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NSF GRFP

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

April 20, 2020 by Meryem Ok

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

Links Mentioned in This Episode:

  • @klsywood (Kelsey Wood’s Twitter Page)
  • PF for PhDs Tax Center
  • Quarterly Estimated Tax for Fellowship Recipients
  • Graduate Research Opportunities Worldwide (GROW)
  • Graduate Research Internship Program (GRIP)
  • Christine Mirzayan Science Policy Fellowship
  • PF for PhDs: Coaching
  • Kelsey’s GRFP Website
  • PF for PhDs: Subscribe

Further Reading:

  • How to Financially Manage Your NSF Graduate Research Fellowship
NSF GRFP finances

Teaser

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

Introduction

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

Will You Please Introduce Yourself Further?

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

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

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

Kelsey’s NSF GFRP Workshop Updates

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

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

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

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

Major Decision Points for NSF GRFP Recipients

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

When To Start Receiving the Stipend

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

Consider Timing (and Adequate Payment) for TAships

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

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

Check with Your Advisor About Research Grant Cycles

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

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

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

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

09:48 Kelsey: No, I don’t think so.

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

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

25% TAships Possible During GRFP

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

Financial and Career Opportunities for GRFP Recipients

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

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

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

Get the Snowball Rolling, Start Early

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

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

Internship and International Travel Opportunities

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

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

Even Without the GRFP, Talk to Your PI About Collaborations

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

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

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

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

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

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

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

Timing of Internship Programs During Fellowship

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

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

Design a Custom Internship

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

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

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

Commercial

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

Financial Advice for Fellowship Recipients

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

File Estimated Quarterly Taxes (NOT Yearly)

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

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

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

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

Personal Finance for PhDs Tax Center

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

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

Start Saving Immediately

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

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

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

Stipend Negotiations and Bonuses for Fellowship Recipients

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

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

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

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

Details on Kelsey’s NSF GRFP Course

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

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

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

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

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

Focus on Broader Impacts, Know Your Audience

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

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

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

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

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

Best Financial Advice for Early-Career PhDs

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

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

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

37:10 Kelsey: Yeah. Thank you.

Outtro

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

This Postdoc’s Financial Turnaround Story and Attitude Toward Money Are Incredibly Inspiring

October 21, 2019 by Lourdes Bobbio

In this episode, Emily interviews Dr. Indira Turney, a postdoc at Columbia Medical Center. Indira tells the story of how her finances changed over the course of her PhD at Penn State. Indira started graduate school with approximately $60,000 of debt in a variety of forms and no idea where her income had been going. She resolved to turn things around, and by the time she graduated she was debt-free with cash savings and investments in a Roth IRA. Indira details the strategies she used to increase her income and minimize her expenses. Her methods are both creative and highly accessible for other graduate students.

Links Mentioned in This Episode

  • Personal Finance for PhDs: Schedule a Seminar
  • Personal Finance for PhDs: Podcast Hub
  • Personal Finance for PhDs: Help Out
  • Find Dr. Indira Turney on Twitter and Instagram

PhD financial turnaround

Teaser

00:00 Indira: And I think that’s when I realized, wait, my bills are going to be the same for the next five years and we’re having all this money coming in, I could pay off my loans. I don’t have to wait until the end. I think that’s what kind of started opening up my eyes.

00:16 Emily: Welcome to the Personal Finance for PhDs podcast, higher education in personal finance. I’m your host, Dr. Emily Roberts. This is season four, episode ten and today my guest is Dr. Indira Turney, a postdoc at Columbia Medical Center. Indira tells the incredibly impressive story of how her finances changed over the course of her PhD at Penn State. Indira started graduate school with approximately $60,000 of debt in a variety of forms and no idea where her income from the previous year had gone. On top of that, she realized that she was taking an income cut to approximately $20,000 per year for her stipend. She resolved to turn things around and by the time she graduated, she was debt free with cash savings and investments in a Roth IRA. Indira details the multiple strategies she used to increase her income and minimize her expenses. Her methods are both creative and highly accessible for other graduate students and we could all do well to adopt her attitude toward income and finances. Without further ado, here’s my interview with Dr. Indira Turney.

01:25 Emily: I’m delighted to have joining me today on the podcast, Dr. Indira Turney, and she has a really remarkable financial story to tell from her time in graduate school and since. Indira, will you please tell us a little bit more about yourself?

01:38 Indira: Sure. I’m happy to be here and thanks again for inviting me on the podcast. I’m currently a postdoc at Columbia Medical Center in New York City and I graduated from the University of the Virgin Islands with my bachelor’s. I went on to do a pre-doctoral program at the University of Pittsburgh for about a year and then I went on to earn my PhD in cognitive neuroscience at Penn State University in Pennsylvania. Now, I just started a postdoc at Columbia Medical Center, where my research essentially focuses on using molecular and functional neuro-imaging to identify socio-cultural sources and neuro-correlates of Alzheimer’s disease across diverse racially and ethnic population.

02:25 Emily: That is awesome. Thank you for telling us about that.

Indira’s Debt-Free Journey

Emily: So financially, where were you at the start of graduate school?

02:34 Indira: When I started grad school, I had about $60,000 in debt at the time. I never really calculated it specifically, but I had a car loan, I had about $20,000 student loans, and I had some health insurance stuff that I hadn’t paid off fully and some credit card bills. So in total about $60,000.

02:56 Emily: Yeah, that’s a pretty heavy debt load for grad student, and especially because with all student loans, of course you’d be able to defer that and not pay attention to it. But with other types of debt you still have to address it as a graduate student. What was your income during graduate school?

03:12 Indira: My first year I had the regular base pay of about, I think it’s about $1950 on a monthly basis, so about $19,000 a year. That’s what we got to cover stipend and then they paid tuition as well, as a teaching assistant. That’s what I had the first year and then after that with applying to other things, I essentially increased that based on how much funding I got that year.

03:37 Emily: So can you give me like a range for your subsequent years in graduate school of what you were earning?

03:43 Indira: As far as grad school funding, for years two, three and four, I got an NSF grant, so I went from $19,000 to $35,000, so that was a huge increase. My last year I got off of NSF because it was only three years and I went back to the regular base pay of $1950, but because I was an NSF for three years, I also kind of negotiated having a little extra, so I had about $23,000 or $22,000 a year. In addition to that, I also had other grants and funding, which probably, at max, was about $25,000 a year from graduate funds, as far as stipend goes, in my last year. So anywhere between $19,000 to $36,000

04:32 Emily: And it was just five years during your PhD, is that right?

04:35 Indira: Six years, actually, six years. Right. So the last two years.

04:39 Emily: And you said a word that I love to hear, which is negotiate. Can you tell me really briefly about negotiating?

04:46 Indira: Sure. So technically the program is five years and if you’re more than that, they tend to bump you down as a way to push you out. I essentially was like, “No, I’m not going to get paid $18,000 a year. I saved you guys a whole lot of money for three years by getting NSF funding.” And even while I had NSF funding, I technically taught a class, which I wasn’t necessarily supposed to. So I was just like, “I did a lot for the university, especially for this department. You’re not going to bump me down. If anything, you guys should increase my stipend.” Not in those words of course. I think there’s always room for asking for more money because there’s always money there, because technically they gave you, in your letter in the beginning, this is your five-year funding. There is money there. If you told me there was money there for five years, I deferred for three years, then there’s money there, so don’t tell me I used up your money for six years. I think there’s always ways to negotiate and tell them why this is what you’re worth and you are always worth more than what they give you. And if you ask there’s usually a lot of room for extra money.

05:51 Emily: I know you just said you didn’t use those words, but I really love the words that you just said and I’m so pleased to hear them. I think a lot of people need to hear them, about your value, and especially if you win outside funding. Yeah, of course they should extend your tenure and increase your pay. But I was just very interested in hearing that you actually did that negotiating after the NSF concluded. And so there’s still room when the money is yet to come in, even after the money has already passed through the system. In your opinion and in your example, the money was still there, you said the right words, you unlocked the money. In those last two years, were you doing like an RA or did you have to TA or where did the money from?

06:31 Indira: I did a mixture of both, so I TA-ed, where I taught a class because after your master’s you can actually teach versus just correcting papers, I guess. Then I also did an RA fellowship with my lab advisor where essentially I just did the work in the lab and got paid for it, instead of teaching a class where I’m taking away time from my research. I also got another award that bought off some time where I didn’t have to TA that year, even though I was getting funded by the university, I still didn’t have to TA that semester. So I really only taught two years out of the six years and on-and-off half a semester here and there.

07:09 Emily: Gotcha. Okay, so start of graduate school, things are actually not looking too great for you to start of graduate school. Approximately $60,000 worth of debt, not a very generous stipend, although probably okay, given where you were living. But then second year and following, buku bucks, at least for the time you were on the NSF. What’s the snapshot of your financial picture upon your defense, when you finished graduate school?

07:35 Indira: Upon defending, I was completely out of debt. I had $0 in debt. I tried to pay off everything, so my goal was pay it off in five years and I paid it off in four and a half, so my last year I had absolutely no debt at all. My car was paid off. I had paid all my student loans, except for maybe like $1,000, that I think is lurking somewhere from undergrad because the $20,000 I had was for my first year of grad school because I had moved away from the Caribbean to the United States, and so I felt like I needed the extra money, but I had about $2,000 in undergrad, which those are deferred because I’m still taking in school. But your grad school loans, they accrue interest while you’re in grad school, so I was determined to pay off that before I graduated. So on graduation day, defense day, I was completely out of debt, which was amazing.

08:22 Emily: So just so I’m clear about where the student loans came from, that was from the year that you were in school prior to starting your PhD? Is that right?

08:31 Indira: No, so the year prior to starting my PhD, I was fully funded. I think we got like $2,500 a month for a year or eight months pre-doctoral program. Then, right before I started grad school, I applied for financial aid, for a student loan until the start of grad school. I had a $20,000, I don’t know what it’s called, but essentially it was a loan from the federal government and it accrued interest every month. once you started grad school.

08:59 Emily: Okay. So you had taken out a $20,000 student loan, but you also had the loan money. You received it at that time, at the beginning of graduate school?

09:09 Indira: Yes, essentially they give you the loan from the beginning, and then you decide, which was scary because I’m like, I have $20,000, what am I going to do with it? But the point was for moving expenses and living other things that I didn’t account for moving from the Caribbean. So I had that, and from day one, I guess it started accruing interests, so when you get that first bill where it’s accrued about $50 an interest, because I think it was like a 6% or 7% interest rate and I’m just like what. And I didn’t even know that at the time when I applied for it because I assumed I’m in school and I’m not gonna be paying off or getting interest while I was in school, but not for grad student loans, apparently.

09:50 Emily: Yes. Okay. I’m glad to get a little bit more clarity on that. So you took out the loan at the beginning of graduate school, which was un-subsidized, as graduate student loans are, because of the expenses that you had just accrued immediately before that in the moving expenses and so forth. And also, I’m assuming you’re looking at your stipend thinking, “how am I gonna do this?” Okay, so you had that loan right at the beginning, but then by the end of it, you had paid that loan back entirely, as well as the rest of your debt. Anything else going on in your financial picture by the time you finished graduate school?

10:22 Indira: So at that time, about maybe by third year of grad school, I had started saving, just regular savings in a bank, and then I also started investing in a Roth IRA where I ranged from putting in monthly about a $100 when I started and then maybe I upped it to about $300 a month. So I had a Roth IRA and regular savings at the end of grad school and zero debt, which was amazing.

Making the Changes to be Debt Free

10:47 Emily: Yeah, that sounds fantastic. And what a turnaround story. So what were you doing in between point A and point B to have this vast change?

10:57 Indira: Right. So essentially I applied to everything, including large grants up to $40,000, $50,000, or if you account for stipend, some of them were $80-$100,000, to things that were even just $500 for anything, whether it’s for research or…What I did was, so for example, if you go to a conference and they give you per diem, where you have about maybe $90 a day for breakfast, lunch and dinner, I don’t need $90 a day for food. I don’t normally spend that anyways. And so yes, I can’t meal prep while I’m on a conference, but I usually don’t have breakfast anyways. I’m not gonna waste $30 on breakfast. So when I get back from the conference, especially say a week long conference, I now probably save at least $30 for five days from a conference that I didn’t have breakfast. And most conferences probably give you coffee and bagels in the beginning anyways. Mmost times I probably spent most of the money on dinner because that’s when you network with colleagues in the field. So $30 breakfast and maybe I’m off $50 for lunch, so $70 for five days that I would save. I think that was one of the easiest ways in the beginning that I learned to save money from money that I got legally — legally I’m saving this, but I’m not, you know, forging signatures to say I didn’t have lunch or something like that. Not signatures, receipts, sorry. Because with per diem they’re not asking for receipts.

12:15 Indira: Then the other method. I meal prepped, so I didn’t have to buy lunch, because as grad students I think it’s so easy to run to the cafe and get something there, long nights you get food there, but I generally meal prepped, most times, on Sundays. I have these Mason jar salads that towards the end of grad school I learned was amazing, and so I would prep five and that’s lunch for the week. I have no excuse to buy lunch, especially since a salad costs like $10, when I probably spend $15 for five salads a week. I had fun, I hung out with friends, but I always planned it. Not the specific event, but plan for this month, like I’m spending $120 on fun and by the halfway of the month I’ll check in, where are you in that $120. Because I feel like once I’m out I’m like, “Well, I’m out, I’m going to have fun, I’m not going to make finances keep me down.” And so I just spend whatever versus if I know I’m within my budget, it doesn’t matter. But if I didn’t plan for it, then I overspend.

13:15 Indira: I also did a lot of side hustles, in addition to funding and federal money, where I did hair braiding, dog and cat sitting. House-sitting was my first summer when I moved. I moved about two months early before grad school and instead of paying for rent, I essentially house-sat for someone and they had a cat, so house and cat stuff for that two months. I also did Airbnb with my apartment. In PA, it was a lot cheaper than New York, so I was able to have a two bedroom apartment. On football weekends — Penn state is a big football school — so from Friday evening, someone would come and leave early Sunday morning and in just one weekend I can make anywhere between $600 to $800. I would just go bunk on someone’s couch and leave my entire apartment for someone, because even within the town, they knew football weekend was big, so hotels would be about $400 a night. Instead of paying $400 a night for a bedroom, they’d easily pay $400 a night for a whole house. I did football weekends about maybe five or six times a semester in the fall, and that would essentially be my roommate. I had a two bedroom, but I didn’t need a roommate. Then on graduation weekends, which was in May or December, but usually the May graduation weekend hotel rooms would be like $800 and $900 as well, so I would rent out my entire home again. On graduation weekends, I think I did it twice, and one time I got about $1,500 for just the weekend. I don’t remember the second time how much it was, but it was around that. So side hustles, applying for everything, and also meal prepping, saved me a lot, and planning my expenses for even fun.

Balancing Different Incomes During Grad School

14:56 Emily: Yeah, that was an amazing amount of information and amazing overview of what you were up to. I want to follow up on a lot of that stuff, but just before we get there — so when you started graduate school and you had this lower stipend level and then you know, in the next year the NSF stipend is so much higher than what you were making, so you have this vast income increase — did you change anything in between those two years? Were you living in the same place, for example?

15:28 Indira: Between the first year of grad school and second?

15:31 Emily: Yeah. I’m kind of wondering if you sort of set up your life in the first year to live off of that $20,000 per year-ish, but then you had that vast income increase — did you increase your lifestyle or did you keep your lifestyle at that original level?

15:45 Indira: No, so at the very beginning I was making about $1,800 a month and so I lived in a one bedroom, but technically it was actually more expensive than the two bedroom I moved into cause it was like a apartment complex versus someone who had a home and they were like, yeah, you can live here kind of thing from Craigslist. Um, and so I didn’t intentionally necessarily go cheaper. So that was really the only thing that changed. I probably, I think I was being like $975 for a one bedroom and that I paid like $950 for two bedrooms. So it wasn’t necessarily a big change. I still had a car so that all of those things remained the same. Um, side hustling if anything. I started Airbnb my second year. So even after I got NSF, it was when I started doing it, because I was like my biggest paying side hustle.

16:29 Indira: Lifestyle-wise most of the things stayed the same which is, I think one of the beauties of grad school. Your bills, your lifestyle for the most part stays the same for at least five years. I think for things like that, I started realizing, and I did a workshop from the Black Graduate Students Association and they had something about financial literacy. I think that’s when I realized, wait, my bills are going to be the same for the next five years and we’re having all this money coming in. I could pay off my loans, I don’t have to wait until the end. I think that’s what kind of like started opening up my eyes. But as far as lifestyle, no. Those things pretty much stayed the same for five years. Aside from like emergencies and stuff like that and just like maybe a little more traveling towards the end. But the basic lifestyle remain the same.

17:14 Emily: Okay. So really what happened is you had your lifestyle set at that original stipend level that you were receiving, and then your income vastly increased both from the NSF and from your side hustling. Were you just like crazy throwing everything at debt? Like that was a huge goal that you had. What were you doing with that excess?

17:34 Indira: In the beginning it was more so I never used to save. Like I said, the year before I started grad school, I did that pre-doc program and we got about $2,500 a month and we didn’t have to pay for housing because all of that was paid for. I don’t know where that $2,500 went for eight months. So when I started grad school and I realized I’m getting paid less than I was going to get out of the pre-doctoral level, I was like, “Wait, this makes no sense. Where did that money go? I need to learn to start saving.” I started just putting that extra money in savings, but then realizing of course I’m not getting a big return. All right, I know those debts, those bills keep coming back. And I’m like, “Why am I just letting this accrue interest for the loans?” So then I started paying just the interest rates and stuff like that.

Indira: I think I just didn’t want to be in debt and I realized that I have all this money coming in and grad school and the lifestyle that’s going to be the same for five years. I started realizing that I was blessed to not have $100,000 in just undergrad debt alone because a lot of my friends did. They just have that sitting there because it’s not accruing interest and that’s fine, but I realized too, a lot of them were taking that money and living a more luxurious lifestyle now in grad school because we’re getting all this money and we could live a pretty decent lifestyle depending on how much money you get coming in. But I’m like, “why not just pay off the other debt?” because then guess what, when you’re done with grad school, the debt is still there waiting for you versus live a balanced lifestyle and paying off your debt. I think it wasn’t like a big, “I have to pay off $60,000 debt”, I was just more aware of where my money was going and one thing after another just led me to investing and putting it into different things.

19:18 Emily: Yeah, I’m really glad that you had that sort of realization. Yyou had this one year in the pre-doc program where you are making a pretty okay amount of money for a stipend, but where was it going? And you sort of had a re-evaluation point, like “Okay, I don’t know what just happened to all of that. I obviously have to change some things within like my financial management going forward.” Also, it sounds like you also went to some financial literacy events or a course or something and that also helped you think differently about your money during graduate school and realizing that you had the ability to work on it right then and didn’t all have to wait for the end.

19:57 Indira: Right. Because unfortunately I think a lot of us are just not taught about how to use the money we get. And so then when you get it naturally, we’re like, “Oh my God, I have all these extra thousand dollar a month. Maybe I’ll go somewhere and travel, do something.” Which is nice, but I mean I think that workshop from the Black Graduate Student Association definitely opened up my eyes.

20:13 Emily: Yeah. Sounds super valuable. I’ll make a shameless plug for my own services here. Probably not exactly the same as what you experienced, but I do offer seminars and webinars for universities, specifically for grad students and postdocs on, I don’t call it financial literacy, but I call it personal finance. So anyone out there who’s looking for that kind of programming that can be incredibly life changing, please think of me. My website, pfforphds.com/speaking, is where you can go to find out more about that.

20:38 Emily: Back to Indira’s story. Okay, so we’ve seen the beginning of the end point. You’ve talked about a few of the strategies that got you from point A to point B. I want to dive into each of them a little bit more. So as you said, you were applying for everything to increase your income, including, I mean obviously you won the NSF, you’ve already mentioned that. That’s awesome. Probably the biggest difference of any of anything that happened. You were talking about how you were using per diems from conferences, but just being frugal right around your food spending. So instead of spending 100% of what you are given, that really is a little bit of like windfall money. You come home from a conference, you realize, “Okay, I was receiving X amount of money, only spent whatever it was, 50% of that.” Hey, a little bit of extra money. That’s something that I think having a plan for, that’s what I call windfall money, unexpected money that enters into your pocket somehow. Did you just throw that towards whatever your current goal was? Savings or debt? How did you think of it?

21:41 Indira: Yeah, so in the beginning, whatever extra I had, I just had it in savings and then I realized my savings was looking really nice and I was like, “well, what am I doing with this money?” I don’t have kids. I send money home to family and stuff in the Caribbean, but aside from that, I didn’t have a need to have a big cushion. Especially, like I said again, I know I’m not going to get laid off of grad school, so I didn’t have to have this big cushion in case I lost my job. I was like, “what am I gonna do with that?” In the beginning, I put everything into savings and then I started doing the Roth IRA because I’m like, “Oh well maybe I can get a bigger return there.” Now, as a postdoc, I’m doing some regular investments as well. But at that time it was just a Roth IRA and savings. I started calculating, if I have this in my Roth and this in my savings, where there’s still a “life happens” emergency fund in my savings, the extra I put towards starting to pay off my student loans. I think at one point I just put a lump sum on my car payments. That way, in case something happened, I just didn’t have like the feeling of every month I had to pay a certain amount and if I didn’t then all of a sudden it’s a problem, so I just put a lump sum down. Technically, I was always about three months ahead of my actual payments due. So starting with savings, then the Roth, and then started paying off the student loan and the car loans and the other health insurance and credit card debt. It’s like the highest interest rate and from there, just started working my way down. One thing I liked about what you said is that extra money. I had a monthly income, then I said this is what I’m spending and when I calculated my spending, I had fixed, flexible, where fixed is like the things that you need — there’s no ands, ifs or buts about it. And the flexible is like Netflix or eating out and stuff like that. Those were budgeted based on my $1,800 a month, and then when I had NSF, it was budgeted on my $3,500 a month and then all the extra staff, I never budgeted. Those just went into my savings and paying off debt. I never felt like I was using it and then extra stuff, that I used for extra fun.

Side Hustling as a Grad Student

23:55 Emily: I see. Yeah. Thanks for going into the that detail about your budgeting. You also mentioned that you had tried out several side hustles and I wanted to know because a couple of them are pretty accessible. So the first one that you mentioned was, house-sitting or cat-sitting, which basically meant that you didn’t have to pay rent for two months and this is like sort of a holy grail of things to pursue. How did you land that gig?

24:23 Indira: The house-sitting the first semester — I told my advisor that I wanted to move early and do an RAship, or research assistantship, so she paid me what they would pay a regular RA. I also asked her if there was anyone — on the faculty list there’s always people going on sabbatical or going away for the summer, for a month or during the summer. I know a lot of faculty members, from being at Pittsburgh, I know a lot of them were going away for about at least a month and they were looking for places or people to house-sit, or cat-sit if they had pets. So I was like, “Oh I wonder if people at Penn State do the same thing.” And lo and behold, they did. There happened to be a faculty member who was going away for the two months that I needed a place before grad school. I asked my advisor, she gave me a few different people who were looking, I reached out to them, told them I was moving, going to be a very responsible grad student and I would love to take — at the time, I didn’t have a dog so I didn’t have any recommendations about being a pet-sitter. But I mean, it was a cat, so I think it was easier to sit for a cat. I just applied and reached out to people and interviewed through Skype and stuff like that and then moved all my stuff into their basement, until I was ready to move into an apartment for grad school.

25:31 Emily: Thank you so much for sharing that because, as I said, I think it’s very accessible. It’s maybe not something you’d do 100% of the time and obviously later on you rented an apartment, you didn’t end up doing that 100% of the time. But for a bridge kind of period of time, it’s really perfect. And again, for the summer, as you said, faculty do travel quite a bit. Even someone going on sabbatical or whatever, could be longer than that. What you did is so easy to do. You asked your advisor, you got some recommendations, you followed up with those people, you land —

26:04 Indira: Sometimes our advisors may not know, but once I was in grad school, I also knew what people who needed house-sitters. I think even asking just the grad students, “do you know any faculty member who needs someone,” is another way to go about it, especially again, even sabbatical. I never did it, but for sabbatical, if someone’s going away for a year, that’s a year you can save in rent. I know one person who did that, so there’s definitely ways to save for rent.

26:27 Emily: You know someone who has sat for a year, like nine months?

26:31 Indira: Yeah, it was a little tricky. She house-sat for about four months. It was half a year, so it was just a semester, and she just stayed at their house. She still had her apartment, because she had a partner and he had to stay there and whatnot, but assuming she didn’t have a partner, that would’ve been saving rent for an entire three, four months. I know other faculty members who leave for six, eight months or usually two semesters I guess, and if they have a pet, that’s usually the key thing, where they need someone to stay there because they can’t take the pet with them or they rather not. They usually just have students who can just come and check in, but because usually we have our things set, and especially in a small town, it was a little tougher because you can’t get a six month lease or three month lease, it’s always a twelve month lease and you don’t want to break your lease. But given that opportunity, depending on the state that you’re in, the city, you would be able to just stay at that person’s place.

27:32 Emily: Yeah. This is a great idea for anyone who’s again doing something like moving somewhere on a little bit of an off schedule from what the market is accustomed to. That’s amazing. What were the other side hustles that you mentioned?

27:46 Indira: I did some hair braiding, so doing people’s hair. I have locks now, but before that I did all kinds of hair, and all kinds of races too. Especially being in State College, a lot of the faculty members kids wanted braids, for example. I know a lot of friends for example, who braid hair, but it’s a little tricky to braid ethnic hair versus someone who’s white or Hispanic. I braided all kinds of things. I would do the kids’ hair and of course they love it and be excited and be like, “Oh my God, I want you to do it to my hair all the time,” so that was a client automatically, at least once a month. Then I also did Airbnb.

28:22 Emily: Right. Airbnb. Yeah. That was the other thing I wanted to follow up with you about. It’s very evident to me that you have this, I don’t know if I want to say entrepreneurial, but you just go after things. You just take opportunities as you see them, which is amazing. The Airbnb thing I think is so clever and it’s again, something that I haven’t heard of from a PhD before. I wanted to talk to you a little about it a little bit more. You were renting during this time, right? And was that kind of usage of your rental in accordance with the lease?

28:53 Indira: I know in New York there’s a lot more, I didn’t realize there were so many restrictions with Airbnb. I know there were some rental properties in State College that didn’t allow Airbnb. I was pretty up front with my neighbors. They were these old little couples, so they were pretty flexible. I told them, you know, I’ll have people coming into my, I didn’t say Airbnb because I didn’t think they knew what Airbnb was anyways, but I was like, I have people who will be visiting and they would stay here on the weekend, especially a football weekend, Friday to Sunday. I will make sure they don’t damage anything, everything will be my responsibility, although Airbnb I think reimburses up to like $1 million in damage, I never had that issue. I essentially just reaffirmed them that I will have strangers in my apartment for short periods of time and I will make sure that they don’t disturb the neighbors or anything like that, but if you have a problem let me know. But actually, I think they never lived close to me anyways and like I said, they were older couples, so maybe there was some leeway there. Even after I started doing Airbnb, I told all my friends about it cause I was like, there’s so much money to be made here. Some of them illegally did it and others, their apartment people were fine with doing it as well, for the most part. I think it depends on the city. I think New York is definitely a big no, no, but in PA, unless it was one of those big fancy new student-based apartments, most apartments allowed it.

30:13 Emily: Yeah. This is definitely something that if someone’s interested in this idea, they definitely just have to keep on top of the regulations because it can change really quickly. But yeah, your place in time, it sounded like it was perfectly acceptable and the numbers you were throwing out earlier were very impressive for the amount of money you were able to rent for, especially the graduation weekends. I’m just thinking, you saw a huge influx of people coming in for a game day, coming in for graduation, and you saw what hotels were charging and you just said, “well, I have a place to offer too.” That’s just amazing that you did that. It sounds like some of other people are doing as well, so it’s not like you are the only person who thought of it.

30:49 Indira: I think about maybe four or five of us did. I don’t know anyone who was doing before me. Not like I’m the person who told everyone about Airbnb, but I think everyone was a little hesitant about having someone in their apartment. Is someone going to steal my stuff? And so I think after just being like, “no, there’s no harm because Airbnb also reimburses you up to $1 million,” that’s what they say anyways. I think when I got a dog it got a little trickier. Towards the end of grad school, I had a dog and it was easy for me to just go stay on someone’s couch, because you have friends, you’re probably spending the night there anyways, but with a dog you have to bring a crate and then if they don’t allow dogs in their apartment that gets a little tricky. I would do it a little less frequently when I had a dog and then the last year I just didn’t at all because it just became inconvenient for both me and him and my friends. But I think without a dog or if it’s a really small dog where you don’t have to bring a crate and all that stuff, then I think that’s more flexible too. Or like my friends, if they did it a weekend, I would take their cats and stuff and because it’s easy with a cat and stuff. I just think it depends. For the most part it was, I think, my most favorite side hustle because it brought in the most money for the least effort. Then the second one would have been hair braiding because I just loved doing hair.

32:05 Emily: Yeah. That sounds incredible. And I think this is again, potentially very accessible for other people who live in college towns who can see the same patterns emerging of people flooding into the city for big events.

32:17 Indira: I mean anywhere, especially college towns that have football games because people are just going to spend money. They come with families, they want a big place or a place versus just a hotel room. And there’s a really low risk because the whole day Saturday they’re at the game, so they’re not really there and you can decide whether or not you want them to have parties at your house or not and then they usually leave early Sunday morning and they come late Friday night. It’s really one full day that they’re there. Even now in New York, I was looking into it before I found out that you had to do at least 30 days or something like that. New York would be a good place too if it wasn’t the 30 day limit because again, it’s just another place where people are always coming in. I think as long as it’s a place that people like to visit, I think you can do it.

Lifestyle Changes as a Debt-Free Postdoc

33:03 Emily: Yeah. Oh my gosh, I’m so excited about this. Thank you so much for sharing that. We’ve talked a lot about your time in graduate school. Now that you’re a postdoc and you have even more experience in a different city now as well, you have a whole different set of challenges. What does your budgeting method look like today? What are your best practices?

33:23 Indira: I still use the same thing. I have a monthly budget, I have fixed and flexible spending and I still pay off my credit card in full. Recently, I’ve been experimenting with just trying to calculate the percentage of things that I’m spending for each expense. You know, because of the whole don’t spend more than 30% on rent kind of thing.

33:44 Emily: Exception, New York.

33:46 Indira: Exactly. I’m like, I don’t have a choice. So just having a better sense of my income and where it’s going and what I’m doing. Because in grad school, for example I just had my main fixed spending, flexible spending and everything else just went to debt. Now that I don’t have necessarily debt to pay off, but I have a huge rent and living expense, I just want to know where that money’s going. I still have a Roth IRA and now I am also doing regular investments with stocks and bonds and all that stuff. I just have the one you just leave it and you forget about it. I don’t do the following the stock market. That’s a lot for me right now. Maybe eventually one day, but right now I don’t think I have the time for that.

34:27 Emily: Stick with your current strategy, it’s a good one.

34:29 Indira: Exactly, stick with what you know. For the most part I’m doing the same strategies. I have a Mint app and I also still have an Excel sheet just to kind of visualize where all the money’s going because I think it’s a lot of anxiety of just spending way more than 30% of my postdoc salary on rent, but I’m okay. It’s more of an emotional thing to just feel okay about it. I don’t have a lot of money and I’m spending a lot on rent, but I’m still okay. I’m still doing the same thing.

35:02 Emily: Yeah. Okay, great. What frugal strategies are you using? Are you still meal prepping?

35:08 Indira: Definitely. I still meal prep. My Mason jar salads are still part of my lunches. Depending on my workout schedule and whether I am consistent with working out, I do breakfast, but I haven’t figured out a meal prepping for breakfast yet. Sometimes it’s just a shake. And then dinners, I also still meal prep. I have been trying to strategize and trying to figure out whether I need to meal prep all dinners. Because it’s fine for me to eat the same salad for months and years while I’m at work, versus when I get home, if it’s winter, I don’t really want the same food I had yesterday or maybe want something hotter. It just depends. I’m still trying to figure out dinner, but for the most part I still don’t eat out a whole lot. I still budget, like this is what I’m going to budget for lifestyle this month and if it’s the second week and I’ve gone through that, then I guess we’re done eating out for the week or the month or you know, hanging out or whatever. I still budget everything for the most part and just try to not overspend on things that I don’t need.

Indira: I don’t really take Ubers. The train is pretty reliable in New York. Unless I’m really, really late for something and it’s important that I can’t be late, then I’ll take an Uber, but for the most part, I still take the train everywhere. I feel like a lot of people are just like, “let’s Uber and I’m like, no, I’ll meet you guys there. I’ll take the train.” There’s just so many ways to lose money in New York. It’s ridiculous. I’m still trying to figure that out. I’ve been here about nine months and so I’m still trying to figure out going out. I was a big outdoors person in PA, so parks and hikes were great. Not so much in New York, although I do live close to a park, but it’s not like a hike. I’m trying to figure out those new things because I know there’s a lot of free things in New York, I just need to figure those out. But I still for the most part have a lifestyle and it’s just a matter of, again, budgeting that lifestyle.

Final Words of Advice

36:53 Emily: Thank you for sharing that. Final question as we wrap up here. Thinking back to yourself, your starting graduate school, you have a low-ish income coming in, for the stipend. You have this debt load. In fact, you even took out a student loan because you were unsure about how things were going to go with your finances. What advice do you have for another person facing that kind of financial challenge and also on a grad student kind of income?

37:19 Indira: I mean I think it’s kind of the same things you just summarize. I think apply to everything, no matter how small or large the grants are, because I think the more grants you apply to, the better you get at grant writing. In the beginning it may seem like, “Oh my God, I don’t want to write this essay or this statement.” But over time I reuse statements. And as you get deeper in the program, you learn to write better. You change things, but for the most part I never really rewrote a grant from scratch after my second or third year. Apply for everything no matter how big or small. Don’t doubt that you’re not going to get it, because a lot of grants I got, I didn’t think I was even eligible. Especially for diverse, minority students. I think there’s so much money for minority students that people just don’t even apply to. And then they give it to, not anyone, but people who actually needed versus who don’t. Because people who need it don’t apply or they don’t know about it. Ask other students because there’s so much. A lot of the grants I applied to was because another student had applied to it before. Imagine one person may not have five or ten grants, but if you ask ten different people who had ten different grants that’s ten different grants you can get, so apply for everything.

Indira: Definitely pay off debt while you’re in grad school. Don’t let it sit there and whatever money you get, don’t use it for other lifestyles until after you pay for your debt. One thing I did was paying off debt and then whatever was left over I would have for fun, travel, and stuff like that. And it’s okay to take out a loan in the beginning, especially people who have like $100,000 in debt in undergrad. Yes, it’s not accruing interest, but if you want to take out a loan and just pay a lump sum for now and just to get in the habit of like paying something down, take out the loan. And apply for a lot of things. Have a strategy to pay off the loan before you finish grad school because that loan is going to accrue interest. But in the long run you paid off more in grad school and then it’s like it never existed anyway. So apply for everything, pay off debt while you’re in grad school, and do what you need to do to also still balance life and paying off debt because you don’t have to be miserable paying off debt.

39:21 Emily: And I definitely would also add to that, from your story, just go after it. I mean you were going after funding, you said no to your program: “No, you’re not going to cut my funding. I won so much money. No, you’re going to pay me more.”

39:34 Indira: When you’re starting, so I know I asked after, but even in the beginning, once I was through the program and seeing behind the scenes, you can ask for more money in the very beginning before you even start grad school. They’re not going to take back your letter and say, “well, you asking for too much” because if they have it, they’ll give it. The worst they can say is no. So if they have it, they will give it. So ask.

39:52 Emily: Yeah, I totally agree. And I’ve done one podcast episode on negotiating grad student stipend, before in season one. I’m planning on releasing another one, actually a compilation of stories in the  early months of 2020. So if you’re very interested in grad student salary, stipend negotiation, please tune into those episodes.

Emily: Indira, thank you so, so much for sharing this story. Where can people find you?

40:16 Indira: I have been trying to be a lot more active on Instagram, so on Instagram it’s just my name, Indira Turney, so @indiraturney, I N D I R A T U R N E Y. And it’s the same on Twitter, as well. I think those are my two main networking platforms. Email is Indira dot Turney at gmail dot com. It’s fine if you want to ask me questions, please reach out. I’m always open. Like I had mentioned earlier, I’ve been trying to be more open, even about just budgeting on a grad school stipend on Instagram, but also I’ve been also doing a lot of one-on-ones with people just talking about their process because there isn’t a one size fits all for budgeting because people have different scenarios. If you’re interested, send me an email, reach out to me on social media and I’m happy to answer any questions.

41:05 Emily: Yeah, that’s amazing. Thank you for that work that you’re doing, and thanks so much for coming on the podcast today.

41:09 Indira: Thank you for having me. I had a lot of fun.

Outtro

41:12 Emily: Listeners, thank you so much for joining me for this episode. PFforPhDs.com/podcast is the hub for the Personal Finance for PhDs podcast. There you can find links to all the episode’s show notes, a form to volunteer to be interviewed, and a way to join the mailing list. I’d love for you to check it out and get more involved. If you want to support the show and my business, please go to PFforPhDs.com/helpout. There are plenty of ways to sell without laying out any of your own money. See you in the next episode, and remember, you don’t have to have a PhD to succeed with personal finance, but it doesn’t hurt. The music is Stages of Awakening by Poddington Bear from the free music archives and it’s shared under CC by NC.

 

The Graduate Student Savings Act Fixes a Major Flaw in Tax-Advantaged Retirement Accounts

October 14, 2019 by Meryem Ok

In this episode, Emily interviews Abigail Dove, a PhD student at Johns Hopkins. Abby spent last summer as a science policy fellow at the Federation of American Societies for Experimental Biology (FASEB). Her major policy accomplishment during her internship was to secure FASEB’s endorsement of the Graduate Student Savings Act of 2019 (GSSA), a bill that has been proposed in both chambers of Congress. Graduate students and postdocs are not currently permitted to contribute their non-W-2 income, which typically comes from fellowships and training grants, to Individual Retirement Arrangements (IRAs). The GSSA would allow this type of income to be contributed and have a very beneficial effect on the PhD trainee workforce. Abby explains her role in shepherding the GSSA endorsement through FASEB, what the GSSA would do for graduate students and postdocs, and how the GSSA relates to the SECURE Act, another bill that has passed the House and is before the Senate.

Links Mentioned in the Episode

  • FASEB Webinar on Work-Life Balance
  • GSSA – House Bill
  • GSSA – Senate Bill
  • Personal Finance for PhDs: Schedule a Seminar
  • FASEB Statement on GSSA
  • SECURE Act
  • Personal Finance for PhDs: Podcast Hub

SECURE Act fellowship income

Teaser

00:00 Abigail: But it was a little tricky for FASEB to first navigate the waters. They’ve never supported a tax legislation before. You think that experimental biology doesn’t have that much to do with legislation on tax. But here was a perfect one for them to start.

Introduction

00:22 Emily: Welcome to the Personal Finance for PhDs podcast, a higher education in personal finance. I’m your host, Dr. Emily Roberts. This is season four, episode nine and today my guest is Abigail Dove, a PhD student at Johns Hopkins and recent science policy fellow at FASEB, the Federation of American Societies for Experimental Biology. Abby’s major policy accomplishment during her summer at FASEB was to secure FASEB’s endorsement of the Graduate Student Savings Act of 2019, or GSSA, a bill that has been proposed in both chambers of Congress. Graduate students and postdocs are not currently permitted to contribute their non-W2 income, which typically comes from fellowships and training grants to individual retirement arrangements or IRAs. The GSSA would fix that problem and have a very beneficial effect on the PhD trainee workforce. Abby explains her role in shepherding the GSSA endorsement through FASEB, what the GSSA would do for graduate students and post docs, and how the GSSA relates to the Secure Act, another bill that as of this recording has passed the House and is before the Senate. Without further ado, here’s my interview with Abigail Dove.

Will You Please Introduce Yourself Further?

01:33 Emily: I have joining me on the podcast today, Abigail Dove, and she is a PhD student who completed an internship at FASEB last summer. And she has a lot to tell us about the Graduate Student Savings Act. So if you have been wondering about your IRA and why you can or cannot contribute to it, that’s what we’re going to be discussing in today’s episode. Abby, thank you so much for joining me today and will you please introduce yourself a little bit further?

01:59 Abigail: Sure. Thanks for having me. My name is Abigail Dove. Currently, I’m a PhD student at Johns Hopkins and I just started my sixth year. I work in fruit flies and study the gonad development. A little bit of my background: I first started as an undergraduate at Bard college, a small liberal arts school in upstate New York. And then I did a postbac for two years at the NIH NIDDK (National Institute of Diabetes and Digestive and Kidney Diseases) before starting at Hopkins. What we’re talking about is kind of the work that I did at my internship at FASEB, which is the Federation of American Societies for Experimental Biology, which I guess to be a little more descriptive it’s a society that represents 29 member societies, which has about 150,000 scientists that they represent.

Tell Us More About Your FASEB Internship

02:57 Emily: Excellent. You and I have common that we both did a postbac at the NIH. In fact, I’ve interviewed several other people on the podcast who have that on their resumes as well. So very popular program. Anyone still in college considering going for a PhD in biomedical sciences or related areas should definitely consider the NIH postbac program. It’s amazing. Okay. So you had this internship at FASEB last summer. What exactly were you doing in that role? Because it’s a little bit unusual for a graduate student to have an internship. And I think especially a graduate student in the biological sciences because, I don’t know about you, but I sort of observe the culture as like, “ah, you need to stay at the bench 120% of your time and never do anything away from the bench.” So please tell us a little bit more about what you were doing in that internship.

03:40 Abigail: Yeah, so I was really fortunate. I have a PI that–we both know that I’m interested in a career that is outside of the academic track. So, I did a lot of science outreach and I knew that I like communicating science to the public. So I wanted to pursue this career of science policy as a way to talk to the public about science and its importance. So what I did at FASEB, I had a lot of responsibilities. I was particularly interested in training and workforce policy. So, policy that relates to students, postdocs, and even faculty as it’s something that everyone can relate to. So that was one of the reasons that I was most interested in it. And I did a wide range of things. I hosted a webinar on work-life balance and the lab culture and we can include a link to that if anyone wants to watch it later. I represented FASEB on Capitol Hill and at the NIH for different events and I generated comments on sexual harassment that will soon be sent to the NIH. I also helped organize an online symposium series for the FASEB Science Policy Committee on challenges facing women throughout their career lifetime. And then I compiled minutes for the meetings, I drafted talking points for committee members, and then the big thing that I did was I spearheaded FASEB’s endorsement of the Graduate Student Savings Act.

How to Land a Science Policy Internship

05:13 Emily: Excellent. And we’ll get a lot more into that in a moment. But that sounds like a really exciting internship. It’s absolutely fabulous that your PI was supportive in you completing that. I actually did a science policy internship as well. The Mirzayan Policy Fellowship out of the national academies. That was actually after I finished graduate school. But it’s available to current graduate students as well. So, if what Abby was describing sounds amazing to you, that’s another potential avenue for you to get that kind of experience in science policy. Okay. So how did you actually land this internship if other people are interested in doing something similar?

05:46 Abigail: Yeah, so I first started–we have an office at Hopkins, it’s called the Biomedical Careers Initiative Office. And it’s really great for people that are looking for careers outside of the academic track. They were offering a course on science policy and advocacy that was actually being taught by the Director of Public Affairs at FASEB, Jennifer Zeitzer, and the Director of Science Policy, Dr. Yvette Seger. So the class gave us a background on legislation and how bills get enacted into law. And we did some case studies on different issues in science policy. They also taught us how to be a science advocate. But finally, we had to write a policy memo on an opportunity or challenge in research activities supported by federal funding, and we had to give an elevator pitch on that to the class as well. And I did mine on saving for retirement as a graduate student and a postdoc.

06:48 Emily: Yeah. Excellent. And so was it through that paper and that pitch that you gave that you found the Graduate Student Savings Act?

06:56 Abigail: Yes, that’s how I found it. Oh, I guess we didn’t cover how I got the position too. So this office that hosted the class actually also hosts internships for students. And so FASEB was also accepting applications for science policy fellows through the Biomedical Careers Initiative Office. So I applied for that directly. But they also have internships for a wide range of different careers outside of the academic track, including industry and consulting and patent law as well as policy.

What is the Graduate Student Savings Act?

07:33 Emily: It sounds like a great deal of support actually, that Hopkins is providing and helping you sort of step a little bit outside of academia into another role that can really presumably help your post-PhD career, should you decide to pursue one in science policy. So let’s kind of back up a second and explain more about what the Graduate Student Savings Act is because it’s probably not one that most people have ever heard of. Right? Like probably a lot of people in my audience, they know about IRAs. Maybe they don’t have one, but they sort of know they’re supposed to or maybe they know they might not be able to have one. So what is the Graduate Student Savings Act?

08:06 Abigail: Yeah, so the Graduate Student Savings Act. There’s a bill in both the House and the Senate and they’re essentially the exact same bill, so they’re called companion bills. And they would allow graduate students and postdocs who receive their income through either a fellowship or stipend to contribute to an IRA or an individual retirement account. The current issue right now is that on the current tax law, trainees who are receiving their income through a fellowship or a stipend are actually prohibited from contributing to an IRA because it’s not considered compensation or earned income.

08:44 Emily: Exactly. And I like to further kind of clarify this for people by saying within academia we might use the word fellowship in different ways. We might use the word stipend in different ways. Nobody’s ever heard the word compensation. But what it really boils down to is, is your graduate student or postdoc income reported on a W2 or not reported on a W2? It could be reported somewhere else, it could be reported not at all. W2 income is the kind of income, taxable compensation, or earned income that can be contributed to an IRA under the current law. And anything else in terms of graduate student, postdoc income non-W2 does not fall into that category, unfortunately. So that’s how things currently stand. The Graduate Student Savings Act includes this type of non-W2 or fellowship income in taxable compensation for the purposes of contributing to an IRA. Is that correct?

09:39 Abigail: Yes. And unfortunately, it doesn’t change its designation universally. It doesn’t make it earned income or compensation, but it just allows it to be saved for retirement purposes in an IRA.

09:51 Emily: Yeah. This is one of those confusing things about the tax code in general is that they use these terms like “taxable compensation” and “earned income” under different contexts. And so sometimes they have different definitions under different contexts. So earned income has other implications in the tax code, like around the earned income tax credit. Whereas, taxable compensation has a different meaning. It’s under the section for IRA contributions and so forth. So it’s sort of defined there as “taxable compensation for the purposes of contributing to an IRA is these things,” and currently, it says explicitly, “does not include fellowship income, not reported on a W2.” So that’s the current status. But then there’s this Graduate Student Savings Act bill as you said, it’s sort of on the floor in both the House and the Senate.

How Abby Got FASEB to Endorse the GSSA

10:37 Emily: I was looking at the history of this and I think the first time it was introduced was 2016 and it’s introduced every year I think in more or less the same form until now, 2019. We should actually say we’re recording this interview on September 25th, 2019. It will be released within a couple of weeks of that date. So things might have changed. But as of September 25th, 2019, the Graduate Student Savings Act has not been passed but it is, I guess, available to be passed. So, what was the process like for getting FASEB to ultimately endorse the Graduate Student Savings Act, and what work did you do to make that happen?

11:15 Abigail: Yeah, so originally before I even did the class, FASEB was not aware of the Graduate Student Savings Act at all. It wasn’t on their radar. It wasn’t until I wrote my policy memo on the issues of graduate students saving for retirement, and I actually did the research and I was just Googling it and I came across it on my own, that we both kind of became aware of it. And so I kind of took this on as a task that I wanted to complete in my fellowship and I thought it was an important task and FASEB was great. If there was an issue that I really wanted to take on and it was something that was good for FASEB to endorse, they would have no problem with me taking the lead. So this was my big accomplishment of the fellowship.

12:04 Abigail: And since FASEB is a nonprofit organization any bill that they support needs to have bipartisan support for endorsement. And that thankfully both the House and Senate bill had bipartisan support on both pieces of legislation. I think some of the previous iterations of the Graduate Student Savings Act didn’t have bipartisan support. So this was really important for FASEB to get on board. But it was a little tricky for FASEB to first navigate the waters. They’ve never supported a tax legislation before. You think that experimental biology doesn’t have that much to do with legislation on tax. But here was a perfect one for them to start.

Personal Impact of Flawed Tax Legislation

12:49 Emily: Yeah. As you were saying earlier, it’s a clear workforce issue. Right? So that’s the definite connection or conduit between what they do generally and this weird little tax quirk that happens to deeply affect their own workforce.

13:03 Abigail: Well, yes. So this actually personally affected me. From when I was in college and doing other side jobs, I was always contributing to an IRA, if possible. My dad is very financially responsible and he just told me when I was young, “you need to have an IRA.” He always recommended a Roth IRA. He always thought it would be better to get tax first and any profit you make later you don’t get taxed on. So there’s two different IRAs, a Roth and the standard IRA. So maybe some clarity on that. But this personally affected me when I was a post-bac for those two years I was receiving stipend income and wasn’t reported on a W2 so I couldn’t contribute to an IRA for those two years.

13:51 Abigail: Then my first year in graduate school I was on a training grant, so also not receiving a W2 so I couldn’t contribute. My second year I was actually a teaching assistant, so I was being employed by the university somewhat and getting my income reported on the W2. So I was for that year able to contribute, which was really great. And then I got awarded the National Science Foundation, Graduate Research Fellowship award.

14:20 Emily: Congratulations, but also, dun, dun, dun.

14:23 Abigail: Yeah. So it was really great. But then I also couldn’t contribute to my IRA because it wasn’t reported on a W2. So that affected me for my third and fourth year of graduate school. My fifth year I got married. So that changed things a little. I was still on my NSF fellowship. But because I was married to someone who had a real job and was receiving income that was deemed compensation, I was able to contribute to my Roth IRA just because I was married to my husband. so that was my last year of my fellowship. Now I’m back at Hopkins and I’m TA’ing for this year. So I will again be able to contribute even if my husband wasn’t receiving earned income himself.

15:14 Emily: Yeah, I have a little bit of a similar story of flip-flopping between RAs and fellowship income. And at some point I got married and so my husband, having a similar situation of flip-flopping between RAs and fellowship income, it helped in certain years one of us would have a taxable compensation, maybe the other one wouldn’t. So one of the things that helps people in this situation–under the current status of fellowship income, non-W2 income is not eligible to be contributed to an IRA–one thing that helps is that the academic year and the calendar year do not line up. So, if you have different sources of funding in two different academic years, maybe you can be covered for one calendar year in terms of being able to contribute. It helps if you’re married of course, to someone with taxable compensation. And the other workaround is actually having a side hustle that is self employment income. So self-employment income is taxable compensation that can be contributed to an IRA. So that’s something I sometimes float with people who are frustrated by their multi-year wonderful fellowship packages that don’t allow them to contribute to an IRA. If it’s possible to side hustle, that’s another way to kind of sneak in that eligibility. So, your stipend wouldn’t be eligible, but that side hustle income would be eligible. All these are workaround solutions, the real main solution is just changing the tax code because this is ridiculous that this is happening, right?

Commercial

16:35 Emily: Emily here for a brief interlude. Through my business, I provide seminars and webinars on personal finance for graduate students, postdocs, and other early-career PhDs for universities, institutes, conferences, associations, etc. I offer seminars that cover a wide range of personal finance topics and others that take a deep dive into the financial topics that matter most to PhDs, like taxes, investing, career transitions, and frugality. If you are interested in having me speak to your group or recommending me to a potential host, you can find more information and ways to contact me at pfforphds.com/speaking. That’s p f f o r p h d s.com/speaking. Now back to the interview.

Anything Else About Your Role in FASEB?

17:25 Emily: Okay. So, anything else to add about your role with getting FASEB to endorse the GSSA?

17:31 Abigail: Yeah. So, because it was a tax bill and FASEB had never endorsed a tax bill before, they want it to go through full process of endorsement. They wanted to get everyone’s feedback on it. So the first step was going through their Training and Career Opportunities Subcommittee. So, they have a monthly meeting, I prepared talking points for the chair of that committee, and we discussed it and they couldn’t see anything wrong with it. So, we got a full endorsement from that subcommittee. Then we had to go up one level to the Science Policy Committee and did the same thing, had to talk to the entire committee, got overwhelming support of it. So, it got pushed up to the next FASEB tier, which was the executive committee. They gave the final approval. Actually, for the Training and Career Opportunities Subcommittee and the Science Policy Committee, I made a one-page summary of the current situation and how the Graduate Student Savings Act would change that. So, a one-page review for them. And then when we went for approval for the Executive Committee, we had the full letter drafted for them to approve, and we can also give you a link to the FASEB’s endorsement letter too, as well.

18:56 Abigail: Normally, it would go to the FASEB board for approval, but the board was jam-packed with what they had to do for that month. So, because we got unanimous support from the two committees before that, they thought that the Executive Committee approval would be sufficient. But I started my internship in June and it wasn’t approved until the first week of September. So, it does take a long time for this approval to go through because you have to wait every month for the next committee to happen. And if there are changes and edits to it, then it can also take a lot of time. You want to do it as quick as possible so the endorsement actually has an effect if the bill is getting voted on soon.

19:47 Emily: Yeah, exactly. This is fascinating to hear kind of how the sausage is made, and not even to make the policy, but just to get something like this: an endorsement from group whose endorsement matters in this kind of thing. What I’m just thinking is how good it is that FASEB has connections to the current trainee workforce like through you and other interns they accept because they had you to tell them, “Hey, this is an issue that’s going on. And by the way, there’s a solution to it and it’s in front of Congress right now.” So it’s just, I guess it’s really good for them to offer these kinds of internships programs to get those fresh ideas and those connections to people who are still in training.

20:30 Abigail: Yeah, I think they really appreciate the fellowship program for that same perspective. The younger generation. People serving on these committees and the boards are faculty members that have been serving for a while and they’re very removed from this training portion. I think there might be–and correct me if I’m wrong–but I think there could be a few postdocs who are serving on boards, but I think that’s very unlikely. Most of it’s always faculty. There’s never a postbac representative in these meetings. So, having a fellow there, they really value so they can get that younger perspective on what’s happening currently.

What is the SECURE Act?

21:10 Emily: Yeah. That’s excellent. Okay. So that was your role with FASEB and then with respect to the GSSA, the Graduate Student Savings Act. There is a different bill before Congress that has sucked up a lot more attention in terms of changing the tax code than the GSSA has, and that is the SECURE Act. Can you tell us what the SECURE Act is? Not in a lot of detail, but basically just how it relates to the Graduate Students Savings Act?

21:35 Abigail: The SECURE Act is Setting Every Community Up for Retirement Enhancement Act of 2019, and it’s just a massive retirement savings bill. For some perspective, the Graduate Student Savings Act is a two-page bill, whereas the Secure Act is 124 pages. So it’s just way too large for FASEB to endorse something so big. But fortunately, it has almost the exact same wording as the Graduate Student Savings Act in one of its sections. So it would get across the same thing as the Graduate Student Savings Act. It would allow graduate students receiving unearned income to contribute to an IRA account. It just was too big of a bill for FASEB to endorse because we can’t vet everything and it’s a little bit out of FASEB’s wheelhouse.

22:22 Emily: Yeah. So, basically what sounds like has happened is that the Secure Act has absorbed the Graduate Student Savings Act pretty much verbatim. And it’s making a lot of other changes as you said to retirement accounts. I’ll link to a couple articles on the Secure Act from the show notes, but some other things that caught my eye that it’s trying to address are like having part time workers have more access to 401k’s. It’s changing a little bit of the distribution rules, like once you’re actually in retirement and about inherited IRAs and there’s just a lot of changes there. Abby and I were glancing over it and we saw something that, “Oh maybe this addresses the kiddie tax.” We’re not even sure about that, which would be amazing if it does. So there’s a lot of different things that it touches.

23:02 Emily: And as you were saying earlier, like for FASEB being able to endorse the GSSA, the GSSA had to have bipartisan support. In fact the Secure Act does have bipartisan support. It passed the House and is currently hung up in the Senate as of, again, September 25th. Because the Secure Act passed the House with such strong bipartisan support, everyone kind of thought that it would pass the Senate really quickly. But it’s been hung up, so its future is uncertain but hopefully it will get through. And the wording that was adopted from the GSSA, hopefully that would actually be maintained. And in the final version we would actually see this benefit be extended to graduate students and postdocs where it wasn’t before. But that’s kind of where things stand as of today as of this recording. Hey, maybe by the time this is published something will have changed on that front. That would be awesome.

23:56 Abigail: I think something also important to note is that the wording of the bill, I don’t think that it would also apply to postbacs. It seems very specifically to graduate students and postdocs. So I think, unfortunately, postbacs would be still excluded from the Graduate Student Savings Act.

How Will the Internship Help Your Future?

24:12 Emily: Hmm. Interesting. Yeah. I’ll have to take a look at that because I didn’t realize there were distinctions being made among different levels of training. We’ll see how that actually shakes out. It’s always sort of uncertain until kind of the next tax cycle rolls around how these things are actually going to be implemented and everything. Thank you for pointing that out. For postbacs out there, this might not be the news you’re looking for. Maybe you still need the side hustle or maybe you still need to get married to have one of these workarounds. Just kidding, people don’t do that. Okay. So Abby, how do you think that this internship experience with FASEB is going to benefit your future career?

24:52 Abigail: Oh, I think it benefited me already tremendously. Besides from just getting a sense of what science policy really is and getting to immerse myself in it and what I would expect in a job. I got great networking. I already met a bunch of people because FASEB represents so many other societies. You know, I really got to get my name around and people know my work now. I also just got a ton of experience. I generated a bunch of writing samples, which is really crucial in the science policy job search, and I think I’ll get great references also for future jobs. So, it’s benefited me tremendously.

25:30 Emily: Do you have specific plans yet for after you finish? Like what positions you might apply for?

25:35 Abigail: Yes, I’m probably looking for science policy analyst positions. When I graduate. I don’t see really any benefit of doing a postdoc afterwards. There are people that continue to do more science policy fellowships. I’m kind of in the boat where I would just like to be out of fellowships and schooling and just want a real job. And I think with this internship I generated enough experience that I would be able to get an entry-level position and be a sought-after candidate.

Final Advice for Early-Career Grad Students

26:08 Emily: Yeah, I have a great deal of sympathy with that position of, “okay, I don’t need any more training. I’m trained. Let me have a job. Finally.” Definitely. So Abby, last question here, which is one I ask all of my guests. What is your best financial advice for another early-career PhD? And that could be related to something we’ve talked about today or it could be something entirely different.

26:29 Abigail: Yeah. So I think of course I would recommend that everyone should open and save in a Roth IRA account and start saving what they can, even if they can’t hit the max. But I think more importantly, we know that graduate school is a really stressful time, and I think it’s really important to invest in your personal wellbeing. And so if that means, paying for workout classes or traveling or if it’s even retail therapy. I think whatever it is, if it’s important to you and if it makes grad school a little bit saner for you it’s important to put some money aside and make time for yourself.

27:08 Emily: Yeah, it’s, it’s actually a little bit weird that sometimes we have to give graduate students permission to spend money on themselves. But if you think about it like more broadly, other people when they receive the financial advice to cut back on those discretionary expenses, cut back on those Wants and so forth, it’s usually because they’re spending at such a level that’s actually endangering their other financial security.

27:35 Emily: Graduate students I would say in general are not spending a sufficient percentage of their income on discretionary things for themselves. Actually, sort of to tie this back to the GSSA, one of the co-sponsors of the GSSA is Senator Elizabeth Warren. She’s sponsored every year in the past, whatever, four years that it’s been up. Many years ago, back when she was a consumer advocate, basically, she wrote this book called All Your Worth*. She co-authored it with her daughter. And that book promotes the balanced money formula, which is to spend, of your after-tax income, no more than 50% of your after-tax income on Needs, 30% on Wants and 20% to Savings. And I was looking at that the other day and I’m thinking that graduate students, I would be surprised if they spent 30% of their income on their Wants.

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

28:28 Emily: Usually, it’s that Needs category that gets up to 60, 70, 80% or more because of rents and high costs of living areas and low stipends and all of those kinds of problems. So yeah, in fact, sometimes we do need to hear the advice that it is okay to spend a little bit of money on yourself to help bolster your mental health and help you get through graduate school in great shape. Of course, it’s ideal if you can do that alongside saving for your future and doing all these other great things, but we want you to get through graduate school in one piece. So yeah, thank you for that advice, Abby, and for giving this interview today.

29:02 Abigail: Well, thank you for having me.

Outtro

29:05 Emily: Listeners, thank you so much for joining me for this episode. Pfforphds.com/podcast is the hub for the Personal Finance for PhDs podcast. There, you can find links to all the episode show notes, a form to volunteer to be interviewed, and a way to join the mailing list. I’d love for you to check it out and get more involved. If you want to support the show and my business, please go to pfforphds.com/helpout. There are plenty of ways to do so without laying out any of your own money. See you in the next episode! And remember, you don’t have to have a PhD to succeed with personal finance, but it doesn’t hurt. The music is Stages of Awakening by Podington Bear from the free music archive and is shared under CC by NC.

This Graduate Student Switched Universities and Moved Long-Distance to Stick with Her Excellent Advisor

August 19, 2019 by Meryem Ok

In this episode, Emily interviews Dr. Katie Wedemeyer-Strombel, a recent PhD in environmental science and grad student advocate. Katie’s advocacy for her peers grew out of the challenges she faced during graduate school, particularly with respect to her first advisor. Katie details her decision to change labs and ultimately universities a couple years into her PhD and how she handled the financial and logistical aspects of moving from one side of Texas to the other. Emily and Katie discuss their advice for PhD trainees on how to choose a good mentor and preparing for the unexpected.

Links Mentioned in the Episode

  • Personal Finance for PhDs: Speaking
  • Katie’s website: (Katiewedemeyer.wordpress.com)
  • Personal Finance for PhDs: Help Out (https://pfforphds.com/helpout/)

Teaser

00:00 Katie: I never could imagine that it would have happened to me. I applied to one program to work with a certain professor that I was really excited– it was my dream program to get into, my dream project I was going to get to be on– and I didn’t even think to ask around about what’s it like to work with this person.

Introduction

00:22 Emily: Welcome to the personal finance for PhDs podcast, a higher education in personal finance. I’m your host, Dr. Emily Roberts. This is season four episode one and today my guest is Dr. Katie Wedemeyer-Strombel, a PhD in environmental science and graduate student advocate. Katie’s advocacy for her peers grew out of the challenges she faced during graduate school. We discuss her decision to change labs and ultimately universities a couple of years into her PhD and in particular how she handled the financial and logistical aspects of moving from one side of Texas to the other. Katie gives excellent advice for every PhD trainee on how to choose a good mentor and preparing for the unexpected. Without further ado, here’s my interview with Dr. Katie Wedemeyer-Strombel.

Will You Please Introduce Yourself Further?

01:13 Emily: I am delighted to be joined today by Dr. Katie Wedemeyer-Strombel and she is going to be telling us about a time of upheaval during her PhD in a variety of different ways. So Katie, will you please tell us a little bit more about yourself?

01:28 Katie: Yeah, and thanks so much for having me. I’m really excited to be here chatting today. I just recently finished my PhD in environmental science at the University of Texas El Paso where I integrated social and natural science to help improve conservation, specifically of sea turtles is what I was looking at. I grew up in southern California in a quiet little beach town and I love to be outside in the mountains and the ocean, playing with my dog, hanging out with my husband. I lived in California for most of my life, did my bachelor’s degree at the University of California, San Diego, then worked at a small zoo and aquarium as the lead educator where I got to talk about science to kids of all different ages, which inspired the pursuit of my PhD where I started at Texas A&M. After my second year, I decided the environment I was in was not a good environment, a good fit for me. And so I left that lab, found a new one and finished my PhD with a new advisor and ended up moving to a new university across the state of Texas. So yeah, it was a long journey. It took me seven years total to finish my PhD. I am thrilled to be done with it recently. It’s still sinking in and I think that’s it.

02:46 Emily: Well you’ve moved again recently, right?

02:48 Katie: Yes, yes. So we just recently moved a couple of weeks ago to the Denver, Colorado area to enjoy a new place and a culture of being outside and exploring. We’re really excited to be in a place where we feel like we’re surrounded by like-minded people.

What Motivated You to Switch Labs?

03:08 Emily: Excellent. So glad to hear that. So let’s go back to just before again this time about people. When you were switching labs and ultimately switching universities. What motivated you to do that switch?

03:23 Katie: So for me, it was even starting early on my first year of grad school. I felt like I really knew what I was getting into. I had taken three years off between undergrad and grad school and I had worked with researchers at a federal research lab. I’d worked with grad students before in that capacity as well. So I felt really confident that I knew what I was getting into. And then I went to grad school and the department culture was not the healthiest. And then within my lab, it was a struggle kind of from the beginning. There were a lot of expectations of working really long hours and kind of going with the philosophy that graduate school is supposed to be miserable and a time that you’re suffering and you’re not allowed to be anything but a grad student or have any hobbies or anything outside of graduate school. If you showed interest in anything else or dedicated time to anything else, including family, then you would fail is essentially what I was told. So I just realized kind of midway through my second year that what I wanted and what I needed for my education and to be successful and in my life to be happy, I was not getting with the professors that I was working with.

04:34 Katie: So, thankfully to the support of other faculty members and to my cohort, I recognized that this was not a good situation for me– that thinking every day, oh man, I don’t think I can do four more years of this. I don’t know that I can make it through that, feeling that way every day, and just realizing that what I was feeling was not how graduate school had to be. It is how it is, unfortunately, for a lot of people, but it’s not how it has to be. It can be a much more positive and a better experience. And so I was able to leave my lab, in part hugely to receiving a National Science Foundation Graduate Research Fellowship, which really helps give me freedom because it was a lot easier to approach new professors having that credential. I was able to find my new advisor who had a really positive way of mentoring her students. Still challenging, still high expectations but in a very positive manner, which for me was the kind of environment that I really needed to thrive. So she initially was still at Texas A&M when I moved into her lab at the beginning of my third year, but she was looking at and then eventually took a job about 12 hours across Texas at the University of Texas El Paso. So after third year my husband and I moved across Texas and started up and spent another four years in El Paso where we finished school.

Warning Signs for Unhealthy Labs

06:09 Emily: Yeah. Thanks for that kind of overview and we’ll be getting into quite a bit more into various components of that story. For someone else who is entering graduate school or entering a new research situation, maybe it’s postdoc, maybe it’s something else. What are the warning signs that they should be looking for for labs and groups to avoid if they have maybe a similar outlook on life as you do that graduate school, that research, should not be consuming 100% of your life?

06:40 Katie: Yeah, that’s a really good question. I think the biggest thing is ask students, ask postdocs working in the labs you’re interested in joining, current students and former students or postdocs and you know, get them on the phone or if you’re there in person, take them out to coffee. Ask them, if you could do it again, would you work with who you’re working with? And take that answer seriously. On the phone or in person, people will be much more candid than say in an email because there’s no track record of it. And in my experience, when I was switching labs, I did a lot of investigating on that front. Talk to a lot of students and collaborators that worked with the people I was looking to work with and, in my experience, students and postdocs were very open and willing to chat with me on the phone or in person.

07:31 Katie: So that’s a big thing, but I think, looking into what is the culture like in that lab or in that department, in that town. Do they emphasize binge drinking as a way to blow off steam and the one way to deal with burnout– which doesn’t actually deal with burnout, it just adds to it. Do they encourage you to take time off to be with your family? Do they seem to have expectations that all you’re going to be doing is your work or do they seem to promote, “Hey, you like that band, why don’t you go to that concert?” Or “Hey, your family has an opportunity to all be together. Why don’t you go do that?” So really asking questions about how do you feel about taking time to see family? How do you feel about my work schedule? If I’m a better worker from 5:00 PM till midnight, is it okay if those are the hours I’m in the lab rather than 7:00 AM till 4:00 PM or whatever works best for you. So getting a feel for what you need and what’s going to work for you and asking those questions to who you’re working with, to people in the department that you’re thinking of joining and especially to the students who are already experiencing that. I think that that’s something that I didn’t do initially that I wish I would’ve done to get a better idea of what I was getting into.

08:55 Emily: I think there are some, I’ll say graduate students especially, who have a beggars can’t be choosers kind of attitude towards their selection of university or program or advisor. And that really may be the case if you have only gotten into one place or only one person will accept you into his or her lab. But the thing is that, as you experienced, if the culture and the work style and whatever it is about the group does not mesh well with what you want, you’re not going to end up being successful anyway. Like it doesn’t matter if they were the only one, if it’s going to put you through way too much strain or you’re going to have to leave their program, whatever it is. I mean it’s hard to say no to like your only opportunity or an opportunity that you would really like to think that it might work. But it’s just about more being honest with yourself that it’s not going to work and the PhD is a long time. It’s not the kind of time period that you can suck it up and power through for five plus years. And hey, it may take even longer if you’re struggling, you know? So it seems to be very, very wise to be very selective on the front end, even if it means turning down what might otherwise seem to be a really good opportunity.

Advice to the “Exceptions”

10:06 Emily: So when I was in graduate school, my husband and I were both very fortunate to have supportive advisors who were the kind of advisors that you’re talking about who didn’t have crazy work expectations, were supportive of family and so forth. But my husband considered joining a lab that had a little bit of a reputation, known among the students for being a more challenging lab to be in and with a more challenging advisor to work with. And I remember he heavily considered joining that lab but ultimately did not, all to the good. And I remember at a later point in graduate school, one of my friends who was a first-year or something, was rotating through labs and considered working with, again, another advisor who had a reputation as being a very difficult person to work with. And having had the experience my husband had, he was counseling this person to, as you were saying, take very seriously what other students, former lab members especially have said about this person to him. And ultimately he decided to join that lab. And he did graduate. But it’s just, I don’t know. What would you say to a person who thinks, “I’m going to be the exception? I’m not going to have that experience in that lab that 80% of people are having.”

11:24 Katie: Yeah, that’s a really good question. People leave labs for a lot of different reasons and sometimes people can be successful in an environment that was very unsuccessful and unhealthy for other students. And so that does happen. It’s not necessarily always like a nuclear situation when people leave labs. But because I’ve shared my story pretty transparently, I’ve heard a lot of horror stories. A lot of people have privileged me with sharing their experiences with me as well. And it’s a risk, I think, to join a lab that you know has a bad reputation. That’s a really good question. Thinking about what to say to a student that thinks that it’s not going to happen to them. I never could imagine that it would have happened to me. I applied to one program to work with a certain professor that I was really excited– it was my dream program to get into, my dream project I was going to get to be on– and I didn’t even think to ask around about what’s it like to work with this person, what it had been before. I probably would have ignored that anyway because I didn’t know any better. I didn’t know much about graduate school really at the time when I was getting into it. You know, it’s a risk, but to a student that thinks that they can go into a lab that doesn’t have a great reputation and thinks they can be successful: If they really want to try and they don’t have other options, they can try and they’re not stuck.

12:51 Katie: That’s a big thing I like to encourage graduate students to recognize is that you are not stuck. Just because you signed up for one program does not mean that that means you are locked into it for five, six, seven years, however long it takes. With the caveat of if you’re an international student, changing is a lot harder because you have visa issues, you have to deal with, you need the sponsorship of a lab. So there are a lot of extra obstacles that international students, underrepresented minorities face that, for example, I didn’t face when I was going through it. But there are options. And so, if the student feels really confident in joining a lab that other people have maybe warned them about, it’s their education and their life and if they decide that they want to take that risk, that just that they know, if for some reason it doesn’t work out that they’re not stuck in that environment, they’re not trapped. They don’t have to prove to anyone that they can withstand whatever treatment they’re getting, that if they’re unhappy or it’s an unhealthy environment that it is okay to say, “I have to leave this environment and find a different one.” Whether that different one remains in grad school or is a total different industry or career change. I think that would be what I would say.

The Advantage of Lab Rotations

14:17 Emily: I think I would add to that: if you know you’re taking a gamble with a certain lab to just be even more intentional about developing relationships with faculty members outside of that one. And it really depends on your program, how much that’s encouraged or not, but you should just take even more of that on for yourself to sort of look around and say, “okay, what are other people I can go to here either to help me stay in the current lab and give me advice, or what have you, support, collaboration, or a potential new advisor to switch to if this one doesn’t work out.” This is one reason why I really liked the system of doing rotations that some fields and some programs had. I personally didn’t do rotations in my lab. Sounds like you didn’t either. But I just think it’s a great idea to try on a lab for a semester or what have you and be able to make a better evaluation at the end of that. So, if you have the opportunity to go to programs that offer rotations, I think it’s a real advantage.

15:14 Katie: Yeah, absolutely. And I know I have a couple of friends who ended up switching labs into a lab of someone else that they had done a rotation with. And so they knew, “well, my interests overlap with this person. I liked that environment. It was a better fit for me.” And so I actually know a couple of students who eventually changed into a rotation lab. And just one more thing that I wanted to add on on this topic is that we keep mentioning labs that have a reputation. And so much of the onus is on the student to navigate this, but what students really need is faculty, especially tenured faculty and administrators in these departments that know that their department and/or faculty in their department have these reputations. People know about it. It’s not surprising when a student leaves the lab, people know their reputation. And yet, those professors still get funding for TA-ships or RA-ships to have students in their lab when there’s a known cycle of either inappropriate behavior of a variety of types or just of being a really negative environment that can emotionally hurt a lot of students. And so it’s a systemic issue and a lot of students are talking out more and more about it. And on Twitter, a lot of faculty are talking out more and more about it and it’s definitely becoming something that in my experience, even like some graduate deans are paying more attention to.

16:44 Katie: But really, the students need the help of established folks in the fields and we need them to help either watch out for students that join those labs or to talk to their colleagues and say, “Hey, your behavior is inappropriate. It’s not okay to treat students like that.” Because so much of the onus is on students. So much of having to navigate changing labs is on the students with zero support from the institution or other faculty unless they’ve already had the opportunity to carve out relationships with other faculty who will advocate for them. So, I talk about this a lot and so much of the advice which is important is to give to students to look out for red flags and what to do in that situation. But I always like to add, we need the help of folks that are more established that already know of these reputations to say, “hey, maybe don’t work with that person or if you get stuck or something seems off, come talk to me.” Just knowing that students have the support and knowing that faculty are working to help fix this problem is going to be a huge step forward I think for academia in general.

Helpful Policies

17:56 Emily: Yeah. Just to add on that, I think that either having policies in place or enforcing policies that are already in place regarding, for instance, the time devoted to work usually is officially limited. For a TA or an RA position often it’s 20 hours per week. How about that’s actually tracked and actually changes are made if students aren’t able to get their work done or whatever it is within that period of time. Also, about vacation policies. I remember during graduate school, midway through when I was in grad school, there was an official vacation policy implemented for Duke overall. And it basically said, I think, that students can have two weeks or more if their advisor wants to give them more. Often international students need more than two weeks at once. So it’s a two weeks or more policy. So it was kind of a good thing because I think often when policies are proposed, people are nervous that the policy could detrimentally affect them. Like maybe I take more than two weeks of vacation per year and my advisor is okay with it, but two weeks would limit me. So that was kind of a good phrasing. Like it had to be at least two weeks. And so that’s at least a policy that could be pointed to. Someone needs to take time off, and if the advisor’s not respecting that, then maybe again someone a level up can start intervening in that situation.

Commercial

19:11 Emily: Emily here for a brief interlude. Through my business, I provide seminars and webinars on personal finance for graduate students, postdocs and other early career PhDs for universities, institutes, conferences, associations, etc. I offer seminars that cover a wide range of personal finance topics and others that take a deep dive into the financial topics that matter most to PhDs like taxes, investing, career transitions, and frugality. If you are interested in having me speak to your group or recommending me to a potential host, you can find more information and ways to contact me at pfforphds.com/speaking. That’s p f f o r p h d s.com/speaking. Now back to the interview.

Challenges with Changing Institutions

19:59 Emily: Thank you so much for that discussion. But moving on to the happier end to that story. You got into the new lab, but you knew from the beginning that there was a move upcoming. That your new advisor was looking around and ultimately did move. So, what were the challenges associated with that of moving and changing institutions partway through your PhD?

20:22 Katie: Yeah, so there were a few different aspects of that. First was my, at the time fiancé and my now husband, he moved out. He was a professional chef for many years in southern California and he walked away from that in California and moved to Texas since we knew I was going to be there for a while and we wanted to be together. So he moved out to Texas two months before I left my first lab. And so he had just gotten there and we stayed there for another year. And so, I had a really strong support system with my cohort. My original cohort mates were just phenomenal and still some of my best friends. And my husband moved out, got a good job and became really close friends with a lot of my cohort mates, some friends on his own as well. And so we lived there for a year and a half and then we had to move and move away from the support system that had seen us through a tough time, that had celebrated our marriage with us. And that was a really tough thing to have to move away from that support system. That was tough both personally, but also we lost support for if we needed help with anything or a place to crash or if we needed just, you know, what you lean on your community for. We had to walk away from all of that.

Financial Considerations

21:45 Katie: And so that was tough and we had just paid for my husband to move from California and then we had just had our wedding and we moved like two months after our wedding. The move itself cost us probably like total $3,500 that we didn’t have lying around. It wasn’t something we had planned for or had expected. We were really fortunate that my parents were able to lend us some money so that we could kind of basically take an interest-free loan from my parents. Not everyone has that option. So we were really, really fortunate to have that to lean on or else we wouldn’t have been able to pay for the moving truck, for instance, to move our stuff across Texas. Because it’s like a 12-hour drive basically from east Texas out to West Texas. And having to put down a new deposit on an apartment, having to start building a life there again and moving everything. And then starting over with no support system was really tough. Again, just didn’t have a place to crash if we needed, didn’t have friends to lean on that were local. And so that added, increased pressure on us in a lot of different ways, both like academically and personally. And so those were the biggest things, having to find all new doctors, having to pay copays to go and do like the initial appointment with the doctors and then just kind of going through all of that and moving. The cost of living was a little bit more expensive where we moved to in El Paso just because it is a city. Not a lot but a little bit more. So that was something that we weren’t totally prepared for either. So those were the big things I think.

Logistical Considerations

23:49 Emily: With the actual moving itself: so, the lab that I was in in graduate school, the reason that I graduated at the time that I did was because my advisor decided to change institutions. It was kind of like he graduated like six or seven people and moved some, some stayed at Duke. So I got to see the front end of the packing up of the lab and I assisted with that. But I was basically out of there at the same time that the move was actually happening. So I’m just curious how much sort of downtime there was for the lab as a whole and also for you to actually do the move physically of the lab and also of yourselves and how much of an interruption that was to your research? And whether that was like vacation time that you had to take or whether it was like, oh no, okay. Like this is something that my work is requiring me to do. So it’s like sort of papered over.

24:43 Katie: It was a pretty stressful time for us. So we got married on May 2nd, 2015. We had a destination wedding in Mexico, which was wonderful. So we took that time and then we took about a week after that to stay for our honeymoon. And then about two weeks later, I went down to my field site for the first time and I was there for about two weeks. And my field sites are really remote so I have very little communication abilities when I’m there. And then I got back home and we had to move out of our apartment I think by the end of May. So we packed everything up, put it in a pod, had that stored for a few months. My husband essentially moved in, we moved in with two of our good friends who had a house and an extra room and they let us stay there for June and July because I had a conference I was going to I think.

25:44 Katie: And I also had a two-week short course that I was going to. So I was doing some traveling as well. And so essentially we moved into a room in our friend’s house with just like a bag and our car’s worth of stuff and a bed and then shipped the rest of our stuff. So we didn’t have most of our stuff for a couple of months. And that summer was really crazy. I traveled a lot and my husband was finishing up work and then we had to drive to El Paso to look for apartments. I think we drove the 12 hours, stayed there for two days, had to get like a hotel and everything for him to go to orientation because he was actually going to be starting as a full-time undergraduate. He left the chef industry and was going back to school.

26:29 Katie: So he had to go to orientation for two days at the new university. So we took that opportunity to drive out there and spend a couple of days looking for apartments. So I think in July we drove out for two days, found an apartment right before we left, had to pay a deposit and then drove all the way back and then spent another couple of weeks in east Texas before we officially left and did the drive back out. So it was a really hectic time and it took away a lot of our honeymooning period where we didn’t really get to just “be.” And part of that we recognize in hindsight, because hindsight’s 20/20 or whatever they say. But we really should have taken more time to just be together and just enjoy being newlyweds. But it was really stressful packing up and leaving and packing up the lab.

27:27 Katie: I didn’t have a lot of stuff in that lab because I hadn’t been in there that long and I hadn’t really started my research yet. So that was a pretty easy thing, at least on my end to do. But yeah, it was a really hectic and stressful time for us. And then coming and getting settled and then jumping right into both being full-time students was challenging for us as well. I’m glad I did it because the advisor that I finished with, Tarla Rai Peterson, she’s so wonderful and was such a supportive and positive role model and still is for me. That was why we decided to make that move. It was a long discussion that my husband and I had before we decided to make that move was: is this worth it? Do we want to upheave our lives and have to go through all of this? And I could tell that this was a really good fit for me and it ended up being a phenomenal fit for me. So, I’m glad that we did it. I wish we would’ve done it a little differently and it would have been great to have planned a little bit more for an unexpected, anything really to come up, during grad school.

Advice for Making a Long-Distance Move

28:44 Emily: Yeah. I want to probe on that point just a little bit more as we finish. So speaking to another graduate student or early career PhD who’s maybe considering a big move like this. I don’t know if it’s optional or not, like this for you, you decided it was worth it. I guess technically it was optional, but you could see the advantages of sticking with that advisor. But like in, in my case, when my lab moved, many of the students were making a decision, do I move with my current advisor or do I try to find another advisor at my current institution? So both kind of for that situation, but also just sort of anyone more in general who’s facing a long-distance move. With this hindsight that you have now, what is your best advice for that person?

29:27 Katie: Make the move the most convenient it can be for you. We kind of did that in a few different ways. Like we paid the extra to have the pod that would store everything so we didn’t have to rent the cheap truck and load a storage unit and then unload it and drive it ourselves. Make sure that it’s going to benefit you to do that. It’s a lot of work to do a long-distance move. It’s hard to upheave your life and move to a new place. So definitely weigh the pros and cons. For me, the pros were hugely outweighing the cons. I would say be proactive of finding community wherever you’re moving to when it’s a new place. That can be really tough to do. It was hard for us.

30:12 Katie: We made a couple of good friends in our new place, but we weren’t there for very long and we both traveled a lot. And so we didn’t really find as full of a community as we had had previously. So think about where are you moving to? Is it a place that is going to make you happy? Just the location in general. That is a huge consideration. Think about community and how you’re going to build community when you get there and look into connections from other friends you may have from your network that’ll be there. And know that it’s going to cost some money. It’s expensive to move anywhere but especially long distance. But I think making that time as least stressful on you as you can by taking time to spend with your loved ones who are in the area. Whether it’s a partner, spend time with them just alone to really try to keep up the normal parts of your life and don’t let your move totally consume you, in the same way that I always say don’t let your research totally consume you.

31:14 Katie: It’s honestly because grad school can be so unpredictable and you don’t really know what’s going to happen if you’re going to have to move again or if you’re going to have to change labs or what that might mean for you. I think to always think that just because you sign up for a program for however many years doesn’t mean that that’s where you’re going to stay or end up. So just kind of always keeping in mind that you have options, that there can be change and that that change might require some resources that you maybe don’t have or hadn’t planned for. So planning for those resources, like trying to save money or people you can lean on that can maybe help you if you’re in a tight spot. Really think about those things. I know we already have a lot to think about, especially as new grad students, but I think just really planning for the unexpected because you never really know what’s going to happen or where you’re going to end up. And so just acknowledging from the beginning that something might happen and you might have to make a change is okay and just trying to have some support you’ve built for yourself in place to help you as you move through that.

Budgeting for the Unexpected

32:20 Emily: Yeah, I totally agree. And specifically on the financial resource, to put a little bit more of a fine, fine point on it. I mean having an emergency fund. Like okay, yeah, moving is not necessarily an emergency, but the thing is when you’re low income, like a graduate student, a lot of things qualify for emergencies that don’t sound like it. But it’s money for a necessary expense and it is unexpected to a degree. So just when you set up your budgets of your life, the first time in graduate school and your postdoc, just have a line item in your budget. It’s going be a small savings rate towards the unexpected as you said. Because the thing is, I mean, I’m always saying like money gives you options. So you were fortunate that you were able to lean on your parents to give you a loan.

33:04 Emily: That money gave you the option of moving. I mean, what if you didn’t have money yourself or didn’t have access to a loan like that? I mean, what really could you have done? Maybe you would’ve passed up this really fantastic opportunity to stay with this advisor. Maybe you wouldn’t have even finished graduate school. So yeah, just having money or having access to money is necessary at many points to sort of get to your career goals and have the life that you need to have. So yeah, if possible at all, build it into your plan that something unexpected is going to happen and you need to give yourself the option to say, to say yes to certain opportunities.

Advocacy for Graduate Students

Emily: So thank you so much, Katie, for sharing this story and being on the podcast today. How can people find you? And I understand you’ve been doing some speaking recently as well. Tell us about that.

33:52 Katie: Yeah. So, you can find me mostly on Twitter. My handle’s @krwedemeyer which is my last name, which I’m sure will be posted somewhere. You can find me on Twitter. That’s where I share a lot of my story and interact with a lot of wonderful early career academics and also established folks who share their stories as well. I was recently an invited keynote speaker at Ohio university’s graduate and professional student appreciation week celebration. And that was a really awesome opportunity to get to share my story and some advice to a room full of graduate students. And it was really cool to see them taking some of the things that I shared, like talk to each other about your struggles and your vulnerabilities, and hearing them actually go, “Oh yeah, I feel that way too. I didn’t know we could say that,” was just a really neat environment to be in. And I also got to speak with the dean of my graduate school and the Graduate Council. So a group of professors at UTEP who are in charge of graduate education and kind of the graduate school environment at UTEP.

35:03 Katie: And I got to speak with them about what we need as students and was able to work with them and they’ve now put on the docket for the fall to create an Ombud position. So, a confidential impartial person who graduate students can go to if they’re struggling with a lab or a professor they’re working with. And so they’re going to actually work to kind of create that position and fulfill that position so that students have more resources. Um, so I’ve been really thankful to be able to speak to both students and also to graduate deans and professors who are in charge of graduate schools. I’ve written a few articles for The Chronicle of Higher Education as well on these same topics, advocating for a healthier and kinder, but yet still intellectually challenging graduate school environment.

35:57 Emily: That’s excellent. And do you have a website for people to check out?

36:00 Katie: I do. It’s katiewedemeyer.wordpress.com.

36:04 Emily: Excellent. Well, thank you again for joining me today.

36:07 Katie: Yeah, thanks so much for having me. I really appreciate it.

Outtro

36:09 Emily: Listeners, thank you so much for joining me for this episode. Pfforphds.com/podcast is the hub for the Personal Finance for PhDs podcast. There, you can find links to all the episode show notes, a form to volunteer to be interviewed, and a way to join the mailing list. I’d love for you to check it out and get more involved. If you want to support the show and my business, please go to pfforphds.com/helpout. There are plenty of ways to do so without laying out any of your own money. See you in the next episode! And remember, you don’t have to have a PhD to succeed with personal finance, but it doesn’t hurt. The music is Stages of Awakening by Podington Bear from the free music archive and is shared under CC by NC.

How to Financially Manage Your NSF Graduate Research Fellowship

April 5, 2019 by Emily

Congratulations on being awarded the National Science Foundation (NSF) Graduate Research Fellowship (GRF) (or a similar remunerative, competitive, national fellowship)! Whether you’re a prospective grad student or a current first- or second-year PhD student, this fellowship is a great boon to your research, your CV, and almost certainly your finances. However, you may not yet realize that your finances will become a bit tricky once you start receiving your fellowship. With the help of this article, you can avoid the pitfalls associated with fellowship income and fully capitalize on the benefits.

NSF GRFP stipend

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

The NSF GRFP’s Negotiation Power

I’m sure you didn’t miss this headline info about the NSF GRFP: The fellowship pays you a stipend of $34,000 plus $12,000 of educational expenses to your institution for three years. Awesome! At the majority of universities in the US, that stipend amount is well above what you would be paid if you didn’t receive the fellowship, so you’ve effectively achieved a raise for the next three years.

But the good news doesn’t stop there: Your university/department might confer even more benefits upon you for winning independent funding. If the administration isn’t forthcoming about these additional benefits, it is appropriate to inquire about them.

Independence

Your new outside funding may give you a degree of independence in your research that you wouldn’t otherwise enjoy. This is highly dependent on your field, department, and advisor, but the fellowship may enable you to take your doctoral research in a direction that you advisor couldn’t or wouldn’t have supported without it. Perhaps you could take a risk on a side project, establish a new collaboration, or take extra time to rotate through a lab to gain new skills.

Additional Funding

At many universities, there is a standard offer of additional funding for winning a multi-year, lucrative fellowship like the NSF. This offer could come in one or more forms, such as:

  • A guarantee of funding for additional years
  • A one-time bonus
  • A stipend supplement above $34,000 while you have the fellowship
  • A stipend supplement after the fellowship concludes (e.g., up to $34,000/year for your remaining time in graduate school)

Not all departments offer additional funding to NSF GRFP recipients, but it’s worth inquiring about with your advisor, the administration, and current NSF fellows at your university. Stipend supplements during the time that you receive the NSF GRF are more common in high cost-of-living cities where the departmental base stipend is near $34,000/year to begin with. For example, searching “NSF” in the PhD Stipends database reveals stipend supplements awarded during the NSF GRFP years to students at the University of California at Berkeley, Northwestern University, and Columbia University, while a student at the University of California at San Diego writes that he/she received no funding incentive for winning the NSF GRF.

For Prospective Graduate Students

You’ll never have more negotiation power than you do as a prospective graduate student with an outside fellowship in hand. Unfortunately, you don’t have a lot of time to negotiate as the NSF GRFP awards list comes out approximately two weeks before grad school decision day, April 15.

Further reading: Vote with Your Feet, Prospective Graduate Students

As quickly as possible, you need to clarify if the offers from the universities you are still considering are going to be sweetened at all now that you have your fellowship. If the financial package from your preferred university isn’t up to par with your other offers (after considering cost of living differences), you can tactfully ask if a bonus, stipend supplement, or guarantee of future funding is possible.

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Budgeting with Your Fellowship Income

There are two vital questions you need to ask of your department before you can begin creating a budget for your NSF GRF stipend.

  1. After the fellowship ends, what will my stipend be?
  2. How frequently is my fellowship disbursed?

Accelerate Progress on Financial Goals

In my ideal personal finance-oriented world, an NSF fellow would live on (less than) the base stipend from his department and put all the excess income received toward growing his wealth. There are a few advantages to that approach:

  • Your lifestyle roughly matches that of your peers in your department.
  • You can relatively quickly achieve financial goals such as saving or debt repayment.
  • If your income is set to drop once the fellowship ends, you avoid acclimation to the higher, temporary income and don’t have to make major lifestyle sacrifices once the three years are up.

Some financial goals you could work on during the time you receive the additional fellowship funds are:

  • Eliminating any troublesome debt (e.g., credit card balances, medical debt, car loan)
  • Saving up cash for short-term needs and expenses (e.g., emergency fund, targeted savings accounts)
  • Investing for long- and mid-term goals (e.g., retirement, house down payment)
  • Pay down student loans

Further reading:

  • Options for Paying Down Debt during Grad School
  • Why Every Grad Student Should Have a $1,000 Emergency Fund
  • Targeted Savings Accounts for Irregular Expenses
  • Whether You Save during Grad School Can Have a $1,000,000 Effect on Your Retirement
  • Why the Roth IRA Is the Ideal Long-Term Savings Vehicle for a Grad Student
  • Why Pay Down Your Student Loans in Grad School

This strategy is easiest to implement for graduate students who start the NSF GRF after one or more years in grad school. Just put all of your ‘raise’ toward financial goals and don’t change anything about your lifestyle! Prospective grad students will have to be more conscious about setting up their grad student lifestyle on a lower income than they will start out with.

Preparing for the Post-Fellowship Income Drop

If you choose to upgrade your lifestyle with your fellowship stipend, be careful to maintain any long-term financial contracts at a level that will be sustainable for you after your income drops (if it will). The two key areas to watch out for are housing and transportation expenses. While it is possible to reduce your spending in either of these areas during grad school, it is a painful process, so it is preferable to lock in your spending in those areas at a level that you can maintain long-term.

Budgeting with an Irregular Income

Sometimes, fellowships are disbursed to the recipient at a frequency other than monthly, e.g., once per term. This schedule can cause issues for budgeting, which is usually framed as turning over each month.

One of the advantages of an infrequent disbursement schedule is that you are paid at the beginning of the period rather than the end, so the money you need throughout the period is already available to you. However, you may not be able/inclined to use typical budgeting software functions and prefer to set up your own budgeting system.

One of the most useful budgeting concepts for people with irregular incomes is that of fixed vs. variable expenses. At the beginning of your budgeting period, project the fixed expenses that will be paid during the period, such as your rent/mortgage, debt payments, certain utilities, subscriptions, etc. Then allocate your remaining income to your variable expenses at a frequency that is convenient for you. For example, you can estimate the variable utility bills that you may pay monthly during the period, plan to spend no more than a certain amount of money each week on groceries, and give yourself a lump sum of money for entertainment for the entire period to be spent as opportunities arise. In this way, allocate your fellowship disbursement so that you are sure that your expenses won’t exceed your income (leaving some buffer for unexpected expenses).

Income Tax Implications of the NSF GRFP

Your NSF GRFP stipend is subject to federal income tax. (It is usually subject to state and local income tax as well, but there are some exceptions.)

Further reading:

  • Grad Student Tax Lie #1: You Don’t Have to Pay Income Tax
  • Grad Student Tax Lie #4: You Don’t Owe Any Taxes Because You Didn’t Receive Any Official Tax Forms
  • Grad Student Tax Lie #5: If Nothing Was Withheld, You Don’t Owe Any Tax

However, the taxation of fellowship stipends is handled completely differently by universities than assistantship pay.

Tax Reporting

While assistantship pay is reported on a W-2, fellowship stipends are not required to be reported in any particular way.

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A large fraction of universities, possibly the majority, do not report outside fellowship stipends on any official tax form. At most, the fellow might receive a courtesy letter, which is an informal letter stating the amount of the fellowship stipend received during the calendar year.

Some universities report fellowship stipends on Form 1098-T in Box 5 (along with other scholarship and grant income).

A small minority of universities report fellowship stipends on Form 1099-MISC in Box 3.

Whatever reporting mechanism used or not used, the important information to bring to your tax return preparation process is the amount of fellowship stipend paid to you during the calendar year. From that point, the fellowship stipend income is treated the same as any other fellowship/scholarship/grant income, and (possibly after some adjustments) it will ultimately be taxed as ordinary income.

Further reading:

  • Weird Tax Situations for Fellowship Recipients
  • How to Prepare Your Grad Student Tax Return

Quarterly Estimated Tax

While you are required to pay federal and usually state income tax on your fellowship stipend, the vast majority of universities do not offer automatic income tax withholding on your fellowship stipend as they normally do for employee pay. (You should inquire whether automatic withholding is an option and use it if so, but the remainder of this section assumes it is not offered.)

This means that you will receive 100% of your gross fellowship stipend instead of your stipend net of income tax as you would assistantship pay. However, the IRS still expects to receive income tax payments throughout the year, so you will have to look into filing quarterly estimated tax.

Further reading: The Complete Guide to Quarterly Estimated Tax for Fellowship Recipients

As a default position, you should assume you are responsible for paying quarterly estimated tax. It’s possible that you won’t be required to in the year you switch on or off of the fellowship or if you’re married to someone with a high income and high withholding, but even in those cases it’s prudent to check.

The way you calculate your quarterly estimated tax due (and figure out if it’s required of you) is by filling out Form 1040-ES. That form will give you the amount of the payment you are supposed to make four times per year and an estimate of your total tax due for the year. You can make the payment online at IRS.gov/payments or through a host of other mechanisms.

Whether or not you are required to file quarterly estimated tax, it’s a great idea to set up a personal system that simulates automatic tax withholding. Open a separate savings account labeled “Income Tax” and transfer in the fraction of each paycheck you receive that you ultimately expect to pay in tax each time you are paid. Then, draw from that savings account when you make your quarterly or yearly tax payments.

Investing Implications of the NSF GRFP

The upside of receiving the NSF GRF is that your income is most likely higher than it would have been, which means you have an increased ability to achieve financial goals during graduate school such as debt repayment, saving, and/or investing.

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Through 2019, fellowship income, like that of the GRFP, was not eligible to be contributed to an Individual Retirement Arrangement (IRA). However, starting with tax year 2020, fellowship income is eligible to be contributed to an IRA, eliminating the only major downside of receiving fellowship income.

Further listening: Fellowship Income Is Now Eligible to Be Contributed to an IRA!

An IRA is a tax-advantaged retirement savings vehicle. It’s a great idea to use an IRA (or other tax-advantaged retirement vehicle such as a 401(k) or 403(b)) for your retirement savings as it helps you maximize your long-term rate of return by protecting your investments from taxes. As a graduate student, you almost certainly don’t have access to the university 403(b), so the IRA is basically the only game in town for tax-advantaged retirement savings.

Further reading:

  • Everything You Need to Know About Roth IRAs in Graduate School
  • Why the Roth IRA Is the Ideal Long-Term Savings Vehicle for a Grad Student
  • Should a Graduate Student Save for Retirement in a Roth IRA?

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