resident employed in the manufacturing sector. He repaid around $20,000 in student loans and has been working to build his investment portfolio as a DIY investor (not trader) while nurturing plans to retire early. He loves reading (and using the lessons learned) about personal finance, technology and minimalism.





23 Comments, Comment or Ping

  1. 1. Mike

    Interesting question.

    I think humans have “dreams” in order to motivate us to improve.

    The first cavemen probably dreamed of easier ways of killing animals, which might have led to better weapons and hunting strategies. Likewise, modern day people might dream of a big house in the country, which might lead them to work harder at their job and save more money.

    Unfortunately, most dreams aren’t meant to be. A desire to play in the NHL might result in a someone becoming a very fit and skilled hockey player, but it’s not likely they will ever make the big leagues.

    The problem is that you can’t do everything. Having kids and maintaining a clean, uncluttered household are two dreams of mine which are not compatible. :)

    In your friends case, I’d say she already waited too long. She’s married, has debt, had a child – I just don’t see how it is realistic to ask the hubby to quit his job and move everyone to Switzerland so she can go to school there.

  2. 2. Alexandra

    In terms of student loans, as long as a person is in school, they can defer re-payment of student loans. So that part of the problem would not have been an immediate issue.

    I don’t think the dream is dead – there is lots of time left in thier working careers, especially with people living longer and working longer. With proper planning, they can fulfill this dream – just later on.

  3. Great post Clark. I commend you for speaking your mind with regards to finances to a friend who was in the middle of a very large and emotional decision.

  4. 4. ldk

    For most people who become parents, the dreams they have for their kids quickly supplant the dreams they have for themselves…and they are willing to sacrifice their own desires (quite happily, often) to pursue the life they believe is best for their child. It doesn’t mean that they have given up on themselves or their dreams, just that ‘new dreams’ have taken precedence.

    As Mike (#1) mentioned, your friend’s dream to study in Switzerland may simply be incompatible with her new dream to raise her baby close to extended family (for example) and without growing student loan debt.
    And, of course, it may not be “dead” at all–just deferred!!

  5. 5. Clark

    Thanks for the comments.

    @Mike: Setting the bar too high may work sometimes as in your NHL example. The aspirant would be a lot fitter than he/she may have otherwise been and would have a hobby to pursue.

    @Alexandra, @ ldk: I hope that the dream is not dead. I agree that it is not impossible that older people will do PhDs.

    @FrugalTrader: Thanks for the appreciation. I think my friend deserves equal, if not more, appreciation for opening herself up to friends and discussing money-related stuff. As you are aware, it is still a taboo subject, especially for people in debt.

  6. 6. Andrew F

    I’d say a big consideration is whether the husband’s skills make it easy for him to get a job in any location. Most PhDs who end up working for universities, think tanks, etc. have little choice over which city or even country they end up living in. So, this investment in education may cost on husband’s future earnings, or may not return the expected value of a PhD. Also, having a PhD can make it harder to get a more mundane job, as HR considers these people to be overqualified and at high risk of job dissatisfaction.

  7. I know a lot of mothers who were in the same boat as your friend and the dream certainly does not have to die. Once her child grows up and starts going to pre-school, she can reconsider going back to school. At the time it seems like there was just too much on her plate but once things settle down again, she can pursue her dream.

  8. 8. April Elsegood

    It seems that in too many cases, pursuing a career (or the higher education that will result in one) and having a baby are just not compatible….especially for the woman, who must carry this baby and keep herself healthy and stress-free as possible in order to have a successful pregnancy.
    If she was going after school and career, she shouldn’t have gotten pregnant. If the pregnancy was an “oops” but she decided to keep the child, I would say she already made her decision.
    Children are a life-long project…and a very intense one for the first several years. She made her choice.

  9. 9. allgood

    I don’t think the dream needs to be dead. My own mother pursued a PhD in Europe in her late 40s, when I was grown and in university myself. She’s now embarking on a second career as a professor. This delayed my mom’s retirement plans somewhat, but not as much as one would think – the university where she works has an excellant DB pension plan.

    If your friend’s husband has a “portable” job, they should go for it. Scholorships and TA/research positions can offset a lot of the costs of post-grad work as well.

  10. 10. Greg

    I think it greatly depends on the field of study. My wife works in a cancer research facility and many of the people there are PhD students. Some of them come from other countries and a few have young families. Generally people working on PhD’s are driven by their ideas and goals. In the case of where my wife works the PhD students make about $17,000 per year and can also apply for grants for their work and for themselves.

    I think if this is something your friend really wants, she should do it. She has plenty of time to deal with the financial matters later.

  11. 11. eMoney

    In terms of achieving her PhD, I think its definitely a worthwhile goal and something that needs to be done ASAP because there is also the issue of establishing tenure as a leader in her field of studies. While she may be able to go back and get her PhD many years later, the knowledge and developments might be completely out of reach (take the IT field for example).

    Certainly there are trade offs – the practical vs the emotional. I have known some couples who have lived on different continents and even had grandparents or uncles help raise their kids for several years while they figured out their financial situations overseas. Is it acceptable? Maybe not to all but in the end, but their kids turned out great and I don’t we can judge others. Did they miss out in their kid’s childhood? Absolutely.

    I’m about to be a dad and I understand Ikd’s post about supplanting dreams to their kids. But in reality it bothers me that I might be trying to get my own kid(s) to achieve what I couldn’t – they should have their own dreams.

    My parents survived losing everything, becoming refugees in Canada – which resulted in us growing up rather poor. Now they are professionals and well off. Do I resent them? Not at all, in fact I admire them for taking the courage to achieve their dream – which now has enabled me to live in a great country to live out my own dreams also.

  12. 12. Carl

    As long as she loves what she is doing fine, but if she is not happy in her life as of now… then why not. Not everyone want to retire at 55, some peopel might want to get a PhD and work in a field they are passionned about until the end of their life.

    I work for a university and we have a lot of professors that are still working, even though theire are in their late 70′s and even 80′s…

    If you are passionate about something, then keep going… Otherwise you will find most of the rest of your life boring.

    @ Mike

    Your NHL example is not that great in such a context, unless you were a really good player. However, I think that the lady Clark was talking about would be highly desirable for the university she would be studying for…

    There is a way to make it happen with everyone being happy and comfy with the live abroad scenario. I lot of people I know went on long trips and came back with awesome business ideas and passions and became richer than I am now… even if I thought that they would come back broke… In fact, they were physically broke, but mentally rich and transformed that thing into tangible gold pots.

    My $0.02!

    Cheers

    P.S.: I really like this website and I am a first-time poster.

  13. 13. why I opened an ING account

    It’s all about priorities and sacrifices.

  14. 14. Clark

    @Andrew F: Yes, the options are reduced after a PhD – universities or companies with research positions. I believe that the situation could have been avoided if she had planned better. She has had this dream for a long time but I am not sure if she discussed it on a deeper level with her husband {to avoid debt and delay the kid unless it was an “oops” happening as April Elsegood (#8) puts it}.

    @eMoney: Valid points. Supplanting dreams is facing reality after the horse has bolted. It is atoning for one’s mistakes (could be circumstances too) by planning better with the kid’s life (whether the kid goes on that path is another story). It is not possible that all dreams will materialize but I believe that this dream was achievable (still may be!).

    @Carl: Yes, I know a professor emeritus who still visits his university (just turned 80) a few times every week, meets with new students, offers advice and serves as a mentor to faculty and students alike.

  15. 15. Mike

    @Carl – You are right – the NHL example wasn’t very appropriate. Especially in my case – I gave up the dream at age 6. :)

    I have to agree with April Elsegood – the friend had choices (including doing the phd) but she made other ones.

  16. 16. Jan

    A child can take 5 years out of your employment but adds a lifetime of interesting and stimulating situations.
    I know many women who returned to research, PhD and MD after their children were in school. It can be done if the dream is strong. Women are much more willing to reenter the workforce after leaving. Most of my friends are now in their chosen fields and going strong as their husbands retire!
    I think she made a wise decision.

  17. Great story, Clark, and an excellent question. I have noticed that some dreams are very persistent and really stand the test of time, while others fade away as life goes on. Let me show a real-life example of what I mean.

    Years ago my wife had just started her Ph.D. studies when she unexpectedly received a job offer. The job was very interesting, came with an excellent pay, and was in a foreign country, which made it very enticing as my wife (and I) were that time dreaming of moving abroad at some point soon. At the same time, though, my wife was really into the Ph.D. program and badly wanted to complete it and get her degree.

    Eventually, she decided to take the job, as she figured she could still do the Ph.D. later on, in a few years’ time. The relocation and new life abroad turned out to be an excellent choice in many ways, but the idea about the Ph.D. degree remained on her list. Over some years, though, things sort of evolved though, and the Ph.D. degree was no more so high on the list. Other things took priority: a safari in Africa (was even better than we expected!), half-marathon in 1.5 hrs (sheet got to 1hr 40 min and decided that was good enough), ladies’ championship of our golf club (she won it when 8 months pregnant!), two wonderful babies (yes that was a biggie!), and so on.

    Meanwhile, also many other new dreams made her list: a nice nippy sports car, a house in Tuscany, and a chalet in Switzerland are just a few examples. The interesting thing is that again some of these have started to fade away while others just keep getting stronger. The sports car and Tuscany are clearly on their way out (simply no interest in nice cars anymore, and several vacations in Tuscany have taught her that she loves to vacation there but would get bored if staying there over an extended period). On the other hand the chalet in Switzerland is just becoming more and more probable: she (and the rest of us) really love skiing, hiking, and other things Switzerland offers, and this is getting just more so year by year.

    So, my point is this: it’s vital to pursue your dreams, but not all things your dream up are worth the effort. Sometimes the realities of life constrain your ability to pursue a give dream, and sometimes just other dreams take priority. By letting go of some dreams you enable yourself to pursue the most important ones and also make room for dreaming up new ones.

  18. 18. tom

    The mistake was made when they decided to have a child before they were on solid financial ground and her education was completed. I suppose it is a planning problem, but what do I know as a childless married man at age 51?

  19. 19. Clark

    @U. Romilion: Thanks for sharing your story. The longer vacations in Tuscany that became boring remind me of instances when some hobbies that seem like passions but when pursued on a full-time basis (after quitting the day job), end up as mere fads. The higher paycheck and other benefits offered by the day job would have been the reason the hobby looked to be so fulfilling.

  20. 20. Neil

    My wife did a Phd after we had our first child. Despite enjoying it she found balacing the demands of a family and study hard. Also, once she had her Phd the demands of establishing herself in her field were incompatible with the responsibility of bringing up a young family.

    Overall the experience and impact of doing a Phd later with a family were not the same as doing it at a younger age.

  21. 21. jonathan

    Thanks for sharing this story as it’s a real dilemma and I guess many people get stuck at this stage in their lives. Although money may be a barrier we only get one shot at this life that we are living and if someone can put off their dream by just a few years then hopefully all will work out. But many then put this off time and again and never fulfill their ambitions. Perhaps he can get others to help him out because with the qualification his earning power will be much greater longer term.

  22. 22. Multiple Egg Baskets

    I’m of the opinion that education is never wasted effort. If your friend has personal aspirations to advance themselves intellectually then can you determine the price tag? As long as they can maintain a respectable quality of life for their family and it’s a goal that could enable their career then I’d say go for it.

  23. 23. Cristene

    In my situation, replace your friend’s newborn with my immigrant parents. I have to choose between spending time working and helping at parent’s restaurant and doing my CGA (level 4). I also have a full-time job as an analyst that depends on my CGA so it is difficult to choose what to do. I only have so much time in a day.

    It’s difficult to choose between helping my parents and school. My parents don’t have much, and they worked really hard since immigrating here. I was born here, have a university degree and have the opportunity to further my career to be stable financially. However, I’m just starting out in life since I graduated last year with student loans and I don’t have much of a portfolio.

    I decided to drop my next CGA course to help out more at the restaurant on weekends and weekdays because it’s the least I could do. My life has a lot more to offer because I’m just 25 but my parents are now 55 and still have not experienced what life had to offer (living paychck to paycheck with minimum wage). I don’t want them to work so much more physically because they’re getting old.

    I am very sad that I cannot devote 100% of my time to CGA, but it’s the least I could do for my parents for another couple years until they sell the restaurant (I hope).

    it was also difficult to tell my managers that I decided to drop my next course and push back my grad by 9 months. I didn’t know what else do. It’s so hard to focus on cga+work+family business guilt tripping me for not working enough.

    Being in the generation of poor immigrants, I should be proud of myself for getting this far. This is difficult for me and it’s difficult to ignore some Canadians my age who have it easier because they have more support and monetary support from their parents who grew up here.

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