Personal Finance for PhDs

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How Far Will My New Stipend or Salary Go?

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Virtually every PhD will experience this at one point (if not multiple points): You’re looking at an offer letter, whether for grad school, a postdoc, or a Real Job and you’re not sure what to think about the stipend or salary. Because you’ll have to move to a new city to accept the position, you don’t have any context for understanding if it is reasonable or generous or stingy. Your personal finances as well as the local cost of living play heavily into the determination you have to make. Will you be able to survive (or thrive – or neither) on this salary? How far will your new stipend or salary go toward paying your living expenses and getting ahead financially?

new salary new city

This isn’t at all a trivial question, especially for:

  • Graduate students and postdocs who unfortunately can’t assume they will be paid enough to live comfortably.
  • PhDs who are responsible for the well-being of others, e.g., spouse and/or children.
  • International scholars who are prohibited by their visas from working to earn extra money.

You can attempt to answer this question with little or much research, depending on how invested you are in the outcome and what your initial inquiries turn up.

Further reading:

Find Answers on the Internet

You can find a first-pass, non-personalized answer to “How far will my new stipend or salary go?” at any time over the internet.

Stipend and Salary Databases for PhDs-in-Training

If your offer is for a graduate program, go to PhDStipends.com and search for stipend entries for your university and other universities in your city, if any. Not only will this data tell you what other graduate students are being paid so you can compare your stipend offer, some of the entries contain subjective comments on how possible it is to live on that stipend. The stipends will also be normalized to the local living wage for the county the university is in (the LW Ratio) – more on that in a moment.

Similarly, if your offer is for a postdoc, use postdocsalaries.com.

The Living Wage

For graduate students and possibly postdocs, a well-researched, insightful database is the Living Wage Calculator. For each county in the US, this resource shows you the minimum your necessities will cost (on average) based on your family size. It calculates the “living wage” needed to support one adult, two adults, adults with children, etc. and breaks it down into its constituent categories: food, child care, medical, housing, transportation, other expenses, and taxes.

As graduate students are likely to be paid close to a living wage (perhaps above or below by up to 50%), this database will give you a starting point on what you can expect to spend in your various necessary budget categories. Postdocs who are paid close to the living wage can also utilize this resource. Higher earners and homeowners will not find the calculations as relevant.

Cost of Living Calculators

If you know what you spend on your expenses in your current city, you can use a cost of living comparison calculator to translate that amount of money into an amount of money in your new city based on the differences in the cost of living.

Some of the prominent cost of living comparison calculators are provided by:

These cost of living comparisons also break down into sub-categories of spending such as housing, utilities, food, transportation, etc. However, be warned that the housing data come from a mix of renters and owners, so you may find you own housing costs differ dramatically from the expected increase or decrease.

Find Answers from Your Peers

I think the best way to get an accurate answer to “How far will my new stipend or salary go?” is to survey people currently living on it in your new city, i.e., your future peers and co-workers.

This is trickier for PhDs starting Real Jobs because of the (damaging but firm) culture in most workplaces of not disclosing your salary. However, graduate students and postdocs are usually paid on a set schedule, so you can assume that someone already in the position you have accepted (e.g., within your same department or funded by the same source) does have the same or a similar salary to yours.

Simply ask an open-ended question such as “Are you able to make ends meet on the stipend?” or “Do you live more or less comfortably on the salary?” and see what it elicits. Be sure to ask several different people because you one person’s perspective may not be representative.

Find Individualized Answers through Research

If you are willing to dig into some financial weeds, the ultimate way to obtain an individualized answer to “How far will my new stipend or salary go?” is to draft a budget.

After all, your finances are unique, and looking to average data or asking a few peers will not directly speak to your specific obligations, lifestyle, and preferences.

If you already track your spending and keep a budget, you can use that as a starting point, or you can download a fresh template. There are plenty of templates available online, and I’ve also created one specifically for this purpose, which is available below.

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Some line items on your budget will need major overhauls due to your career and geographic transition:

  • Tax: If you’re changing salary and/or state (or making changes to your household), your income tax bill will need to adjust. Some early-career PhDs might also start or stop paying FICA tax or be excused from paying state income tax depending on the exact type of paycheck they will receive in the new position. My favorite calculator for estimating income and FICA taxes is from Smart Asset.
  • Employee/student benefits: With a change in university and/or employer comes different benefits that you may or may not have to pay for out of pocket. If the amount of money you are responsible for paying is not clearly delineated in your offer letter, it is worth inquiring about as you draft your budget. Examples of these types of payments are premiums (and copays/coinsurance) for your health, vision, and dental insurance; life and/or disability insurance premiums; and tuition and/or fees.
  • Student loans: If you are entering graduate school and have decided to defer your student loans, you’ll need to update your minimum required student loan payments to $0. Conversely, if you are exiting deferment for a postdoc or Real Job, you’ll need to know how much your payments will be. Your loan servicer should be able to tell you your minimum payments. If you have federal loans and are considering an income-driven repayment program, you can use the Repayment Estimator from studentloans.gov to compare your payments under different plans.
  • Living expenses: Obviously, if you are changing cities, many of your living expenses will shift. But the ‘major overhaul’ here is if you need to add or subtract whole budget categories, such car ownership, daycare, and travel to visit family, a partner, and/or friends.

As for your living expenses, you can use one or more of the methods detailed in the first two sections of this article to start putting numbers into each budget category. Some living expenses may stay more or less constant even when you change cities (e.g., cell phone bill, cost of electronics) while others will be subject to the cost of living (e.g., housing, utilities, food).

The most important budget categories to get right from a distance are your large, fixed expenses, e.g., housing, transportation (if you own a car), and childcare. The Living Wage calculator and the cost of living comparisons can help here, but it’s going to be even better for you to do your own research and determine your individualized expenses.

The two best ways to research your housing and childcare costs from a distance (and jump-start your housing search) are to ask your peers what they pay and monitor prices online for at least several weeks before you commit to your expense. (Knowing when to sign a lease/pay a deposit is part of familiarizing yourself with a market!)

Drafting a budget will help you decide how much you can afford to spend on these large fixed expenses, so it will be most beneficial to start drafting this budget before you commit to any expenses. Your ability to reach financial goals in your first year in your new position will likely hinge on getting these large, fixed expenses set at an appropriate level, so it’s worth quite a bit of time and research. Variable expenses can be changed more or less on a dime and small expenses aren’t so impactful, so it (literally) pays to focus your effort on the large fixed expenses.

If you would like some additional help with drafting your new budget at a distance, please purchase my previously recorded webinar ($24.99) below. The 30-minute “Draft Your Budget from a Distance” webinar also includes the budget template spreadsheet described above.

The objective of the webinar is to help you draft a complete budget for your new position (in a new city) so that you can set your large, fixed expenses at a reasonable level for your income and determine in advance what financial goals you might set for the next phase in your career.

Sign Up for “Draft Your Budget at a Distance”

The final answer to “How far will my new stipend or salary go?” will only come once you’re living in your new city. But you can start getting approximations on that answer immediately from online sources and your future peers. These initial answers may prompt you to create a more detailed draft budget before you move if it looks like you will experience a financial challenge or reaching financial goals is important to you. This budget will help you determine how much you can afford to spend on the expenses that are generally fixed prior to or upon your move. It will also help you decide how much money you can put toward your financial goals during your next position.

How to Read Your PhD Program Offer Letter

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Congratulations on receiving an official offer of admission to a PhD program! This is truly an exhilarating period in your academic career. After celebrating your admission and letting the giddiness wear off, whip out your magnifying glass: It’s time to take a close look at your offer letter to figure out what it actually means. Offer letters can be a bit difficult to decipher (sometimes intentionally!), but this is a vital step so that you go into your PhD program with your eyes wide open regarding your financial situation. This article covers how to discern what your program is offering you regarding your stipend/salary, out-of-pocket tuition and fees, the type of pay you receive and whether it comes with a work requirement, health insurance, “guarantees,” and how your funding package evolves as you move through your PhD program.

PhD offer letter

If your offer letter doesn’t answer all the following questions (and you’re seriously considering taking it), turn to the offering department’s administrative assistant (for official answers) and/or current graduate students (for this-is-how-things-actually-work answers).

Gross Stipend/Salary

Right away your eye might be drawn to a phrase like “Your total financial aid package is worth…” and some huge number like $50,000 or $90,000. Don’t be distracted by it! You need to know what your actual pay will be – what is usually referred to as your stipend. The letter should delineate between your stipend and the cost of the tuition and fees paid on your behalf. The important take-away is what’s going into your pocket (before taxes) as this is the money that will pay your living expenses and fund your financial goals.

Tuition and Fees (Your Responsibility)

If your offer letter includes funding, it should say that some aspect of your tuition and/or fees will be paid on your behalf. However, when determining how much money you actually get to keep at the end of the day, you have to know: Are you responsible for paying any (partial) tuition and fees out of your own pocket? For example, perhaps your tuition is being paid on your behalf, but out of your stipend you are expected to pay a relatively small fee. Don’t be impressed by huge numbers in tuition and fees being paid for you! What matters is how much you have to pay out of your own pocket; ideally $0 or close to it!

Source of Stipend

Your offer letter will likely tell you the source(s) of your stipend: an assistantship or fellowship. One of the key differences between these two types of funding is whether there is a work requirement.

Fellowships do not have “work requirements,” and to maintain them you are generally just expected to make satisfactory progress toward your degree with respect to your coursework and dissertation progress.

Assistantships do have a work requirement; you are technically an employee of your university. Research assistantships with your dissertation advisor usually allow you to combine your work requirement with your dissertation research (with some exceptions). Teaching and graduate assistantships require you to teach or perform some other kind of service for your university (most often officially capped at 20 hours/week), after which you are free to work on your coursework and/or dissertation.

It’s vital to know whether you have a work requirement in your first year or really any requirements to maintain your funding (e.g., attending a seminar series, submitting progress reports). If you don’t meet those requirements, your funding could be revoked.
Your stipend offer letter should clearly state what your work requirement is or whether you need to secure one prior to the start of the school year. For example, you might be offered funding from a teaching assistantship, but it could be still up to you to actually arrange with a professor to TA a certain course.

Knowing about a work requirement will help you properly envision how you’ll spend your time during your first year in your PhD program.

Duration of Stipend

Your offer letter should tell you over what period you will be paid your stipend. Ideally, the answer is 12 months, although carefully note if the source of the stipend changes during that time. (For example, I was paid in my first 9 months of graduate school by a training grant and in the next 3 months by a research assistantship, and this was all spelled out in my offer letter.) If the offer letter says the stipend lasts any period shorter than 12 months, you need to follow up: Does that mean you actually won’t be paid (you’ll have to plan financially for that, obviously) or that you are going to have to secure other funding after the initial period?

Who Pays What for Health Insurance?

Health insurance is a huge issue for graduate students, and universities handle it differently. The key answers you need from your offer letter are:

  • Will you have an opportunity to buy student health insurance through the university? (Almost certainly the answer is yes.)
  • What is the yearly premium for the student health insurance?
  • If you sign up for student health insurance, is the premium paid on your behalf (similar to tuition and fees) or do you pay (part of) it out of pocket?
  • Are dental and vision insurance bundled along with health insurance, or would you have to buy them separately?

Even if you plan to stay on your parents’ insurance for some years at the start of your PhD, it’s important to understand what you may be paying for premiums once you switch to insurance through your university.

Is There a Guarantee?

Does the word ‘guarantee’ appear anywhere in your offer letter, e.g., is your funding guaranteed for 2 years, 5 years? A guarantee is nice to have, but it shouldn’t necessarily be a deal-breaker. If you don’t have guaranteed funding throughout your PhD (which might very well go beyond 5 years!), find out from current students whether students all pretty much stay funded or whether funding becomes tight/competitive in later years.

What Happens after the First Year?

Probably of the most important things to know about funding during your PhD is what happens in later years. A PhD is long, after all, and your offer letters might only discuss funding in the first year. Your offer letter might include hints of funding changes in the future, such as by saying you received a first-year fellowship or one-time bonus, or saying that your funding source will change starting in your second year.

You should be particularly wary of your stipend decreasing after your first year due to a one-time/first year-only bolus of money (a promotional offer, so to speak). It would be quite painful to find out at the last minute that your stipend is going down and have to scramble to adjust your living expenses. Better to build your life and budget around your ongoing stipend amount and use the first-year increase for one-time expenses or savings.

If you are seriously considering accepting an offer, you should definitely inquire about what funding looks like in the second and following years. The departmental administrative assistant may not be able to say for sure what will happen in your case, but he/she and current students can tell you the precedent.

  • What will my after-tuition/fees stipend (and its term) be in my second and subsequent years (lower, higher, pretty much the same)?
  • What will the source of my funding be in later years, and am I responsible for securing it? (For example, in your first year you might be funded from a training grant so you can rotate among potential advisors, but starting in your second year you must secure a research assistantship with your dissertation advisor.)
  • Are yearly cost-of-living raises typical?

Don’t be dazzled by a pumped-up first-year offer if the reality behind it is a department where students compete with one another for limited funding and you’re paid the same stipend in your fifth year that you were in your first!

You can see that to properly understand your funding during your PhD you need a lot more information from your stipend offer letter than just the number that will hit your bank account each month! Again, you only need to investigate beyond the offer letter to the degree that you are considering accepting the offer (most likely based on other factors). But even if you don’t care about money at all, I strongly encourage you to find answers to these questions for the program that you ultimately accept before you commit to a lease or move.

Negotiating PhD Funding Offers: This Grad Student Did It Successfully

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In this episode, Emily interviews John Vsetecka, a second-year PhD student in History at Michigan State University. When John was a prospective PhD student, he attempted to negotiate the stipend and benefits of the three admissions offers he was seriously considering. John shares exactly how he initiated the negotiation process and the outcomes at each of the universities. His negotiation method is well-researched and well-considered and is applicable to many if not most other prospective graduate students. John and Emily also discuss how prospective PhD students should combat imposter syndrome during the admissions process.

Links mentioned in episode

negotiating PhD offer

0:00 Introduction

1:05 Please Introduce Yourself

John Vsetecka is a second-year PhD student in the Department of History at Michigan State University. He studies modern Ukrainian history, with a focus on the 1932-1933 famine. Before beginning his PhD program, he worked as a GEAR UP advisor. This is a federal grant agency that works with low income students, called Gaining Early Awareness and Readiness for Undergraduate Programs. He worked in Colorado to help middle school and high school, low income students prepare for college. Before this job, he got a Master of Arts in History in 2014 at the University of Northern Colorado.

2:55 What PhD offers and interview requests did you receive from universities?

When John applied to PhD programs, he applied to eight schools and faced some rejections. He considered four offers, then narrowed his list to three. The first offer he eliminated would have required that he start with MA and work into PhD. Since he already had an MA, he felt he was ready to move on. He seriously considered three offers. He accepted the offer from Michigan State University, where he is now. He visited “University 2” in person for an interview. He had a virtual interview with “University 3.”

4:21 What did you think about the offers from these three universities?

John wasn’t sure what a fair offer was for a PhD position in History. Generally, PhD students are shy about sharing their financial experiences. So he did research and his mentor from the University of Northern Colorado guided him in this process. He talked to other PhD students, who would say they had enough to live on or that they were struggling. He used the websites GradCafe and PhD Stipends. He got a sense of what people were being paid, including their health insurance and fees. From all of this information, he decided two offers were fair and worth considering.

Emily shares an important piece of advice for prospective PhD students is to do your research. Anonymous databases, like PhD Stipends, provide more transparency around these offers. But you should talk to current graduate students, because it’s one thing to look at the numbers, and another thing to get a feel for how it is to live on that amount.

Further Reading: How to Read Your PhD Program Offer Letter

7:54 How did you initiate the negotiation process for your PhD stipend offers?

John negotiated his stipend offers during his interviews. He went to visit two universities in person for interviews, and had a virtual interview a University 3. His first interview was at University 2. During the visit, they have an itinerary and fully scheduled day. The experience is like a whirlwind. He prepared a set of questions for faculty members and set of questions for Graduate Director. With the Graduate Director, he talked about the PhD program as a whole to get their insight. Then he directly asked the Graduate Director if there is any other money available, such as other fellowships, and explained that he has other offers with higher financial value. The Graduate Director is the one that can control the money. The faculty can only put in good word on a student’s behalf. So as a prospective PhD student, you should know who you can talk to and know who you can negotiate with. You don’t need to be afraid to ask tough questions about financial aid.

The PhD program interview was a good time to negotiate PhD stipend offers. John waited until he received all offers to see where he stood across the field, and this gave him some leverage. Negotiating like this is is what people do with any other job. John told the Graduate Director that he had other offers, but he didn’t show them the letters themselves. Negotiating before receiving all other offers and before the interview can seem desperate. But if he negotiated after the visit, it might seem like that offer wasn’t his first choice and he was only negotiating after losing another offer. John also believes that talking in person is the best type of communication. Negotiating in person puts them on the spot.

During his interview visit for University 2, John asked the Graduate Director about the potential for a better financial package. The Graduate Director told John that they would get back to him a couple hours. Later that day, John received an email with a offer for a fellowship package. This showed John that they were willing to work on his behalf. He was surprised by this because he had expected them to negotiate and push back. During the interview visit, the department is most focused on recruitment, so they quickly considered his request and acted on it.

John went into the meeting with a set plan for negotiation. He had a notebook and visibly took notes during the conversation, which indicates that he took the negotiation seriously. Treating graduate school interviews like a professional scenario sets you up for success.

14:35 What new offer did you receive after negotiating?

Because he negotiated with the Graduate Director, John received an offer of a university fellowship instead of a teaching assistantship. The new offer was university-based funding, not department-based funding like his original offer. The university fellowship had different teaching requirements than the department teaching assistantship. It was more money in total, as well as better health care coverage. This showed what kind of control the department and university has over financial awards for PhD students. Even if the university can’t raise stipends, they can cover more fees or provide better benefits.

16:22 What outcomes did you get from negotiating with the other two universities?

John learned that not everyone would negotiate. At Michigan State, he had a generous offer that he was already happy with. Even so, he asked the Director of Graduate Studies at Michigan State about his financial award. The director kindly told him that his original financial award was what the department was willing to offer. John later learned that his department offers different financial packages based on a tiered system, and he was happy with the offer he received.

At University 3, John had a virtual meeting with the department. John brought up that he had offers with much more value than what they had offered him. John says that honestly, he was displeased with University 3’s financial offer. He learned that due to financial constraints at University 3, the department couldn’t offer more money. The department suggested term-to-term options. John didn’t want to be on his toes every semester wondering if he’d get paid. Though University 3 offered paid tuition, the money offered for teaching/research was not enough to even consider.

It’s important for prospective PhD students to recognize that some offers only tell you about the first year, while others present a five-year plan for funding.

19:35 Based on what you experienced, what would you do to negotiate differently?

John says he wouldn’t change much. While he knew negotiation was possible, he personally didn’t know anyone in his cohort group that negotiated their stipend offer. John heard from his advisors and mentors that it’s ok to ask, but you have to know to ask. John says this is one of those hidden things in academia. If prospective graduate students receive multiple offers, this is a chance to use offers against each other.
even if you get one offer, be happy, but if you get more offers you can use them

Emily brings up that often, applicants don’t feel a lot of confidence. They often think, “Who am I to be receiving these offers?” This imposter syndrome deters prospective PhD students from negotiating their stipends and ensuring that they receive the best offer.

22:27 How did you know negotiating your PhD offer would be possible and welcome?

John’s MA program advisor told him how to negotiate PhD stipend offers. First, you have to apply to multiple universities and know their programs well. Second, you need to know who you want to work with. Third, you need to talk with current graduate students. This is the most important advice. If you find their email on department websites, you can email them directly. Fourth, online communities like GradCafe help you connect with people who can help you.

John says that graduate school applicants should treat a PhD position like any other job. John says this profession should not be excluded from the process of negotiation. John’s experience at GEAR UP, where he helped low income students fight for undergraduate school money, showed him that there is a lot of money out there. He says it’s unfortunate so many undergraduates go into a lot of debt, when there are all types of money out there for different skills and talents. John wonders why graduate students can’t have that money too? There are different organizations, based in different fields, but money is out there. He suggests prospective students apply to everything they’re qualified for, but they also ask universities and departments what they can give.

Emily adds that prospective PhD students need to consider cost of living. If you have school A versus school B with higher stipend and in lower cost of living, you can ask the school A’s department what they can do to make the offer comparable.

26:44 Has your negotiation had any lasting impact on your graduate career?

John says the negotiation process doesn’t stop when you receive your final offer. Negotiation is a longer standing issue to think about in the future. At Michigan State, John and his peers negotiate for conference money, travel money, research money for the summer. Some graduate students can’t find money beyond teaching assistantships. Because he considered these benefits in his financial offer, he accepted a position that allows him the time and money to not worry. He has summer funding and he can teach online. For instance, he taught a seven week class online while being in Ukraine for research. He chose a school with an institutional investment. The department is doing well and it is investing in its students. He saw that the department was willing to invest continually in their students. He thinks the investment will continue after he graduates.

29:33 Final Comments

John says prospective graduate students should feel free to reach out to him. He likes to help in any way he can. When you get your offers, the first thing you should do is celebrate, and get a round of applause. After celebrating, look over your financial offer, and look beyond stipend to health insurance and benefits. If you get multiple offers, compare them. Be confident about your acceptance into a program and don’t be afraid to negotiate. Know that you have power in these situations. Even though graduate students often don’t have much power, this is the situation where you do. You have all the power and you should use it while you can.John treated PhD offers like job offers because it’s also a job, in literal and figurative sense.

31:27 Conclusion