Income

This PhD Entrepreneur Advocates for Universal Basic Income (Part 2)

May 11, 2020 by Meryem Ok

In this episode, Emily interviews Dr. Jim Pugh, the founder of ShareProgress and co-host of the Basic Income Podcast. Jim defines universal basic income and outlines how it would alleviate poverty and other social ills, including results from research and real-life experiments with basic income. He describes the possible avenues by which universal basic income could be funded and whether it would replace our existing social safety nets. Jim and Emily speculate about how universal basic income might affect higher education funding, including PhD stipends and postdoc salaries, and PhD trainees themselves.

Links Mentioned in the Episode

Teaser

00:00 Jim: You could basically think of this as universal basic fellowships for PhD students because I think that the dynamics that come with it very, very closely would match what it would be if you were getting a fellowship of the same size.

Introduction

00:18 Emily: Welcome to the Personal Finance for PhDs podcast, a higher education in personal finance. I’m your host, Dr. Emily Roberts. This is season six, episode two, and today my guest is Dr. Jim Pugh, the founder of ShareProgress and cohost of The Basic Income Podcast. In this second half of our interview, Jim articulates what basic income is and how it would alleviate poverty in the United States, including results from recent research and experimentation. He describes the possible avenues by which it could be funded and whether it would replace our existing social safety nets. We speculate about how basic income might affect higher education, including PhD stipends and postdoc salaries. Without further ado, here’s the second part of my interview with Dr. Jim Pugh.

Will You Please Introduce Yourself Further?

01:06 Emily: We’re back now with part two of my interview with Dr. Jim Pugh. In part one, he told us all about how he started a business a few years after graduate school, which ultimately allowed him a great deal of time freedom. So, his business pays for his lifestyle, but he only works at this point about five hours a week on the business. And that has allowed him to pivot to his advocacy work around universal basic income, which is what we’re going to be hearing a lot more about today. So, Jim, thank you so much for continuing this interview with me. And we want to start off with a basic question about universal basic income because frankly, I probably would not have really heard about this except that you and I are Facebook friends. And also, we’re recording this in September, 2019 and Andrew Yang is a candidate for the democratic nomination for president. So, between those two things, I’ve kind of heard a little bit about basic income, but I would love to hear a lot more about what it actually is from you.

01:59 Jim: Sure. Well, so, just to start with the definition. A universal basic income is a policy that would provide every single person in the country with unconditional cash payments regularly–most people talk about once a month–that’s actually enough to cover basic needs. And the idea of it is that, if you were to enact this, you eradicate absolute poverty. You’re ensuring that everyone does have enough money to cover the fundamentals. And so, in some ways it’s very, very simple because it’s just giving people some cash. But in other ways, we’re potentially talking about something very radical because we would for the first time be saying, we are fully abolishing absolute poverty. We’re saying that absolutely no one in the country should be poor and that we’re going to structure our systems with that in mind. And so the ramifications of that are pretty profound as far as what does it mean for work? What does it mean for health? What does it mean for people’s general lifestyle if you’re actually establishing that fundamental financial security floor?

Benefits of Universal Basic Income (UBI)

03:12 Emily: Okay, so let’s first take the benefits–the upsides of this–and let’s leave aside, for the moment, the practicalities of it, but just to talk about the vision for what this society might be like. So, what are the benefits that people might experience maybe who are currently in poverty but would be lifted out of that through UBI? You started to talk about this a little bit at the end of the last episode. So, there’s actually been research done in this area and there’s been some experimentation. So, can you talk a little about what we know already about how this might change things for people?

03:43 Jim: Yeah, so I think there are the obvious things that we know when people are poor, they can’t afford food or at least healthy food. They may be having trouble finding somewhere to live. They may not be able to take care of themselves. So, if you’re actually ensuring that everyone is up above the poverty line through just regular cash transfers, those are all things that are addressed, first order of facts. But I think beyond that, that’s where things start to get quite interesting because we have seen more and more evidence around how poverty and financial insecurity, if not causing, are at least are greatly contributing to a lot of other issues that we’re dealing with today. And so, people when they are approaching any aspect of their life, they can either be in an abundance mentality where they think, “Okay, I have enough. I can think bigger picture.” Or a scarcity mentality where they feel constrained, which basically gives people tunnel vision that they’re only thinking about what’s right in front of them.

Abundance Mindset, Higher IQ

04:51 Jim: And that difference has huge impacts on what happens to people. So, first off, there have been studies just looking at general intelligence, and there is a substantial shift in people’s IQ level between those two different headspaces. I think it’s around one standard deviation, so about 10 IQ points, smarter when you’re in an abundance mindset as opposed to a scarcity mindset. So, you’re making better decisions. Second, as I said, when you get that tunnel vision and so it means you’re just thinking about what’s right in front of you, it basically prevents you from longterm planning. You can’t be thinking about, “What is my life going to be even a year, much less, five, 10 years down the road?” if you’re worried about, Oh, how am I going to put food on the table tonight or tomorrow? And so, it allows people and encourages people to plan better, to make better longterm decisions which has big impacts around choices on education, choices around what sort of work they pursue, and ultimately, where they do end up in five, 10 years down the road.

Scarcity Mindset Damages Mental and Physical Health

05:58 Jim: And so, beyond just being able to afford health treatments, there’s also a lot of evidence that when you’re in a scarcity mindset, when you’re in poverty, it’s extremely damaging for mental health. And also for physical health, the stress has an impact on that as well. Crime–strong, strong correlation based on people’s financial security as to whether they’re more or less likely to commit crimes. And so there’s all of these second and third order implications around how things would look in our society if we weren’t to have this absolute poverty. That’s seems incredibly promising. And so, that’s why, again, our typical approach as a society is to, when something’s going wrong, to treat the symptoms of it. And this, instead, is really saying, “Let’s actually try to take a step back, deal with some of the underlying causes, and see how much easier that makes dealing with all the rest of this stuff.”

UBI and Job Flexibility

07:00 Emily: Okay. Sounds amazing. It sounds very, very compelling. I’m wondering a little bit more about what the vision for what this society may look like, should we bring it about. You talked earlier about jobs. And so, is the idea that not as many people would need to work? There wouldn’t necessarily be as many people in jobs? Or is the idea that you would have just more freedom and flexibility around when you want to work and when you went to have further training? How does this relate to the jobs, I guess is what I’m asking?

07:28 Jim: I think much more the latter. So, the idea is not that this is something that’s going to replace jobs wholesale. I think it does allow you to pursue a more general definition of work, I would say. And so, in the sense that “job” right now means a fairly specific thing in those conversations about more like a nine to five, like ongoing, consistent workplace. This does give you additional flexibility to think a bit differently about what is the right form of work for you to be doing. So, whether that’s part-time, whether that’s taking some time to get more of an education in the area that ultimately is going to allow you to do something that you feel better about and maybe much more productive for society. Whether it’s going to give you the flexibility if you want to do some sort of family care or staying home with children or elderly folks.

UBI Facilitates Entrepreneurship

08:25 Jim: Another one is entrepreneurship. If you’re considering starting a company or doing something that, in its early stages, may not be giving you a steady paycheck–having more flexibility around that as well. So, it opens up all these doors that most folks, I would say, don’t really have access to at this point in time. As far as overall impact on how much people are working, there have actually been a number of studies on this. And what it suggests is the results vary. That there are certain situations where, when you give people regular, unconditional cash, they work more. It seems like, either through stimulating the local economy and creating jobs or by giving people that flexibility, they end up doing more work. So, Alaska for the last 40 years has actually had a universal income provided by oil in the state. And recent studies have found that the overall work rate hasn’t changed, but you see a lot more people engaging in part-time work than you have in the past. Or, certain groups, studies have found there is a decrease in work, quite consistently actually across studies. The ones where that’s only really stood out is parents with young children and teenagers, basically. And interviewing folks involved in that, it seems like the former is spending more time staying home with kids, the latter spending more time at school. So, again, it’s not captured as work in how we measure it today, but it actually is work and potentially much more pro-social work than they might otherwise be engaged in.

10:06 Emily: So, this is really reminding me of–so I have not read this book. The book is Your Money or Your Life by Vicky Robin, I want to say. And she has a coauthor. Anyway, I heard a podcast interview with her within the last few weeks and she was talking about how in our current society, like you’re saying, there’s a lot of work that is not inside a job, right? There’s a lot of work that people do in our society to further it. A lot of women do this kind of work and it’s not valued in terms of a paycheck from a job, right? That doesn’t mean it’s not contributing to society. And so, I don’t remember if they specifically talked about basic income on that podcast, but this is a way to sort of reframe what counts as work and what counts as doing something valuable with your time.

UBI and Social Safety Nets

10:51 Emily: Yeah. Okay. So, I think I’m getting you here. I have another question: would this replace the social safety nets that we have currently and expand them, I guess you could say?

11:03 Jim: So, there are mixed opinions on this amongst people who advocate for basic income. I’m actually in the camp saying that this should not initially be treated as a replacement for any social programs. And I think the reasons are: one, is that I think there is widespread recognition across the political spectrum that our social safety net is not working as well as we would like it to. You get very different opinions as to what would allow it to work as well as we would like it to. But no one is satisfied with where it’s at. I think a lot of people have talked about, “Let’s provide basic income and then just cut much, if not all, of other social programs because this will eradicate absolute poverty. Why do we need to worry about anything else?” And there are actually, I would say, a lot of edge cases here where it’s people who are dealing with some specific challenge for which cash on its own is not going to quickly solve it. It will help a lot in many situations. But I think there is the risk that if you say, “All right, we’ll get rid of this other stuff and just give you cash,” you’ve basically taken a problem that requires multiple parts to solve and just replaced one part with another. And, in some cases, maybe they keep people worse off because of that.

Targeted Interventions Beyond UBI

12:25 Emily: Can you be more specific about what is being provided to people now that’s not money?

12:29 Jim: Yeah. So, I think disability being a good one where disabilities can look very different for different sorts of people. And in some cases, the support you would need to actually be able to live with disabilities requires much more than what a basic income would provide. And so, that’s a case where, if someone were to say, “We’re going to wipe everything off the books and just give you that,” a lot of people in that situation are going to be left far worse off. I think there are specific issues around addiction, in some situations, housing assistance where there is obviously there are areas where housing is far, far more expensive. And so, to think that a national UBI would actually be enough for people in the Bay Area to be able to get by, it’s not realistic. And so, that’s a situation where a targeted intervention beyond the UBI is going to be important.

13:22 Jim: And then I think there are other ones where it may be some general challenge where someone’s falling out of the workforce or coming back from deployment abroad where, again, making sure that they have enough cash is important, but there are additional services that come beyond that that also much better set them up to succeed than the cash on its own. And so, I think that that’s a key thing here is to recognize both how transformative and valuable UBI could be, but also that it’s not a panacea. It’s not a silver bullet. It’s something that will need an ecosystem of additional supports if we actually want to have an effective safety net. And so, I don’t think the safety net that we have right now is doing that well enough, and we need to be rethinking that. But I think that there’s a danger when people say, “UBI instead of that,” that we throw the baby out with the bathwater and end up in a situation where people may be much worse off than they are today.

Regional Cost of Living Considerations

14:25 Emily: Yeah. I think because this is, I don’t necessarily want to say it’s a new idea. I mean, you said Alaska has been doing something like this for 40 years, but it’s gained maybe national attention only in recent years. So, this is still an idea that’s being worked out. And at the policy level, if viable, we don’t know exactly what the ultimate solution would look like. And presumably, it would change over decades and generations anyway. So, I’m glad you brought up the cost of living question. Because the U.S. is very diverse in terms of cost of living. Is the ultimate idea still that people would get the same amount of money no matter where they live? Maybe with some additional help, like you were just saying, for certain people in certain areas?

Psychological Implications

15:05 Jim: So yeah, a key part of it is–and I don’t think I said in my original definition, but the idea is–this would be the same amount to everyone. And there are a couple reasons for that. One is logistical that it becomes much easier to manage if it’s the same for everyone. But the other is more psychological. One of the reasons for taking a universal approach is to try to eliminate stigma associated with receiving support, which in our modern age, we all see how much stigma is associated with receiving various forms of welfare. And that, if it’s something that everyone in society is getting, you’re able to get around that. Because why is it wrong for the homeless person on the street to get the check every month if I’m also getting my check every month?

Regional Supplements

15:52 Jim: And so, that’s another reason to have the equal, universal amount. But as you say, what that means is that in particularly different regions across the country, you’re going to see big differences as far as the implications of that. So, there certainly are parts of the country where if you were giving everyone a thousand dollars a month, you can survive without too much difficulty. If you’re in the Bay Area or other places, that does not get you very far. And so, that’s an area where you do need to have something beyond that. There’s been some discussion around regional supplements where you might be able to top up a equal federal amount with something that goes up more for more expensive areas. But I think beyond that, yeah, there may be other targeted interventions that are important.

UBI Increases Mobility

16:46 Jim: I think one question that comes up that we don’t really have a good answer to but people wonder about is, if you’re providing the basic income to everyone, it is going to increase people’s mobility. And so, if you currently feel tied to a certain geography for economic reasons, which may be very expensive, whether that gives you the option to relocate to somewhere that is less expensive. And then that gets very complicated because it goes into community ties and family and things like that where there may be other factors beyond just the economics of it. But it’s something that would be different if we did this and so, potentially, that at least partially would help to mitigate some of those challenges.

Commercial

17:35 Emily: Emily here for a brief interlude. I bet you and your peers are hungry for financial information right now, especially if it’s tailored for your unique PhD experience. I offer seminars, webinars, and workshops on personal finance for early career PhDs that can be billed as professional development or personal wellness programming. My events cover a wide range of personal finance topics or take a deep dive into the financial topics that matter most to PhDs like taxes, investing, career transitions, and frugality. If you’re interested in having me speak to your group or recommending me to a potential host, you can find more information and ways to contact me at pfforphds.com/speaking. We can absolutely find a way to get this great content to you and your peers even while social distancing. Now, back to our interview.

The Basic Income Podcast

18:34 Emily: I feel like I could continue asking you questions about this for quite a long time. It’s a good thing you have a podcast where other people can learn more about this. What is the name of your podcast?

18:45 Jim: Our name is a bit on the nose. We are The Basic Income Podcast. We’ve been introducing weekly episodes for about three years now and exploring both UBI specifically, but also, how it relates and connects to all sorts of other areas.

How to Fund UBI in the U.S.

19:00 Emily: Okay. So, I’m going to hold off on the questions that are still swirling in my head and just say, listeners, if you’re excited about this idea, or skeptical of it, or whatever, go ahead and check out the podcast and I’m sure there are other resources that you refer to from there where people can continue to learn even more. So, one more question around the vision of this, which is should we all, or enough of us in the United States, decide this is a good idea, what actually does it look like to fund this? Maybe post-transition, if there is a transition.

Enact Changes to the Tax Code

19:32 Jim: Yeah, so that’s another area where people have very different opinions around. Because, I mean, if we’re looking at it on its face saying, “All right, everyone in the country gets a thousand dollars a month,” that’s about $4 trillion, which is the size of our current governmental spending, which seems insane. But there are various caveats, I would say, that make it much more achievable than it may seem at a glance. My preferred approach to financing is first to recognize that, if you’re going to enact universal basic income, it means you need to make some significant differences in the tax code. And specifically, as a starting point, I think income tax. At its core, the goal of UBI is to provide people with financial security. And so, what that means is that, knowing you’re always going to get your check every month is important because who knows what may happen to you. And having it always there gives you that security.

20:31 Jim: But, if you’re earning a good paycheck, there’s no reason why you should be coming out net ahead, necessarily. And so, to basically update our income tax brackets such that, once people make above a certain point, their UBI is effectively being taxed away. So, maybe that’s four times the poverty level. So, if you as an individual are earning more than 50 or $60,000 a year, basically, you’d be getting your check every month and then you’d be paying a bit more in taxes to cover that expense. If you do it that way and look at what’s eventually the net cost, it drops to somewhere between 500 billion and a trillion dollars a year, which is still a lot, but a lot less than the four trillion we started with.

Shift Tax Programs and Brackets

21:18 Jim: And so, then there are different ideas as to how do you pay for that. That’s much more in line with other somewhat ambitious governmental programs. You can couple together some combination of a carbon tax, the financial transaction tax, a wealth tax. And sort of talking more about that, Elizabeth Warren wrote it up in her campaign where you’re able to raise that amount of money to cover that difference. And also, I think potentially looking at adding a few tax brackets at the top of the income level. If we were to go back to the taxation we had pre-Reagan, that would be bringing in a substantial amount there. So, with those things combined, you can relatively easily actually be able to cover the cost.

UBI and Graduate Training

22:02 Emily: Okay. Very, very interesting. So, I wanted to pivot a little bit to tie this really into more of our PhD audience because we haven’t brought that up so far really. I mean, you mentioned earlier that you know, having a basic income could afford people the flexibility to do more training. Of course, PhDs have a lot of that. Have you given any thought, or has there been any discussion around this, how basic income–I’m sure it’s been discussed at the undergraduate level, how that would affect people pursuing college degrees? You can speak about that a little bit if you like, but I am curious about what you think about how it might affect PhD training in the United States. And specifically, you know, you brought up earlier the scarcity mindset and how that prevented people from thinking longterm and it caused an effective IQ drop.

22:45 Emily: And in season four of this podcast, I published a two-part interview with Dr. Lucie Bland and she talked about her scarcity mindset that she developed during her PhD because she was living in poverty during her PhD. She was funded at a very low level. She lives in a very expensive city, and it’s something that a lot of people can relate to during their graduate training. Although you wouldn’t necessarily think about graduate students, a relatively privileged bunch, I would expect, necessarily being beneficiaries of basic income. But maybe during that training period, they are. So, can you just speak a little bit about that?

UBI and Financial Security

23:18 Jim: Well, I would actually just add on to that. What we’re seeing in the Bay Area right now is not only at the graduate student level, but actually the assistant professor level, in some places, that people are homeless. They can’t afford to live here. So, they’re living out of their cars. Yeah, I mean I think that it’s giving you that layer of financial security, which should help with that. I think, not just because it’s some extra money, but because it would be extra money not tied your employment education situation. And obviously this is not everyone, hopefully a small minority, but if you’re having some bad power dynamics with your professor and feeling like you don’t want to be working with him or her but are not able to step away because of finances you’re receiving from there, it gives you kind of that out knowing that, regardless of what you decide there, you have that income coming in otherwise.

Parallel: UBI and Fellowship Income

24:15 Emily: So, there’s actually a slight parallel there, actually with fellowship income, right? And you did your PhD outside of the state, so, maybe it’s a little bit different there. But here with fellowship income, you know, it’s an award that you receive as an individual. It’s based on your own merits. And so, it’s not necessarily tied to you staying in one person’s lab. And so, I again, I publish an interview in season four where someone was able to switch labs, did not have a good relationship with their first advisor, was able to switch labs partially because she received an NSF graduate research fellowship. And so, similar situation, right? If, you know you can go a few months and transition without a paycheck coming from your advisor, it gives you more freedom there to really seek out the situation that is going to support you best as a developing researcher. So, yeah. Excellent point there. Please continue.

24:59 Jim: Yeah. Well, I was going to say, I think you just nailed it. You could basically think of this as universal basic fellowships for PhD students because I think that, yeah, I think the dynamics that come with it very, very closely with match what it would be if you were getting a fellowship of the same size. I mean obviously with the added flexibility that you could leave a PhD program and still have it. But as far as the context within graduate school, I think that that’s basically what it would be.

25:27 Emily: Just to explore that a little bit further. Because I do think it’s a good analogy. So, one of the great things about fellowship income is that it gives you more freedom in your research, right? So, if you’re not beholden to working on a specific grant for your advisor, like you often are in STEM fields if you have a research assistantship. The fellowship allows you more intellectual flexibility and pursuing projects that are more in line with your own goals. It allows you to pursue collaborations. It’s just a greater degree of freedom. Now, some advisors exact more or less control when they do have people on a grant for research assistantships. That’s sort of up to their discretion. But yeah, the flexibility there in terms of your intellectual pursuits would then translate in terms of UBI into your general career pursuits, life pursuits. It would just be a much broader funding of that.

26:14 Jim: Yeah, I think that’s right. I think I could imagine there would also be kind of a trade-off on that versus greater financial security. Because one of the questions would be, if everyone were getting a basic income, would you still have PhD student stipends and outside fellowships at a similar level? If you would, okay, everyone’s going to be much more economically stable.

Final Thoughts on UBI and Academia

26:40 Emily: You said earlier as like a touch point that, in your vision of this, around 50 or $60,000 of income, that’s when the UBI would kind of phase out. And for the graduate student level, graduate students don’t reach that point. A lot of postdocs don’t reach that point. So, in some sense, if nothing changed on the grant side of things, then it would boost your income. But yes, the question is whether people would still be funded to the same degree given that they have that baseline. So, if the idea right now in academia is we give people just enough money to live on so they don’t have to have other jobs that distract from their PhD research, well then maybe they would just decrease that funding. So, yeah. Any other thoughts around that? I’m sure this has not been very fully explored because it’s a very niche interest.

27:24 Jim: Well, no, I think that this is a specific example of something that is much broader, which is basically, if we were to have UBI, what does that do to wages? And the theory is that it depends a lot on what type of work you’re talking about and how much there is the internal versus external motivation around doing that work. Because if someone’s only doing the work because they’re getting paid to do it, UBI actually has the potential to then increase wages because it basically gives them more leverage to say, “Oh, well I don’t actually like this work. I’m going to go pursue other options.” And a company might then have to say, “Oh, well instead of $8 an hour, we’re going to pay you $15 an hour.” On the flip side, if it’s something that people just want to be doing for other reasons, like perhaps going to graduate school since not too many people go to graduate school to get rich, then there’s the opposite potential where, if someone is basically willing to do it, assuming that they won’t be starving, then universities may say, “Okay, well you’re UBI now instead of giving you $18,000 a year, we’re going to give you six.

28:43 Jim: So, I mean, it’s a whole other topic, but I would say that that’s where unions might come in handy. But yeah, I think it’s one of those areas that it’s very, very difficult to answer and know exactly what will happen until we actually do it. So, we can hypothesize around it. But yeah, that’s an open question.

Value of Teaching and Shifting Landscape in Education

29:07 Emily: Yeah, I guess I’m also thinking about sort of we’re having larger debates and angst in academia around the value of teaching, right? Because there’s this huge adjunct workforce that is, you know, severely underpaid. They don’t have job security and yet such a huge percentage of the classes that undergraduates and graduate students take are being taught by people who are not full-time employees of the institution that they work for or institutions. And it’s just such a difficult area right now. I can definitely see how UBI would help people in that situation, right? Because they are also experiencing poverty or near poverty-like situations, many of them. But, yeah. I mean, we’re in a transition point for education broadly. Like, if we’re moving to massive online courses and so forth, maybe if your teachers are needed. I don’t know. There are just a lot of transition here. I guess when we’re talking about maybe some kinds of jobs disappearing or transitioning, teaching at the higher education level, is one of those jobs that is sort of in transition in the workforces. And so, yeah. UBI is just kind of another element to kind of throw into the mix here that we don’t really know how it’s going to play out entirely.

30:13 Jim: Yeah, I think that’s right. And this applies less, I would say. I would expect it to still apply to some degree, but on the flip side, as far as what is the responsibility of the teacher versus the student? I think, certainly at the elementary and high school level, there’s ample evidence that financial stability of the family that the students are coming from makes a big difference as far as how well they’re able to learn. And so, that’s, I would say, another wrinkle that gets thrown in here as well, where if you are ensuring that everyone who is in the class is in more of an abundance mindset, what implications does that have to what is the most effective way of educating?

Tell Us More About Your Podcast

30:55 Emily: Such an interesting topic, Jim. I think that people will definitely want to follow up with you and learn more about this. Maybe have more discussions with you around what does the potential of UBI look like in affecting higher education and graduate students and postdocs and trainees. Again, tell us a little bit more about what you do. We have the name of it, but what do you do on your podcast?

31:14 Jim: Yeah, so we cover a lot of different areas. Most of the episodes, I think like yours, feature or are centered around a guest interview on some topic. And so, we’ve covered everything from, yeah what does UBI do with the disability community, to what’s happening in Canada with UBI to digging in on some of the modern control pilots that are being done in the U.S. and abroad to what is the connection between UBI and housing? And so, it really covers a lot of different areas, but generally we bring on an expert, we chat with them, and then we talk through what are the ramifications of what they said. And so, really try to dig in a little bit on many different areas.

UBI and Healthcare, Education

32:03 Emily: So, actually one follow-up question that goes maybe more back to our earlier conversation with what does this vision look like? Does the implementation of UBI come with it or depend on a revolution within healthcare and also in higher education? You know, paying for higher education.

32:21 Jim: Yeah. So, I would say healthcare comes up a lot. And in my view, UBI can only truly be successful if we actually have truly universal healthcare because it basically counts on the assumption that you can somewhat reasonably project what is the cost of living for people across the country. In our current system. If you don’t actually have universal coverage, that is impossible. I mean we see all the time, all these cases of people having insane bills for services. And as long as that continues to happen, there’s no way to actually guarantee universal financial security. And so, I see those two things as very, very complementary and part of a whole package that we should be fighting for. And education, perhaps not quite as closely coupled, but I think if we’re talking about what is beyond just financial security, what is really setting people up for longterm success, it seems obvious that we want to make that as accessible as possible. And so, a model where everyone in society has access to higher education is certainly the way to go.

Best Financial Advice for Another PhD

33:29 Emily: Gotcha. Okay. Standard question as we wrap up here that I ask all of my guests which is what is your best financial advice for another PhD? And that could be related to something that we’ve talked about in these two episodes, or it could be something entirely new.

33:44 Jim: I mean, I think it’s just like figuring out your sustainability. So, I mean, thinking about where you’ll be going with your PhD and what is your cost of living then, but just trying to set yourself up so that you’re not heading towards a cliff somewhere, which yeah, I feel like it would look very, very different depending on your specifics.

34:06 Emily: Yeah, definitely. It’s something I talk about a lot for people who are sort of in transition, right, out of graduate school, out of the postdoc into other positions, especially when they’re moving. Make sure you understand the cost of living. As you brought up earlier, you know, in San Francisco, make sure you understand the cost of living that you’re getting into and that the salary that you’ve been offered is is appropriate for that area and negotiate if that is not your initial offer. So, thank you so much for that advice. Jim, this has been a fascinating conversation, really just the tip of the iceberg on this topic, and so thank you so much for joining me.

34:38 Jim: Yeah, I really enjoyed the conversation as well.

Outtro

34:40 Emily: Listeners, thank you for joining me for this episode. Pfforphds.com/podcast is the hub for the Personal Finance for PhDs podcast. There you can find links to all the episode show notes and a form to volunteer to be interviewed. I’d love for you to check it out and get more involved. If you’ve been enjoying the podcast, please consider joining my mailing list for my behind the scenes commentary about each episode. Register at pfforphds.com/subscribe. See you in the next episode! And remember, you don’t have to have a PhD to succeed with personal finance, but it helps. The music is Stages of Awakening by Podington Bear from the free music archive and is shared under CC by NC. Podcast editing and show notes creation by Meryem Ok.

This PhD Entrepreneur Advocates for Universal Basic Income (Part 1)

May 4, 2020 by Meryem Ok

In this episode, Emily interviews Dr. Jim Pugh, the founder of ShareProgress and co-host of the Basic Income Podcast. Jim earned a PhD in computer science and subsequently worked for the Democratic National Convention and other progressive groups. He always aspired to start a business, and his post-PhD work experience inspired him to found ShareProgress, a software product and consulting service. Jim describes the evolution of his business, which now brings him sufficient income to support him in San Francisco in exchange for about 5 hours of work per week. Jim’s observations of changes in technology and the workforce while building his business and newfound time freedom drew him to investigating universal basic income.

Links Mentioned in This Episode

Teaser

00:00 Jim: As you’re doing something, you’ll see many other, adjacent great things to do as well, but that can so easily be a distraction from actually figuring out, “Alright, what is the core of this successful business going to look like?” And if you let yourself be pulled in that direction, it can really detract from your chance of building something big.

Introduction

00:25 Emily: Welcome to the Personal Finance for PhDs podcast, a higher education in personal finance. I’m your host, Dr. Emily Roberts. This is season six, episode one, and today my guest is Dr. Jim Pugh, the founder of ShareProgress and cohost of The Basic Income Podcast. Jim’s doctoral work in computer science and his experience working for the Democratic National Convention inspired him to start ShareProgress seven years ago. In this first half of our interview, we discuss the growth and evolution of his business, which now brings him sufficient income to support him in San Francisco in exchange for about five hours of work per week. Jim’s observations while building his business and newfound time-freedom drew him to investigating universal basic income. Without further ado, here’s the first part of my interview with Dr. Jim Pugh.

Will You Please Introduce Yourself Further?

01:15 Emily: I am delighted to have joining me on the podcast today, Dr. Jim Pugh. It’s a really special episode for me because Jim and I know each other in real life. He is the older brother of a dear friend of mine and my husband’s from college. And we actually had lunch a couple months ago when we were visiting and had gotten into this really interesting conversation about what Jim’s up to these days, the activism that he does. And it was just really exciting and I could see there was a definite PhD angle there, not just because Jim himself has a PhD but also because what he works on has implications for PhDs. So, we will get into all of that in just a few minutes. So, Jim, will you please take a moment and introduce yourself a little bit further to the listeners?

01:53 Jim: Yeah. Well Emily, thanks for having me on the podcast. My background brings together a few different areas. My academic background is in the sciences. I did my undergraduate and doctorate in computer science, specifically robotics, my doctorate. And following that, ended up getting involved in the political world. And so, I spent some time working on the 2008 Obama campaigns, spent a few years in D.C. after continuing political work out there. And then about six, seven years back decided to take honestly experiences on both those fronts to start my own company called ShareProgress, working primarily with political and nonprofit organizations, providing them with tools and other technical support. And then just in the last few years, I started to delve really in on the activism side of things myself and helped to start an organization that does a lot of work around universal basic income doing both advocacy around that topic and also some policy development work in that field.

What Role Did Your PhD Have in Starting Your Business?

02:58 Emily: Yeah. Super, super exciting. Thank you. Clearly, you have a lot of skills and a lot of interesting experiences that you’ve brought to bear on these most recent endeavors. So, kind of backing up slightly to the business that you started, ShareProgress. How did your PhD prepare you for ultimately starting that business? Obviously, you had some work experience after that point before you started it, but how did the PhD specifically prepare you? Or how did it not prepare you very well for that?

03:25 Jim: So, I would say the PhD itself wasn’t terribly relevant for starting that because I was really in a hard research area and was working on algorithms and models that didn’t have any clear path to monetization to turn it into a company. So, that I don’t think was terribly relevant. What was a bit more relevant is I was involved with, at the university I was working with, which is the Institute of Technology in Lausanne, Switzerland. They actually were making a pretty significant investment in cultivating entrepreneurship amongst their students, both undergraduate and graduate. And so there was a program on campus that was talking a lot about that. And so, I feel like there was some stuff I learned through experience with that going through events, and they had various activities that they would organize. And so, I felt like that it was informative in some ways, but it really was very much focused on taking the sort of research you do through your doctoral degree, through your academic work afterwards and turning that into a company. And my company that I ended up starting really didn’t resemble that much at all because that was much more informed by the political work I’d done and seeing what the needs were in that space. So, there were there aspects around “what does it look like to go through that process?” that I would say generally provided me with some guidance. But as far as the specifics, really not much at all.

Jim’s Entrepreneurship Journey

05:02 Emily: Did you have in your mind at that time that you did want to pursue entrepreneurship?

05:08 Jim: I did. That was something from I think pretty early on in college I realized was an area I was quite interested in. And when I was graduating from undergraduate, actually, I kind of had in my head either go to grad school or do a startup. I didn’t have an idea for a startup, so I said, “Well I guess it’s grad school.” But it definitely was something that I had been thinking about for awhile.

05:34 Emily: And did you initially, when you were getting involved during your PhD program with this training program for entrepreneurship, were you thinking about the possibility that you might turn your PhD work into a company? Or were you already like, “No, that’s definitely not going to happen, but this is just like for future reference?”

05:50 Jim: More the latter. Maybe there were a few moments where I considered something that was closely connected, but in general, that wasn’t where I saw opportunity. I more generally was thinking about, “Oh, I want to do something at some point. And this is an area that interests me and is just an area that’ll be helpful to know more about.”

Relevant Technical Skills Gained During PhD

06:10 Emily: Gotcha. And what about, I guess I could say, your technical chops. Did you use those in your business, or were you always hiring out for that? And then also is that something you got from your PhD, or do you think your undergraduate education was sufficient in that area?

06:23 Jim: I think there definitely was some of that from my PhD. Obviously, as an undergrad I had done a lot in that space, but I think that some of the specific technical skills and areas of expertise–and I think also just generally understanding different technological ecosystems–some of that did come through in my PhD. When I was starting my company, I very much structured it to not have put myself in the role of that technical person because I was interested in really taking on the CEO mantle in the more traditional sense. So, I had hired out for a developer to actually build out our software platform from the get-go. That said, I was being involved in various ways with the technical stuff throughout, and at different points definitely got more engaged on that front. And so, having that background definitely proved to be important and a valuable asset. And honestly, I mean I think those of us who are deeply into tech, and particularly doing software development and whatnot, we think of tech in a pretty extreme way as compared to the population in general. And so, just knowing how to work with various technical systems out there, I know it’s a leap for a lot of people not committed to that space. And so, certainly my background had equipped me well to be able to handle that sort of thing.

07:50 Emily: Yeah, I kind of see this as being a common sort of value of the PhD. You sort of prove yourself in an area, you can work very deeply, you can master something completely. And then after that, a lot of people do take a step back and allow other people to do that kind of work and do more of the management. And that’s kind of the PI model. Right? So, that sort of does apply, in a way, to what you did after. But it sounds like the actual work experience that you had after your PhD with the Obama campaign and so forth, that was what gave you the idea–right?–for what your company would ultimately be. Can you talk a little bit more about that?

Inspiration While Working for the Democratic National Convention

08:19 Jim: Yeah, so the work I was doing, to some degree on the campaign, but in particular when I was out in D.C., I was working for the Democratic National Committee at that point, and we were actually running, effectively, the continuation of the Obama campaign. It was called Organizing for America at that point. And so, my role, I was the director of digital analytics and also web development for the program. And so, it was really paying attention to/digging in on what was actually happening under the hood with all of our digital presence, our social media, our email lists, our website, and so on. And so, I got a chance to see what’s possible, what’s not, what works well, what doesn’t. And one of the observations I had was that so much of our ability to do anything, whether that was raise money, whether it was to try calls to Congress, whether it was to get people turning out in their local communities for events, it depended on us having a wide reach.

09:19 Jim: And that reach, to a large degree, came from us intentionally doing outreach to get people involved. Whether that was big publicity efforts, whether it was paid acquisition online. But then the third category being people bringing in their friends. And actually during that time period, that was really crucial for us that so much of the new people we had coming in, it wasn’t from anything we were doing in particular, it was because our existing supporters were recruiting people they knew to get involved in a campaign and whatever the moment was. And it was an area that there really had not been much investment in as far as figuring out, “Alright, well how do we facilitate, and how do we amplify this?” So, that was really the motivation for my company, which was, “Let’s build some software tools that make this more effective and easier to do.”

How to Gain a Wide-Reaching Audience

10:10 Jim: And so, basically we had a plug and play solution where organizations, as they were doing this sort of advocacy work, they could be encouraging their supporters to be reaching out to their friends through various digital social channels. So, social media, Facebook, Twitter, but also just getting people to email folks they knew and say, “Hey, I’m involved in this really important thing. Will you be involved as well?” And that’s proved very, very effective at bringing in new people, particularly in high-energy moments. And then we allowed organizations to track the analytics on what was happening there. And so they really understood what was going on and actually allowed them to do controlled testing around what sort of messaging they could give to their supporters that made them more convincing, basically, to people they knew. So, when their supporters post on Facebook they could have a couple of different headlines, a couple of different thumbnail images and the system would be able to measure, “Okay, well how effective are those different pieces of content at getting their friends to say, ‘Oh, I’m interested,’ and click through it and get involved.”

Evolution of ShareProgress

11:16 Emily: Yeah. Super scientific approach to that. Right? I’m sure your background helped with that, the design of it. Okay, so that’s around the product that you created. I think you said when you introduced yourself that this was maybe six, seven years ago that you started the company. Two years ago, you transitioned more to doing this advocacy around universal basic income. So, I’m curious about how your role within the company, and in particular the time that you put into it, evolved over that, five-ish-year period.

11:44 Jim: Yeah. So, at the start, the software that I just described, the plan was for that to be the company. That was what we were going to do. I realized relatively early on about six months in that the growth that we were seeing from that wasn’t going to allow us to sustain. And in exploring different investment strategies, the type of company I was looking to build, which very much had a social mission, wasn’t looking to make as much money as possible, as quickly as possible if that compromising that, wasn’t actually a great target for traditional investment routes with startups. And so, what I decided to do was to couple on with that a consulting arm where we would actually work with the same sorts of organizations that we were providing the software to, but a system with either data analysis work or some sort of web design development work, which is similar to what I had been doing out in D.C. prior to that.

12:42 Jim: And so, that actually ended up being the bulk of what the company did for most of its existence. We were able to find clients there. I was able to scale up our staff with that sort of work. And so, while we were doing the software, we were continuing to grow the consulting side of the company. And so, our peak was I think early 2017 we were nine people and most on the consulting side. But it was around that time I had realized–I had known pretty early on, I didn’t really want to start a consulting company. That seemed like where the path to profitability was. But around that time, my interests had started to shift to more of the advocacy work around universal basic income. And we went through some tough periods as far as expectations around business and profits and not matching reality. So, we had to do some downsizing. And so, at that point I actually decided, “This isn’t where I want to be investing my time and effort for the future. So, let’s just ramp down the consultant product company.” And at that point, our software was making enough money that I could support a much smaller staff. And so, over the course of 2017 I went through a process around that. That ended with, at the end of the year, I was having more of a skeleton crew and requiring not very much of my time in order to just keep our software running, or the clients that we had there.

Consulting as a Stage of Growth

14:20 Emily: So, I’m curious, with the evolution of adding the consulting aspect and then winding it down, are you happy that you did that, or do you think that you should have just stuck with the software product kind of throughout that whole time and come to this point where you are now maybe a little bit sooner?

14:36 Jim: Well, it honestly wasn’t an option to do exactly that because we did need the consulting early on in order to make payroll. So, it took a while for us to build up enough of a client base and the software where that was an option at all.

14:49 Emily: So, it’s a stage of growth, then.

14:51 Jim: It was a stage of growth. Whether or not I would have invested as much as I did in that, I think looking at it solely from a business perspective, I think that was probably a mistake. I think that it would have been a better approach to say, “Let’s keep focused on the software. Let’s do this as much as we need to, but let’s not really invest in growing that as the company.” Because I think that in most cases, when you’re trying to do more than one thing, you’re not going to do either of them as well. And so, that would have been the better business decision. As far as from a personal perspective, I think I certainly learned a lot through the whole process. So, I wouldn’t say it was a bad decision from that. It certainly was stressful at times, but I think that it’s hard for me to make a valuative judgment on it.

San Francisco Venture Capital (VC) Environment

15:40 Emily: Sure. I want to say for the context, for the listeners, that you live in San Francisco right now, and you mentioned living in D.C. before that. Did you start the company when you were living in San Francisco?

15:50 Jim: Yes, that’s right.

15:51 Emily: So, you’re in a very different environment than probably most of the listeners who are maybe still on academic campuses, you know, spread throughout the U.S. and other places. So, anyway, I just want to say that because you probably had a lot of exposure just from your environment in things like how to approach for VC funding, whether that’s actually a good idea for your business. You decided that the values that they’re going for are not exactly the values that you were going for. And so it wasn’t a good match there. This is actually something I’ve heard about quite a bit that people elect not to go the VC funding route for various, I guess, “vision” reasons.

16:23 Jim: Well, I should clarify that I did attempt to raise funds for the company with already knowing that there would be certain people I wouldn’t accept money from, certain types of investment that I wouldn’t be comfortable with. But, I was hoping to be able to do it in some capacity and was not successful at it. So, that was part of it. Maybe had I met the right people, those things could have looked differently. But I will say, both prior to that and since then, having observed the dynamics in that space, I see how that would be a challenge for many, many people who are attempting to do something similar. But it wasn’t as though I was equipped to know upfront, “Oh, there’s no way this is going to work.” It was very much a learning experience for me.

Current Role in the Business

17:11 Emily: Yeah, that sounds really great, actually. And you’re still living in San Francisco, so you’re still exposed to all of that stuff. But I’m curious about this decision that you said around two years ago, you wanted to focus more on the UBI stuff and you restructured the business. And now, how much time do you spend working on the business now, maybe per week or per month? And what is your role in it now, exactly?

17:32 Jim: Yeah. Well, I’m still CEO of the business, but to be honest, it probably averages about five hours a week at this point because we want to keep running, we want to keep our clients happy there. The idea is really to have it be maintaining the service rather than doing new things. And so, that just doesn’t require that much work. So, I have an employee who is, basically, like any sort of support we need to provide, is dealing with that, keeping an eye on things, and then myself overseeing things. And that allows us to keep going with that.

18:06 Emily: And to ask kind of a more pointed financial question, but you are supporting yourself entirely off of your business income for which you’re only putting in about five hours a week at this point?

18:16 Jim: That’s right, yes.

Financial Independence and Early Retirement (FIRE) Movement

18:17 Emily: Wonderful. Wonderful set up for you. So, we’ll talk about this a little bit more in the upcoming UBI conversation. But the reason I was kind of interested in your story and sharing it on the podcast is because there’s this big movement in the personal finance community called the FIRE movement, Financial Independence and Early Retirement. In season three, I released a pair of interviews with someone on that subject. And your story, while the FIRE community might not call you financially independent by their definition, a lot of what they’re going for, financial freedom, you have bought for yourself with your business, right? So, there’s a lot of overlap there between the goals of the FIRE movement and what you’ve done for yourself. So, I was really interested in having you on the podcast for that reason.

Business Advice for Early-Career PhDs

18:59 Emily: So, okay, now that we’re going to transition to sort of the universal basic income aspect of our conversation, I kind of wanted to wrap up the aspect of our conversation about the business by just asking if you had to give some advice, if another early-career PhD asked you advice around starting a business, what would you tell that person now?

Advice #1: Talk to People

19:20 Jim: I think just go and talk to a lot of people who’ve been through the process because I think part of the challenge is it does look very different in different situations. And that was something I struggled with early is thinking, “Okay, well, there’s going to be standards around this. And so did a bunch of Googling online for like, “Okay, what is the standard, whether it’s around the equity or whether it’s around other aspects of the business.” And I found some stuff but not as much as I expected. And so, I think that, if you can just talk to a lot of people who have gone through the process, you get a sense of the diversity of ways that can work. And so I think it can give you a better idea as to what the trajectories may seem to be. That was something I know I struggle a lot with, and I think may have delayed me deciding to start a business, is that it just felt too amorphous and scary. Alright, what does it look to get something like this off the ground? And in hindsight, it’s such a simpler process than so much of the work I had done before, but I think that there is that opacity and then those unknowns that make it difficult. I feel like I was not unique in having that perspective.

Advice #2: Find Your Focus

20:33 Jim: And then I think focus is another big thing that I continually struggle with frankly, but I see many, many people struggle with. There’s many great things to do and, as you’re doing something, you’ll see many other, adjacent great things to do as well, but that can so easily be a distraction from actually figuring out, “Alright, what is the core of this successful business going to look like?” And if you let yourself be pulled in that direction, it can really detract from your chance of building something big.

Commercial

21:07 Emily: Emily here, for a brief interlude. I bet you and your peers are hungry for financial information right now, especially if it’s tailored for your unique PhD experience. I offer seminars, webinars, and workshops on personal finance for early-career PhDs that can be billed as professional development or personal wellness programming. My events cover a wide range of personal finance topics or take a deep dive into the financial topics that matter most to PhDs like taxes, investing, career transitions, and frugality. If you’re interested in having me speak to your group or recommending me to a potential host, you can find more information and ways to contact me at pfforphds.com/speaking. We can absolutely find a way to get this great content to you and your peers even while social distancing. Now, back to our interview.

Should Entrepreneurs Move to San Francisco?

22:06 Emily: I’m trying to think about for someone who is, let’s say still affiliated with the university, I would imagine there are some people to talk to there, networking, especially universities that have incubators or something from launching a business out of. But I asked you before about living in San Francisco, what do you think about moving to a place like San Francisco where you can just run into other people who are on a similar path? What do you think about that idea?

22:31 Jim: I mean, I think it’s a very double-edged sword because certainly the density of that happening is a significant asset for a lot of this sort of work. And it is so expensive here that if you’re looking to hire locally, you’re gonna be paying, sometimes easily two, three, four times as much as you’d be paying, not too far away. And so, I think it’s a question of balancing those sorts of things. I mean, I think there are ways, like either if you live somewhere not too far away, where you can go into the city and have those easy conversations in-person with folks, but still be in a place where it doesn’t cost you thousands and thousands of dollars every month to pay for your rent. That could be your compromise. Or, just take the occasional trip out here. Assuming you can afford whatever the travel costs are. And then I think there are other areas where you’re starting to see better density. I don’t really have a great sense for what it actually looks like yet. And I do think that there is a cultural component to why Silicon Valley is Silicon Valley because there’s kind of a pay-it-forward mentality, pretty broadly, where people who have done well are eager to help new people coming in, which I think has made a big difference. But yeah, you get both sides of it.

Advocacy for Universal Basic Income

23:54 Emily: I see. Okay. So, now that you pay for your life based on your business, which you only work in a few hours per week now, I’m curious about this transition that you made two years ago. I mean, you said it was kind of like you became more interested in universal basic income and that movement. You then structured your life so that you didn’t have to work so much. So, I guess the question is, how has your experience of having that business and having that source of income that requires only a very small amount of work at this point or small amount of time, how did that lead you into your advocacy for universal basic income?

24:34 Jim: So, I think there are a couple of different ways that I can answer that. So, as far as what first got me interested in universal basic income, a big part of it was the process of starting my company because I had certain expectations coming in around staffing related to operations, to payroll, to HR services, and expecting that, assuming things at all got off the ground pretty quickly, I would need to be hiring at least part-time help to assist with that. And what I found is that there were all these new online services that automated a lot of that. And so, from the beginning for payroll in the company, we use Gusto. It used to be called ZenPayroll, which you have to plug in the information to start with people’s where they live, their bank account transfer information, what the unemployment insurance rate is in the state. But then every twice a month you just say, “Okay, go,” and it pays them and files their taxes and that’s it. And costs not very much money to do it. And so, that being one example of how technology is allowing us, not just to replace jobs because I think you lose something when you describe it just that way, but is A) definitely changing the way that that work is being done, and B) and this is the thing that really stood out for me, is allowing much smaller groups of people to be able to do far, far more than was true before.

Small Business is the New “Big”

26:14 Jim: Because in the past, if you wanted to start a big company, or I shouldn’t say big, I should say a company that was going to generate a lot of income and wealth, kind of inherent to the process is you would need to involve a lot of other people. And it’s far less true now. You can have a team, I mean if you look at I think, what was it, the WhatsApp team, which is like half a dozen, a dozen people who then sell a company for multiple billions of dollars. Never in human history before could something like that happen. And so I think that was an A-ha moment for me and realizing that things are already starting to and will continue to look very differently than they have in the past and we need to stop assuming that the economic solutions that have been effective before are necessarily the right ones going forward.

27:06 Emily: So, it’s not necessarily just jobs are going away, but maybe some jobs are going away, some other jobs are popping up, the people that create the companies and the software and so forth. Are you also speaking about wealth concentration?

27:20 Jim: Yeah.

27:21 Emily: Gotcha.

Changing Mindset Around Universal Basic Income

27:22 Jim: Yeah. And I think for me, that was as much of a factor as jobs are not. I think we’re used to thinking about the jobs thing, so it’s more clear why that would be problematic if we had only a requirement that 10% of the people have a job. But I think that, particularly as I’ve worked on the issue more, that piece more clearly is a big issue that I think as our systems are structured now is really incompatible with having a fully-functioning society, I would say. Anyway, so that was kind of how I first started to think about UBI, universal basic income. And I don’t even remember where I first heard about the idea. I think I read maybe some piece about the referendum that Switzerland was pursuing.

28:18 Jim: It started back in 2013. But my initial reaction was, “This seems dumb, frankly.” I was like, “Oh, this seems like an oversimplification. Just thinking you can give people money and that will solve things. And then I started to look more into it and look at the research and understanding what are the actual, both economic and psychological ramifications when you do this. And it turns out it was incredibly positive that this is something where we have, at this point, a lot of evidence that unconditional cash–people take that and use it for whatever they actually need to use it for. And that, in fact, it confers a sense of agency to people that they might not otherwise have. And that in itself is hugely beneficial because it encourages people to think more longer term in terms of sensing more responsibility for a situation, all things that are actually very valuable in sending people out for their own longterm success.

29:15 Emily: I want to leave this for part two of this interview. Where we’ll be talking less about your personal story and more about, well, maybe what you’ve been learning over the last few years. We’re going to take a step back and define universal basic income because we haven’t done that yet. So, listeners, if the next part of this conversation sounds like it’s going to be really interesting to you, please tune in next week. For the second part of the interview, we’ll be talking a lot more about universal basic income with the expert, Dr. Jim Pugh.

Outtro

29:40 Emily: Listeners, thank you for joining me for this episode. Pfforphds.com/podcast is the hub for the Personal Finance for PhDs podcast. There, you can find links to all the episode show notes and a form to volunteer to be interviewed. I’d love for you to check it out and get more involved. If you’ve been enjoying the podcast, please consider joining my mailing list for my behind-the-scenes commentary about each episode. Register at pfforphds.com/subscribe. See you in the next episode! And remember, you don’t have to have a PhD to succeed with personal finance, but it helps. The music is Stages of Awakening by Podington Bear from the free music archive and is shared under CC by NC. Podcast editing and show notes creation by Meryem Ok.

The Financial and Career Opportunities Available to National Science Foundation Graduate Research Fellows

April 20, 2020 by Meryem Ok

In this episode, Emily interviews Kelsey Wood, a National Science Foundation (NSF) Graduate Research Fellow who now teaches others how to write competitive applications for the Graduate Research Fellowship Program (GRFP). They discuss the decisions that new fellows have to make regarding when to start receiving the funding and the internship opportunities available. Kelsey also issues a warning regarding paying quarterly estimated tax and gives great insights from her course for GRFP applicants. At the end of the interview, Kelsey shares her best financial advice for current graduate students and postdocs.

Links Mentioned in This Episode:

Teaser

00:00 Kelsey: I think that a lot of times the graduate groups or the administration will attempt to get as much free labor out of graduate students as they can, but there is actually a lot of money there to pay people, so I think a lot of times grad students need to be proactive in asking for money for things like leading workshops or teaching classes, TA-ing, et cetera.

Introduction

00:26 Emily: Welcome to the Personal Finance for PhDs podcast, a higher education in personal finance. I’m your host, Dr. Emily Roberts. This is season five, episode 16, and today my guest is Kelsey Wood, a graduate student at UC Davis and National Science Foundation Graduate Research Fellow. We discuss the decisions that new NSF fellows have to make regarding when to start receiving the funding and the internship opportunities available. Kelsey also issues a warning regarding paying quarterly estimated tax. Throughout the interview, she shares her insights into how to best manage your finances as a fellowship recipient. Kelsey now teaches others how to write competitive GRFP applications, and she details some excellent strategies from the online course she developed. Without further ado, here’s my interview with Kelsey Wood.

Will You Please Introduce Yourself Further?

01:15 Emily: I am so delighted to be joined on the podcast today by Kelsey Wood. She is currently a graduate student at UC Davis, and she is also a former NSF GRFP fellow. And she’s going to be talking to us about that program and also the advice that she gives people in her course regarding applying successfully for the application. So, Kelsey, I’m so glad to have you. Welcome! Will you please tell the audience a little bit about yourself?

01:39 Kelsey: Sure. Thanks for having me on. I am a PhD student about to graduate in integrated genetics and genomics at UC Davis and I currently am studying plant pathogen interactions. I got my bachelor’s in biology from Reed College where I studied animal behavior and then I happened to get a job in the biotechnology industry working on potato disease resistance. And I really liked my time in industry, but I found that I was frustrated that I couldn’t pursue my own independent research questions. So, I realized I needed to go to graduate school.

02:14 Kelsey: And so, I applied for the NSF GRFP during my first year. Mostly due to peer pressure from a senior grad student who was a GRFP fellow, and he actually gave a workshop on the fellowship where he basically convinced everyone to apply. And I’m glad I did because I actually got it. And then after I received the fellowship, I decided take over that workshop and also encourage other people to apply and give them tips on how they can actually get it. So, I’ve offered a variation of that workshop for the last five years, and I did an online version last year. I held some free webinars that were attended by over 200 people all across the U.S., and then I also offered an intensive workshop with additional webinars, one-on-one and personalized editing services. Participants said that was really helpful in preparing their applications. And actually, out of the 10 people who submitted in the workshop, three of them got it this year and one honorable mention. So, I’m really proud of them and happy that I kind of helped people to get it.

Kelsey’s NSF GFRP Workshop Updates

03:18 Emily: That’s incredible. Oh my gosh. I would have loved to participate in something like that when I was early on in graduate school. Tell people right up front where can they go to find more information about that course?

03:27 Kelsey: Right now, the best place to probably get updates on what I’m going to be offering it–and I’ll also be posting a lot of the materials–is my Twitter. It’s @klsywd (Kelsey Wood), but without any vowels. So, K L S Y W D.

03:42 Emily: So, it sounds like you were a fellow between your second and fourth years of graduate school. Is that right?

03:49 Kelsey: Let’s see. I started the fellowship–it would have been in June, 2014–the summer before my second year. Yeah.

Major Decision Points for NSF GRFP Recipients

03:58 Emily: Okay. And so, what are the decisions? Okay, so let’s say we’re speaking to one of the people who has just found out that they received the GRF. Amazing, congratulations! But they’re faced with a few decisions either right away or during the course of their tenure. So, can you talk through–kind of give them a little preview, what are those decisions that they need to make, and what are some things they should consider as they’re making them?

When To Start Receiving the Stipend

04:23 Kelsey: Sure. So, I mean the first one is when to start receiving the fellowship stipend. So, you’re technically a fellow for five years, but you’re only receiving the stipend for three of those years and then the other two years you’re on tenure–you’re either on tenure or on reserve. Anyways, you only get paid for three years and then the other two years you just you have additional benefits that you can receive from the fellowship, but you’re not paid any longer. And you can start that at any time. What you really want to consider is potentially what other funding sources you might be encountering during graduate school. For example, there are a number of fellowships that you can get after you’ve passed your qualifying exams, which usually happen second or third year. So, if you think you’re going to be applying and getting those fellowships, it can be really good just to start the GRFP right away.

Consider Timing (and Adequate Payment) for TAships

05:14 Kelsey: And then the other fellowship will take over once your GRFP funding runs out. Some really lucky people got multiple fellowships, actually, right at the beginning. Somebody I knew got the GRFP and the Ford fellowship this year, actually. So, they need to decide which ones, what order to get those because you can’t get them both at the same time. But that’s a pretty lucky problem to have. I would say that. And then the other thing is, some people have to do TAships in order to satisfy a degree requirement. And you can’t do a 50% TAship while you’re doing the GRFP. That’s not allowed. So, you might want to maybe get that out of the way first so you can pass your qualifying exams and have that TA under the thing. What I did is I actually TA-ed for free. But in retrospect, I don’t know if I would make that same decision again because it was a lot of work, and I don’t know. I’ve kind of changed my feelings on just doing things like volunteering and for free because there actually is–I think that a lot of times the graduate groups or the administration will attempt to get as much free labor out of graduate students as they can. But there is actually a lot of money there to pay people. So, I think a lot of times grad students need to be proactive in asking for money for things like leading workshops or teaching classes, TA-ing, et cetera. So, that’s what I found. I started asking for stipends for my workshop and I got them. I started asking for stipends for TA-ing grad level classes. They weren’t offering them before, and I started to get them. So, I think in retrospect I maybe would have tried to get paid for a TAship to meet my degree requirements and then taking the GRFP.

07:09 Emily: It is kind of strange that universities have different policies around who gets paid for doing what exactly, because TA-ing–sort of similar to your situation, but–in the department that I was in, in graduate school, we had what they called, a graduation requirement to TA for two semesters, and it was not tied to our stipend. So, we were all being paid in some manner, either research assistantship or on fellowship or something, but we just had to do this TA work on top of it during a couple of semesters. So, that was the way they structured it. It wasn’t tied to our income. But in other places, of course there are some people who are TAs and that’s their stipend and that’s their funding and that’s the source of it. But then there is even another option that I’ve heard of which is essentially sort of being hired as an adjunct, as a graduate student. So, it doesn’t have to do with your base stipend. That could still come from a fellowship or research assistantship or whatever else. But if you take on an additional class as a TA or even as the lead instructor, you could be paid like an adjunct would be paid. So, different places do things different ways.

Check with Your Advisor About Research Grant Cycles

08:11 Emily: But I think to your original point about deciding, “Okay, when do you want to be paid for these three years when you’re in those three years of having the GRF?” You said that you should think about, “Are you going to be applying for different kinds of fellowships post-quals or post-prelims? Are you going to need this TA thing?” You could potentially get it out of the way first and have your funding come from there, initially. I would also want to throw in there, maybe ask your advisor about research grants, and are they at the end of a grant cycle, the beginning of a grant cycle? Because that could also play into it. You don’t want to take the fellowship when your PI has tons of money and then, you know, three years later, maybe there is no funding there for you. So, that’s a potential risk too. So, it’s just kind of being open about what are all these financial factors within your department, within your group, that could play into this.

09:03 Kelsey: Yeah. And actually, that’s a really good point. Because for a lot of people, getting the GRFP actually influences what lab they can join because you’re coming in with your own funding. So, you might be able to join a lab that you wouldn’t have been able to join otherwise. And in that case, you’d probably want to start using your funding right away. And then, you know, you can essentially help your PI get other grants that will take over once the funding runs out. So, that’s a big benefit.

Are You Listed as a Dependent on Your Parents’ Tax Return?

09:33 Emily: I wanted to add one more point. It’s tax season right now. So, I’m thinking a lot about taxes. And so, this weird thing happens with fellowship funding when you’re under the age of 24. I don’t know how old you were when you first started, were you under 24?

09:48 Kelsey: No, I don’t think so.

09:49 Emily: Okay. Yeah. Because you had had at least one year of work experience. But if you’re starting when you’re 22 or 23, anytime that you have fellowship income in a year when you’re age 23 or younger, some weird stuff can happen with your tax return. Namely, your parents might be able to have more of a claim on you as a potential dependent on their tax return, which is not good for you if it turns out that way. And secondly, you might be hit with this weird high tax called the “Kiddie Tax.”

10:16 Emily: And so, I don’t want to go into all that right now, but if you go to my website, pfforphds.com/tax, there are articles there about both of these issues. But my point is just when you have fellowship income and you’re under the age of 24, sometimes it can have these weird effects of making you pay a lot more in tax than you would normally if you were over the age of 24. So, to me that’s just another factor that I want to throw in there of, “Hey, if you’re under the age of 24, maybe consider delaying a year until you actually turn 24, and then take the fellowship if your alternative is having a research assistantship instead, which is W2 income, which is treated somewhat differently tax-wise. So, more details about that if you want to talk with me about it or read about it more, but I’ll just throw that in there for those of you on the younger side.

25% TAships Possible During GRFP

11:00 Kelsey: That’s a really good point. Oh, and I actually thought of one more thing regarding TAships, which I think a lot of people don’t know–or I didn’t realize at first–is that it usually is possible to get a 25% TAship while getting the GRFP. So, that might be an option if that will satisfy your degree requirement. And the other benefit is that you actually get paid on top of the GRFP additional money for the 25% TAship, and that’s allowed within the GRFP rules. So, it’s just something to consider. I did that for one quarter, and it was really nice.

Financial and Career Opportunities for GRFP Recipients

11:34 Emily: Yeah, I love hearing all of these different ideas. Okay. So again, speaking with a new fellowship recipient, what are some of the financial and career opportunities that come along with receiving the fellowship?

11:46 Kelsey: Well, probably the biggest one is just the fact that the stipend is a lot higher than most standard stipends offered for grad students. And so, that makes a really big difference to be able to afford cost of living, which has really gone up in a lot of places, especially in California. I’m sure other places as well. And then another benefit for your career is that winning one fellowship usually leads to winning additional fellowships and awards. And I think one reason for this is that the reviewers look at your CV and they’re like impressed that you have the GRFP so they are more likely to give you these other awards. And then the other reason is that I think that just the practice of writing the fellowship in grants, you become better and better at it. And so you’re able to write more convincing applications.

12:35 Kelsey: So, for me personally, after I got the GRFP, I won research funds from UC Davis. I got like three or four travel awards for conferences. I got the USDA predoctoral fellowship. And then I also applied for a Dean’s award for mentorship and got that. And I’m pretty sure the GRFP helped me a lot in that. And also writing these and teaching classes on fellowship writing probably helped me also become a lot more convincing. So, that’s a huge benefit for your career.

Get the Snowball Rolling, Start Early

13:05 Emily: I’ll actually add in there that I think it makes a ton of sense, like what you’re doing with your course, or the students in your course, it makes a ton of sense to focus and put so much effort into these really early funding applications like before you enter graduate school in your first, maybe second year of graduate school. You don’t have to say, “Okay, this is going to be my bar for every application I’ll ever do.” But as you said, if you can get that snowball rolling of receiving awards right away in the start, it does make the rest of it easier and is very impressive. It’s a wonderful fellowship to win. So, I’ll just say, go take Kelsey’s course. Or somebody else’s. Just get these resources and make sure that you are putting as much effort as you possibly can into these early applications. And like you said, the skill of writing the application itself, that is something that carries over into the future. So, yeah, when you have your time before you’re deep into your research and you’re still doing your classes or whatever, make time for this. Make it almost like a course in your schedule in that semester that you’re applying. Because it really is worthwhile to put in the effort.

14:08 Kelsey: Yeah. And a lot of people don’t want to apply, for example, because they just don’t think they’re going to get it, for various reasons. And I encourage them just to do it anyways as an exercise. And usually by the end of it, I always ask my students during the course evaluation if they thought that the class was worth it, even if they don’t get the fellowship. And like 95% of them say yes, just because it’s the skill, it’s writing about your research. A lot of times if you’re actually writing about your real research, you can use that GRFP application in other grants or your qualifying exams, which is really useful. So yeah, definitely a good skill to get and to get early. And then if you get it, like you said, it’s just a snowball effect.

Internship and International Travel Opportunities

14:54 Kelsey: I was going to mention just the internship and the international travel opportunities that GRFP fellows are able to apply for. So, I didn’t actually apply to either of these, but I have known people who have done the Graduate Research Opportunities Worldwide, the GROW program, and that just allows you to do like three to six months research abroad. You identify a host in another country and then you apply for it. And I heard it has around like a 50% acceptance rate, and they fully fund your travel and living expenses abroad. So, it’s just a nice way to kind of get some international experience, maybe learn a new technique, or use some instrumentation that’s not available at your home lab. And it’s just another fellowship you can add to your CV.

15:49 Emily: I’m also thinking that that’s just an incredible thing to be able to talk about in future job interviews, or whatever. Just having a different kind of experience that broke up graduate school a little bit. Expanding your network, you know, seeing things from another perspective. It’s in the name, right? It’s a real growth opportunity.

Even Without the GRFP, Talk to Your PI About Collaborations

16:08 Kelsey: And I mean, something to consider too is even if you don’t have the GRFP, if your PI does have enough funding, this is something you could probably set up on your own basically doing research in a collaborator’s lab internationally or in the U.S. So, I think it’s something to consider just to diversify the experience that you get and you can talk to your PI about it and it might be something they go for.

16:34 Emily: Yeah. I know actually one of my labmates while I was in graduate school did the Whitaker Fellowship. I don’t know how subject matter-specific that is, but he was able to spend nine months in East Asia. And yeah, I think it was a great experience.

16:48 Kelsey: Yeah. The NSF has another one too that I think is open to all, not just GRFP fellows, that’s just a travel abroad or research abroad fellowship. There are other ones out there too. So, it’s definitely something to look out for and apply for.

17:03 Emily: Okay. So, that was the GROW fellowship, but there’s another internship program, right?

17:07 Kelsey: Yeah. So, there’s the GRIP program. So, it’s the Graduate Research Internship Program, and that one you do research at a federal agency. I don’t know all the ones, but I know like you can do research in the Smithsonian for example, any of the agencies, basically the governmental agencies.

17:28 Emily: That also sounds like an incredible career opportunity.

17:32 Kelsey: Especially if you want to go into government research. You know, I think that nowadays more and more graduate students are realizing that the academic path of being a professor–there are so few opportunities for that and so many graduate students trying to get those, that a lot of people are considering alternative career paths like industry or government jobs. I had a lot of people who took my class who really wanted their end goal to be to work for a governmental agency and do research in that respect. And actually the NSF really encourages that for GRP applicants. So, I tell people, if that’s their career goal, to write about that in their application.

Timing of Internship Programs During Fellowship

18:16 Emily: Just to add on to that, I think having outside work experience before you actually finish your PhD is incredible for finding whatever your next job is. Even if you decide to stay within academia. Again, it gives you multiple perspectives, broader network. But a question I have about the internship programs, is that something that you have to do during your funded years or is that something you can still do on the remaining two years?

18:39 Kelsey: Yeah, that’s a good question. So, both the international program–the GROW program–and the internship program can be done while you’re on reserve. So, while you’re not receiving the stipend. So, it has to be done within the five-year period of when you first start the fellowship. But yeah, that’s really one of the benefits. And I think the GROW is really something you’d probably want to do towards the end of your graduate career–probably both programs–because one, it’s additional funding? So, maybe your GRFP funding has run out and now you can get some more funding for your travel and living expenses.

Design a Custom Internship

19:16 Kelsey: And then the other thing is that you really are probably better able to identify a lab or a governmental agency that would be a right fit for your research at that point. And actually something else regarding internships is, you know, there was a program at UC Davis that’s like the biotechnology program. It’s like a degree, an “emphasis,” and they require that you do an internship as part of the emphasis. But one thing I realized is, even if you’re not in a program like that or even if you’re not a GRFP fellow, you can a lot of times arrange an internship in industry towards the end of your graduate career. Potentially, the company will fund you to do that, too. And it can be a really good chance to explore these career opportunities.

20:07 Kelsey: A lot of times, if you end up doing a good job, the company will be really excited to hire you and it kind of lets you trial industry or trial a company and maybe contribute something else to your research, too. So, I just have realized that a lot of times you can kind of design your own programs. Obviously, you want your advisor to be on board with this, but a lot of times, especially if you can get funding from the company, then they’re going to be very happy about that and they also want to see you grow in your career. So, I think that’s something that people should consider. Even if you’re not a fellow or even if you don’t have an official program, you can kind of craft your own internships during graduate school.

20:51 Emily: Yeah, I totally agree. I think it’s one of the most powerful things you can do for your career, prior to finishing your PhD, while you know you have something to go back to after the summer ends, or whatever. I actually did a science policy fellowship that was three months, the Christine Mirzayan policy fellowship. It’s at the National Academies. And I did it after I finished my PhD. I applied basically around the same time that I was defending, but it’s open to current graduate students as well. In retrospect, sort of like you, I wish I had done it while I was still in my program and I think it would have informed some of the decisions that I made as I was finishing up. So, internships, great for everyone. I know not everyone thinks that internships are for them. I’m from an engineering field, so it’s sort of more normal to think about doing an internship. And of course in computer science or similar fields like that. But I think it’s expanding and it should expand more to other disciplines where it hasn’t been a traditional part of the PhD path.

Commercial

21:50 Emily: Hey social distancers, Emily here. I hope you’re doing okay. It took a few weeks, but I think I have my bearings about me in my new normal. There is a lot of uncertainty and fear right now about our public and personal health and our economy. I would like to help you feel more secure in your personal finances and plan and prepare for whatever financial future may come. You can schedule a free 15-minute call with me at pfforphds.com/coaching to determine if financial coaching with me is right for you at this time. I hope you will reach out, if only to speak with someone new for a few minutes. Take care. Now, back to our interview.

Financial Advice for Fellowship Recipients

22:36 Emily: So, let’s broaden this line of questioning a little bit. Not just for people who have just received the NSF GRFP, but people who have received it in previous years who are still receiving that higher stipend. And maybe other people who’ve received outside fellowships that also have some stipend augmentation based on that. What’s your financial advice for people who have received one of these lucrative outside fellowships?

File Estimated Quarterly Taxes (NOT Yearly)

23:00 Kelsey: Yeah, so I think the biggest pieces of advice I have are regarding taxes and savings. And so, the thing you should do immediately is start to file your taxes quarterly instead of yearly. And you can estimate how much taxes you’re going to have to pay quarterly so you can start to save up. My personal sob story is that I did not do this the first year and I ended up filing my taxes and I owed about $5,000, which I didn’t have saved up. So, I ended up having to do a payment plan with the IRS which charges interest, actually quite a bit of interest. So, I ended up having to pay way more in taxes than I would have if I had just started filing quarterly. So, do that right away. I know taxes are not fun, but it’s actually not too hard to calculate if you’re only getting the stipend income, and that’s way better than having to owe it.

23:56 Emily: Actually, let me pause there because this is one of my big areas, right? It’s tax for fellowship recipients. So, was that $5,000 just the IRS or was that split between California and federal?

24:08 Kelsey: Oh, yeah, it was California and federal, split.

24:10 Emily: Okay. That’s within the more reasonable realm. Okay. Yeah, definitely. I mean I’ve actually had, I think, two other people interviewed on the podcast who have also set up payment plans with the IRS based on this exact same situation. So, this is not at all uncommon, and it’s one of my big areas of focus is to get this information in front of new fellowship recipients. No longer is income tax–this is the case at almost all universities–no longer is income tax going to be automatically taken out of your paychecks. It’s something you now have to take responsibility for, like you were just saying.

Personal Finance for PhDs Tax Center

24:43 Emily: So, most likely you are going to be required to pay quarterly estimated tax. And I have a ton of materials about this. Again, if you go to pfforphds.com/tax there’s an article there. And in particular, I have actually a workshop for people in just this exact situation. If you go to pfforphds.com/qetax for quarterly estimated tax, it will forward you to my most recent workshop. And probably similar to yours, Kelsey, I have prerecorded videos for that, and I also do live Q&A calls to help people with questions as they come up through tax season. So, just because of when we’re recording this though, I want to add in that part of the response to the coronavirus crisis actually has been to delay the first, like the Q1 payment for 2020. So, just like with your annual tax return, right now, this year in 2020, it’s no longer April 15th, but rather it’s July 15th.

25:34 Emily: So, for those fellows out there, you have a little bit extra time to figure out what’s going on in 2020 regarding your quarterly estimated tax and making those payments. So, the first payment as of this recording is actually due [July] 15th, which is the quarter two payment. But yeah, totally a common story, like you were just saying, Kelsey, is just to not realize the change that had gone on with your income tax and catching up with it when you actually file your annual return and realizing, “Gosh, now I have all this money that I owe to the IRS.” So, how did that payment plan go for you? Like was the increase in stipend more manageable, or what were your tips around saving I guess?

Start Saving Immediately

26:11 Kelsey: Yeah, so I think I’m still paying off some of my taxes monthly for that. So, anyway, just do it ahead of time and you won’t have to worry about it. And then in terms of saving, the other thing is that, because the GRFP stipend is a lot higher than the normal grad student stipend, you can kind of get used to a certain style of living. Like you’re able to go out to eat more or buy more expensive groceries. And then as soon as the stipend stops, it can be kind of a shock. So, what I’d advise doing is actually just start saving almost immediately. And I use automatic monthly withdrawals to a mutual fund. And the benefit there is I don’t see the money. Like it’s just automatic.

27:02 Kelsey: The savings are out of sight, out of mind. And then when I actually really need it I can go and be like, “Okay, here’s how much I have.” And I’ve done that a few times. I used that to fund a vacation to Europe. And so I advise just like setting something up right away and make sure you can’t see the money. Save up for when the GRFP ends, and also just because you have all this extra money that you wouldn’t be getting otherwise, so you might as well save part of it and not just spend it all.

27:33 Emily: Yeah, I definitely echo what you’re saying. And I think especially where you’re living, it’s a high cost of living area. It’s probably already challenging to live just on that GRFP stipend and it’s certainly less than we’d be making if you were having a regular job. But, think about your peers who are somehow probably managing to survive, hopefully without debt, on that lower stipend level and see if you can maybe keep your fixed expenses, like your housing, your transportation, at that lower level, so that if your income does drop after the fellowship ends, you don’t have to move or you don’t have to sell your car. Or you can adjust the groceries and adjust the restaurant spending. And it’s much easier and more palatable than having to go through those more major upheavals. So, I totally agree with what you’re saying.

Stipend Negotiations and Bonuses for Fellowship Recipients

28:19 Emily: So, something I know that some fellowship recipients do–and it sounds like maybe you didn’t or maybe it wasn’t possible for you–is that once they know that they’re receiving the fellowship, they actually negotiate to have their stipend stay at that fellowship level. Even after it ends, instead of going back down to the baseline level. Or, alternatively, sometimes programs give out one-time bonuses to fellowship winners. Have you heard about that or have any experience in that area?

28:47 Kelsey: It’s something I thought about asking my PI, because after the fellowship ended, I was struggling a little bit, financially. I ended up doing the 25% TAship to recover that income. But I do think that, I mean it’s really going to depend on your PI and their sources of funding, but it is something that is possible, potentially.

29:15 Emily: Yeah. I think it’s kind of a “no harm in asking” situation. And actually, if you happen to receive this fellowship when you’re not yet committed to a program, so prior to starting your first year of graduate school, that is something I would take to every program that you’re heavily, heavily considering, saying, “Okay, I got this fellowship. Can you augment, can you extend the guarantee?” Like what more negotiation room is there now that you’re bringing in all this money for them, right?

29:46 Kelsey: I mean, exactly. You’re bringing in just about a hundred thousand in your stipend dollars alone, not to mention tuition and fees. So, it is pretty lucrative. It’s lucrative for a program and a lab to want to accept you because you’re coming in with all this money and you just asking like, “Oh hey, can I get an extra $5,000 a year?” When you’re bringing in $100,000, it’s really still a pretty good deal for them. So, I definitely encourage people to do it. I’d love to hear if anyone is successful at this.

Details on Kelsey’s NSF GRFP Course

30:17 Emily: Yeah, I always want to hear negotiation stories. Absolutely. Email or tweet me those. So, let’s hear more about your course and the content that you create there. You said the best place to find out more about that is your Twitter, could you repeat your handle?

30:34 Kelsey: Sure. It’s @ K L S Y W D (@klsywd). So, it’s my name without any vowels. It’s pronounced Kelsey Wood.

30:41 Emily: So, tell us a little bit more about the structure of the course. I know you’ve mentioned this a little bit upfront, but last year for example, you ran it between what month and what month and you know, what goes on in that time period?

30:53 Kelsey: Yeah, so one of my biggest pieces of advice for the GRFP is to start it early. So, it’s due in like October now. And if you’re on the quarter system, like UC Davis, classes start at the end of September. So, it’s basically due during the first month of classes and it’s also your first month of grad school. So, you’re either just starting in a lab or doing rotations, and that month is just crazy. So, if you don’t start the fellowship early, it’s going to be really hard to do it all and do it well. So, my course actually starts in August, so then you have kind of a full month to start to think about stuff, outline it.

31:35 Kelsey: And then you have September to really refine it before classes start. And then we do all the final drafting and editing in October. So yeah, my course is a three-month thing. And that’s one of the benefits of doing it online. I wasn’t able to start in August at UC Davis because not everyone had come to Davis yet because it was still summer. So, doing it online, I was able to get people just at least starting to think about it and getting ideas rolling. And so, what I do is I had four different webinars on different topics. So, I covered the two NSF criteria, which are intellectual merit and broader impacts. Basically like a full 45-minute webinar on both of those topics. And I think that’s really important because especially the broader impacts one is really confusing to a lot of people.

Focus on Broader Impacts, Know Your Audience

32:27 Kelsey: It’s something that you pretty much probably have never heard of until the NSF fellowship. And it’s a really important part of that fellowship, too. So, I really emphasize the importance of that. And also, it’s really important that you get broader impacts experience before you apply. And if you’re starting the application early or even people who are listening to this, thinking about applying for next year, should basically right now find some activity that you can do that you can write about in your broader impacts section. So, volunteering, outreach, teaching, et cetera. Because if you don’t have any experience, you’re not going to get it. And then I also do a webinar on writing tips. The biggest one that I’ve learned in all my years of writing is probably just like really knowing your audience and writing for them.

33:21 Kelsey: So, you really want to just imagine who’s reading it and who they want to fund, and you really want to just be that person that they want to fund. I help people do that in their essays. Something else that’s really interesting, and it actually might be a regional difference, is in the way that you want to sell yourself in these essays. So, a lot of people are really understated or humble, and I’m like, “No, you have got to really come off like a rock star and show off all the awesome things that you’ve done.” And apparently, somebody told me that that’s actually frowned upon in the UK or in Europe to do that in your grants.

34:10 Kelsey: But in the U.S., at least, it seems to be more popular or more of a winning technique. And so, the other part of the course is that I read people’s essays and give them a ton of tips and just help them write it and rewrite it to just have a better chance of getting the fellowship. And I also set up peer editing groups, too. And I do think that that’s something you want to do, if you take a class or not. Just find somebody who, especially who’s experienced with the NSF, and have them read your proposal and give you feedback. So, for example, when I applied, I was really lucky to have a former NSF reviewer read my application and give me feedback. And he pretty much destroyed my initial draft. It was red everywhere and he’s like, “Get to the point. Be more concise. This is too vague.” And so, I kind of have internalized his feedback and I use that now when I’m editing people’s essays.

35:13 Emily: Yeah, that sounds incredible. Thanks so much for telling us about the course. And were there any other tips you wanted to add in? I know you just gave several already, but any others?

35:23 Kelsey: I guess the last one would also just be to read a lot of example essays, too, for inspiration. And there are a lot out there. I have my own personal collection. I actually have quite a few in my personal collection that I share with people in the course. And then the ones that are okay to share publicly, I’ll probably be posting on my Twitter or on my website once I get that up.

Best Financial Advice for Early-Career PhDs

35:46 Emily: Yeah, that sounds great. Well, Kelsey, thank you so much for joining me for the interview today. And final question that I ask of all my guests is what is your best financial advice for another early-career PhD?

35:59 Kelsey: Well, I think the number one is to apply for fellowships and you know, cast a wide net and apply for anything that you’re eligible for, pretty much. I think it’s totally worth it. I have a quote that’s from that previous grad student who helped with the NSF workshop, which is, “You win 0% of the fellowships you don’t apply for.” So, I think it’s worth it. You can do it. And I guess the other thing is that I think it is important to consider the cost of living and the stipend amount when you are choosing a graduate school. I don’t know. This wasn’t really made apparent to me. And you know, you’re just like, “Oh no, you just choose the best school or the best lab.” But there is kind of a range in stipends across the U.S. and cost of living. So, I think it’s something to really consider because your finances are a part of your happiness in grad school. So, apply for fellowships, and consider that.

36:58 Emily: Totally, totally concur. Absolutely. Well, Kelsey, thank you so much for joining me today and telling us more about these decisions that come up for GRFP recipients and your own experience and about this fabulous course. Thank you.

37:10 Kelsey: Yeah. Thank you.

Outtro

37:12 Emily: Listeners, thank you for joining me for this episode. Pfforphds.com/podcast is the hub for the Personal Finance for PhDs podcast. There, you can find links to all the episode show notes and a form to volunteer to be interviewed. I’d love for you to check it out and get more involved. If you’ve been enjoying the podcast, please consider joining my mailing list for my behind-the-scenes commentary about each episode. Register at pfforphds.com/subscribe. See you in the next episode! And remember, you don’t have to have a PhD to succeed with personal finance, but it helps. The music is Stages of Awakening by Podington Bear from the free music archive and is shared under CC by NC. Podcast editing and show notes creation by Meryem Ok.

Insights from the Bargaining Table with a Graduate Student Union Leader

March 2, 2020 by Meryem Ok

In this episode, Emily interviews Mary Bugbee, a fourth-year PhD student in anthropology at the University of Connecticut. Mary tells the story of the grad student union at UConn, from its inception in 2013 to through the start of the second and current contract. Mary served on the bargaining committee for the second contract and gives her insights from the bargaining table into how the university views graduate student labor. She tells graduate students what they can do to support higher pay and better benefits at unionized and nonunionized universities. Mary also shares how her personal finances have benefitted from the strong union contract and her excellent financial advice for other early-career PhDs.

Links Mentioned in the Episode

Teaser

00:00 Mary: The economic model of universities is exploitative. We’re cheap labor. A lot of us aren’t going to get tenure-track jobs. It’s designed this way for a reason. The problem is structural. Sometimes it’s not individual.

Intro

00:19 Emily: Welcome to the Personal Finance for PhDs podcast, a higher education in personal finance. I’m your host, Dr. Emily Roberts. This is season five, episode nine, and today my guest is Mary Bugbee, a fourth-year PhD student in Anthropology at the University of Connecticut. Mary tells the story of the grad student union at UConn, from its inception in 2013 through the start of the second and current contract for which she served on the bargaining committee. She gives her insights from the bargaining table into how the university views graduate student labor and what graduate students at unionized and non-unionized universities can do to support higher pay and better benefits. Mary also shares how her personal finances have benefited from the strong union contract and her excellent financial advice for other early-career PhDs. Without further ado, here’s my interview with Mary Bugbee.

Will You Please Introduce Yourself Further?

01:13 Emily: I have joining me on the podcast today, Mary Bugbee. She is a graduate student at the University of Connecticut, and she has been very active within their graduate student union. So, we’re going to hear a lot more about how that works from Mary. So, please, Mary, take a moment to introduce yourself to us.

01:29 Mary: Hi, and thanks for having me on this podcast. I am very passionate about unionization and that’s what I’ll be talking about. So, my name is Mary Bugbee. I’m a fourth-year PhD student at the University of Connecticut in Anthropology. I’ve also served as the vice president for the graduate employee union, UAW Local 6950, and then served as the president. And during that time, I also served on our bargaining committee for our second contract.

UConn Grad Student Union: First Contract

01:59 Emily: Yeah. So, when you started graduate school, which it sounds like that was during the first contract, what was the status at that point? What was in your offer letter for your stipend and the benefits? What was that first contract including?

02:13 Mary: Okay, so I was really lucky. I came into a university that had a unionized workforce of graduate employees. So, my benefits were really good starting off. I started in the fall of 2016, which was the second year of the first contract that they ever had. I was funded fully, which means for 20 hours a week, split between research assistantship and teaching assistantship. And that was $22,000 about for my nine-month academic year stipend. So, the University of Connecticut, in the Storrs campus, it’s not typical to have 12-month funding. People are usually funded at nine months, and then some people get additional funding. I also had a really good health insurance package. I pay $200 a year, I have no deductible, and my copays are $15, $20, depending on where I go. And it’s awesome.

03:14 Emily: That does sound really good. And you came in as a master’s student, is that right?

03:18 Mary: Yeah, so I got my master’s on my way to the PhD, and the way our stipends are set up is there’s a beginner’s level, a master’s level, and then the PhD candidate level. So, if I had come in with a master’s degree, I would have been making more than $22K.

03:34 Emily: Okay. And was that all part of the contract as well? That sort of graduated stipend level?

03:38 Mary: I believe the graduated stipend level was something in place before the contract, but it was maintained with what they negotiated. Instead of just having the same amounts for like many years in a row, we got raises from year to year. So, that was where the improvement was. So, not just a raise when you get to the next level, but also just a raise each year to help keep up with the cost of living.

Summer Research Fellowship

04:03 Emily: Yeah. So, one more question kind of about what was going on when you came in. You mentioned that your offer didn’t include summer funding. So, for you in particular, did you end up getting summer funding some of the years? Or how has that worked out in the years you’ve been there?

04:16 Mary: Yeah, so my department, the Anthropology Department, has something called a summer research fellowship. It’s basically guaranteed for first and second-year students to do exploratory fieldwork or language training during the summer. So, I had that my first summer and my second summer, which helped a lot. It still only covered my costs in the field, so I had to have savings to pay certain bills when I left for the summer. And since I was in Mexico, I couldn’t work. I didn’t really have any income. So, it was really important that I was able to save during the year. I did have side gigs.

Summer Side Hustling and Housing

04:54 Emily: Okay. Yeah, I was just about to say. So, the $22,000 in that first year that you received over a nine-month period–was that basically just paying for your living expenses during that nine-month period and then you had to side hustle to do the summer self-funding or how did that end up working out?

05:09 Mary: So, I’ve always had a side hustle or two. At one point I had technically four, but I’d say I just had one extra side hustle that first year. I got some per diem hours working as an administrative assistant at a local hospital. It was something I had before I started graduate school. So, I was lucky. I would say the stipend alone was enough to pay my living expenses. I lived with my partner at the time, a one-bedroom apartment. We split rent, although he paid a higher percentage of the rent. Had I lived with just a regular roommate and had a two-bedroom apartment. I think things would have been a lot tighter, because Connecticut is an expensive state. But, I never had a month where I was broke, and I was always able to put a little bit of money away. I’d say I earned maybe a hundred to 200 extra dollars a month with my side hustle.

Was Side Hustling Allowed Under the Union Contract?

06:04 Emily: Okay. I’m always very curious when people talk about side hustles. Is side hustling officially allowed under that first union contract? Or is it something that’s not really addressed?

06:14 Mary: So, the union contract has nothing about whether or not we can have outside employment. The graduate school at UConn actually governs that. And officially, you’re not allowed to work beyond the 20 hours a week in your offer letter. However, with advisor approval, you can. It really depends on your program and your advisor. I’m very fortunate to have a program and an advisor who has been completely okay with me having side hustles as long as I was meeting the academic criteria and progress goals. But some people at the University of Connecticut do not have the same luxury, and their advisors or their programs will give them crap about it if they find out. So, it’s really dependent on where you are in the university.

07:06 Emily: Yeah, that’s unfortunate. I definitely come down on the side of, if you’re doing what’s expected of you in your role as a graduate student, your advisor or whoever should not care what you’re doing outside of that, whether it’s a side hustle, whether it’s other stuff in your personal life. Especially when you’re being paid a stipend, like you were just saying, that’s like maybe adequate, sort of. Really, if you’re going to be making the choice between, “Okay I’m going to side hustle a little bit or I’m going to experience a bunch of financial stress,” and that can affect your work too. Thanks for adding that detail. So, how did you first get involved with the union and what was your role? I mean, you already mentioned a little bit what your roles were, but what were you actually doing?

Mary’s Role in the Grad Student Union

07:42 Mary: So, my research area is actually health policy. And I know a lot about health insurance. So, when I knew the contract was going to be reopened for bargaining–that was in 2017–I decided to get more involved. I wanted to be part of the bargaining committee and help with issues around health insurance. And then from there, I became super involved. I ended up becoming the vice president as well as a member of the bargaining committee. And from there, I’ve just been actively involved ever since. I did resign from the presidency this past May. So, I was the president for the past academic year, but I really need to focus on my research now. So, I’ve moved on and now I’m just a rank and file member and a volunteer. So, that feels good.

08:33 Emily: Yeah. But still doing outreach like this podcast.

08:36 Mary: Yes.

History of the UConn Grad Student Union

08:37 Emily: Okay. So, can you tell me a bit more about maybe the history of the union? When did it first come into place, and how did that work?

08:45 Mary: Yeah. So, from what I understand, there were multiple attempts at unionizing at the University of Connecticut over the years, but it culminated in 2013 when the university decided to just unilaterally change the health plan that the GAs were on to a higher deductible and just a more limited coverage network. So, not only was it more expensive, but it disrupted care for people. There were people who had to switch therapists or primary care physicians because they were no longer in-network. And that was the straw that broke the camel’s back. People realized that, without having a collective bargaining agreement, without having a union, the university could do that sort of thing at will, and they didn’t like being in that vulnerable situation. And on top of that, they were increasing student fees every semester. Wages were stagnant, the workload was becoming an issue. So, there were a lot of factors, but I’d say it was the health insurance. That was the last straw.

Health Insurance as a Common Catalyst for Unionization

09:46 Emily: That’s actually a little bit similar to the story that I heard out of the University of Missouri where–I think this was as a result of the passage of the Affordable Care Act–the university decided to stop offering health insurance or stop making it an included benefit. And so that again, as you were just saying was–and they did this like the day before the start of the coverage period. So, people literally we’re going to be without insurance the next day and finding out–I mean, that’s an extreme scenario. And so that again, as you were just saying, that was the catalyst there for a unionization movement. And I don’t know how quickly they got that into place, but yeah, please continue on with what was happening at UConn.

10:27 Mary: Yeah. So, from there there was a lot of organizing and these were mostly volunteers–or all volunteers at that stage–of people, graduate students who just decided that they needed a union. So, they got buy-in from other groups on campus, including faculty, the Graduate Student Senate. By November, December, 2013, they had selected United Auto Workers for their parent union. I think they had talked with a few others, but they decided UAW was probably their best bet. They have a really good track record in higher education.

11:00 Emily: As I understand, UAW does most, or virtually all, of the grad student unions, is that right?

UConn Breaks Higher Ed Record for Fastest Card Drive

11:07 Mary: I think there are a few AFL grad employee unions, but yeah, UAW I’d say might have the monopoly in higher education graduate employees and postdocs. So, from there, we had the card drive in February 2014 and we actually broke a record at UConn for fastest card drive in higher education organizing history. By early March, over 50% of graduate assistants had said, “Yes, we want a union. And yes, we want to be a member of this union.” By April it was recognized by the university and certified with the state labor board. Bargaining kind of got off on a bad foot. That June, the university decided they didn’t want to do summer bargaining. But they ended up bargaining from August, 2014 to April, 2015, and the first contract was in place by July 1st, 2015. And it was a three-year contract.

12:07 Emily: I see. So, really the initial phase of, “We want to get this in place, let’s get the buy-in.” That happened relatively quickly. But then the bargaining–I’m learning about this for the first time–the bargaining took quite a bit of time.

Bargaining: A Long, Arduous Process

12:19 Mary: Yeah. So, the process of bargaining can be very frustrating. The first contract is always going to take longer because you have to write everything from scratch. So, I was on the bargaining committee for the second contract. So, if you’re a member of the executive board you’re automatically on the bargaining committee. But there are also elections for district representatives so that there’s representation across the graduate assistant community. And then usually there’s a survey that’s done prior to bargaining, or there always is in our case, to elicit what people’s priorities are–to see what matters most to them. And then that’s used to define the bargaining goals. And the membership ratifies that and then bargaining can begin with the university. So, we started the second contract October, 2017 and we bargained until April, 2018. And it was a long, arduous process.

13:18 Emily: So, can you give me some examples of points that people brought up to you during the survey process that they wanted to have on the table for bargaining? Maybe some that ended up in the final contract and some that didn’t.

Issues: Health/Vision Insurance, Parking, Student Fees

13:29 Mary: Yeah, so everyone has always wanted vision insurance. We haven’t gotten that in either of our contracts, unfortunately. But you know, a lot of us wear glasses and contacts, so that gets brought up a lot. Health insurance–people want to keep the health insurance we had. People want wages. Parking is a big issue at UConn. It’s very frustrating. You have to pay to park and then you might pay for a permit and you still won’t be able to find a spot at certain times of day. I understand this is probably a problem at a lot of universities, but it always comes up with our members. But yeah, the student fees are another issue because each semester before we start, before we’ve gotten our first paycheck, we have to pay fees. And my understanding is that before the union was in place, fees were close to a thousand dollars a semester. Now they’re like $600, $700, and that’s with the university increasing fees during that time. So, we’ve kept it pretty low. So, the financial stuff is always big, but there’s other stuff too. And sexual harassment and discrimination protections, those are very important to our members as well.

Active Membership is the Key to a Bargaining Committee

14:41 Emily: I see. So, can you tell me a little bit more about how the bargaining committee works? You just said it was a six-month process. It’s arduous. What are some details there?

14:49 Mary: So you have the team–the negotiating team–and for us, our lead negotiator was an international rep from the UAW because none of us really have experience in bargaining. So, that’s one of the reasons you go with a parent union, because they have all those resources for you. So, he was the lead negotiator. We would try to meet as often as we could. The university wasn’t great about giving us a lot of time. We even met over breaks. Sessions could be from like two hours to four hours, and by the end, like all day sessions. We signed the tentative agreement at two in the morning. So, that’s the actual, active bargaining at the table. What’s most important for people to know about the bargaining process is that you need an active membership. You need to have collective power behind the bargaining team. So, our organizing committee all year long was organizing direct actions, was doing member outreach to educate them about the bargaining process and the trials and tribulations at the table. People would write op-eds for the campus newspaper or other news outlets. So, we were constantly putting pressure on the university from behind the scenes of the actual bargaining table. And that is the reason why we’ve gotten strong contracts both times. It’s because we have really active members who put so much time and energy into securing really good contracts.

Ways to Be an Active Member (Beyond Striking)

16:22 Emily: What does it mean to be an active member? You just mentioned writing op-eds. Did it come to really visible action, like strikes, or anything like that? Or maybe there are some intermediate steps.

16:32 Mary: Yeah, so, we never had a strike. Connecticut is a no-strike state, which doesn’t necessarily mean people wouldn’t strike, but we’ve never had to do that. I’d say being an active member is doing what you can with the time you have. And for graduate students, even the smallest thing can be a big ask. So, it was very inspiring to see people turn out for our big direct action at the end. We had a sit-in at the student union. We had three simultaneous sit-ins. We had some people at the student union chanting, then we had people in the Office of Institutional Equity because sexual harassment was a major theme in bargaining, and then we had people who went to the president’s office. Prior to that, we’d had a big sit-in in her office building a day she was offering office hours. So, like big, public, noisy, direct actions that called attention–not just to people at the university but people outside the university–to what was happening. And some of those people I had never seen at a membership meeting before. They weren’t regularly involved, but they turned out that day, and that was awesome.

Commercial

17:47 Emily: Emily here for a brief interlude. Tax season is upon us, and while no one loves this time of year, it’s particularly difficult for post-bac fellows, funded grad students, and postdoc fellows. Even professional tax preparers are often thrown for a loop by our unique tax situation. And don’t get me started on tax software. I provide tons of support at this time of year for PhD trainees preparing their tax returns, from free articles and videos, to paid at-your-own-pace workshops, to live seminars and webinars for universities and research institutes. The best place to go to check out all of this material is pfforphds.com/tax. That’s P F F O R P H D S.com/T A X. Don’t struggle through tax season on your own. Visit my website for the exact information you need in the most efficient form available. Now, back to the interview.

Sit-ins Demonstrate Collective Power

18:51 Emily: So, how does something big and visible like a sit-in translate to the bargaining table? Are the people from the opposite side coming in, they’re saying, “Okay, okay, we see, we see”? What’s actually happening?

Mary (19:03): They see the collective power that we have. They see, “Wow, this group of GAs, they do really important work at this university. And if they were to ever not do that work, that would be a big deal.” So, even though we haven’t had a strike, I think that’s always on the back of the mind of the employer, because we do the day-to-day research, the day-to-day teaching. There are 2,200 of us at the university. The university wouldn’t be able to do what they had to do without us, so they have to listen to us. And when they see how much we care and how we’re able to band together in those crucial moments, then they take us seriously.

Changes from the 1st to the 2nd Contract

19:47 Emily: What were some of the changes from the first contract to the second contract that you worked on? Or, was it more about, like, maintaining the really good health insurance that was in place initially?

19:57 Mary: So, I can’t think of anything that we had to give away. But yeah, we wanted to maintain the health plan, and we also wanted raises. So, Connecticut is in a huge budget crisis right now, but we were still able to secure 2% raises year to year. The first contract, it was 3% raises.

20:18 Emily: So, that 2%, it’s basically the cost of living raise. Every year, you get another 2%. Is that right?

20:23 Mary: Yes.

20:23 Emily: During the length of that contract?

Hold On to Your Fundamental Rights

20:25 Mary: Mhm. And we fought tooth and nail to maintain a grievance procedure for sexual harassment and discrimination. The university tried to take that away from us. They tried to use it as a bargaining chip for economic items, which was to me just like completely despicable because that is a problem at UConn, as it is anywhere in higher education.

20:50 Mary: So, we fought tooth and nail to make sure that we still had an avenue of recourse in our collective bargaining agreement in cases of sexual harassment and discrimination. I think that might’ve been our biggest fight at the table. We also tried to get a full fee waiver. That’s what we try every time. We didn’t get that, but we did get an increase in our fee waiver. So, that was helpful. And we secured a relief payment for a new fee that went into place this year for a very beautiful multimillion-dollar student recreation facility they just built, and it’s $200 a semester. So, we get that money back in our first paycheck of the semester.

21:31 Emily: Okay. So, it’s still a fee that you pay, but then you get the money back. And that’s for the length of this contract.

21:37 Mary: Yeah. And the reason it was structured that way was because of how it was financed in bonds. They couldn’t legally give us a waiver. So, that was our work-around.

Union Fees Are Minimal and Worth It

21:46 Emily: Yeah. Interesting. Yeah, it’s good, I guess, to hear about all the different little levers that can be put in different ways. Although, as you said, some levers you don’t want to allow. I’m wondering, what is the fee for the union members? And then, are you totally confident that, based on, for instance, just the lowering of fees or not increase of fees, has that paid back immediately?

22:12 Mary: Oh, definitely. So, people pay 1.095% in dues, and it’s just taken out in paychecks. So, when I was at 75% funding one year, it came out to be like, I think around $10 a paycheck for me. I think for people making the highest amount you can make, it’s around $15 a paycheck. But you get that all back in your fee waiver, and your raises make up for it as well. So, for me, it’s a no-brainer. The union has been instrumental in making sure that I have a decent living wage. So, the least I can do is pay my union dues.

22:52 Emily: Gotcha.

22:52 Mary: And it takes resources to run a union, so that money is needed. You might have to go to arbitration, which costs money. We pay dues to the international UAW who provides us with resources like our lead negotiator during bargaining. And yeah, we also have to pay staff to handle grievances. So, it does take resources to have a strong union.

Remaining Insights About the Bargaining Table

23:18 Emily: Mhm. And are there any other insights that you want to share with the audience about what it’s like to be at the bargaining table? Or, what they might want to know if they are union members but maybe not active in the leadership at the union in their university, or maybe their university doesn’t have a union? Anything else you’d like to share from your unique position?

23:36 Mary: Yeah, so it can be a bleak place at the bargaining table because you come to learn that the university really only cares about its bottom line. And it was very upsetting for me to see them try to use, like, our right to have a grievance procedure for a sexual harassment case as a bargaining chip for economic items. It was very disillusioning, but it was also so inspiring to see what we were able to do as a collective. So, for people who don’t have time to contribute, like signing a card, that’s enough. That’s all what some people can manage. Like sign a card, pay your dues. Whatever little thing you can do helps your union. So, the bargaining is nothing without a strong membership.

What About Postdocs and Non-Employees?

24:24 Emily: Yeah, that’s good to hear that this work is not done by a few individuals who decide to volunteer a great deal of their time, but rather it’s those people, yes, plus they need to have the backing of at least a little bit of effort from a great number of the other workers. What I always wonder about with unions is, like they cover employees of the university–graduate assistants, TAs, RAs. What about the students and the postdocs who are fellowship recipients, who are not technically employees–or, at least for a period of time, they aren’t employees? Are they still benefiting from the negotiation that happens with the union?

25:01 Mary: Yes, absolutely. So, even though they can’t be classified as employees–some postdocs can, which I’ll get into in a second–they can’t be covered by collective bargaining agreement. But some of the things we’ve gained at the table, like our health insurance, that health insurance package is now available to those postdocs and to graduate students on fellowships.

Health Insurance, Not Fee Waivers, Benefit Non-Unionized

25:25 Mary: It’s subsidized a little differently, but it’s still pretty affordable. And I think there are a lot of studies that show when you have unionized employees at a workplace, the non-unionized employees can benefit as well. So, I’d say the health insurance is the big way that it’s benefited those folks.

25:44 Emily: I would imagine fees too? Or, is there a different fee structure for fellows versus employees?

25:50 Mary: So, they don’t get the fee waivers we get because they’re not employees.

25:55 Emily: So, it’s not like the fees have been lowered. It’s just, the fees are high, but you get a waiver for a certain amount of it. Is that how that works?

26:02 Mary: Yeah, exactly. And we always stand in solidarity with grad students when fees are being raised overall because we are in principle against any of that for anyone at UConn. But currently, unfortunately, they still have high student fees.

26:19 Emily: I see. But yeah, the health insurance seems like a big one. Especially what you described earlier, it seems amazing not having a deductible.

26:25 Mary: Yeah.

Unionization Effects on Personal Finance

26:25 Emily: That sort of leads into our second to last question here, which is how has being at a place that has a strong union affected your finances personally?

26:34 Mary: So far, I’ve accrued no debt in grad school. I’ve been able to live on what I’ve made, plus my side hustles, in addition to my TA work. So, I wouldn’t say I’m ever truly comfortable financially, but I do not feel financially vulnerable. I save. That’s why I have side hustles, so I can keep saving, and I don’t have to worry about a medical emergency. For me, that’s a really big thing because I have a chronic illness that’s in remission. It’s been in remission for a long time, but it can rear its ugly head at any moment.

27:12 Mary: And if I don’t have good health insurance, I could go into medical debt in like a week. Or medical bankruptcy, practically. So, I mean, the union is like the reason I went to the University of Connecticut, because I knew the health insurance would cover me in a worst-case scenario. So yeah, I’d say I haven’t been completely comfortable. I definitely took a pay cut from what I was doing before graduate school. But what I’m making allows me to live a decent lifestyle and to put money away.

Pro Tip: Look into Health Insurance Prior to Enrolling

27:45 Emily: I want to follow up on just that point about the health insurance, because I’m curious. So, when you were applying to graduate school and you received a few offer letters, how did you evaluate the health insurance that was being offered to you at that stage prior to actually enrolling?

27:58 Mary: So, I actually didn’t apply to that many graduate schools, and this was the only anthropology program I applied to. So, when I got the offer, I just took it. But I’m from Connecticut, so I knew about the unionization efforts, and I knew to look online and see about the health insurance. So, I don’t think it was mentioned in my offer letter, the health insurance, but the collective bargaining agreement was cited. So yeah, I didn’t really have to do a lot of comparison in the selection process.

28:29 Emily: That’s good to hear though that you were able to just find the information about the health insurance online. Because I know, not necessarily universities, but just in general with private health insurance, sometimes it’s really difficult to figure out what your benefits are, even once you’re actually enrolled in it. So, to do that as a step prior to actually being enrolled, it’s impressive. So, it’s good that they had that transparency that you were able to find the information that you needed right away. Yeah. So, that’s really good to hear. I mean, I’m happy for you, right? That you have a degree of stability and of course not having to take out debt at this stage is awesome.

Best Financial Advice for Early-Career PhDs

29:00 Emily: And so, final question, a standard one that I ask all my guests, is what is your best financial advice for another early-career PhD? And it could be related to something that we’ve talked about today or it could be something completely else.

29:13 Mary: So, individually speaking, this goes back to something you said earlier. I personally like to have side hustles and I think saving is really important. I prefer to have money in the bank and be a little bit more stressed out in terms of my schedule than to have more free time–well, “free time”–and no financial safety net whatsoever. So for me, I think that’s one of the reasons I haven’t had major issues financially in grad school. It’s because I do work on the side. And also, live within your means. But if you can’t–if you can’t balance a budget–don’t be so hard on yourself, because the economic model of universities is exploitative. We’re cheap labor. A lot of us aren’t going to get tenure-track jobs. It’s designed this way for a reason. The problem is structural. Sometimes it’s not individual, so don’t be so hard on yourself if you can’t make ends meet on your stipend. And also, that’s why you should be involved in your union if you have one. And if you don’t, definitely, definitely get involved in a unionization effort. Because even if it fails, it still lays the groundwork for future efforts. For me, it’s the most important thing for my finances in grad school–has been the union.

30:35 Emily: Well, there’s nothing I can add to that. Thank you so much for that statement and for this interview. It’s been wonderful talking with you.

30:41 Mary: Thank you for having me.

Outtro

30:43 Emily: Listeners, thank you for joining me for this episode. Pfforphds.com/podcast is the hub for the Personal Finance for PhDs podcast. There, you can find links to all the episode show notes and a form to volunteer to be interviewed. I’d love for you to check it out and get more involved. If you’ve been enjoying the podcast, here are four ways you can help it grow. One, subscribe to the podcast and rate and review it on Apple podcast, Stitcher, or whatever platform you use. Two, share an episode you found particularly valuable on social media or with your PhD peers. Three, recommend me as a speaker to your university or association. My seminars cover the personal finance topics PhDs are most interested in, like investing, debt repayment, and taxes. Four, subscribe to my mailing list at pfforphds.com/subscribe. Through that list, you’ll keep up with all the new content and special opportunities for Personal Finance for PhDs. See you in the next episode! And remember, you don’t have to have a PhD to succeed with personal finance, but it helps. The music is Stages of Awakening by Podington Bear from the free music archive, and is shared under CC by NC. Podcast editing and shownotes creation by Meryem Ok.

This Grad Student Is on the Lowest Rung of the Pay Ladder and Side Hustles to Compensate

February 10, 2020 by Meryem Ok

In this episode, Emily interviews Sarah ‘Frankie’ Frank, a grad student in sociology at the University of Wisconsin-Madison. Frankie describes the hierarchy of grad student positions at UW; the positions she’s primarily held over her years in grad school, teaching assistantships, are on the lowest level in terms of hourly pay. To make ends meet, Frankie side hustles doing activities that she truly loves, chiefly tutoring and baking. She concludes the interview with excellent advice for a grad student who wants and needs to do it all.

Links Mentioned in the Episode

Teaser

00:00 Frankie: You feel so subjected to whatever the institution tells you you’re worth–what you can do, what you can’t do–and the honest truth is that you have a little bit of bartering that you can negotiate. If you are in a position that you can make that kind of offer, you should because it’s possible that they find that money somewhere.

Intro

00:22 Emily: Welcome to the Personal Finance for PhDs podcast, a higher education in personal finance. I’m your host, Dr. Emily Roberts. This is season five, episode six, and today my guest is Sarah Frank who goes by Frankie, a grad student in sociology at the University of Wisconsin-Madison. Throughout most of grad school, Frankie has been a teaching assistant, a position that receives the lowest hourly pay rate at her university. We discuss the various types of positions a grad student might have and the advantages of being paid through a fellowship or research assistantship. Frankie’s $15,000 per year stipend isn’t enough to make ends meet, so she is engaged in many side hustles, the best of which were tutoring NCAA student athletes and her cake business. You won’t want to miss the advice Frankie gives at the end of the interview to grad students who are juggling a lot of responsibilities and activities at once. Without further ado, here’s my interview with Frankie.

Will You Please Introduce Yourself Further?

01:22 Emily: I’m delighted to be joined today on the podcast by Sarah Frank who goes by Frankie. And we’re going to be talking today about TA-ing, having a teaching assistantship and how that compares to other jobs you might have on campus as a graduate student. So, Frankie, thank you so much for joining me today.

01:38 Frankie: Thank you, Emily. I really am excited to be here. I feel honored.

01:42 Emily: Oh, well that’s lovely to hear. Would you please tell us a little bit more about yourself, you know, where you go to school and so forth?

01:48 Frankie: Yeah. So, my name is Frankie. I am a PhD candidate and a lecturer now at the University of Wisconsin-Madison in the Department of Sociology and in the Department of Legal Studies. I’ve previously spent three years as a teaching assistant and lecturer. I’ve also worked for athletics. And yeah, I think I have about two years to go before I have a job somewhere, hopefully.

02:10 Emily: Sounds good. So, you’ve already mentioned you’ve had a few different positions, so let’s talk about what your current position is and what your pay is right now.

02:20 Frankie: Yeah, so current position for lecturers, right now it depends on how many students will be enrolled in the course, but at a 33% appointmentship for one course in the fall, I’ll make about $7,000. So, over the whole course of the year, that can fluctuate to about a $15,000 baseline salary. And then adding in other jobs thereafter, I don’t make more than about $22,000 a year.

Level of Pay Variation at UW-Madison

02:45 Emily: Okay. So, that gives us a good idea of the range. So at a 33% appointment, if you did that approximately for the whole year, it would be about $15 K. Plus, your side hustle and such, have other jobs on top of that, of course, to make that work, naturally. Okay. And how has that level of pay varied over your time in graduate school?

03:06 Frankie: Yeah. So, when I first came as a TA in 2016, University of Wisconsin had one of the lowest pay rates for TAs. So, in our tiers of graduate studentship, being a teaching assistant was at the very lowest, at about 15 and a half thousand dollars per year at a 50% appointmentship. And then the union here, there’s a teaching assistant union that put a lot of pressure on our administration to raise that salary. So, we have gotten substantial raises. And then just this year, lecturers also got another bit of a raise. So, it has increased a little bit as we’ve gone on. But we still pay student fees. So, we pay segregated student fees that go into like student clubs and student rec centers that are mostly undergraduate. So, we lose a little bit of our salary there to the tune of six or $700 each semester that you’re taking full load.

03:55 Emily: Yeah, that is a huge bite. Okay. So, I just want to add in like a couple of notes there for the listener. So, if you want to see what other people are being paid at Wisconsin or in other places, one of the websites I run is phdstipends.com. So, go there and check out what TAs and RAs and other types of grad students, fellows are being paid in various places and enter your own data. So, there are a couple of things you mentioned I want to follow up on. You mentioned that TA pay was the lowest among the different sort of options, the way graduate students might be paid. So, what are those other options at Wisconsin?

04:31 Frankie: So, typically the lowest tier would be teaching assistants. The next tier up would be research assistant, and the tier after that would be project assistant. And then the top tier is obviously fellowship. So, if you’re on fellowship, you make the most. After the raise, teaching assistant and research assistant are more in line with one another. So, this is the first year that they’re really in line.

04:54 Emily: Yeah. That was something curious that you said that I wasn’t really sure about, that TAs and RAs had been paid differently. Now you mentioned that the union was just a TAs union, or does it also cover RAs?

05:09 Frankie: Right, so it’s strange. It’s called the Teaching Assistant Association, so it would sound like it’s just for TA’s, but it’s actually for all graduate student workers. So, it includes RAs, PAs, and it includes people on fellowship actually as well. So, graduate student workers generally.

What is a Project Assistant?

05:23 Emily: Okay. That’s really interesting to hear. I would love to follow up more on that actually with you, but I actually have multiple episodes scheduled with other people talking specifically about unionization movements at their own university. So, I’m excited to dive into that more in other episodes. But I’ve never heard of this job title, project assistant before. Can you tell me what that is?

05:43 Frankie: So, there are research assistants and project assistants, and it depends wholly on the grant that a supervising faculty applied for or the amount of responsibility or ownership that the student is taking over the project. In the mix, there is something called a traineeship, which seems to be blended with both project assistant and research assistant. I think it’s a matter of just titles, honestly. Because I’ve heard very different projects, very different gamuts, it depends on the department, what they call a traineeship versus a research assistant or project assistant. To me it sounds like, as far as hours worked, I know that teaching assistants have the most, and then research assistants have the second most followed by project assistants and trainees, and then fellows should have the least amount of work. They’re not required to do any specific work activities.

06:34 Emily: Okay. So, you mentioned a 50% appointment for a TA position, so that’s ostensibly 20 hours per week, is that right?

06:42 Frankie: Yeah, it’s supposed to be 20 hours a week. Yeah.

06:43 Emily: Yeah. Well, we all know how that really goes. So, what is it for RAs and PAs then? Do you know?

06:49 Frankie: They’re supposed to be 20 hours a week as well.

06:52 Emily: But in reality…

06:54 Frankie: Yeah, so the common thread is people know that RAs and PAs don’t work that much. They usually do closer to like 10 or 15 hours a week, if that.

RA-ing Does Not Always = Dissertation Work

07:04 Emily: Okay. So, this is something that I and other people get a little bit confused or conflate together. So, are you talking about for an RA position, a research assistantship, is that distinct from the student’s dissertation work?

07:22 Frankie: So, this is a really good question. It can be. It may be that’s the way you are earning your income, working on a supervising professor’s work and using their data. And depending on your relationship with that professor or what you want to do for your dissertation, their data might be your dissertation. And in some cases it is, but in other cases it’s not. So, the way that those things help you out in the long run dissertation-wise varies. The variation is incredibly wide.

07:52 Emily: Yeah. Because it’s always seemed to me–so, I come from a STEM field, biomedical engineering. And so what was common in my field and others that I observed in STEM is that most of the time most people had RA positions, and their RA work was the same as their dissertation work. So, it was like, really, once your classes were done and so forth, your full-time efforts could go towards your dissertation. And, you were also being paid off of the grant to do that work. Now, that means you don’t have as much freedom in what you do because it depends on what the grant is, of course. And so it’s all worked out between you and your advisor. I do think that it was more rare in my observation to see someone have an RA position that was different from their dissertation work. But it sounds like that is maybe more common where you are. And I’m sure this is very like field-dependent, right?

08:40 Frankie: So, in sociology, because someone might be working on some specific project long-term, or like a demographic project that takes many years of data collection, people might use some part of a dataset. Or you know, they’re becoming really familiar with the general science survey through their research assistantship, and then they use another element for their dissertation. Or, they end up meeting their professor who will chair their dissertation based on that project or find out who shouldn’t be their advisor via those kinds of projects. But I mean it does vary incredibly widely. I have heard that sociology is one of the few disciplines where it’s not a direct relationship, like you are working on what you will dissertate on. But I know very few people who are earning their income on exactly what they’re dissertating on. They’re usually right next to it somehow. Particularly, in sociology here we have demography. So, you have a lot of quantitative people working together. As far as qualitative researchers, not one of them have I heard is working on the same data set that they will use in their dissertation unless they get some sort of fellowship or specialty grant or something or have access to a professor’s previously collected research.

Perspective on Assistantship Tiers

09:51 Emily: I see. This is really interesting for me to hear because it’s such a different field than where I’m coming from. So, it’s good for me to learn about this. So, what I’ve always found as the important distinction, let’s say as a prospective graduate student, when you’re looking at different offers and different programs, I’ve always found an important distinction to be what percentage of your time is going to be available for you to work on your dissertation versus doing some other thing. You know, classes, TA-ing, RA-ing not for your dissertation, whatever that might be. And I would think that the advantage would be going towards programs where you can put a higher percentage of your time towards your own dissertation work. Now, that’s not to say you can’t find value from these other activities, but I don’t know, that’s kind of what my thought has been. Do you agree with that or what’s your perspective on that?

10:40 Frankie: So, for me and where I’ve been located, the more lucrative offers coming into graduate school are the ones that have more money or the fellowships. So, it’s sort of like you have to be higher ranked I suppose, or like at a higher admit level. So, then you have to take classes, right? But you can only take so many classes if you’re a teaching assistant, especially for the first time. And you know you have the highest workload, but you have the lowest pay, so you have to take on more classes or you just have to stay in graduate school longer. So, the system seemed really backwards to me when I first got here. Like, why would TAs be your lower tier? Or like, you know, not your highest admit student. Not that the people who teach are necessarily not as smart or anything, but the grant money is really in that quantitative data that the demographers are collecting.

11:33 Frankie: But then you have to work really hard, possibly more years while you’re taking classes. And at the same time, the expectation to publish is exactly the same across the board. And some people are given data from professors or they have quantitative data, but then you have qualitative people who have to conduct their own studies from the ground. So, IRB approval, to recruitment, to interviewing. And so, the people who are teaching have to do far more hours, far more work, but they’re also the least paid, so they may also have to take on these outside jobs. So, I think that those are the people who I see being the most stressed out. I think that they have the highest turnover as far as dropout rates as well. I think it’s just incredibly stressful to have little money and not enough time to accomplish every single thing you’re supposed to accomplish. At the same time, you’re supposed to be applying for every grant in the book while you’re doing all of this.

12:20 Emily: Yeah, it does sound to me like we’re on the same page. If you can land a fellowship, either an outside fellowship or something that’s provided by your university or whatever, that’s going to free you from these other responsibilities, it’s going to pay you better and as many years as you can do that for, that’s amazing. Minimize your TA responsibilities. If that is the thing that has the highest workload at your university, it sounds like it’s the case for you. Not to say that teaching experience isn’t valuable. Maybe you need to have that for moving onto your next stage, but you don’t necessarily want to do that every single semester. That’s a lot of teaching. Anyway, so really glad to hear your perspective on those things. So, it’s a very complex issue, especially for prospective graduate students who may not be that familiar with the academic system.

Determine the Standard Offer in Your Field Ahead of Time

13:01 Emily: I mean, I’ve been through graduate school and I’m still struggling to understand the structure that you’re talking about, you know, in the fields that you come from. So, this is just kind of a plug to do as much field-specific research as you possibly can. Well, I actually wrote an article about this a little while ago. It was titled something like “before admission season starts, determine what a standard offer in your field is.” So, is a standard offer going to be, “Okay, you’re going to TA the entire time”? Or is a standard offer, “Well, you’ll TA a couple semesters and then you’ll be an RA and if you want a fellowship that’s cool”? Like, what is that standard? So, then you can know if any individual offer you receive is at the standard, a good offer, a really not good offer. It’s just something you have to do your homework on before you even start like looking at those offers, and it’s very difficult. It’s very field-specific. So, I’m really glad to hear from you about that.

13:50 Frankie: I was going to say I feel really lucky, actually. So, for two reasons. One, my program decided to fully fund five years. So, students who come to sociology at UW Madison will be funded for at least five years. After that, they cannot guarantee you funding. But the second piece is I came here to teach. I’m becoming a professor to teach, which is not always common at an R1. I have been discouraged from teaching multiple times, but I think I would have left graduate school without it. So, I feel really lucky that it’s in my heart because it makes it worth it. It’s still very challenging, but I feel luckier in some ways than I know other folks in other universities.

A Deep Dive into Frankie’s Side Hustles

14:24 Emily: Yeah, well it totally makes sense. If it’s part of your career path and you want to go that direction, it’s great to have that experience and for you to get better at your own craft before you move on to that next stage. So, totally valuable in that sense. For people who don’t want to stay in teaching, it’s something probably to be minimized. Yeah. So, are you ready to talk about your side hustles that you have to put on top of this graduate student stipend to make it?

Tutoring for the Department of Athletics

14:49 Frankie: Yeah. So, the first one I did was I worked for the NCAA, the Department of Athletics at UW Madison. Of course, this is a big school for athletics, so you might think that we’re the only place with money, but I actually did this in undergrad, too. And the money tends to be excellent, particularly if you already have your undergraduate degree, they can pay you more. And so this is to the tune of about $20 an hour for group tutoring, closer to $18 for single tutoring sessions. And you make your own schedule. It’s very flexible. You only tutor what you want to. It was really fun. I loved my students. Student-athletes are highly exploited by universities like Wisconsin. And so it was awesome to build relationships with them. And I mean, I absolutely loved that job. When I gave it up to finish my Masters, I was very sad. But that was probably my favorite side gig, and I recommend it to literally everyone. If you want to pick up extra tutoring hours, the Department of Athletics wherever you are has money. And they have a need for sure.

15:48 Emily: That is a great tip. I’m always really curious when people talk about having side gigs on campus. How does that play with your stipend? Were you actually a W2 employee or was it like an independent contractor position?

Self-Employment: Frankie’s Cupcakes

16:01 Frankie: Great question. So, it’s still a W2. So, you can only work 75%. That means that I had a cap on how many hours I could work at the same time as being a TA. So, then comes in my other side hustle. In the last 18 months or so, I’ve started a cupcake company. So, I now sell cupcakes and cakes to everyone in the Madison or surrounding area here in Wisconsin. It started as a self-care hobby and then I got good enough that people would start paying me. So, now that’s my side hustle and also my hobby and self-care at the same time.

16:35 Emily: That is so much fun. What is your business name? Do you have an Instagram?

16:39 Frankie: I do have an Instagram. You can find us @frankies.cupcakes, which is the name, as well. We just went to the state fair yesterday to find out that I won a bunch of first place ribbons. So, that’s feeling good. Wisconsin state fair representing. But so yeah, you can find me. It’s Frankie’s Cupcakes. We have a Facebook and an Instagram.

16:57 Emily: That’s awesome. And so that, of course, is your own business. That’s total independent, not even a contractor. It’s just self-employment kind of stuff. So, I have this framework for side hustles that I like to talk about, which is one type advances your career. That could be like the teaching or tutoring for you, for example. Another type is just something you really enjoy doing that you can monetize. That is exactly this cupcake thing. And then there’s stuff you don’t like to do so much, but it gives you money. So, you do it. That’s a third category. And then the fourth one is passive income, which is a whole other can of worms. So, I love to hear that the cupcake thing sort of hits different satisfaction areas in your life for you. So, that’s awesome to hear. Have you pursued any other side hustles besides those two?

Arbitrage via Poshmark

17:42 Frankie: Well, so as far as passive income, actually, there’s an application called Poshmark, which lots of young people are using and they’re installing themselves on college campuses. And I’ve made a couple of thousand dollars selling stuff on Poshmark. Homewares, jewelry, designer bags, whatever. I’ll go to Goodwill, buy something designer that someone donated and then sell it on Poshmark and keep the profit. Or if I grow out of something or gain or lose weight, which you do in graduate school, it’s a great way to replace/cycle out your clothing. But also make some good money, especially if you come across anything valuable.

18:16 Emily: So, that’s a cool side hustle. Anything else you’ve done?

GRE Tutoring and College Application Assistance

18:20 Frankie: I know that I’ve done like tutoring on the side. Or like, unofficial tutoring for entrance exams, GREs, college application essays, things like that. For sure.

18:29 Emily: Yeah, that’s another really accessible one for graduate students because presumably, you got into graduate school, so you’re probably good at taking tests. You may be able to help other people with that.

Commercial

18:43 Emily: Emily here for a brief interlude. Tax season is upon us, and while no one loves this time of year, it’s particularly difficult for post-bac fellows, funded grad students, and postdoc fellows. Even professional tax preparers are often thrown for a loop by our unique tax situation. And don’t get me started on tax software. I provide tons of support at this time of year for PhD trainees preparing their tax returns, from free articles and videos, to paid at-your-own-pace workshops, to live seminars and webinars for universities and research institutes. The best place to go to check out all of this material is pfforphds.com/tax. That’s P F F O R P H D S.com/T A X. Don’t struggle through tax season on your own. Visit my website for the exact information you need in the most efficient form available. Now, back to the interview.

Prioritizing Valuable Side Hustles

19:46 Emily: When you are looking for a side hustle, what’s something that has really brought value to your life? In terms of like, what’s a really good pro of one of your side hustles? Where you’re like, “Yeah, this was a really great reason to be pursuing this particular one.” Or maybe, another one, “Hey, I stopped pursuing this side hustle because it turns out it wasn’t serving me that well for this reason.”

20:05 Frankie: Yeah. When I started with Poshmark, it was working really well for a while, but then it ended up being really time-consuming, and it’s not going to add anything to my resume. But tutoring for athletics–and then I ended up becoming a sociology and psychology tutor trainer, so I would help train other people–that’s going to look great on my resume. I ended up getting tutor-certified, and they pay for your training. So, they’re paying you to put lines on your resume. So, that ended up being wonderful. I wrote a couple of pieces about athletes and education. I ended up meeting some amazing people. It was great to meet people outside of my department. Not that I don’t love the people in my department, but it is nice to meet people who are not in the same building all the time with you who are also in graduate school. So, it was both personal and professional.

20:49 Frankie: Like what is it that you’re spending your time on that is good for you, your resume or your CV? But also, whether it’s because it’s something that you enjoy personally and the people you really like, or because you’re like, “Well this is a good way to make money that doesn’t like break my heart or soul somehow,” or like isn’t drawing you emotionally. The emotional drainage or some of the side hustles can be extreme. So, I knew that and needed to keep my emotional energy spent kind of low because I was spending so much of it teaching. I spend so much of it teaching. So, the cake thing is pretty much something I do by myself. And so it’s really nice because it’s something I pretty much do alone. You know, listen to a podcast or something on the radio and make cakes and it’s really good for my introverted side.

Managing Work-Life Balance

21:32 Emily: Yeah, I think that’s one really important thing. Just recognize about the whole, you know, work-life balance thing–like, the graduate school-“other things you do”-balance–is that it’s sometimes really, really wonderful to have an escape from research. I know for example, for me, if research was not going well, which it didn’t for like three years, it was great to have some things going on outside of that that I could find some success in or some satisfaction. So, how do you manage your actual dissertation work, your main job, your grad student job and all these side hustles and you know, taking time for yourself. Like, how do you make all that work?

22:11 Frankie: It’s a really good question. And I answer this question so many different ways and have answered it so many different ways. So, I think today my best response to you is that my work-life balance is less of a work-life balance. Just because my work is my life, and my life is much of my work and I have to be in love with everything I’m doing for it to be possible that way. So, I’m running these different organizations. I’m also committed to teaching. I’m deeply invested. I interview people about menstruation. And so, I have to love all of those things because I do them all the time or they’re always on my mind. So, I think for me, my work-life balance ends up being calming my mind or like finding good headspace. And for me, actually, it ends up being that my partner is not an academic.

22:57 Frankie: He is not part of academia at all. And that ends up being a blessing. And I put a lot of time into–we have wonderful cats and I do cat-sitting–finding peace in both cakes and cats. And also taking the time and being okay with not doing work for a minute or two. Not always having to do something–I have such productivity anxiety–convincing myself that it is okay to go see a movie, to just sit on Instagram for an hour and be okay with it and not judge myself. And so the first couple of years of graduate school, I had to learn to do that and know that that was actually self-care and healthy. I cannot recommend enough that anyone in graduate school go to therapy. Even if you don’t think you need it or if you’re like, “Well, I don’t need that yet.”

Benefits of Therapy in Graduate School

23:49 Frankie: It’s great to establish the tools you do need for when you need them. And I wouldn’t have made it, I don’t think this far, without having great support both at the university health system and in our own–I have this wonderful woman who I see in Madison–and sometimes it’s when I need it, and sometimes it’s when I don’t. And it’s a great tool that, like I said, I recommend to everyone in academia or any stressful life situation. It really is wonderful to have someone outside your department who won’t affect your resume, your hiring decisions, your teaching appointments, someone who you can really talk to. And you know, it’s hard to build friendships in graduate school. It’s hard to build really like noncompetitive community sometimes. And I recommend that people find spaces that they feel like they’re part of a community or they feel like they have friendship. And not that my therapist is my friend, but it’s someone who I can talk to candidly and not worry about anything. So, I definitely recommend that as a resource to anyone.

Best Financial Advice for Early-Career PhDs

24:46 Emily: You know, you put that so well. I really don’t have anything to add to that. I hope that everyone listening just kind of rewinds a couple of minutes and listens through all that again because I think what you said is so, so valuable. What really resonated with me was when you said that you have to love everything that you do. And I think that it’s something that we sometimes forget about in academia and in graduate school that, ultimately, you’re there by choice and presumably at some point there was some reason why you chose the field you did and the advisor that you did. And there’s something that you love about it, and you might be going through a really hard period. It might be a long period, but it should be something that you’re passionate about, right? Or else why are you doing it? And hey, go ahead and leave your program if it’s not your passion anymore. But it’s so refreshing to hear you say that you do love all these different aspects of what you do, even though it’s not paid that well and you have to string all these different things together. It’s something that you find great joy and satisfaction in in all these different areas. I’m really, really happy to hear that. And as we wrap up here, Frankie, what is the best financial advice that you have for another early-career PhD?

Save for Unexpected Expenses (E.g., Medical Emergencies)

25:52 Frankie: That’s also a great question. I have a little experience running into medical emergencies. I had two surgeries my first year of graduate school. That’s something I don’t recommend. If you can avoid it, don’t do that until the summer of any school year. I don’t recommend doing it over Christmas. And then again over spring break. That’s–don’t recommend. So, I was hit with some medical bills in a harsh way. And I wish that I had budgeted a little bit better, like my moving expenses my first year, and not spent money on cat trees and whatever else that I thought was necessary at the time. Because I was like, “Oh, I still have more money,” or, “Oh, I still have more money. I could spend a little bit more.” Or, “Oh, you know, I can make this $50, $100, $200 go a little bit further.”

26:37 Frankie: I wish that I had saved it and thought to myself, “If something does happen, I’m at a low enough income that I need to be collecting what I do have, even the pennies, so that if something bad does happen to me or if I do end up needing to take, I don’t know, a semester off, a summer off, something like that–which is totally normal–that I would be able to.” And I wish that I had prepared a little bit better for that because I spent the better half of my second year paying off medical debt from surgeries that, I mean my insurance plan “covered” so to speak, but I needed to more carefully plan that out my first year. I think I spent more money out of stress or thinking, “Oh, if I spend more money, I’ll feel better.” And then when I did need to have surgery and pay that off later, you know how medical bills work, they send you the bill after the whole thing’s over.

Own Your Negotiating Power (Yes, Even in Grad School)

27:25 Frankie: So it’s not like I could have avoided it. And I did fight the insurance companies. I did fight the doctors to get things lower. And then the other thing I would say is that I did end up going to my department one point and asking for more money for a certain job that I was being pushed to do. You can do that, and if you are a graduate student and you feel like you’re between a rock and a hard place, you can negotiate or ask for help or ask your university for help and put yourself in a place where you can say, “I need a little bit more for this semester or in advance or something.” And do try to work with the people around you just in case it does help you.

28:01 Emily: Two really amazing pieces of advice there. And thank you so much for those. On the first one, I totally agree. I mean, I think especially for someone who’s like a young adult, maybe you haven’t been navigating insurance on your own before. Maybe you’re new to budgeting, maybe you’re newly independent from your parents. These irregular events, these unusual events are not something that you necessarily budget in from the beginning. The thing is that, you know, maybe you didn’t know in particular you were going to have these surgeries or what the bills are going to be. Right? There is no way, really, as you said, that you can know that in advance. But the thing is that something’s going to come up in some category in some way at some time. You’re guaranteed that something’s going to happen like that.

28:40 Emily: So, as you said, just saving up in advance a bit as best you can. Obviously, it’s going to be challenging, but saving up in advance can really save you a lot. Both financially and stress-wise, like on the backend of whatever that emergency happens to be. So, thank you so much for sharing your story about that. And I am curious to hear a tiny bit more about your negotiation because it’s not something that I usually hear about, let’s say after the admissions process is done. So, can you say like what was the job that you’re being pushed to do?

Know Your Worth, and Advocate for Yourself

29:08 Frankie: Yeah, that’s a really good question. So, I was actually sort of between departments where one department had offered me a better-paying a job and one department really needed me to teach a job. Like, they were lower on teaching faculty and they needed someone to step in. And if they don’t admit enough people to teach each cohort year, then eventually they run into these issues where they don’t have enough people to lecture or people who have experience in the field. So, it was just this past year, and I had accepted this job in another department which would’ve been a lot more work, but they were going to pay me more. And I was excited about the opportunity. But then I had also said, “If I could work both jobs.” Well, UW intervened, the Dean’s office said, “You can’t work two lectureship jobs before you officially have dissertation status.”

30:00 Frankie: And I said, “Okay, so I have to choose one.” And so I was like, I’m going to choose the one that pays me more. And then basically I positioned to the other department and said, “This is less work for me. If you can match that salary and raise mine to meet the salary that this other department is going to pay me, I’ll take your job. And I’ll tell them that I’ll defer their job until next year.” And that’s exactly what happened. And people were like, “Well, I don’t think we can do that.” And I said, “Well, I don’t think I can take your job then.” So, I felt really lucky that I could sort of position that way. And it sounds very corporate, but the truth is that you feel so subjected to whatever the institution tells you you’re worth–what you can do, what you can’t do–and the honest truth is that if you have a little bit of bartering after a year or two that you’ve been part of a lab, part of a TA-ship, part of a union of some kind, to say, “I’m willing to do this for you. I’m willing to help out this department in whatever way.” You have a little bit of bartering that you can negotiate. If the department asks you to lecture and you can say, “Hey, I need about a thousand more dollars to really make that work or I can’t.” If you are in a position that you can make that kind of offer, you should because it’s possible that they find that money somewhere. Or they do this thing where they give you a top out scholarship where the department will just add on another thousand dollars in a scholarship fund to your tuition account and then you can refund, check it back to yourself. And that stuff happens and is possible. They can offer you greater hours. Like, they find little ways around the bureaucracy to help you. And I really recommend that students understand all of those different positions and also have those conversations.

Ask for Help: Get to Know Your Administrative Staff

31:33 Frankie: And if, if anything else, the administrative staff of your department are the people you need to know almost better than your advisor. Those are the people who have changed my life at the University of Wisconsin in every way. They know the system, they know the money, they know how I can get through the bureaucracy or challenges I’m facing. So, hats off to the administration at my university and my department and particularly in legal studies and sociology. They’re amazing people and they’ve made my life much, much easier on the financial end.

32:02 Emily: Yeah. Thank you so much for making that point. And I totally agree that they are the people to know. And it’s really good to hear that, you know, sometimes bureaucracy seems like this total juggernaut. It is what it is. It can’t be changed. It can’t be gotten around, whatever. But no, there are creative solutions. You just have to talk to the people who are familiar with their bureaucracy, who know all the tricks, who are going to be really advocating for you and working on your behalf to make whatever you need to have happen, happen. So, I’m really glad to hear that example of what was basically two competing job offers. Hey, you would have taken both of them if the bureaucracy had told you that it was possible. That wasn’t possible, but you were able to negotiate. That’s a perfect story, and I’m really glad that you shared that.

32:41 Emily: I’m glad to have another negotiation story that’s not right from during admissions season because that’s a really unusual one. So, Frankie, thank you so much for joining me on the podcast day. This is a wonderful interview.

32:52 Frankie: Yeah, Emily, thank you so much for having me. I feel really honored that I was able to talk to you and get to meet you. I recommend that everybody follow the advice given by other people who’ve spoken here. It really is valuable and it makes it so that everyone else’s life can be easier and everyone doesn’t have to experience it for the first time.

Outtro

33:08 Emily: Listeners, thank you for joining me for this episode. Pfforphds.com/podcast is the hub for the Personal Finance for PhDs podcast. There, you can find links to all the episode show notes and a form to volunteer to be interviewed. I’d love for you to check it out and get more involved. If you’ve been enjoying the podcast, here are four ways you can help it grow. One, subscribe to the podcast and rate and review it on Apple podcast, Stitcher, or whatever platform you use. Two, share an episode you found particularly valuable on social media or with your PhD peers. Three, recommend me as a speaker to your university or association. My seminars cover the personal finance topics PhDs are most interested in, like investing, debt repayment, and taxes. Four, subscribe to my mailing list at pfforphds.com/subscribe. Through that list, you’ll keep up with all the new content and special opportunities for Personal Finance for PhDs. See you in the next episode. And remember, you don’t have to have a PhD to succeed with personal finance, but it helps. The music is Stages of Awakening by Podington Bear from the free music archive and is shared under CC by NC. Podcast editing and show notes creation by Meryem Ok.

How Winning Fellowships Forced This Grad Student to Take Out Student Loans

January 6, 2020 by Lourdes Bobbio

In this episode, Emily interviews Dessie Clark, a doctoral candidate in Community Sustainability at Michigan State University. In 2018, Dessie received a few small fellowships for conference travel and a couple months of stipend income. In 2019, the financial aid office told her she had been “over-awarded” and had to pay the travel fellowship money back. Dessie took out student loans to pay that bill and then set up a payment plan with the IRS when she couldn’t pay the additional tax due on the fellowships. Dessie shares the steps she takes now when receiving fellowships so that she does not become over-awarded and how to prepare for tax time as a fellowship recipient.

Links Mentioned in This Episode

Teaser

00:00 Dessie: Outside of academia, people wouldn’t hesitate to ask questions about their paycheck, right? And so we need to kind of be thinking about it the same way. If something was different on your paycheck, you would ask why or what’s going on and how you need to deal with it. So just not being afraid to try and talk to people about what’s going on with you so you don’t get in a bind.

Introduction

00:22 Emily: Welcome to the Personal Finance for PhDs podcast, higher education in personal finance. I’m your host, Dr. Emily Roberts. This is season five episode one and today my guest is Dessie Clark, a doctoral candidate and community sustainability at Michigan State University. In 2018, Dessie received several thousand dollars in fellowship income for travel awards and a couple months of stipend income. In 2019, she received a bill from the university for the amount of the travel awards. Apparently, she had become overawarded, a term that was totally new to me., Dessie he took out student loans to pay back the university, and to add insult to injury, faced a higher tax bill that season as well. Dessie relays what she had learned on how to avoid becoming over awarded and her advice for all graduate students receiving stipends. Without further ado, here’s my interview with Dessie Clark.

Will You Please Introduce Yourself Further?

01:19 Emily: I have joining me on the podcast today Dessie Clark, who is a graduate student and is going to be telling us about being awarded fellowships as a graduate student and some of the unexpected downsides that can come with being awarded fellowships, which is of course a wonderful thing, but in Dessie’s case they caused a few other complications. Dessie, thank you so much for joining us on the podcast today and will you please tell us a little bit about yourself?

01:45 Dessie: My name is Dessie Clark and I am a doctoral candidate in community sustainability at Michigan State University. I actually got my master’s degree at Vanderbilt University in community development and action. And then I moved to Michigan to finish out my PhD.

02:01 Emily: Great. And how long have you been at Michigan State?

02:04 Dessie: I have been at Michigan State for four years.

02:09 Emily: Okay. So I won’t ask you when you’re finishing, but I’ll just say soon, you’re finishing soon.

02:13 Dessie: Yeah, hopefully this year, maybe next year, maybe, you know, whenever.

Funding During the PhD:

02:16 Emily: Yeah. So can you tell us a bit how your funding has worked since you’ve been doing your PhD?

02:22 Dessie: I’ve mostly been funded as a research assistant, so that provides coverage for tuition and then a stipend to live on. There have been a couple of summers where I’ve taught as an instructor, but for the most part it’s been RAs. And then there have been some brief moments in time where fellowships have also come into play, which is what I wanted to talk about today.

02:43 Emily: Yeah. Please elaborate about that. When did you win fellowships and maybe what amounts were they, those kinds of details?

02:52 Dessie: I think one of the things that’s important is that I didn’t necessarily know that I was getting fellowships. How this came into play for me was I had friends that had gotten fellowships and they had talked about how they were unaware of the tax implications. So I knew when I was going to apply for fellowships or asked for them that there would be tax implications there. But for me, I was actually receiving fellowships in the form of travel awards. So there were multiple times where I applied to go to conferences, and when I was awarded that travel money, I wasn’t aware that they were fellowships. So I’ve won I guess, fellowships of several thousand dollars for travel. Then there was a brief time where, I needed to change labs and so fellowships were used to fund me in my transition.

03:40 Emily: Okay. So definitely for the travel awards, we’re only talking about thousand, few thousand dollars here and there. Seemingly a relatively small amount of money, right? And then when you were switching labs, was it a semester’s worth of funding or how long was that?

03:54 Dessie: It was still relatively small. It was a couple of thousand dollars, but all of these fellowships awards actually happened in the same semester, so by the end it ended up being like $7,000 or $8,000.

04:07 Emily: Oh, okay. When they hit all at once, it really does add up in that case. Okay. So yeah, you didn’t really know that that was what you were receiving. So what happened? You get this money and it’s all good, right?

04:19 Dessie: Right. So I get this money and I’m really excited, I can afford to go to these conferences, I’m able to switch labs. But one of the things that I didn’t know is that they were fellowships, so I was kind of surprised two-fold. The first thing that happened that let me know that something wasn’t going quite right was that — this was in the fall of 2018 — so when I was going to start school in spring 2019, I got a bill from the university that said, “you owe us money, you’ve been over awarded.” I had no idea what that meant, but what I understand now is that every student has a cap on what they’re allowed to receive for education-related expenses. They had decided that this amount of money that I had received for travel had thrown me over that, so I needed to pay back university. That was kind of the first thing I noticed.

Fellowship Cap and Being Over-awarded

05:05 Emily: Let me pause there, because this term over awarded is new to me as well. What are you paying back to the university?

05:16 Dessie: What they were charging me ended up being the sum total of those travel award costs. There’s something that you can do to kind of help with this. Like I said, every student has a cap for how much money they’re allowed to receive, but one of the things that your department can do is they can write a letter saying, “This travel money is necessary for this person’s education. This is advancing their education or contributing in some way and this money is going towards that. It’s nothing extra. It’s not something we can go shopping on. This is money for the students’ education.” I didn’t know that that was something that could be done or needed to be done, so it wasn’t done in my case. I got this bill and it happened to be for the exact amount that I had received for travel awards. I found out through talking to financial aid that basically those things have been passed through as fellowships and because of how they were categorized, I got more money from the university than I was allowed to and so I needed to pay it back.

06:12 Emily: So it sounds like your stipend had been paid by your RA position and this supplemental fellowship, but those were kind of evening out to be what you’re allowed to be paid. And then these travel awards were over and above that and they were like, you’re not allowed to receive this money. This is literally the first time I’ve heard of this. I don’t know if maybe this is unique to your university or your department or maybe in all these cases, other people write these letters, their advisors write these letters that you’re talking about. I’m not sure how that works out, but this is really the first time I’m hearing about this, so it’s definitely raising like some major red flags for me.

06:46 Dessie: Yes. So from my understanding, and this is just what I’ve been told, this kind of cap exists for every student that is at a university, but I don’t know if it’s just how my university chose to handle it, or if this is happening a lot more than people know about, but basically what happened was I was over whatever that cap is. So it became a huge issue because now I’m sitting here before I can start school being told that I was thousands of dollars.

07:15 Emily: Right, exactly. So what did you do?

07:19 Dessie: What I did was what I didn’t want to do, I took out student loans and they subtract it from that.

07:24 Emily: So you took out student loans to pay the university for money that you had won that you used go to conferences. This Is bananas. This situation makes no sense. I’m really glad that you volunteered to come on the podcast to talk about this because the situation I’ve heard in the past for other students is that maybe they have a fellowship coming from the university or maybe they have an RA position or TA, something like that. Then they win a fellowship that’ll pay like their stipend. And a lot of students think, “I am in the money now.” They think getting that fellowship on top of the existing funding for their RA position or whatever it was. That is almost universally not the case. It is possible that you may end up being paid more than you were going to in the first place, but it’s not going to be double what your stipend was to begin with. And so there’s plenty of people who are caught by surprise by “what I just won funding, what do you mean you just take away my other funding?” No, that’s definitely how that works everywhere. There may be some room for negotiation and so forth, but that’s how the standard situation works. But I’m really glad to hear about your situation as well. So you know, now that you have been through the whole thing, what could have been done on your behalf and wasn’t. I don’t know. This is something that I’ve never heard of, of a student having a proactively ask for, so of course you wouldn’t have known, but I guess in the future, anyone listening who receives extra fellowships in some manner, make sure that you’re not going to run into any kind of cap, or whatever exceptions need to be made are going to be made on your behalf. Is that your advice?

Proactive Steps to Avoid Getting Over-awarded

08:54 Dessie: Yes, that is definitely my advice. I think something else too that really ties into this, that I experienced, is I got another fellowship for travel in spring and of course this time I was like, “hi, can you please write this letter and send it to financial aid? “And they were able to do that. But I came upon a situation this summer where there was something the university was going to pay for and they weren’t able to pay for it the way that they want it to. I had gone to my college and I said, I need help figuring out how this thing is going to get paid for, but it can’t be a fellowship because I’m scared I’m going to get over awarded again and I’m going to owe it. My college was really great at hearing that concern and trying to work with me on it, but what ended up happening in the meantime is that the graduate school at my university granted it as a fellowship anyway. One of the things that I think is a kind of a broader issue is that when we’re getting loans or we’re getting grants, we have to accept them and there’s usually some paperwork that we have to go through promising whatever and making sure we fully understand the impacts, but I was awarded a fellowship without my permission basically. I think that the school has figured it out, so that way I won’t be over awarded and this won’t impact me, but I also think that’s why I said at the beginning, it’s really important to know how things are being classified and categorized on your behalf because maybe something is a fix, but then all of a sudden six months down the road you’re being asked to pay it back. I think keeping an eye on that is really important.

10:15 Emily: Yeah. I mean, it sounds like you were taking the proactive steps the second time around that you knew to take, and yet, as you just said, they can just push these things through into your student account and there’s no process around it. It’s totally on their end and they have control over it. But I guess, did it just end up being that they just took it back like, “Oh, we gave it to you, now we’re going to take it back and award you the money in some other way?”

10:40 Dessie: They ended up just doing what I was talking about before and doing the right amount of paperwork to explain why this is an educational expense and all of that. I think it was handled because they knew that there were some extra steps that needed to be taken. But I think another thing too is you asked me how I found out about all this. Like so many other students at tax time, it really became a “you owe this money.” I think too, it’s easy for us to just think like, well this was only, you know, $1,000 here or $1,000 there. But it really adds up. And for most graduate students, we’re not in a super comfortable financial place. So even a surprise tax of a couple of hundred dollars can really set you back.

11:20 Emily: Yeah, and sometimes I think it’s easy to forget the academic year and the calendar year don’t line up, right? So you could be receiving fellowships maybe in two different academic years, but if they fall in the same calendar year, then it’s all going to add up at that year-end tax return.

Commercial

11:40 Emily: Emily here for a brief interlude. Tax season is upon us and while no one loves this time of year, it’s particularly difficult for post-bac fellows, funded grad students, and postdoc fellows. Even professional tax preparers are often thrown for a loop by our unique tax situation. And don’t get me started on tax software. I provide tons of support at this time of year for PhD trainees preparing their tax returns. From free articles and videos, to paid at-your-own-pace workshops, to live seminars and webinars for universities and research institutes. The best place to go to check out all of this material is pfforphds.com/tax that’s P F F O R P H D dot com slash T A X. Don’t struggle through tax season on your own. Visit my website for the exact information you need in the most efficient form available. Now back to the interview.

Tax Consequences of Being Over-awarded

12:44 Emily: Okay, not only did you, you know — Hey, you received award funding. Awesome. Got that. Oh no, you have to pay it back to the school. Ridiculous. You have to take out student loans, do that. So essentially, with some middlemen, you were just taking out student loans to go to conferences, which is probably not a decision, it sounds like, you would have made, had you known that was going to be outcome. On top of that, travel and research is not a qualified education expense for making fellowships tax free. So you end up with this tax bill on top of all the other stuff that’s happening. How did that play out?

13:19 Dessie: I think one of the things that I knew when I was changing labs is that I knew that a portion of that fellowship money, I knew it was untaxed* and I was gonna need it. So I was able to put that aside. What surprised me is when I sat down with my accountant and she put two and two together, that all these other things had been categorized as fellowships, the amount I had set aside to pay taxes on was not nearly the amount of money that I needed. That was obviously a huge strain. I’m lucky enough that I have a partner who works, but we did end up having to go on a payment plan to the IRS because I just couldn’t afford to come out of pocket the amount that I owed.

[* By ‘untaxed,’ Dessie is referring to the fact that income tax was not withheld for her on this portion of her income, not necessarily that it is tax-free.]

13:57 Emily: At the point when you were working with your tax preparer, at what point in tax season was that? Were you getting ready to file and you found out that, “Oh wait, I’m going to owe more than I had set aside?”

14:08 Dessie: It was right at the end. There was no fixing it. I getting ready to file taxes and she’s like, this is not looking good, and it was what it was at that point.

14:18 Emily: Not all the listeners may know, but some people might hear, maybe from their parents or something, about filing extensions. So they get another, I don’t know, six months or something to file your tax return. You do not get an extension on actually the tax that you owe. You only get the extension on the return. So if you’re finding out in March or April that you owe a tax bill and you’re not prepared to pay it, as you said, graduate students typically live without much margin in their lives. If you find that you owe a tax but you’re not prepared to pay it, really probably the best thing to do is what you did, which is to go on a payment plan with the IRS. A lot of people would say, “Oh my gosh, the IRS, I’m so afraid I don’t want to talk to them. I don’t want to deal with them,” but actually that’s the worst step you can take, is not to talk to them. Did the payment plan work out okay? Did it end up being all right that you could pay a little bit over time?

15:06 Dessie: I’m still on it to this day. I owed a chunk and there’s only so much I could put towards it per month. So yeah, it has worked out. I’m making my payments so I haven’t gotten in trouble with the IRS, but it isn’t a new bill now every month that I have to pay. I think too, just thinking about this calendar year and the implications for next tax season, I think now I’m just very closely watching anything financially that comes through the school just to make sure I don’t get into this situation again. I know now there are ways that your department or your college can help you, and making sure that these expenses are processed the way they should be as true education expenses and not as extra in your life. And just keeping an eye on that. I think especially as I get into the fall, I will definitely be following up with my administrators and saying, “Hey, just want to make sure I see this here. Was there something that went with this to make sure that I’m not getting a bill for being over-awarded again, or I’m not having any more tax implications than I already know I will have.”

Saving Money for Taxes When Your Fellowships Do Not Have Tax Withheld

16:08 Emily: Right. At this point, now that you’re so aware and you’re so proactive about everything, are you filing quarterly estimated tax or does your additional tax due not rise to that level of necessity?

16:22 Dessie: It doesn’t rise to that level, but I am always putting stuff aside. Even when there are things that should be categorized in a way that I won’t have to worry about that, I’m still always just taking a certain percentage and putting it aside, because I think in my situation, the worst case scenario is to have what happened this year and be totally surprised and unprepared, because that’s exactly what happened.

16:42 Emily: Can you tell the listeners a little bit about your system for setting money aside? Because maybe they want to know, mechanically, how you do that.

16:48 Dessie: Yeah. I am not an accountant so I don’t have this down to any kind of science. It’s just kind of what I’ve found has worked for me. So anytime that I get any kind of award through the school, whether it be for travel or whatever else, it could be research money, I always take about 30% of that and I put it in a savings account. And that seems to be kind of a pretty safe estimate of you definitely won’t need to pay more than that, and so I think that’s been my system now. Even when I make requests for money, I always keep that in mind, because I think something that I’ve watched other students go through is they ask for exactly what they need, forgetting about that tax buffer. And so you might end up short or paying back necessary money later.

17:33 Emily: Yeah, good idea. I do think 30% is a very good margin, probably more than you’ll need, but better to be on the safe side than on the sorry side, as you definitely found out. Do you have like a separate savings account that you use for that or something?

17:46 Dessie: Yes, I have a savings account that I just don’t touch. I kind of joke with my partner, that it’s like the savings account that you don’t use as a savings account. There is no level of emergency that could make me touch that money. I pretend it’s not there because for all intents and purposes, it’s not mine. It’s the government’s, and I don’t want to end up in a situation. I mean it’s August, right? And I’m still on a payment plan for this past year’s taxes. I don’t want to have to do that again.

18:12 Emily: Yeah, I do the exact same thing. When I was in graduate school, some years…Well, I guess it wasn’t in graduate school, but it was when I did my postbac, taxes weren’t being withheld. I had to pay quarterly estimated tax at that time. I started doing the exact same thing. I set up a separate savings account, I have it nicknamed tax, put money in there as I get money to come in, withdraw from it as I was paying quarterly estimated tax. But I wanted to say that I do the exact same thing as you, which is that I don’t think about that tax savings account as being my money. Right now, when I’m self employed, I also have the responsibility of paying quarterly estimated tax. And so I actually calculate my, or our family’s net worth every month, on the first of the month, and so I calculate two numbers, which is one my technical net worth, which includes the tax money in it, and then what I label as my true net worth, which subtracts that tax savings account balance out. And I say, “Nope, I don’t even think of it as being mine right now because, as you said, I know I just have to hand it over to the IRS in a few months.” I don’t want to think of it as accessible at all, in the meantime. So yeah, thanks for sharing about that.

Final Words of Advice

19:16 Emily: Is there any other final advice around the situation that you would want to tell someone else so they don’t get into the same kind of problems that you did?

19:24 Dessie: Yeah, just kind of recapping what I said. So I think, of course, the conversation that fellowships are untaxed* is just a broader conversation we need to be having in general because I don’t think a lot of people know that. But again, just monitoring how things are being processed for you and if they’re technically being categorized as a fellowship. Then, I think that for the most part students are pretty safe. I don’t want to create mass panic as far as this cap goes. If you’re just talking about you just have an RA or you know, just the little student loans or you just have a TA. I think where you start to get near this cap is when you’re doing a lot of research awards and travel awards and teaching where it’s on top of what you’re already getting. I think for students that might have multiple things going on, like I clearly had, making sure you’re having a conversation and knowing where that line is so that way you don’t cross it because the way that they balance their books is you’re not going to know until you’re far down the road and the money is already spent. It’s going to be the next semester. So just keeping an eye on that and honestly just reaching out and asking your financial aid office and saying “I know that there’s a certain amount of aid that we’re allowed to get. What is my number?” So you can kind of monitor it yourself because I really think that for most people, you’re better off saying, “No, I’m not going to take that award this semester. No, I’m not going to get this or do this now” and waiting, so you don’t cross that line and end up having the money need to be paid back.

[* By ‘untaxed,’ Dessie is referring to the fact that income tax was not withheld for her on this portion of her income, not necessarily that it is tax-free.]

20:44 Emily: Yeah. Or just be aware, as you were saying earlier, that these letters or whatever can be written so that the money goes on top. So it sounds like, at least your university, your department, it wouldn’t be like, oh, your advisor just wants to pay you more or someone wants to just like give you a fellowship. You’re going to run into problems with that. It has to be something that’s justifiable under their system for raising their cap on an exception basis to allow that award to go through.

21:10 Dessie: Right, and I think too, just noting that the people that work in financial aid may not be as familiar with why research money or why conference money is an educational expense. So things that you might see and go through and you think, “Oh yeah, that’s totally an expense for my education. Anyone would see that?” No, you might have to justify it and they might need, you know, justification from your department on why this is important for your education.

21:32 Emily: Yeah. And I will just add that financial aid professionals and so forth, they’re not going to touch this tax issue with you. They’re going tell you to go away if you try to ask them tax questions. But in the area of how much you’re supposed to be awarded and what the education expenses are, they are the experts in that area. So you can definitely go to them with those kinds of questions. Just don’t ask them, “what’s my tax bill going to be?” They’re not going to answer that. But, yeah, among that subject matter, they are the best people to go to, I think. It sounds like you’ve developed a little bit of a working relationship with those people.

22:04 Emily: Dessie, thank you so much for giving this interview and sharing the story. I think it’s really unfortunate how it worked out and also just that you were saying that you didn’t catch all of this until the following calendar year or the following semester, naturally. That’s how these things work. Of course you wouldn’t, but because it happened so late, it sounds like the proper paperwork couldn’t have been pushed through in the past. I just want to ask the concluding question that I ask of all my guests, which is what is your best financial advice for another graduate student or early career PhD?

22:34 Dessie: I think asking questions. I think that early and often you should ask questions about the money that you’re getting, where it’s coming from, how it’s classified, and just always not being afraid to shoot financial aid and message and say “Hey, this has come through. Is there anything I need to do with this?” Because I think everyone, us included, but also the financial aid folks would rather be proactive about dealing with a problem rather than getting the early spring email, which was “what is happening, I can’t pay you a couple of thousand dollars.” I think just always asking questions and not being scared to ask about how these things impact you. Outside of academia, people wouldn’t hesitate to ask questions about their paycheck, right? And so we need to kind of be thinking about the same way. If something was different on your paycheck, you would ask why or what’s going on and how you need to deal with it. So just not being afraid to try and talk to people about what’s going on with you so you don’t get in a bind.

23:28 Emily: Yeah, absolutely. And like you said earlier, you don’t have to accept a fellowship. It can just be pushed through. And likewise for some other people, they might not even really be aware of how they’re being paid. They’re just kind of receiving a paycheck and they don’t really know is it from an assistantship. I mean they would know if they were teaching your class, right? They know if it says teaching assistantship, but is it a fellowship, is it an RA, I don’t know. The roles, like what you actually do for each of those things, are pretty much the same. So you might not even be aware until you get a W2 at tax time or don’t get a W2 at tax time, what happened in the previous year. Then, if any adjustments need to have made, then it’s too late, right? Then the tax year has already ended. So totally want to underline that advice — know why you’re being paid, know what kind of tax forms you’re going to receive.

24:10 Emily: I just want to add in a final note for the listeners, if there’s anyone listening who is receiving a fellowship, even a small award, like what Dessie’s been talking about during this interview, you should look into whether or not you need to file quarterly estimated tax. I’m going to link in the show notes my massive article on quarterly estimated tax. And I also have a workshop on that that’s linked from that article. So I’ll link to both those things in the show notes. Please note that the deadlines for quarterly estimate tax are in mid April, mid June, mid September and mid January of every year, usually the 15th of the month or the business day following. So keep those deadlines in mind. If you are receiving a fellowship, you might not have to pay quarterly, but at least you need to investigate and figure out whether or not it’s your responsibility, or whether like what Dessie’s doing, you can just set the money aside and leave it until the end of the year and pay it all at once with your annual tax return.

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25:01 Emily: Thank you again Dessie for coming on and giving this interview and giving this word of warning to all the other graduate students listening.

25:08 Dessie: Thank you for having me.

Outtro

25:10 Emily: Listeners, thank you for joining me for this episode. PFforPphDs.com/podcast is the hub for the Personal Finance for PhDs podcast. There, you can find links to all the episode show notes and a form to volunteer to be interviewed. I’d love for you to check it out and get more involved. If you’ve been enjoying the podcast, here are four ways you can help it grow. One, subscribe to the podcast and rate and review it on Apple podcast, Stitcher, or whatever platform you use. Two, share an episode you found particularly valuable on social media or with your PhD peers. Three, recommend me as a speaker to your university or association. My seminars covered the personal finance topics PhDs are most interested in, like investing, debt repayment, and taxes. Four, subscribe to my mailing list at PFforPhDs.com/subscribe. Through that list, you’ll keep up with all the new content and special opportunities for Personal Finance for PhDs. See you in the next episode, and remember, you don’t have to have a PhD to succeed with personal finance, but it helps. The music is Stages of Awakening by Podington Bear from the Free Music Archive and is shared under CC by NC. Podcast editing and show notes creation by Lourdes Bobbio.

Income

Links Mentioned in the Episode

Introduction

Will You Please Introduce Yourself Further?

Benefits of Universal Basic Income (UBI)

Abundance Mindset, Higher IQ

Scarcity Mindset Damages Mental and Physical Health

UBI and Job Flexibility

UBI Facilitates Entrepreneurship

UBI and Social Safety Nets

Targeted Interventions Beyond UBI

Regional Cost of Living Considerations

Psychological Implications

Regional Supplements

UBI Increases Mobility

Commercial

The Basic Income Podcast

How to Fund UBI in the U.S.

Enact Changes to the Tax Code

Shift Tax Programs and Brackets

UBI and Graduate Training

UBI and Financial Security

Parallel: UBI and Fellowship Income

Final Thoughts on UBI and Academia

Value of Teaching and Shifting Landscape in Education

Tell Us More About Your Podcast

UBI and Healthcare, Education

Best Financial Advice for Another PhD

Outtro

Links Mentioned in This Episode

Teaser

Introduction

Will You Please Introduce Yourself Further?

What Role Did Your PhD Have in Starting Your Business?

Jim’s Entrepreneurship Journey

Relevant Technical Skills Gained During PhD

Inspiration While Working for the Democratic National Convention

How to Gain a Wide-Reaching Audience

Evolution of ShareProgress

Consulting as a Stage of Growth

San Francisco Venture Capital (VC) Environment

Current Role in the Business

Financial Independence and Early Retirement (FIRE) Movement

Business Advice for Early-Career PhDs

Advice #1: Talk to People

Advice #2: Find Your Focus

Commercial

Should Entrepreneurs Move to San Francisco?

Advocacy for Universal Basic Income

Small Business is the New “Big”

Changing Mindset Around Universal Basic Income

Outtro

Links Mentioned in This Episode:

Further Reading:

Teaser

Introduction

Will You Please Introduce Yourself Further?

Kelsey’s NSF GFRP Workshop Updates

Major Decision Points for NSF GRFP Recipients

When To Start Receiving the Stipend

Consider Timing (and Adequate Payment) for TAships

Check with Your Advisor About Research Grant Cycles

Are You Listed as a Dependent on Your Parents’ Tax Return?

25% TAships Possible During GRFP

Financial and Career Opportunities for GRFP Recipients

Get the Snowball Rolling, Start Early

Internship and International Travel Opportunities

Even Without the GRFP, Talk to Your PI About Collaborations

Timing of Internship Programs During Fellowship

Design a Custom Internship

Commercial

Financial Advice for Fellowship Recipients

File Estimated Quarterly Taxes (NOT Yearly)

Personal Finance for PhDs Tax Center

Start Saving Immediately

Stipend Negotiations and Bonuses for Fellowship Recipients

Details on Kelsey’s NSF GRFP Course

Focus on Broader Impacts, Know Your Audience

Best Financial Advice for Early-Career PhDs

Outtro