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interview

How to Successfully Plan for Retirement Before and After Obtaining Your PhD

April 8, 2019 by Jewel Lipps

In this episode, Emily interviews Dr. Brandon Renfro, a finance professor and financial advisor. Brandon shares the tortuous path that led him to his current faculty position at East Texas Baptist University and side business in retirement advising. They discuss the long-term financial effects of doing a PhD – both positive and negative – and how to have a successful retirement even if you can’t save (much) during your PhD training.

Links mentioned in episode

  • Tax Center for PhDs-in-Training
  • Volunteer as a Guest for the Podcast 
  • Brandon Renfro, PhD, Retirement Planning and Wealth Management

PhD plan for retirement

0:00 Introduction

1:05 Please Introduce Yourself

Dr. Brandon Renfro has a PhD in Finance. He is both an academic and a practitioner. He advises retirement advising for individuals. He does financial planning while being a tenure track professor.

2:02 What was your career trajectory?

Brandon says that he “walked backwards” or stumbled into his PhD. As an undergraduate, he planned to go to law school. He was advised to major in business in preparation for law school. He took an American enterprise course and saw a presentation about the time value of money in the retirement planning context. This presentation inspired him, so he majored in finance and loved it. He went to law school but says he crashed and burned. He was in the military and had GI bill benefits. He decided to use his GI bill benefits for an Master of Business Administration (MBA). He asked his MBA advisor about adjunct teaching. He had to have 18 graduate hours in the discipline to teach a course. He discovered he loved teaching. He decided he wanted to teach full time. He feels fortunate that he got a tenure track position at a liberal arts college in Louisiana, where he worked for three semesters. Now he is in his third semester at East Texas Baptist.

Emily points out that Brandon tried stuff and saw what stuck. Brandon agrees that this is important to explain to students today. He says many students set a goal and stick to it no matter what, even if the path isn’t right for them. He says there is a time when you should recognize if you don’t love what you’re doing and you should try something different. Brandon says he would tell his 18 year old self to major in finance, but at the time it didn’t occur to him.

Emily asks how Brandon handled the sunk costs of going to law school. Brandon clarifies that he didn’t meet the GPA requirements to continue law school but he wasn’t sad about it. He says he was miserable in law school. He had taken out loans to pay for the year in law school. He says it was $20,000 that he spent to learn that he didn’t want to be an attorney. He says if he looks at it like it’s money he spent to learn that he loves being a finance professor, it was worth it.

7:47 Given that a person has decided to do a PhD and maybe a postdoc, what are the effects of their financial outlook?

Emily starts by explaining that graduate students, postdocs, and early career PhDs have a lot of anxiety around saving for retirement. Most of these people are in their 20s or 30s and they know they are supposed to be investing for retirement. But planning for retirement feels overwhelming in the context of their competing financial demands, like student loan payments or saving for a house down payment, coupled with their suppressed income for an extended period of time.

Brandon says that if you put off starting a career to do a PhD, this will make saving and preparing for retirement a little more challenging. These are foregone years of savings. However, academics have the ability to work past typical retirement age. As a professor, you can work longer and save money for retirement for more years, even if you start work and start saving a little later in life. Emily clarifies that PhDs can add years on the back end, instead of on the front end, to the total years that they can work to save for retirement. PhDs can do this because their work is fairly intellectual, and hopefully they get better with time. It’s less daunting to add years at the end in these career paths than others. Brandon says it’s (physically) easier to talk about what you know than it is to work on a factory floor, and you can prolong the years you do this kind of work. Even as PhDs reach retirement age, they have options to be an instructor, lecturer, adjunct, or consultant. You can work less than a full time load, and still capitalize on your years of experience.

Brandon says even while you’re working in your 30s or 40s, you have the ability to leverage expertise outside the classroom. Even if you are working a full time tenure track position, you have a lot of knowledge that you can leverage in industry, even while you’re teaching. Emily shares that when she was an engineering PhD student at Duke University, she saw plenty of professors had consulting businesses or wrote books. In academia, there are many ways to step outside your primary role and leverage your expertise. Emily says that there are plenty of opportunities to have side hustles all through your career. She is part of a community of self employed PhDs, and many people’s self employed job is on the side of their full time job. Brandon believes there is a lot of potential for academics to be self employed. He says even if you were the lowest ranked student in the lowest ranked PhD program, you still have knowledge and you are already part of a select group. Emily says any PhD can find a market where their skills are valuable. They give examples of formatting and copy-editing and tutoring.

17:13 How can someone handle the income jump after the suppressed income period of being a trainee in a PhD or postdoc?

Brandon says in one phrase, avoid “lifestyle creep.” When you suddenly go from an undergraduate or PhD student lifestyle based on lower income to receiving a full time income, you need to be mindful to not immediately start living at the new income. He says you don’t need to be extremely frugal, but use a moderate amount of your new income to build your emergency savings, pay down consumer debt, and pay down student loans in order to be much better off in the long run.

Emily shares the standard personal finance advice to commit a large percentage of your raise to your financial goals. Either all of the raise or as much of the raise as you can, put it towards goals instead of your consumption spending. She says it applies even more when you have a large income jump. Most of it should be used to accelerate financial goals. When Emily and her husband finished their PhD programs, they applied this concept to their new “real jobs” income. They had several financial goals that they focused on and avoided lifestyle creep.

Brandon shares his story about buying a house. He was unsure where he would get his tenure track position, but he wanted to build equity without committing his family to a large mortgage payment. He bought a small rent house before they bought a house to live in. Emily brings up that some people rent their properties as they move, in contrast to how Brandon purchased the property purely as a rental property.

23:40 Grad students and some postdocs don’t pay into the social security system. What are the long term effects of missing out on these years of contributions?

Brandon explains that social security benefits are based on 35 years of covered earnings. Essentially, it’s an average of your highest 35 years of earnings. If you’re starting to contribute later, do the math. If you’re in your early 30s, you may be in your late 60s before you have 35 years of covered earnings. The issue is that your benefit will be calculated with some zeros in the 35 year average, which skews down your average. When you’re on the back end of your career, this may influence your decision to work for a few more years to replace some of the years where you contributed zero dollars to social security.

26:59 What steps can someone who’s in or recently been in PhD training do to mitigate negative effects of lower income and not contributing to retirement?

Brandon brings up the psychological benefit of being used to living on a small income. He says to continue to live like that for a couple of years so that you can build yourself a financial cushion and start saving for retirement. He says eventually the feeling goes away and you get used to the new level of income. Psychologically, it’s harder to start saving for financial goals later.

Emily says that this is classic personal finance advice. Sometimes the lifestyles of PhD students are lower than those of college students. She says it’s difficult to deflate lifestyle. You might see the higher paycheck from your first real job, then you lock yourself into higher housing costs or buy a new car. It’s difficult to take a step back, but it’s much easier to keep a similar lifestyle and put the new income to your financial goals and slowly work up your lifestyle.

30:16 If a person starts saving during graduate school, what kind of effect can that have on retirement?

Brandon explains the first presentation that he saw on the effect of compound interest. If you started when you were 18 years old and you saved just $2,000 per year in a retirement account, you would have a million dollars for retirement if you simply earned the average market return. He says the same is still true if you start at 30 or 32, but there are a few less years for compounding to take effect.

Emily says that even during graduate school, saving a couple hundred dollars a month is accessible. It’s not a thousand dollars every month that you need to save. The earlier you take these steps, the more and more impact it can make. It really does make a difference to take these steps earlier.

Brandon adds that at least, don’t make negative steps. Buying a cheaper car or cheaper clothes can go a long way. Emily says that the professional students, like law students, were living a higher lifestyle even though they were living on loans. She says the smallest amount of debt that you have to take on during training will make it easier for you in a few years.

35:50 What do you do for clients?

Brandon can help with anything within realm of retirement planning. He can help someone starting out. He can help graduate students and postdocs sort through their different options for retirement plans. He can help with decisions about how to invest within retirement plans. Brandon encourages you to take retirement very seriously and to think very hard about putting off retirement. He says it’s really hard to make a strong case against contributing to a plan with an employer match. He says employer match is essentially free money. Emily says an employer match is a 50% or 100% return on investment.

Emily clarifies that someone looking at different options can ask Brandon for help considering which option to prioritize. Brandon can help overcome “analysis paralysis.” Brandon says something is almost always better than nothing, and you need to just do something. He encourages you to envision your retirement and what your financial goal looks like.

40:03 Final Comments

Brandon’s contact information is at brandonrenfro.com. If anyone has a question about something that he hasn’t published an article about on his website, send him an email and he will write about it!

41:15 Conclusion

Making Ends Meet on a Graduate Student Stipend in Los Angeles

March 25, 2019 by Jewel Lipps

In this episode, Emily interviews Adriana Sperlea, a PhD student in computational biology at the University of California at Los Angeles (UCLA). Living in Los Angeles is financially challenging to say the least, and Adriana has found ways to improve her cash flow over time, such as by doing a summer internship, moving into subsidized graduate housing, living car-free, and budgeting intensively. She has even recently started contributing to a Roth IRA! Adriana and Emily additionally discuss how Adriana discovered that she owed a large tax bill on her fellowship income and how she paid those back taxes and started paying quarterly estimated tax.

Links mentioned in episode

  • Tax Center for PhDs-in-Training
  • Volunteer as a Guest for the Podcast
  • Why You Should Invest During Grad School
  • Quarterly Estimated Tax Workshop for Fellowship Recipients

grad student los angeles

Teaser

Adriana (00:00): I tell everyone, I, I’ve told people in my lab being like, no, you have to do this. It’s simple and it’s easy, and it can help you a lot.

Introduction

Emily (00:15): Welcome to the Personal Finance for PhD’s podcast, A Higher Education in Personal Finance. I’m your host, Emily Roberts. This is season two, episode six, and today my guest is Adriana Sperlea, a PhD student at UCLA. Adriana shares her detailed budgeting process, how she keeps her expenses in Los Angeles in check, and what a difference doing an internship made in her financial life. We also discussed the mistake she made with her taxes while receiving a fellowship and how she got that aspect of her financial life back on track. Without further ado, here’s my interview with Adriana Sperlea. I’m welcoming to the podcast episode today, Adriana, who is joining us from, uh, Los Angeles. She’s a graduate student at UCLA, and in today’s episode, we’re covering budgeting, you know, the big challenge of living in a high cost of living area on a grad student stipend. Um, she’s doing really well with this, and she’ll tell us all about her process and what financial goals she’s able to accomplish, and then also about something that happened in her second year of graduate school, which is a big, uh, financial mishap, financial challenge that she had to overcome. And we’re talking about how to, one, not let that happen to you, and two, if something big like that does happen, how to work through it and how to recover from it. So that’s a subject for, um, today’s episode. So Adriana, thank you so much for joining me today.

Please Introduce Yourself

Adriana (01:40): Yeah, hi. It’s great to be here.

Emily (01:43): Uh, so first question right off the bat is, you know, just take a moment to introduce yourself to us, where you are, what you’re studying, and so forth.

Adriana (01:50): Yeah, so my name’s Adriana. I, um, go to UCLA for graduate school. I’m in the bioinformatics program there, uh, which is actually an interdepartmental program, so we don’t have our own department, uh, which sometimes causes all, like, funding gets complicated also. Um, yeah, and I live in Los Angeles. Um, I’m, and I’m actually an international student, so I’m originally from Romania, uh, which also adds a wrinkle to the funding situation.

Emily (02:15): Yeah. Okay, great. Um, and so what, what are you making there? What is your stipend?

Adriana (02:20): Yeah, so, um, we’re, I’m pretty fortunate. We’re in a fully funded program. The stipend is 30, around $32,500 a year, I think it is now. It goes up a little bit every year with inflation and stuff. Um, and so that’s before tax, like after tax, it comes out to about 28,000 a year, I think. Um, which what I know is that every year I get, every month I get $2,400 into my bank account.

Emily (02:45): Okay. And how long have you been there?

Adriana (02:47): So this is my fifth year, that I’ve been here for.

How do you live within your means in Los Angeles?

Emily (02:51): Okay, great. You have long experience then, um in Los Angeles. So, um, right off the bat, you know, when, when we were prepping for this episode, I know about you that you live, uh, within your stipend, you live within your means, you’re not having, you know, loans and so forth coming out for you. And so, um, why did you do that during graduate school? Because I think some people might look at living in LA and living on, you know, 30 some thousand dollars a year and say like, oh gosh, this is gonna be really, really tough. I’m gonna need some extra support from here or there. Um, so why, why did you per not not pursue any of those routes?

Adriana (03:31): So, um, it basically wasn’t really an option for me to pursue those routes. Um, a I don’t have any extra support from my family, um, just because they can’t really afford it, and they’re also far away from me. They’re still back in Romania. Um, and because I’m an international student, I can’t actually take out loans. Um, I, there’s some small private loans that I could probably qualify for now after a few years, but at least in the beginning of my graduate school for sure no. Um, so that was kind of, yeah. Um, the only way I could supplement my income and I did, um, it was actually through, um, internships. So I did do an internship, um, in between my, uh, after my third year of graduate school. But yeah, that was the only extra income, otherwise it would be extremely illegal for me to work, um, federally illegal, so I would get potentially deported. So yeah.

Emily (04:18): Yeah, I noticed that, um, you know, I, I talk a lot about side incomes and stuff and, and to some extent I know that debt is an option, uh, for domestic graduate students. But the thing is that like, if you’re in a tight situation, like some places, some programs, they just plain are not paying enough, and it’s really the international students that are in the hardest squeeze because they have no, as you said, legal, other options out of this. Like, there’s no other way to work, there’s no way to get access to these loans, like that is it, that’s the end of the story. And so I really think that in, in some cases, domestic students can learn a lot from international students on how to make things work because their back is really up against the wall, um, more so than domestic students. So I wanna hear a little, a tiny bit more about this internship, um, so in that year that you, the summer that you did the internship, were you, like, did your grad student stipend stop and you were instead paid through the internship, or did you get like both or how did it work?

Adriana (05:17): Yeah, so I actually got both, but that’s a corner case, like that’s not how it usually works. Um, other people in my program have done internships, and I think depending on when your, where your funding is coming from, most of the time your other funding stops and you just get your internship. Um, in my case, I was on this training grant that, um, encourages, I think it’s actually a requirement of the training grant to do an internship, um, because it’s called Biomedical Big Data Training Grant. So they want to do an internship where you actually explore using big data in the biomedical field, yada, yada. So it’s actually part of the training grant, so they keep paying you. Um, so I got my training grant. I didn’t get, the training grant was actually supplemented by a little bit of a graduate student researcher funding. Um, I didn’t get that part, but I was still getting that and my income from the internship. And I was living in San Diego, which was slightly cheaper than Los Angeles, so that helped too. <laugh>.

Emily (06:08): Yeah. Cool. Okay. So did you actually like sublet your place in Los Angeles for the summer?

Adriana (06:13): Um, so I was living with my boyfriend at the time. Um, so he kept paying. I, I kept paying. Did I pay? It was a little bit ago. I think we had, yeah, I stopped paying half of my rent, I think my half of the rent here. Um, and then, yeah, I subleted a place in San Diego.

Emily (06:29): Yeah. So it’s good that you had the double income because you had the double rent <laugh> for a little while. Yes. Yeah, that can be really tough when you do have to move for just a short, a short period of time. Yeah. Um, okay.

What is your approach to budgeting in Los Angeles?

Emily (06:41): But you had, through that period, I would imagine already this effective like, budgeting system in place. So for, for making it work, for making it on your stipend with no other kind of outside income sources, um, yeah. How, how do you budget? Tell us about your system.

Adriana (06:58): Yeah, so I mean, I think even before budgeting, there’s like kind of the more basic thing where like you kind of have to figure out housing that’s like the first order of priority in LA and it’s hard, but there are ways, I mean, currently for example, I’m in a situation where I’m in graduate student housing that’s subsidized. So it’s actually really affordable. Um, but not, there’s not enough for everyone. So it’s not a, not all graduate students get it. So making it work with roommates, like finding the roommates, like hustling on Craigslist, finding the right deals, like you have to shop around a lot. Um, but there are still ways to find something that can kind of fit in that, like desirable percentage of your income. Maybe. Like, I, I don’t think 30% is feasible in Los Angeles <laugh>. Um, it’ll still probably go up to like 40%, but still, um, yeah, making it work.

Emily (07:47): Well, I would like to hear a little bit more about that one, about the subsidized housing, and then two, just about your, when you’re hustling, when you’re hustling on Craigslist, what are you looking for? How do you find those deals? Because I mean, Los Angeles is a huge city. We’ve got a lot of universities there. I’m sure there are some local people who wanna hear about this because it’s such a problem. And then it will also translate well, I think, to other high cost of living cities. So tell me a little bit more about the, the subsidized housing through UCLA. Like how do you get into it?

Adriana (08:14): So that’s a, that the subsidized housing is a lottery based system. Um, so you just apply and then when someone moves out, they let someone off the wait list in, and I think there’s some random component to it. I don’t really, know, there’s not a, I don’t know exactly how that process works, but you get an email if you got it. So, and you celebrate. 

Emily (08:31): Are you allowed to stay as long as you would like? Or is there a cap on it?

Adriana (08:35): So in the one that I’m currently in, yes. Um, well, no, not, I think it’s nine, seven years, seven or eight years, basically, as long as hopefully you don’t need more than that, so, yeah. Um, but it is month to month, so people sometimes will move out, like not, not at the beginning of a year. Um, and then anyone can take their spot. So, yeah. Um, the, it, it’s actually a great system, but it’s just not enough of it. And I’ve, I’ve talked a lot at UCLA trying to push, um, more housing, more affordable housing for students. It’s needed like Los Angeles, it’s impossible. So

Emily (09:06): How much of a discount are you getting? Like how much is the subsidy?

Adriana (09:10): Uh, well it’s, it’s not like percentage based, but it’s, it’s subsidizing that it is cheaper. So, uh, a one bedroom, we have like a junior one bedroom. It’s me and my fiance now living in it. Um, and we pay, uh, 30, around 1300 for the whole place. So split, I pay like $650 for, for rent, which is amazing for LA.

Emily (09:31): Yeah, 650 sounds like pretty good for a lot of cities around the country. Yeah. So a junior, one bedroom. Okay. Yeah. So it helps certainly if you have someone that you’re willing to share a bedroom with.

Adriana (09:43): Yes, a hundred percent. So that may be, if you have a significant other, then that’s a lot easier. I’ll be honest, I’ve talked to people in grad school that talk about like the advantages of having a partner in terms of rent <laugh>, um, but then also you can share a bedroom. I mean, it’s not ideal as a graduate student. You don’t want to be sharing a bedroom, but if you need to make it work because there’s no other money share a bedroom like that, that can be the case. Yeah.

Emily (10:08): Yeah. I just actually ran into someone, um, not ran into, someone attended a seminar of mine a couple days ago and she said, yep, I live in a, I share a bedroom with my roommate. That is still a thing that is happening, like to make her her budget work. So it’s not, it’s not totally unheard of, not totally out of the question. Okay. I totally agree with you. You have to get that housing component kind of set, and that’s something around which a, a lot of the rest of your budget will, will be determined. Um, yeah. So is there anything else like that? Is housing the one expense that you need to fix first? Or like, what about transportation? Did you figure that out before really working on your budget? 

Adriana (10:43): So I mean, housing and transportation are probably the two big ones. Um, I don’t own a car. Um, so for me it’s like you can pay a little more for rent because I don’t own the cars. I don’t have car costs like insurance and all that, or parking. And so I can live a little closer and not have the car. You can have the car that’s more cost, but you might be able to get cheaper rent. So that’s kind of a balance, I feel like. Um, I mean, if also if you’re somewhere that has public transit, then you, your problems are way easier. But in LA it’s kind of the trade off between car and, um, housing. Yeah.

Emily (11:13): Yeah. Okay. So you live car free. That’s awesome. I love that.

Adriana (11:16): Well, so my fiance does have a car now, so

Emily (11:18): Oh, okay. So you’re sort of, you sort of share a car.

Adriana (11:20): Yes, now I do. Yeah. But I didn’t have one for a very long time,

Emily (11:24): So I, I forgot that I wanted to go back to this, um, this idea of how can you find like, affordable housing? Do you have any tips about that?

Adriana (11:33): Um, yeah, I mean, honestly, a lot of it’s just like spending time and looking around and eventually you’ll find kind of these offers that are not as common. Um, there are in LA there the, there’s this one type of building in LA in particular, I forget what they’re called, but basically they’re like older houses that are honestly like, not earthquake proof, <laugh>, um, they’re the <inaudible> build. They have like a carport underneath. Um, and those, because they’re not retrofitted and they tend to have like slightly older furniture and like the AC is like not super up to date and stuff like that, they tend to go for a little less. And occasionally in some areas there is rent control. So if you can get into a place that has the rent control, then your rent at least won’t go up. Um, so there’s various hacks like that, and it’s all about just like having patience and kind of starting early on the housing search. Um, but I do know that it’s getting harder every year. So yeah, there’s, there’s only so much you can do with that, to be perfectly honest. Like, I don’t wanna like claim that it’s, I have some amazing magic for finding housing because it’s just tough.

Emily (12:37): Yeah. So you’re just saying be patient, um, sort of target, you know, types of buildings that you know, are gonna be less expensive. Yeah, I’m a little concerned about this not being earthquake proof thing, <laugh>. Um,

Adriana (12:50): It’s the truth. That’s how it, I mean, yeah, I don’t know if that like, it’s a good thing to say that you should live somewhere that’s not retrofitted, but I do know those apartments are not well retrofitted. It’s a common thing. And that’s why I think they’re going, a lot of them are being like, replaced by newer developments. Um, but yeah, there’s, I mean, maybe don’t live somewhere that you don’t feel safe, of course. But, um, there, you know, you can definitely sacrifice on things like granite countertops, <laugh>, or the open space. You know, like you’re not gonna get, um, something beautiful, but you can get something livable and clean for, um, more affordable.

What is the system that you use for budgeting?

Emily (13:27): Yeah. Okay. So, okay, so let’s return to the, the budgeting, um. System that you used. I, I’d love to hear more about just how you make it work overall. Once, once you’ve gotten this rent and then like your decision about transportation in place.

Adriana (13:40): Yeah. So I’ve had, for a very long time I had this like spreadsheet system where I would put in my income that comes in every month and I would separate it. I would put in my fixed costs, like the rent that has to be paid and my bills, like my phone bill, um, whatever other bills you have that are just monthly, like if you have a gym membership, if you have other bills, et cetera. Um, if you have to pay for insurance, I guess you have a car, you would have that there too. Um, and then I split whatever is, I did sub subtract that from my monthly income and then I divided into four. Um, ’cause there’s like four weeks in a month. And then whenever I buy something, I entered it, I entered in my spreadsheet and I have a cell that subtracts that from my weekly budget.

Adriana (14:22): Um, and so I always have a sense kind of like, of what I’m spending. Um, and I try, so for me, I, I notice, I think, I think it’s common from a lot of grad students that eating out tends to drive your budget up a lot. Like if you don’t cook your own meals, like that’s gonna be a big expense. Um, so for me it’s all about just, you know, buying my, making sure I buy my groceries on the weekend and kind of prep some type of food and make sure I’m cooking my meals. And if my meals are cooked and I’m on top of that, then I pretty much don’t spend anything Monday through Friday, to be honest. ’cause I just go into lab. I eat lunch that I brought from home and then I come back home. So there’s not a lot of expenses. And so then by the end of the, on the weekend, you still have like a hundred something dollars to work with that. Um, you can, you know, you can go see a movie, you can go out, you can do something.

Emily (15:09): I’ll just recap that for a second. ’cause I wanna make sure I, I really like what I’m hearing. I wanna make sure I understand. So, so you take your, your total monthly income, and then you subtract out all of your, basically your monthly bills. They’re often fixed expenses. Maybe there’s some variable in there, like some utilities or something. I dunno if any of your utilities are variable, but, so you’re subtracting out all those monthly bills and then you take the remainder and you divide it up by the week. And so you have your, your sort of, uh, discretionary or variable spending money for each week, and you start that week by buying your food, your groceries for the week. And you basically just are living sort of a, uh, a lifestyle where you don’t spend much during the week. Like, you know, you’re not, you’re not buying gas, you just said you don’t have a car. You’re not eating out during the week, you’re presumably not doing any entertainment stuff so that when you get to the following weekend, you know, you have, you know, the amount of money you have to work with, uh, in terms of being able to do some discretionary stuff, some fun stuff, um, eating out or entertainment or bar or what have you. Does that sound, is that, yeah.

Adriana (16:08): That’s pretty much it. Yeah. And then, I mean, there’s, you know, you wanna have a little bit of room. I have, I actually have a little bit of money set aside for like, things that come up, you know, like things can come up, so you can’t always anticipate that, like the miscellaneous stuff. Um, but yeah, that’s pretty much how it works. And I mean, um, the other thing is like if I have, I see something that I wanna buy, right? That’s just like something I want that’s fun. I want this new pair of jeans, or I want this, I don’t know, whatever it is. Um, like for example, a new part for my gaming computer, something like that, right? Um, I will, I won’t buy it the moment I want it. I’ll make a list and then at the end of either the month or the week or whenever, after a while, I look at that list and then I go through it and kind of rank the things that I’ve I, that I’ve seen that are like, oh, I would really like to own this. And then the impulse part is out of it, right? So now I can make kind of a cool-headed decision about it and I can see where I’m at, how much can I actually afford? And then I can actually buy a few of those things.

Emily (17:08): Yeah, I love that. I love that idea. So you’re, you’re sort of formalizing the practice of delayed gratification. You have a centralized list that you’re using and you’re adding something catches your eye, you add it to it, and then after some days or maybe a full month or something, you’re reevaluating, do I really want that? Is it worth it? What’s the amount of money I have right now available to spend on it? Yeah, that sounds awesome.

What do you do about large expenses?

Emily (17:30): Um, what do you do about like, large expenses, like if you were to fly home?

Adriana (17:35): Yeah, so I mean, in this past year, because it’s been, um, my rent has gone down since I’ve moved into the subsidized housing, um, I’ve been able to have a little more leeway with that. So I usually have a little more extra money at the end of the month. Um, I have, since my internship, I’ve actually maintained this emergency fund, um, that’s about two or $3,000 in just a savings account that’s not, that I can still access whenever I want to. Um, so usually for big expenses like that, I’ll go into, it’s not really just an emergency fund, I guess it’s more of a big expenses that I, that are necessary though. Um, and I’ll, I’ll use from there and then I’ll gradually fill that back up, um, with money as I have extra during the month. Before that, um, before the internship where I did, I had this like extra money saved up. Um, it was pretty tough. Um, I didn’t go home that often, like all the way to Romania. Um, occasionally my mom would help with that, like she would help with the plane ticket. Um, but yeah, so it, it’s tough when big expenses come up.

Emily (18:47): Yeah, definitely. I mean, I like that you, I mean, it sounds like you had this, this one, one summer, only one summer where you did this internship, but because you were getting that dual pay, because the pay rate was a bit higher, it, it sort of gave your finances overall a boost plus the boost that you’re getting from the subsidized housing. And so kind of between those two, you’ve gotten a little bit ahead, right? You’re able to have this money set aside for kind of whatever comes up. It’s already there, you can draw on it and then refill it. Um, instead of being like, I don’t know, putting something on a credit card and then having to repay that over time, you’re sort of repaying yourself into your own savings.

Adriana (19:25): Yep.

Emily (19:25): Kind of like doing the debt, you know, process. So

Adriana (19:28): I’m super afraid of credit cards, actually <laugh>. So I have credit cards for maximizing like rewards and stuff like that, but I absolutely do not spend money on a credit card unless I have that money in checking like that liquid money. So, yeah.

Emily (19:41): Yeah, that’s perfect. I, I use, in grad school, I, I also was pretty afraid of credit cards for like, the first few years that I was like an adult. And I very strictly stuck to that system of, okay, the money is already in my bank account. I’m spending it just like I would if I were swiping my debit card, but I’m only doing this because I’m getting like extra rewards at the end of the day. I think there’s a healthy amount of fear right there. There’s a healthy level of fear that you can apply to credit cards. Maybe you can take it too far. And certainly some people are not afraid enough, but there’s like a sweet, you know, middle, middle there. Um, okay. Yeah. Is there anything else you wanna say about like, your budgeting or just how you’re making it work in la?

Any other comments about your budget or how you make it work in Los Angeles?

Adriana (20:21): One thing is that recently I have kinda like loosened the reins on how I budget, where I don’t maybe like log everything. Like I would log literally, oh, I bought coffee a dollar 50 into my Excel spreadsheet. I don’t do that anymore in the past year or so. Um, just ’cause you kind of get a sense of it after you’ve done it for a long time of what you can or cannot afford. So you don’t make silly purchases because you know what’s affordable and what’s not. Um, and I think that’s part of the learning system. Like you just, you learn that as you go. So

Emily (20:49): Yeah, you’ve sort of, you’ve internalized your budget. It’s now like in your mind instead of explicitly like in your spreadsheets.

Adriana (20:56): Yep, exactly.

Emily (20:57): Yeah. That’s nice. I, I think I, well, I never completely stopped tracking. I think I also internalized, um, my budget during grad school, but then everything got thrown when I moved. Right? If you go to a new city, you have a different life, different setup. Like you’re kind of, you’re not starting over at, you know, square one, but you’re taking a couple steps back in terms of that, that intuition or that like internalization, I think. So that’s a good time to start doing all the, you know, intensive tracking. Again, if there’s a big shift, you know, in your life.

Commercial

Emily (21:30): Do you know what’s even scarier than an upcoming committee meeting the prospect of preparing your tax return? But it doesn’t have to be that way. I’ve created a variety of free and paid resources to help you get through tax season with as little pain as possible. These resources are specifically for grad students and fellowship recipients postbac through postdoc, check them out at pfforphds.com/tax.

Can you talk about saving for retirement?

Emily (21:59): Okay. And you also told me earlier that you are saving for retirement, you’re contributing to an IRA. Can you tell me a little bit about why you’re doing that and how you’re doing that?

Adriana (22:09): Yeah. I’m not saving much. I’m not even maxing it out <laugh>. Um, but I am saving, so, um, about a year or so ago, I just, so my fiance’s uh, dad actually, he like talks a lot about, uh, investing and stuff like that. And I was like, on Thanksgiving, I was like, I, I need to figure that out. Like, can you tell me what you’re doing? Because you talk like there’s stocks that sounds super complicated. And he was like, all right, this is what you do. You go and you buy this book, it’s called A Random Walk Down Wall Street*, and you read it and then you got this. And that’s what I did. I bought the book and I read and I was like, oh, this is not at all complicated. Like, investing is not rocket science at all. Um, there’s just a weird culture around it that makes it sound complicated.

[* This is an affiliate link. Thank you for supporting PF for PhDs!]

Adriana (22:51): And I think people like to talk about it as if it’s something that’s just rocket science, but it’s totally not. It’s super easy and you can do it at like kind of a low risk. I’d say, um, if you want to, and also this is the best time in your life to do it because it doesn’t matter what, like, oh, the market is crashing, I don’t care. That’s a perfect time to buy more because I only have to have access to this money in like 60 years. So maybe not 60, but you know, like 40 years from now. So it’s actually really not stressful at all. I thought it would be super stressful of like, oh my God, now I have to worry about the market. But you really don’t. The best investment strategy when you’re, uh, our age is to just forget your password or something like that, you know, for your investment account and just don’t look at it.

Adriana (23:34): Um, yeah, so I just used, um, I use a Roth IRA because it’s, um, money that’s after. So I’ve already paid taxes on it, um, as opposed to using a traditional IRA or something else that, um, you pay tax when you take money out of it. So when you retire. And my rationale for that was that I’m in probably in the lowest tax bracket I’ll ever be in, um, because it’s the lowest tax bracket that exists. Um, so this is a good time to do that because my tax, uh, is only gonna go up. Um, and yeah, that’s what I do. I put like $200 every, uh, month in it. Um, and that’s just been a recent thing ’cause I was like, oh, I probably can swing that now because of the rent and whatever. So I just did it and it goes up pretty nicely. It’s just like fun to look at it every once in a while and so that you’ve accumulated money and, um, yeah, it’s, you can actually, because of compound interest, right, you can end up having a lot more money when you retire. And I know you write about this on your blog too, and I, I read a little bit about the that there as well.

Emily (24:35): I just, for, for any listener who is nervous or intimidated about investing, I just want you to go back and go back, you know, three or four minutes in this podcast, listen to exactly what Adriana said like a few times and listen to her like, you know, the transformation that she went through in being intimidated to just asking a very simple question of someone getting a book recommendation, which she just gave to you and just saying, read this book. It’s so simple. We do have a culture of making investing seem a lot more complicated than it is. And like, I guess that’s because people make money off of making it sound complicated. But for goodness sake, that does not need to be, it should not be, it is so simple and, you know, you just put it absolutely perfectly about your strategy and, and why you’re doing it that way. And yeah, everyone just listen to that a few times over again. Um, great. Go pick up a random walk down Wall Street. Perfect. Perfect recommendation. Thank you so much for sharing that. I’m, I’m really glad to yeah, hear that the same thing that I say, but just coming from someone else who, who approached it from a different way and got to the same conclusion and I think it’s exactly right. So thank you so much for that.

Adriana (25:42): Yeah, no, yeah, I’m super into inve. Like I tell everyone, I, I’ve told people in my lab being like, no, you have to do this. It’s simple and it’s easy and it can help you a lot. Yeah.

Can you tell us the story of your big financial mistake from your second year?

Emily (25:51): Exactly. Um, so let’s switch gears and talk about this, uh, big financial, uh, mistake or challenge that came up in your second year. Can you tell us that story?

Adriana (26:02): Yeah, so it’s a little bit of a longer story, but I’ll, I’ll try to make it short. Um, so, um, I guess, so when I started graduate school, I was still taxed as an international student. Um, so what that means is, and so I went to, I was an international student in undergrad as well. I went to college in the US um, and I had never had to worry about taxes because they were always withheld from my, um, any salary I had. So I had some small on-campus jobs in undergrad and taxes always been withheld, right? So I never had to worry about it. Um, and then in my, after one quarter in graduate school, I had officially been here for five years and that’s when your, um, your residency status for tax purposes changes from a non-resident alien to resident for tax purposes. So that’s, it literally just means we can now tax as if you’re a resident, but you don’t get anything else that residents get <laugh>.

Adriana (26:56): Um, so when that changed, they actually, so sorry. No, that’s <inaudible>, it was a long time ago, but when it, that actually changed in June, in June of my first year of graduate school. And so what they did is they retrospectively went and said, okay, so this applies to this whole year. It doesn’t apply just starting after June, so we’re actually gonna give you back $3,000 that we withheld from your stipend because you were an international student and we withhold from international students, so we’re giving you back $3,000. Um, and I was like, what is this money that I’m getting back? Why am I getting it back? I don’t even know what it is. Um, and they’re like, yeah, well, taxes, blah, blah, blah, something, something. So I had never heard of anyone having this issue before. I asked a few of the people in the program like how much money they spend on, they, like, did they pay taxes on the fellowship?

Adriana (27:44): How does it work? Because all my money did come from, so it’s, it’s different and, and you write a lot on your blog, there’s tons of resources on this. Um, I’m like, how it’s different if you’re in a fellowship, taxes don’t get withheld, you still have to pay them. Um, and people were like, oh, I paid about a thousand dollars. Oh, I paid like $2,000. There were just like sums all over the board. And I think part of those are from like people, some people were still getting claimed as dependents on their parents. Some people potentially were just committing tax evasion, I’m not quite sure. Um, it’s just all sorts of like information from so many places. And I was like, okay, well this seems fine. Like, I don’t know, I’m just gonna, I’ll, I’ll put this money kind of away. But I did end up spending a little bit from it that I got back.

Adriana (28:26): And then I didn’t know that after that I have to start, like my paycheck went up and I just had no idea what was going on. And I was kind of like, you know, I was like, if, if something bad happens, I would’ve heard about it, right? Because someone else would’ve had this issue and I would’ve, there would’ve been a big uproar about it, but no, then April hit and I had to do my taxes and I did my taxes and it said, you owe $3,000 in taxes. Uh, which was like, what? Um, and it was pretty scary. Um, like I kind of freaked out about it a little bit, um, the way I, you want me to talk about how I dealt with it too, right? Like what happened next?

Emily (29:04): Yeah, yeah. So like the first part of this story is, it’s complicated a little bit because of your previous status as a, a non-resident alien, but it, it is a similar story to what many graduate students go through often, you know, they enter their programs in the biomedical sciences, it’s very common to be on a fellowship or training grant, uh, non W2 income for a year or two, three years at the beginning of your PhD, maybe you won an outside fellowship and so that, that first year, yeah, maybe you came out of college, your income wasn’t too high, maybe you’re still dependent on your parents. It’s, it’s complicated, but also you have usually very little tax due for that year, if any. But then that’s that first full calendar year that you’re in graduate school when you’re supposed to be paying quarterly estimated tax, but you don’t know to do that.

Emily (29:51): Super, super common. I mean, I meet, I meet people in this situation all the time. You don’t know that you’re supposed to be paying and then maybe at the end of the year you figure out that you, you know, had this large amount of tax that you either should have been paying or at least at that point it’s due all at once. Um, or you know, I’ve talked to people who go several years without making this discovery and so then it just builds up and builds up and builds up. In your case, you did figure it out just one year in, um, yeah. That you, you were, were, you know, going to owe tax a good amount of tax on your stipend and maybe you were supposed to be paying that or maybe not during the year. Um, so yeah, that’s kind of where we are. You see this big bill.

How did you pay the tax balance?

Emily (30:28): How did you, I mean, it sounds like you still had some of that money set aside. Did you use that and then where else did you turn for the balance?

Adriana (30:35): Yeah, so I had a little bit set aside, um, but it wasn’t, I think I had about a thousand dollars set aside. Um, so I still had to pay like $2,000. Um, I did get lucky again in that I was actually from a previous year disputing with the IRS, um, over a thousand dollars that they hadn’t given me back on a return. Um, and it was because of this. Um, so they withheld from me, uh, in that first quarter of graduate school, right? That’s from the previous tax year. And I actually was owed that money back because there’s a treaty between Romania and the US and so when you have a treaty status, you can get your tax money back from the first five years. But UCLA still withheld it and they weren’t giving it back, and it was this whole thing. So the, that thousand dollars finally got resolved at the same time as with this giant tax bill. So I got some money from there. Um, and then I actually applied for a payment plan with the IRS, which you can do. And um, they kinda laughed at me because it was only for a thousand dollars <laugh>. Um, but I did, this is usually people that apply for, those have like giant sums, right? That they have to pay, um, or I’m not sure, but they seem to make, they made it seem, when I talk to ’em on the phone as if, why do you need a payment plan for this?

Emily (31:50): Um, yeah. ’cause you’re a grad student and you can’t make a thousand dollars materialize out of nowhere.

Adriana (31:55): Exactly. <laugh>. Um, so I did a payment plan and they were like, yeah, sure, it’s fine. Because usually the, the conditions are just, you have to not have applied for a payment plan in the past five years, I think, and the sum has to be below something absurd, like $200,000. I don’t even know what it was. It was something that wasn’t close. Um, so yeah, so I did that and then I slowly just kind of paid it off. Um, and that actually happened, a similar thing happened to my fiance where he also did a payment plan because he had a smaller tax bill, but it was still a pretty significant sum that he couldn’t just make a appear overnight. So yeah, we, we both took advantage of that. So that’s a good pro tip I guess to.

Emily (32:32): Yeah, that is um, I don’t think I’ve spoken with anybody. I mean, I’m aware these payment plans exist, but I, I don’t think I’ve spoken with anybody before who’s been on one. So it sounds like it was a pretty easy, positive experience. I mean, a lot of people are very intimidated to even like talk to the IRS, like if they know they have this outstanding balance, it’s like, oh, I don’t even wanna engage with this because, you know, they’re gonna like gobble me alive or whatever. But it sounds like it worked out okay. Right.

Adriana (32:58): Yeah, there’s a lot of time spent on hold because they’re, uh, like when you call them that you, there’s not, the call center is super overwhelmed with calls. Um, but they, they, they were, yeah, they were okay with it, so, yeah.

Emily (33:09): Okay. Yeah, so that’s how you worked through it. You had, uh, the savings still, you had a different <laugh> unrelated dispute being resolved at the same time, plus the payment plan and that kind of got you through that. That’s really, really good to know for anyone who is facing a similar, you know, I’m, we’re gonna be releasing this episode shortly before, um, April 15th, 2019. And so if you are a graduate student and you’re coming up on that, you know, you’re filing your annual tax return or maybe it’s your first, um, estimated tax payment for 2019 and you realize that you cannot pay this, the IRS is a place to turn to for help really. Um, it’s, I guess it’s a little bit like finance. I mean it’s IRS debt, like it’s, you’re sort of financing it through the IRS, but it’s, uh, manageable it sounds like, as long as you can afford to be waiting on hold to talk with them. So I’m really glad that you shared that aspect. Thanks.

Adriana (33:57): Yeah, and I don’t think there’s any interest. They never, there’s, it’s an interest free thing, I think for the most part.

Emily (34:02): Yeah, I think if you totally ignore what’s going on and they’re like, then that’s when penalties and interests rack up. But if you engage with them and start working with them, then they can like waive those fees and, and penalties and stuff. So it’s definitely better to just admit that like, Hey, I know, I know this debt exists, you know, this debt exists. Uh, let’s work on, you know, figuring out how to pay it rather than just, uh, yeah, just sort of trying to run and hide ’cause it’s not gonna work out in the long run.

Adriana (34:26): Yeah, absolutely. <laugh>.

Final Comments

Emily (34:28): Yeah. Well, um, yeah, thank you so much Adriana for, for sharing that with us. Do you have any sort of closing comments about, you know, any, any tips you didn’t get in any other part of this interview?

Adriana (34:39): Budgeting can definitely be tough and kind of it’s time consuming and a little bit stressful. Um, but it’s totally worth it because it’s more stressful to not afford to pay your rent <laugh>. So that’s, yeah. 

Emily (34:52): Kind of what we were just talking about, like it’s, it’s better to just face up, fess up, face up to the reality of the situation always and engage, you know, with what, whatever you need to engage with rather than just trying to run hide because it just, it just compounds the problems really. Yeah. Thank you for, thank you for sharing with that, that with us. And uh, thank you so much for being on the podcast today.

Adriana (35:14): Yeah, thank you for having me. This was great,

Outro

Emily (35:18): Adriana. Thank you so much for being my guest on the podcast today. Show notes for this episode are at pfforphds.com/S2E6. As a postscript, this episode is being released shortly before April 15th, 2019, which is the deadline both for your annual tax return and your quarterly estimated tax payment for the first quarter of 2019. If you’re unsure how to go about calculating and making that payment, please consider purchasing my quarterly estimated tax workshop for fellowship recipients. The prerecorded videos walk you line by line through how to fill out Form 1040es. I also hold a live q and a session once per quarter to answer any questions that arise for you during the process. You can find more information about the workshop at the tax center on my website pfforphds.com/tax. If you wanna get in touch with me, you can email me at [email protected] or find me on Twitter at pfforPhDs or Facebook personal finance for PhDs. If you’d like to receive updates on new podcast episodes and other content, go to PFforphds.com/subscribe. See you in the next episode. The music is Stages of Awakening by Poddington Bear from the free Music Archive and is shared under CC by NC Podcast. Editing and show notes creation by Jewel Lipps.

Purchasing a Home as a Graduate Student with Fellowship Income

March 11, 2019 by Jewel Lipps

In this episode, Emily interviews Jonathan Sun, a second-year PhD student at Yale University. Jonathan purchased a house in New Haven after his first year in graduate school. He shares the process he used to search for and ultimately go under contract on a home, including applying for various incentive programs. But his home ownership goal was nearly derailed; his original mortgage lender pulled out because his fellowship income isn’t reported on a W-2, and he had to scramble to find another lender at the last second.

Links mentioned in episode

  • Tax Center for PhDs-in-Training
  • Volunteer as a Guest for the Podcast 
  • Mortgage Originator Specializing in Fellowship Income
  • Contact Sam Hogan via email: [email protected]
homeowner grad student

0:00 Introduction

1:02 Please Introduce Yourself

Jonathan Sun is a second year PhD student in Pathology at Yale University in New Haven, Connecticut. His stipend is $35,000 and it increases annually. When he moved to New Haven, he started by renting a two bedroom, one bathroom apartment with his girlfriend. He was paying about $1,500 monthly for rent.

3:10 What made you think that it would be a good idea to buy a home as a graduate student?

When he began his PhD program, Jonathan had in mind that he would want to buy a home. He thought between his first and second year would be the ideal time to buy. At this point in his PhD, he would know if he would be staying there for five or six years. Emily mentions that it’s a good idea to learn about the neighborhoods before buying a house. Jonathan agrees that it was a good idea to get to know the city and neighborhoods. He shares that if he had bought a home when he first moved to New Haven, he would have chosen a less convenient or less desirable neighborhood.

Further reading: Should I Buy a Home During Grad School?

5:11 Was your interest in buying a home specific to New Haven or anywhere you moved to for your PhD?

The idea of buying a home occurred to Jonathan when he was interviewing at Johns Hopkins. He saw that homes were affordable near Johns Hopkins. He realized that homes could be affordable even on a graduate stipend. When he chose to attend Yale, he did some housing market research on New Haven and saw he could afford homes there.

When Jonathan was interviewing for PhD positions, he met a current graduate student at Johns Hopkins who owned their house. He didn’t meet any graduate student at Yale who bought a home. Jonathan says owning a home as a graduate student is not that common in New Haven. Emily shares that when she was a PhD student at Duke University, it was fairly common for grad students to own home.

7:20 How did you prepare your finances in the months leading up to buying a home?

Jonathan worked on improving his credit. He says that good credit is definitely important. To get a mortgage at a decent rate, or even to get a mortgage at all, he had to have good credit. Jonathan also searched for incentive programs around New Haven. He says he saved about $10,000 with incentive programs. He shares that while Yale University offered incentive programs for employees, he could not qualify for them as a PhD student. He relied on incentive programs instead of savings because he was paying expensive rent in New Haven.

To research incentive programs, Jonathan talked to a real estate agent who pointed him to incentive programs. Shortly after Jonathan arrived in New Haven, he started working with an agent. Jonathan didn’t have connections to an agent when he started to process. He simply dropped into a real estate office and met an agent there.

9:54 What were the steps you went through to buy a home?

Jonathan started looking for houses with agents about three months after he moved to New Haven. He didn’t start seriously looking until six months after his move. He says that even if you don’t have intention to buy right away, it is important to familiarize yourself with the neighborhoods. He was looking at four different neighborhoods around Yale University. He got an idea of price range for homes and who are the neighbors. This process gave him a firm idea of whether he wanted to rent or buy. Most of the time, he looked at houses through private showings with his agent. He went to just a few open houses without his agent.

During Christmas break, Jonathan thought carefully about whether he should pursue buying a home or not. He talked to his friends and family, and it seemed like the right thing to do. He asked his family if they could help with his downpayent, and made sure to have open communication with his family.

Buying a home took at least two months of seriously looking. Jonathan went through some experiences of making an offer but not getting the house. He recalls three homes that he made an offer for, and there were some other situations where he almost made an offer. He didn’t want to settle for a house that he wasn’t satisfied with. However, his offers were outbid or made too late, and this added to the challenge of buying a home. Emily shares that in Seattle, she hears stories about bidding wars and people struggling to get the house they want, then they end up settling for a home that wasn’t all that they wanted.

13:54 How did you balance the process of buying a home with your first year of graduate work?

After his offers on homes were rejected multiple times, Jonathan felt demoralized. He had lowered his standards for a home. But then when he was browsing an online resource, he found a house that looked perfect. This house ended up being the one he bought. He says it was challenging to balance his graduate work with buying a home, but he was glad he did this in his first year rather than in his second year. He shares the example that on the day that he gave his offer, he was giving a presentation on a paper. He barely read the paper because he was so tired, but he still managed to give a compelling presentation. Right after he finished the presentation, he ran off to give an offer on the house. Much of the stressful part of home buying is waiting to get a response on the offer.

16:01 Tell us about the house that you ultimately purchased and live in now.

Jonathan was browsing online on the day before his presentation. He noticed the house was ten minutes away from where he was living. The house had just gone on the market that day. He pushed his agent to get a showing the very next morning. He got to meet the owner and exchanged contact information directly. The owner was a Masters student, and they had a connection. About two hours after the tour of the house, Jonathan gave an offer of $2,000 over the asking price. This was right after his presentation. He asked to receive a response in one day. The next day, someone else made an offer of $5,000 over the asking price with full cash. Jonathan raised the offer to $2,000 over the other offer. Jonathan’s offer was accepted, and he says that meeting the owner in person helped him get the house.

19:06 How was the process of getting a mortgage?

Jonathan didn’t have his mortgage ready until after his offer was accepted. He did have a pre-approval, but this didn’t work out for him. The lenders didn’t understand his financial situation as a graduate student with a stipend. The pre-approval came from a lender with connections to multiple banks. When you make an offer on a house, it is important for the seller to know that you can afford the house. For a pre-approval, the lender does a very brief credit check on you. The pre-approval shows that you can take out a loan of a certain amount. The pre-approval shows the seller that you can take out a loan for the house. Pre-approvals are very superficial, since they do not ask for a W-2. The lender asks for monthly income and proof that you reliably pay rent.

After his offer was accepted, Jonathan first explored incentive programs. He found an incentive program that stipulated if he stayed at least five years in New Haven, the program would pay at least $2,000 per year and contribute to the downpayment. The application for the incentive program took a while. Jonathan says that ideally the application should be done before submitting an offer. The seller wanted to move out three months after the sale, so this gave Jonathan the right amount of time to sort out the finances.

Jonathan qualified for two incentive programs, but he was happy to get just one because the programs were slow to respond. The incentive programs have a list of lenders that you have to use for a loan. The lenders were local banks in Connecticut. Everything seemed like it would work. He submitted all his documents, but about three weeks before closing, he got a phone call saying that they couldn’t pre-approve of his mortgage because the university wouldn’t be able to provide W-2. The university wouldn’t submit a form indicating that his stipend is guaranteed for 3 or 4 years.

Emily explains that there are different types of pay for graduate students. The W-2 is provided for assistantships and this represents a more typical employment situation. Jonathan says he doesn’t know the name of his pay. He gets the 1098-T, and he simply calls his pay a graduate stipend. Emily says that the 1098-T usually means you are funded through an award or outside fellowship. Lenders get confused by fellowship income. Jonathan says his acceptance letter from Yale says his stipend is guaranteed for several years, but the lender wanted the university to sign a form. The university was unwilling to compromise on signing that form that indicated the stipend is guaranteed. Emily says this “guarantee” of income is strange, because even with a W-2, the typical job is not guaranteed for multiple years.

28:15 How did you resolve the problems with the lender?

Jonathan was calling Yale’s financial office daily. He asked for help from the Dean. He started looking at the other banks on the incentive program’s list, because he had a feeling it wouldn’t work with this bank. There were a few banks around the university, so he went in person to the bank. He talked to a mortgage broker in person. They sat down together, and Jonathan filled out the form during the meeting with the mortgage broker at the new bank near the university. Jonathan resolved the situation because he found someone who was willing to work with him through his unique financial situation.

Jonathan said that this bank offered their own portfolio mortgage with their own requirements. It was harder to qualify for, but it came with a lower interest rates. He had little debt and good credit so he could qualify. It was a different type of mortgage than the first lender offered.

Jonathan was really caught of guard by the phone call from the first lender. It seemed fine, then suddenly he got the call, with no easy way to resolve the issue. Closing got delayed from Friday to Monday, but the closing went very smoothly with the new lender.

32:29 How does it feel to be a homeowner and to be a graduate student?

Jonathan says it feels good to come back to his own house. He can rent out some of the rooms. If he rents out two bedrooms of the three bedroom house, he can cover a good chunk of monthly mortgage. He says this is a great financial decision for him. The mortgage is less than what he paid in rent, plus he has the potential to rent out rooms. Two months after he moved in, he started renting out the rooms. He has two tenants and they are covering good fraction of mortgage payment.

Jonathan has to stay in the house for at least five years. He says that in five years, he will definitely be in a better financial situation from buying instead of renting. He bought in a very good location, in the up and coming neighborhood near Yale. He thinks the market value of the home will increase.

35:25 Have you thought about what you will do when you finish your program?

Jonathan says he has two different options after he finishes his PhD. First, if there’s a good market value to sell the home, he can sell it. Second, the location near Yale University will make it very easy to continue to rent the rooms in the house. He doesn’t see himself working in New Haven after his PhD unless it’s for an academic position.

36:24 Final Comments

Jonathan shares that he had a huge budget for his move, but he didn’t spend very much. He estimates he spent less than $1,000 to move into the house. He moved during the summer, so everyone was getting rid of furniture for free. He used his Toyota Corolla to pick up furniture, and hardly spent any money to furnish the house. He is replacing pieces over time as he saves money. He recommends overestimating expenses for a move.

38:44 BONUS INTERVIEW with Sam Hogan, mortgage industry professional.

Emily chats with her brother, Sam Hogan, who works in the mortgage industry. She asks him about solutions for graduate students and postdocs who are receiving fellowship income but want to buy a house.

Further listening: How to Qualify for a Mortgage as a Graduate Student or PhD, Even with Non-W-2 Fellowship Income

Sam Hogan is based out of Northern Virginia. He works for PrimeLending (Note: Sam now works at Movement Mortgage) and he is licensed in all 50 states. He explains what lenders look for in the risk profile. They are looking for the ability to repay, and to see verification of history of the type of employment as well as the likelihood of employment to continue. Sam says that ten years ago, anyone could get a no document loan. This meant anyone could verbally verify their finances, but this practice led to many foreclosures. Now, lenders require written verification of employment.

Sam explains that in Jonathan’s case, the lenders sent a form for verification of employment to the university. On the form, there is a tiny check box that asks if employment is likely to continue. It is a yes/no checkbox. Universities won’t check this box because technically a PhD candidate could discontinue their PhD by going into the workforce or transferring institutions.

Sam shares that the best approach is to document likelihood of continuation of income. This may be in the fellowship offer letter. Conventional loans look for at least three years of guaranteed income. When it comes to approving loans, it is all about the presentation of the buyer. Sam says to work with someone goal-oriented like yourself, who will be able to over-document your income. For example, you can write a letter about why you got the fellowship, and include that even after your PhD you will have income. This approach ensures you have good presentation to the underwriter. Loan approval comes down to one person’s decision, a human’s opinion. He says to work with underwriters who are flexible and will give you personalized attention.

Emily recommends that PhD students and postdocs work with Sam because he understands fellowship income situations. Sam can be contacted by cell phone at 540-478-5803. He can be emailed at [email protected]. His national licensing number is 1491786. He has a Zillow profile under Sam Hogan.

46:28 Conclusion

This Postbac Fellow Saves 30% of Her Income through Simple Living and a SciComm Side Hustle

February 25, 2019 by Jewel Lipps

In this episode, Emily interviews Maya Gosztyla, a postbac fellow at the National Institutes of Health in Rockville, MD who saves approximately 30% of her income from her stipend and freelance science writing income. Her goals for funding her PhD program applications and upcoming move to grad school and wedding motivate her to keep her expenses low and sustain her side hustle. Maya gives great financial advice for PhDs in transition into and out of grad school.

Links mentioned in episode

  • Tax Center for PhDs-in-Training 
  • Volunteer as a Guest for the Podcast
  • Gradblogger Connect 
  • How Much Tax will I owe on My Fellowship Stipend or Salary?
  • Quarterly Estimated Tax Workshop

postbac savings rate

0:00 Introduction

1:15 Please Introduce Yourself

Maya Gosztyla graduated in May 2018 from Ohio State. She majored in Neuroscience and Molecular Genetics. She started as a postbac at National Institutes of Health (NIH) right after graduation. She is mainly focused on drug discovery research. Her interests are in neurodegenerative diseases in particular. She is applying to PhD programs, with intent to begin her PhD program in Fall 2019. Maya is relieved that she does not have to balance undergraduate coursework with time spent on graduate applications. She also has more time for the interview weekends, which Emily says can be a fun experience.

2:33 What is your income? Where do you work and live?

Maya’s postbac annual salary is $30,000. She works at NIH location in Rockville, Maryland. The cost of living in this location is fairly high, because she is in the Washington DC metro area.

3:26 What was your financial situation coming into your postbac position?

Maya didn’t have any student loans. She says she treated filling out scholarship applications like a full time job, so she was able to fund her entire junior and senior years of undergraduate education. She didn’t spend all of her scholarship stipend during senior year. She has emergency savings fund of about $7,000 since she graduated from college.

4:25 Do you apply the same mindset from your undergraduate scholarships to your graduate school fellowship applications?

Maya says she has been applying to many graduate school fellowships. She applied to the National Science Foundation Graduate Research Fellowship Program (NSF GRFP), the National Defense Science and Engineering Graduate Fellowship (NDSEG), and one example of a school specific fellowship is the Knight-Hennessy Scholars at Stanford University. In addition to her graduate school applications, she has been sending in many applications to go after award money in full force. Emily assures that this strategy is a great idea, because you are certain that you will get paid for your graduate work.

5:58 Where did you move from? How did you manage your finances during your move?

Maya’s rent during college was $350 per month. In Rockville Maryland, her rent is $850 per month. Maya says what helped her most during her move was making a really detailed budget. She used several cost of living calculator websites. Additionally, she doesn’t have tax withdrawn from her postbac stipend, so she had to estimate quarterly tax.

She was in shock when she moved from the inexpensive Ohio city to the much more expensive DC area. She thought she needed to spend as little as humanly possible. For instance, she first moved into a bedroom in a three bedroom apartment. Her portion of the rent was $700 per month, which is the cheapest she could find in the area. She had an hour long commute, and she had to leave the apartment because of a cockroach infestation. Maya advises that people not to choose the cheapest apartment, but to take into account other factors. She says it can be worth more rent money to be closer to work for a shorter commute, and to live in a quality apartment.

Maya used cost of living calculators to get a sense of the maximum expenses she would have in the DC area. She says she spends less than suggested by the calculators. She talked to people who are in the NIH postbac program, because these are people in her age group and income level. At this early career stage, people are willing to share information about income and rent.

10:04 What is your savings rate? How are you saving this amount each month?

Maya is averaging around 30% of her gross income, pre-tax, going into savings. She emphasizes the importance of setting targets and timelines for what she is saving for. One of her specific goals was to pay for PhD program applications, which was well over $1000. She wanted to start an Individual Retirement Account (IRA), since she’s not sure she can have an IRA while she’s in graduate school. Another financial goal is to get married next summer! With her partner, she wants to take a couple of weeks vacation in Europe. She wants to do all of this without tapping into her emergency fund, because she wants to use this fund for her move to graduate school.

Maya has several frugal strategies. She doesn’t have a car, which is unnecessary in DC and major cities. She takes a bus to work, which she says is reliable. NIH will pay for public transit, so she gets reimbursed for her bus expenses. Maya says eating out is really expensive. She cooks almost all of her meals, and she meal preps. She goes out to eat with friends, as a social experience, it’s important to eat food to bond with people. This happens two to three times a month, and they don’t go out for drinks that much either. She views her eating out expenses as paying for access to space and people, and eating food isn’t the purpose. She set a rule for herself that she won’t eat out alone.

She goes to work, gets groceries, finds free stuff to do, and she doesn’t spend on entertainment. Also, she has a side source of income. Maya does science writing as a freelancer. It’s not easy work, but it’s not incredibly technical. She can pick and choose when and what kind of assignments she wants to accept.

15:27 How did you get connected to opportunities for freelance science writing?

Maya started a blog about Alzheimer’s Disease while she was in college. She wasn’t making money from the blog, but she started getting cold emails from people who liked her writing who would commission her for articles. She uses Upward, the freelancing website to find clients. Upward has a fee of 30% from every writing, so she charges more to make sure she doesn’t undercharge for her work.

Emily recommends the academic blogging network on Facebook (now called Gradblogger Connect) as a great resource for people interested in blogging and podcasts.

She doesn’t see science writing as her career. The variable income makes her feel anxious. She’d like to keep writing on the side, because she believes it is important for scientists to write about research for the public. Emily says that a side hustle during the PhD training is useful to figure out if this is what you want to do for your career.

20:37 Do you consider yourself having a financially quiet life?

Maya says that she applies a KonMari method to her purchases. She asks herself questions like, “will getting take out actually make me happier?” She does spend money on flights, because her fiancé lives in Ohio and she travels to see him. Maya observes that people spend money because they feel like they have to. She says it’s not a sacrifice for her to not go out every weekend, because she doesn’t really like alcohol. Emily says that it’s very interesting to apply Marie Kondo’s method to finances, and ask “does this spark joy?” Maya has gone through the introspection to consider what is bringing her high value. When you have low income, you can’t just default to the kind of consumerism you see around you.

23:30 Have you started thinking about how you’ll financially manage the transition to graduate school?

Maya is applying to high cost of living areas, so she feels more prepared for that move. Since she’s lived in the DC area, she will have a better idea of expense in places like Boston and San Francisco. She’s trying not to touch her emergency fund, because she needs it for her moving expenses. She is also trying to make sure that fiancé and her are comfortable in their current low income lifestyle, she wants to avoid the lifestyle creep. Graduate school will be a transition, but Maya will also experience the life transition of combining her lives with her partner.

25:02 Do you have any advice for someone looking at a transition out of college or into graduate school?

Maya says the first thing you have to do is look at what you have and where do you want to be in a month, or year. There is no way to set a savings rate if you don’t have something you’re aiming for. She gives the example that she wanted to save $4,000 for their honeymoon, then she could create a budget with that goal in mind.

She also says don’t forget about taxes. She had lab mates who didn’t know this. They weren’t setting aside money for tax season, and ended up owing. She says you can set up a separate savings account to set aside taxes. Emily says that this blindsides a lot of people. She has created resources on her website to help people estimate their quarterly tax.

Maya says you need to buy things that actually make you happy. She offers the caveat that if something is actually important, like you don’t need to get the cheapest apartment, get one you want. You can keep stock of what you actually care about. Maya wonders if people really know the taste of expensive wine, for example, or if it’s more about expectations. Emily says we may need to shuck the expectations. You have to figure out if something is right for you, if it “sparks joy” for you, and it’s not an expectation that others put on you. Maya says that others don’t pay attention.

Finally, Maya says to keep a really detailed spreadsheet. She used to use Mint, but now she uses a manual spreadsheet, and inputs once a week. She customizes it for her needs.

30:47 Conclusion

Using Data to Improve the Postdoc Experience (Including Salary and Benefits)

February 11, 2019 by Jewel Lipps

In this episode, Emily interview Dr. Gary McDowell, the executive director of Future of Research. Future of Research is an advocacy organization that uses data to empower early-career researchers. Gary outlines the ongoing work at Future of Research before diving into the details of their recently published study on postdoc salaries. Emily and Gary discuss the complexities around categorizing and counting postdocs as well as the interesting results from the data Future of Research acquired by Freedom of Information Act requests. Current postdocs can contribute to this ongoing project by submitting their salary and benefits data to the Postdoc Salaries database.

Links mentioned in episode

  • Tax Center for PhDs-in-Training
  • Volunteer as a Guest for the Podcast
  • Future of Research
  • Paper: Assessing the landscape of US postdoctoral salaries
  • Nature News “Pay for US postdocs varies wildly by institution” 
  • PostdocSalaries.com
  • PhDStipends.com

postdoc salaries

Teaser

Gary (00:00): We actually found that the median salary for all postdocs across the US, regardless of field, was actually pegged to the minimum National Institutes of Health National Research Service award stipend.

Introduction

Emily (00:18): Welcome to the Personal Finance for PhDs podcast, a higher Education in personal finance. I’m your host, Emily Roberts. This is season two, episode three, and today my guest is Dr. Gary McDowell, the Executive Director of Future of Research, an advocacy organization that uses data to empower early career researchers. Gary shares results from future research’s, recently published study on postdoc salary data gathered through FOIA requests. We also discuss how prospective postdocs can properly evaluate and negotiate their postdoc job offers. Current postdocs can contribute to this ongoing project by entering their salary and benefits data to the database at postdocsalaries.com. Without further ado, here’s my interview with Gary McDowell. Today on the podcast I have Gary McDowell from Future of Research, and we are going to be discussing postdoc salaries. Uh, they have just wrapped up or well wrapped up a milestone in an ongoing project, and we’ll be discussing that. So, Gary, please, you know, tell us a bit more about yourself and about future of research.

Will You Please Introduce Yourself Further?

Gary (01:25): Sure. Um, so I, uh, I’m from Northern Ireland Originally, I grew up in Northern Ireland, in Scotland. I did all of my, um, undergraduate and postgraduate study in the UK, um, and then moved over to the US to become a postdoc, um, first at Boston Children’s and then at Tufts University, uh, both in the Boston area. Um, and it was while I was there that I started getting more in interest in the, um, the scientific system itself, um, and how we are training people, how we are, um, you know, setting scientists up for success and producing scientists and not just science. So, um, obviously at that time I was also experiencing a lot of the frustrations that people find with the, the hyper competition that there is in this system. Um, and so, um, moved on afterwards. Uh, I’m now the executive director of this nonprofit future of research, uh, and we’re trying to, uh, champion, engage and empower early career researchers with evidence to help them change the, uh, research system and the enterprise that they’re experiencing, uh, and make improvements.

Emily (02:36): Yeah, I love this. It obviously dovetails really well with what I do. Uh, you guys have a broader focus. Mm. Um, I’m more narrow about just really getting people dialed in and helping them with their finances. Um, kind of throughout, you know, uh, pre-graduate school, during graduate school, post-graduate school. Um, so I love that we have sort of complimentary pursuits here. And we’ll of course be talking about that specifically with, with respect to salary in a moment. But can you, um, give me kind of a little bit more of an overview about, you know, what’s your team at future of research? What have you guys been up to, generally all the different areas that you work in?

Future of Research Nonprofit

Gary (03:09): Sure. So, yeah, we’re, uh, an organization, um, at the moment there’s just me as staff, and we have a board of about 20 early career researchers. Um, so we ended up forming this nonprofit. Originally we’d had a, a conference to bring early career researchers together and discuss some of the issues with, uh, the system and with hyper competition, um, that there is particularly in biomedicine. Uh, and from that conference and then a bunch of conferences around the country, we quickly realized there was this, this need for this, um, this group to be, you know, trying to have these conversations. Um, and in particular, you know, trying to give data and evidence to early career researchers to help ’em make better choices, but also to educate in some sense the rest of the scientific community about the realities that our generation is currently experiencing. So, you know, we have this board, um, um, and volunteers who are actively working on a bunch of projects and issues that, that come up and that we’re experiencing. Um, we have two major projects, which I think are, are, have both come out of local meetings that we held in the last couple of years which are really very, um, you know, we, we wanna try and have specific projects that we’re setting up and establishing, um, having looked at a, a need, uh, around in the community. So those projects, one of them we’re calling who’s on board, and that’s trying to get, uh, more early career folks into leadership positions. So we’re gonna start trying with scientific societies and trying to get more people onto the voting council positions at the top of the, the organization. Um, you know, and trying to bring in that perspective. Um, also recognizing that a lot of people need leadership training and development and, and so on. And hopefully generating a network of future leaders, um, that, that, uh, organizations across research can tap into. Then the other major project that we’re really pushing at the moment is, uh, focusing around mentoring. Um, I think mentoring is one of the biggest concerns of, um, grads, postdocs, uh, et cetera, you name it, throughout the system right now, junior faculty in particular, one of the first things that, that I am asked by junior faculty is, you know, how do I find out more about mentoring people and managing people because I don’t know how to do it and suddenly I’m expected to. Um, and, you know, this can lead to all sorts of issues with people reaching their full potential. Um, you know, egregious behavior can, can occur and is not really held accountable. So we’re, we’re pushing a big summit next June in Chicago to bring people working in this space, this, um, and doing research on mentoring together and trying to figure out what we can do to take grassroots action to really make sure institutions are putting mentoring right at the center of what they’re interested in. Um,

Emily (05:57): Yeah, sounds amazing. Um, especially, particularly the latter project, I think. Um, yeah, please keep going. Or any other major efforts there.

Gary (06:07): Yeah, so we, then we have, so those are things that we’ve sort of set up, um, deliberately, and then there’s things that we’ve sort of responded to and we try to be responsive to, you know, needs that arise. So one of those projects is sort of related to the who’s on board thing. Um, and it’s to do with peer review. Uh, and in particular, we’re trying to address this phenomenon of grad students and postdocs, essentially ghost writing a peer review report that is then submitted under somebody else’s name to a journal. Um, and you know, this, this is not only a problem, it’s sort of scholarly recognition. Um, but it, you know, at the same time we’re hearing that there’s not enough reviewers, um, and journals are sort of crying out for more reviewers and this lack of transparency about who’s actually doing the review and getting the names of particularly, you know, grads and postdocs who journals may want to review again in the future. Um, those sort of barriers of not putting those names across, um, and of not recognizing that scholarly work, uh, and, and who, who did it, um, is a thing that we’re pushing, uh, both with journals, but also, uh, we did a survey asking people about their experiences with this. And one of the big things coming up is that, of course, principal investigators have not been trained in peer review either generally. And so a lot of these practices are to do with just a lot of, uh, assumptions and, um, um, you know, a lack of clarity that there should be a different practice that you should be giving these names. So it’s really, that’s been really interesting to work on and sort of was in response to a survey done by, um, junior folks at eLife in the last year. So, so we’ve been following that. And then the other one, which, which we can talk more about now, is the, the salary project. Um, that really started just as we had formed the nonprofit. It was when there was a change to federal labor law being proposed, um, and the long, and the short of it was that this was going to affect postdocs and it was going to raise their salaries, um, or institutions were going to have to essentially have postdocs clocking in and out and, uh, tracking their time, which is not really very realistic. So, so there was this push to raise salaries, and we, we were following what institutions were doing, uh, to accommodate that change. And that then led us to asking, well, what are the actual salaries that people have and led into the, the, the work that we’ve, we’ve done here.

Emily (08:29): Yeah, I would love to talk about that a little bit more in depth now. Um, when I was, you guys just came out with a, a paper recently, right? What’s the title of that and where can people find it?

Gary (08:39): Sure. So the title is Assessing the Landscape of US Postdoctoral Salaries. Um, it’s open access, it’s in the studies in graduate and postdoctoral education, um, and, uh, which is part of the Emerald Insight Publishing Group. Uh, yeah,

What is a Postdoc?

Emily (08:56): Yeah. So my <laugh>, my question is, I was very interested in this, uh, section of the paper where you talked about the different titles that postdocs might have and how that affects what salaries they have. And it just led me to the question of what is a postdoc?

Gary (09:09): Yeah.

Emily (09:10): Actually, like, can we start there? What’s a postdoc?

Gary (09:12): Yeah. So yes, a postdoc is, so I can give you, I can start with what I think a postdoc should be, and we can maybe work from there. My, you know, when you’re, you’re going through the academic track, um, there’s, you know, you go through your undergraduate phase, then you go to graduate school, you get your PhD, uh, that’s the point at which in my opinion, you should be learning how to do science, how to carry out research, how to, you know, do experiments, uh, how to analyze them, how to learn the nuts and bolts of being a scientist. Um, then what has become the default over time is that in order to become a professor after getting your PhD, there’s an intermediate step known as the postdoc or carrying out post-doctoral research, um, post obviously being, after getting your doctorate. And, um, in my opinion, this is a period in which you should be thinking about your own research goals and how to take those forward and learning under the mentorship, uh, slash apprenticeship of an investigator who already, you know, is doing this, learning how to manage a group, learning how to mentor people, learning how to manage budgets, how to write grants, how to, you know, ensure that your research project can succeed and that you can lead a team. Um, but the postdoc more likely is in reality is, um, a period of further research. Um, usually someone will move on to do a, another project. It’s quite common to change field and get experience by doing a postdoc there. Um, but in reality, what people are doing is trying to get, uh, a number of papers trying to demonstrate that they can succeed in perhaps a different lab to where they did their PhD, um, and, um, sort of accrue credentials in order to get a faculty position to then start as a, as a professor.

Emily (11:09): And I, what I was curious about, because your understanding and my understanding are very, um, similar to one another, I was also coming outta sort of the biomedical world, so that kind of makes sense. But, um, I think in your paper you had something like 11 different common titles under which postdocs can be hired. And so I was just wondering if there’s part of the issue, uh, a discrepancy between how the, the employers or universities or workplaces or mentors see postdocs and how postdocs see themselves.

Gary (11:37): Yeah.

How Was the Idea for a Project to Assess Postdoc Salaries Formed?

Emily (11:38): Um, and we can get into this a little bit more, but one of, I think the main motivations behind your project was, um, just kind of trying to figure out what level of awareness universities, et cetera, have about their own, their own postdocs, whether they’re employees or not. So let, let’s take it back there a little bit bit. So like, you’re, you’re coming up with this idea. Okay. How, how was this idea formed for the project? What exactly were you asking?

Gary (12:00): Yeah, so you’re, you’re totally right, because we were coming from this perspective, I think this is particularly why we took the route that we did. Um, when we were looking at the policies that were being updated in response to this labor law, we started to ask ourselves the question, well, these are policies at an institution that doesn’t tell us necessarily what people are actually getting paid. And it requires adherence to a policy, uh, and that someone essentially is checking up that the policy is being followed. Now, we already, we have a, a preprint, um, paper, um, that we’ve done with, uh, rescuing biomedical research, another nonprofit in this space, um, looking at the National Science Foundation’s data on the number of postdocs. And, um, this was in reaction to a paper that claimed that the number of postdocs was in decline, because that apparently seemed to be reflected in the NSF data. Um, and we dug into that data a little, and we first questioned whether there was actually a decline or whether there was actually a bubble of people postdocing for longer after the recession in 2008. But one of the things we found was that institutions were doing a pretty terrible job of reporting year to year how many postdocs they had. And so, while we were very receptive to, you know, institutions telling us, oh, well, we’re raising our salaries, like this is going to be our new policy. Um, if you don’t know who your postdocs are to begin with, we were curious as to whether people would be falling through the cracks and whether you would actually know who your postdocs are, and, um, whether they’re getting the salaries that they’re supposed to be getting, uh, whether, whether the policies were actually reflected in reality, or whether an institution could say, you know, we recommend all our postdocs get this salary, and then there’s no follow up or, or action on that. So that was a big part of that. Right. And, and knowing as you say that there is this great breadth of, um, assumptions about what the postdoc is, um, you know, there is this constant argument of whether they are employees or whether they are trainees. Um, you know, sadly it seems that they’re employees whenever it suits in keeping them out of training or outta things that you need to do for students. But they’re also trainees when it suits in terms of giving them lower salaries and not giving them benefits.

What Position Counts as an Employee or Not an Employee?

Emily (14:16): I was just going to ask about that. Actually. This is one of, this is just a question that I’m constantly asking about whether people are employees w receiving W twos. Or not employees. And I would think that categorizing people as not employees would be an easy way to get around the, uh, you know, the pol- the, it’s a fair labor of Standards act, right? The FLSA, right?

Gary (14:38): Yeah. So yeah, the, the interesting thing about that, and a lot of institutions did in the beginning try to claim that they’re, because also it’s complicated by where the money comes from for the postdoc. So most postdocs are paid directly off a research project grant, um, as quote unquote staff on the grant. But a lot of postdocs are also on fellowships of various kinds from a whole multitude of different organizations and people on fellowships, uh, especially if they are per paid directly and not paid through the institution, they’re most usually referred to as trainees. Um, they often get the, the worst situation of losing their benefits often when they get on a fellowship, um, after moving off a, uh, another mechanism, um, because the institution says you’re no longer an employee, therefore you no longer have to provide benefits. And this came up a lot with the, the, the Labor Act, um, updates. And what was really interesting was the Department of Labor, um, the specification of like, who is a, who is an employee or not, doesn’t come down to who pays you. It’s the nature of the work that you’re doing. And one of the most interesting things that came up was this, this pushback that occurred of you can’t just claim that your fellows are not, that they are exempt from this law. They actually are not. And indeed, the Department of Labor told that to the National Institutes of Health, that’s why they raised their fellowship stipends, um, because they were told these people are not exempt. They are explicitly, they ended up explicitly being, uh, part of the target of those trying to make the change. Um, so yeah. So the, even within those definitions, part of them are just institutional. The institution will just argue that they have that definition, but it actually sometimes doesn’t even stand up under, under law. So it’s, it’s been an interesting part of this.

Emily (16:24): Yeah, that is very interesting. And it is so important, um, I think for people who are looking to take a new position, whether it’s as a graduate student or as a postdoc or, or what have you, um, to know going into it, how you are viewed by the institution. Employee, not employee trainee, not a, not trainee, um, just because yeah, your, your benefits or whatever might, um, change depending on the, the status that you have. Um, they could be taken away from you if something changes at the university level. Um, so just kind of go into whatever situation you have with eyes wide open.

What Did You Do for the Postdoc Salaries Project?

Emily (16:57): Yeah. So let’s get back to the, to the salary project. Um, so you were curious about, you know, whether policies were actually being applied at, at the institution. So, so what did the actually project end up being? What did you do for it?

Gary (17:10): Sure. So, so we wanted to get these salaries, and this is data that is not, you know, easy to find, uh, that is out there. And so we ended up with this rather blunt, somewhat aggressive, but also, um, easy and also standard methodology, which was to carry out freedom of information requests at public institutions. So what we would do is contact the freedom of information, uh, office or the public records office at the, at a public institution. They’re legally required to give out data like this. And we would ask for, um, in this case, we asked for the simply the title and the salary of everyone who was a postdoc. Um, we wanted to keep it as, as easy as possible. And that was on, we were asking for salaries on the date of December 1st, 2016, which was when this labor law was due to come into effect, uh, when, when changes were, were likely to happen, the institutions had been preparing for at the time. Um, and so, yeah. And so we asked, basically asked for, for this data. Now the, the reason it’s a bit aggressive is that it ends up, um, basically forcing the institution to give data in a, you know, we weren’t asking institutions, we weren’t going to the sort of postdoc offices or to various administrators and asking them to give us the data. Um, but that actually worked out as a really interesting part of this project as an internal metric of whether a university’s administration knows what postdocs are. So I would find some institutions were able to provide the data with no problem, and other institutions, I would be contacted back and asked, you know, what is a postdoc? Can you explain what this is? You know, I would have to look up titles sometimes at the institution to find out what the relevant titles were that we wanted. Um, and, um, you know, we were sort of cross-checking the number of salaries we’re getting with the number that NSF thought, um, that they had. Which, again, those numbers should be reported by people who know better what postdocs are to the NSF. And so we’re, you know, providing all these like controls and looking at seeing how good is the data that we’re getting, um, you know, on top of just getting the numbers, what standard is it at? What are we getting back? And that was actually a really interesting aspect of, of what we were receiving as well.

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Analysis and Findings from the From the Postdoc Salaries Project

Emily (20:03): So once you were able to get, you know, some data, uh, coming back from these public institutions, uh, what what did you do with that? What was, what was your analysis like?

Gary (20:14): Sure. So we had, uh, a data scientist on our team, um, who went through and tried to analyze, basically, you know, we’re, we’re sort of looking at the, the, the distributions of salaries. Um, and, you know, we wanted to break things out by geographic region, um, by, uh, gender, um, and, um, possibly other demographics. We have a little try at that. And also by the, the title, whether what variables there were that were affecting the salaries, um, and what we, you know, what were we seeing overall as the, again, you know, to a big part of this was just assessing the landscape, just figuring out what postdoc salaries looked like and giving us a sense, uh, giving us a bar to work from, uh, in terms of, of efforts going forward.

Emily (21:03): And so, was there anything, uh, well, what were sort of the broad, I guess, conclusions, was it just like, okay, here’s ranges of salaries and, uh, here’s the breakdown of these different groups. Like what were some of those conclusions? And then also was there anything that came out of that that was actually surprising to you?

Gary (21:18): Yeah, so, um, so yeah, we sort of got broad distributions of where salaries were. And we actually, um, before the, the paper was done when we’d actually done the, uh, initial data gathering, we had it write up, um, uh, in nature about this, um, I think it was titled Postdoc salaries very wildly from institution to institution. Um, and they did a very nice demographic of where all the salaries lay, and most people were in the forties, thousands of dollars, um, you know, between 40 and and 49,999, um, which made sense. Um, we actually find that 22% of all of our data was in a $25 range around the new, uh, NIH minimum stipend, uh, which was very close to what the proposed salary threshold had been under the, the federal labor law change. So we found that that really had a, a very striking effect. Um, and in fact, one of the things that was most interesting and I think, um, is useful for us in, in doing policy work going forward, we’re interested in finding out what is, what are the levers that we need to pull in order to raise postdoc salaries? And we actually found that the median salary for all postdocs across the us, regardless of field, was actually pegged to the minimum, uh, national Institutes of Health, um, national Research Service award stipend. So these are the, the numbers that NIH uses for things like F awards and T awards that postdocs are paid off. Um, these are the only people who have to actually be paid according to this stipend. Um, but a lot of institutions just peg their salary scale to the NIH, and in particular, they may not use the scale year to year. They may not have increases per year, but they certainly will peg the minimum salary, must be the NIH’S level. And so we actually find that the most effective policy lever for raising postdoc salaries in the US would be to get the NIH to raise their, um, the, the NRSA award stipends. And that’s obviously something we’ve been pushing. 

Emily (23:28): I’m, I’m so glad you brought that up. Um, I remember, so several years ago, I, I did a fellowship at the, um, the National Academies, and I remember reading their, uh, postdoctoral report. The postdoctoral experience revisited, I think was the recent report on it. And seeing that and seeing that discussion about how important the NIH minimum salary, uh, recommendation was, how so many universities were going off of it, which is really just so surprising because again, it’s one, it’s a recommendation. And except for their own internal stuff like it, you know, that’s required. But for everyone else, it’s just a recommendation. And two, it’s a minimum. And it’s not at all taking into account like different cost of living, you know, areas. Like is it, like, is that minimum supposed to be for Bethesda, or is it supposed to be national? I’m not even sure about that. But, um, yeah, anyway, just the fact that they were going off of this as if it were absolute truth and no, it was only ever a minimum and only ever a recommendation. And I’m so glad that you brought that up. And I believe I read that within the last, we’re recording this in December, 2018. I think within the last week or so, NIH actually has raised, um, their, their recommended minimum salary, right?

Gary (24:35): They have, yeah. They have done, they, they did a big raise. We actually plotted this out in a, in the first figure in the paper of raises over time. And, um, you know, the, most of the raises, um, to the current towards the current level happened during the NIH doubling around the turn of the century. Uh, and then the, the Fair Labor Standards Act was actually another major push. Um, you know, the NIH had been pushed along, uh, a couple of times by various reports. Um, I think the, the, the last one previous to the FLSA was the 2012 Biomedical Working Group report. And so there’s been these little pushes and since the FLSA, they’ve pushed up a lot at that point, and then they have consistently continued to push quite high. Um, I think this year was a 2% increase, so that now the minimum is at $50,000, uh, which has been recommended for, for quite some time now.

Emily (25:30): Yeah. So they finally reached another milestone there of getting into the the fifties range <laugh>.

Gary (25:34): Yeah, exactly. So, um, yeah. And then, you know, this has actually been useful as a real policy example. You know, I and, uh, the president of Future of Research, Jessica Polka, were both on the National Academy study, uh, for the next generation researchers initiatives, which NIH is releasing its recommendations on, uh, in a, in a few weeks. And, um, one of the things we were able to push having this data was, well, we know the NIH number is a very important number. And so the recommendation, I think in the upcoming outta that report was NIH needed to raise its number, but also institutions should take that number and then adjust for cost of living and for years experience. So sort of both, both groups needed to be both sets of stakeholders needed to be, to be, uh, yeah. Working on that.

Emily (26:20): Yeah, absolutely. Um, so any other interesting findings from the paper?

Gary (26:25): Yeah. Um, I think one of the things I was surprised with, uh, most was how many salaries there were in the fifties thousand, uh, of dollars. Um, and it was interesting, you know, we did a little bit of, uh, breaking down by, um, by field as far as we could. Um, we had only requested the title and, um, salary of the postdocs to, you know, to have this basic, uh, uh, request, um, and as reasonable requests that hopefully institutions wouldn’t refuse as possible. But half of those institutions ended up giving us also names and department, uh, information so we could work out field for a large subset. Um, and we find that there was no real field dependence on the salaries. Um, you know, I think a lot of people assume that, oh, the humanities will be all the salaries in the low range and the, you know, the higher ones will be computer science, and certainly towards the higher end, you do see some of that. But, you know, there’s no, the humanities are not lower on average than anyone else, to be honest. You’d be surprised how often biomedical en- engineering is, uh, in the low salary range. Um, and, um, yeah, so I think that was one of our surprises, and a lot of this anecdotally seems to be, um, you know, when I go and talk around the country about salaries, um, and make a, a big push for people to be talking about salaries, uh, I hear a lot of who negotiates. Um, a lot of postdocs are negotiating salaries a lot more than I think people know. And so there’s this whole, I think there’s this disparity in who’s asking and who’s not asking. And you know, frankly, that we’re not even supposed to be talking about money to talk about money in academia, as I’m sure you’re, you’re often facing as well in your work to talk about this is already to, to cast out on whether you deserve to be there, because if you’re looking for money, you shouldn’t be in academia sort of thing. Right. So, so that’s been an interesting thing to push as well.

Emily (28:22): Yeah. And I think that leads well into, um, the project that we first met over. Um, you first approached me about, so to give a little backstory for the listener, um, in 2014, I think my husband and I created a website called, uh, PhDstipends.com and it’s just a really simple database where people can enter what their stipends or salaries or fellowships or whatever, uh, your, your university is calling it, uh, basically how much you’re being paid, um, and then kind of whatever other details you would like to add. Um, and it’s just a very simple database, but it’s got, I think there’s over 4,000 entries in it now, and it’s, it’s getting pretty robust. Um, and so anyway, it’s a great place to go to just kind of compare maybe for prospective graduate students offers that they’re getting, um, to see if they’re reasonable, see what other people at that university are being paid, see what, you know, other people in their field are earning at different universities. So that’s kind of that purpose. And then forever, we had the idea that we should do the same thing for postdocs, but we never did it until you and I entered into conversation. And, um, if I remember correctly, the motivation for wanting something like what we eventually created, which is postdocsalaries.com, um, was to figure out if, again, these, well, sort of what you’re saying, if the policies are actually being played out at the individual level for postdoc. So, um, if even the data that was being reported to you was the same as what was perceived to be, you know, the salary by the postdoc, um, him or herself, and then also, you know, the FOIA requests were only given to public institutions. And so you’re completely missing everybody who’s at a private institution. So that was a big question mark there. Um, so yeah, so anything else from your perspective to add about sort of why we started that aspect of the project?

Gary (30:01): Yeah, I mean, as you say, you know, for example, I have no data from Boston <laugh>, um, in the, the postdoc salary paper here because there’s no public institutions essentially there that we FOIA’d or that you can FOIA. So that’s obviously, you know, that’s an example of missing out a, a huge chunk of the population. Um, and, you know, then you’re asking the question, well, this is all for public institutions. Do we think the private institutions might be paying more or less or, or what have you? So again, getting people to self-report, um, you know, the quality of the data that we got for this paper, um, we had a lot of pre-processing, first of all, because, um, frankly, the data that we got, what we asked for was annualized salaries. What we often got was what had been through payroll, and again, with the example of people on fellowships, uh, if they were being paid directly, um, sometimes we would get these salaries back that were zero or a few thousand dollars. Um, and you know, the, the absolute legal minimum under federal labor law is 23,660. Um, and so we, we give institutions the benefit of the doubt and said, well, let’s cut off all the salaries, be below this certain level. That’s not to say all the ones above it or exactly what is being paid, but there was this element of nuance to the numbers we were getting and whether that would affect overall our data. So with the self-reporting, um, it’s nice to not only get private places, but also to get a sense of whether what people are reporting, um, matches up with what the institution is reporting. We, we knew for one institution, university of Washington, um, they had actually sent us excellent salary data. Um, and, uh, I was contacted over social media by someone on a fellowship there who said, oh, you know, you’ve been talking a little bit about how fellows are gonna be lower. Um, you know, I, I’m betting that my salary in Washington will look lower than it is. And I was like, well, all the Washington salaries look, you know, very, they’re all above NIH and they all seem like pretty good. So I just sent that person what their salary was in my data, and they said, oh, that’s exactly what I’m seeing. So it was even, it was really great to see that positive story of an institution that was, you know, giving us like, the data exactly that we wanted <laugh>. Um, so, and seeing that match up. Um, but yeah, I think it’s, it’s fun to, to have the, the, the effort online for people to self-report because it gives you, you know, we are obviously putting out salaries and we’ve repeated our data collection effort again for 2017 and 2018. And so we’re starting to gather that data now and we can keep putting that data out there. But I think it’s very useful also for, for this sort of self-reporting tool for people to go in and look and see what people are doing. And it also gives the opportunity for people to comment on issues that have come up. ’cause we also have benefits in there. Benefits is just a whole minefield with postdocs, even within the same institution. There can be all sorts of different benefits categories for all sorts of different titles of postdocs. So people self-reporting what they’re getting, and also just having a free form space in which to comment on things they experienced has been really interesting to look at. Um, and that sort of sharing of information, which is really what we’re very passionate about, that people are making informed choices and able to act on those.

Emily (33:17): I think that’s where we have such good overlap between, between you and I in terms of our missions and, and I am like all about more transparency around money in general, but salary, I mean, that’s a really difficult area, but we need more transparency around that too. So I agree. It’s so interesting to look into the database. Um, again, postdocsalaries.com, go there, enter your salaries, enter your benefit information. What I love seeing again is, uh, fellowship versus employee kind of stuff. That’s so interesting. And again, what the titles are. And, uh, we do have a section there for demographics as well, so that you guys, that that data is not, uh, publicly visible, but you guys are able to do that analysis on it to continue the questions of who’s being paid what and why. Um, and then my other favorite kind of section about this is regarding negotiating, which you brought up earlier. Um, the last time I looked, which wasn’t, it was maybe a couple months ago, about 25% of the people who had entered, you know, their information into postdocsalaries.com had negotiated something or is had attempted to. Uh, which was kind of a higher proportion that I was thinking, but it’s very encouraging. And so any, I would say any person who’s looking at taking a postdoc position should at least attempt to negotiate. It might not be successful, but, uh, you know, that’s what you would do for any normal job. And absolutely, this is, you are at a high level of training already. Uh, many of us consider it to be a job, whether it’s that officially or not. And so I think it’s a good encouragement just to see other people’s examples, just to know that other people are negotiating and you know, you can do it too. 

Gary (34:46): I think that has been one of the biggest surprises. And then, you know, it’s one of those things that when I knew that a lot of people must have been negotiating because the salaries were there, were salaries higher than what I was expecting. And then starting to talk about that with people. Yeah. 25% now, I actually think sounds about right. Like it’s, it sounds high, but it also is, I think reflects the, the, the data broadly. Um, and my favorite thing in talking about this too, because whenever I give a talk in an institution, I just love to bring up money and talk about money and usually under the, the auspices of, we’re not supposed to talk about this, so I’m not gonna talk about salary and like, what you should do about it. Um, and as you know, speaking to graduate students in particular, um, this should be one of the questions that you ask your prospective pi, and I am, you know, the not only to to get more money, which I think people deserve, but also frankly, how that question is answered will tell you a lot. I think about whether you want to work with that person, because someone who says no can give very different reasons and can be a person that you may, may or may not want to work for. For example, if someone says, I would really love to pay you more, you know, I only have so much of a certain grant, you know, we can look into applying for fellowships and I can give you some more money on top as a reward, which is a thing that also happens quite often. Um, you know, because essentially you’re saving me a salary so I can give you some money out of a, you know, another budget or something for, for that. Uh, as a, as a thank you, uh, versus someone who says, oh, why would I pay you more? Right? Like, why, why should I give you a higher salary? This isn’t about the money. Like, I think if a person tells you that you should really reflect on whether you wanna work for that person, because that could reflect other attitudes that they have about you and your role and your importance and so on. And, and whether you are a warm body in the lab versus someone that they really wanna see succeed and, and encourage. So I think that’s, it’s all part of gathering information and being, you know, making an informed choice, um, and realizing also that you are a bargain, uh, to these people and that, you know, you really should be pushing. If they want someone good, it’s good to try and push a little and see, see whether they’re, they’re willing to budge on some of these things.

Action Steps That Postdocs Can Take Today to Improve Their Salaries, Benefits, or Working Conditions

Emily (37:02): I love it. I love it so much. <laugh>. Um, let’s, let’s zoom back out a tiny bit. So, what can a person who is a postdoc today or expects to be a postdoc in the near future, um, what can they do, what can they get involved in that will help them improve either their salary or their benefits or working conditions or anything like that? What’s some action steps that postdocs can take today?

Gary (37:24): Sure. So, um, always having data to hand is such a useful thing. So both for the individual, but also for groups who are trying to advocate. You know, we hope that the data like this gives a, um, gives a somewhat of a mandate to say, Hey, you know, here are salaries that people are getting, um, that, that are, you know, are in my field or at this institution or what have you, and, you know, or this is what your policy says and this is what you should be doing. Really trying to go in with, with that, particularly on the personal level is good. Um, we found that, um, what was a nice example was that when we were comparing various institutions publicly, we found that there were administrators at institutions who were trying to push for raises who had faced opposition. Um, suddenly we’re able to say, well, we’re being compared with everyone else on this list and we don’t look very good compared to our, our aspirational peers or our, you know, whoever they’re comparing themselves to. And if we wanna be competitive for postdocs, um, that, you know, that then they were having success with that. So for groups who are looking to push for change at an institution, um, you know, there’s a number of lines of evidence. Um, we have, uh, various resources at our, our website on postdoc salaries that we hope are useful for people trying to push for those change at institutions. Again, comparing with the peers is always a useful one. Um, also pointing out the recommendations that there are, I think our most recent recommendation is that the salary should be at least 50,000 then has cost of living adjusted locally, then also has years of experience. Um, and, uh, yeah, that, that these are the recommendations that are out there, that this is what institutions should be doing. Um, you know, we see varying success with this, uh, at various institutions. It depends who’s there to be honest, and, and whether they feel they are concerned about this or not. Um, I would definitely recommend to institutions who are in the Midwest, um, or who are at places where there’s a, um, you know, there’s some institutions you go and they’re like, oh, we really struggle to get quote unquote good postdocs. Um, not quite sure exactly what that means. I think it’s a little bit of, you know, we are not in Boston, so we struggle to get all the people who just apply to Boston. But that’s a good point of, you know, if you’re in institution that shows that you can pay more and live somewhere in the Midwest, which has a lower cost of living, you actually may attract more people at this time when, you know, people are struggling to be able to afford to stay in academia, to be perfectly honest. So, so I think these are all good buttons to, to try to push. Um, and now that we have this data here as a baseline to start working with, working with, um, hopefully that’s, that’s a useful thing to, to use as evidence.

Emily (40:13): Yeah, absolutely. And the, the listeners can participate in this by again, going to postdocsalaries.com and entering their information and telling your colleagues and your friends about it too, and just continue to spread it. I think as of this recording, we have about 1200, um, entries, which is decent, but like, let’s keep it growing. Absolutely. Um, and you guys will keep going on the public institution side of that effort. So I would say particularly if you’re at a private institution, it’s even more important to get out this self-reporting, uh, mechanism because there’s not another good way to get at the data, at least that we know of right now. So, yeah. Gary, thank you so, so much for, for joining me today and I look forward to, you know, continuing to work together on this.

Gary (40:54): Yeah, for sure.

Conclusion

Emily (40:56): Gary, I’m so glad you joined me on the podcast today for this important conversation. Show notes for this episode are at pfforphds.com/S2E3. If you wanna get in touch with me, you can email me at [email protected] or find me on Twitter @pfforPhDs or Facebook Personal Finance for PhDs. If you’d like to receive updates on new podcast episodes and other content, go to pfforphds.com/subscribe. See you in the next episode. The music is Stages of Awakening by Poddington Bear from the free Music Archive and is shared under CC by NC Podcast. Editing and show notes creation by Jewel Lipps.

Negotiating PhD Funding Offers: This Grad Student Did It Successfully

January 28, 2019 by Jewel Lipps

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

Links mentioned in episode

  • Tax Center for PhDs-in-Training
  • Volunteer as a Guest for the Podcast
  • PhDStipends.com
  • GradCafe 
negotiating PhD offer

0:00 Introduction

1:05 Please Introduce Yourself

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

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

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

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

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

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

Further Reading: How to Read Your PhD Program Offer Letter

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

29:33 Final Comments

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

31:27 Conclusion

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