First post- Grad school costs

[Murse]

Before I go into this I just want to say that this is quite a ways in the future, but I like having a plan. I would also like to say that I do not have the desire to retire early, I would much rather enjoy my work but still have the option to retire if need be. I am a 22 year old male.

Where I am at now- I am currently in an associate degree program to become an RN. Starting pay around here is 35$/hour with benefits. In my state it is getting to the point where you are basically required to have a bachelors degree (places only hire you if you sign a contract stating you will start school to get your bachelors degree within a few years.) Luckily these programs can be done online, so I will be able to work full time while accomplishing this goal. The thing is that I have come to realize how back breaking nursing really is. I don't want to be a traditional floor nurse because I don't want to risk damaging my body. The way I see it I have 2 options and I would like to discuss the pros/cons then get feedback.

Management- I have family who has gotten in to management which basically takes the physical labor out of the job, they get a slight increase in pay each time they get promoted up the ladder. The person I know who does this is salaried working for the state for over 6 figures per year (if you work for the state you don't need a bachelors degree) it took him around 5 years to get into management and around 10 to break 6 figures. The problem with this route as I see it is you back yourself into a corner. You climb the ladder, get your pay up, but if you leave you have to start new on a different pay scale, likely back to floor nursing. Also if I chose not to get my bachelors and work for the state, if I ever wanted to leave I would likely have to get one then (programs run about 10k online.) I would prefer not having to be tied to a job.

Graduate school- nurse practitioner school specifically- if I went this route I would work a couple years as a floor nurse to save money, get experience, and finish my bachelors (programs require you to have a bachelors degree before starting np school. Nps pay scale from the listings I have seen start at around 96k/year. Being an NP would give me the opportunity and freedom to go where I please. If I happen to think a workplace is toxic, I would be able to go start fresh without such a big hit to the wallet. Problem here is programs run 2 years for a masters degree, or 3 years for a doctorates. Both can practice as an np. The np program itself runs 50-80k currently (likely to go up before I can get in.) what I should add is in my state nps can practice independently, meaning they can open their own office, pay all of the overhead, and pocket whatever's the rest themselves (nps who work for hospitals typically take a salary, everything is covered for them, but the hospital then keeps the leftover seeing as it is a business.)

with this all taken into consideration, knowing I don't have nearly the financial knowledge the people here do I would like to be walked through the numbers. I have a lot of knowledge about both of these profession levels, if you would like more information, feel free to ask. (Np is knowledge from online research, RN management is knowledge from someone who works in the field.) In either scenario I would invest as much as I can. I will list 2 timelines below.

Rn- will complete 2015 at 23 years old, if all went well I would work at one place until 60 years old with varying levels of pay.

Np- Rn by 2015 at 23 years old, bsn at 2016 at 24 years old, I would start an np program around 2018 hopefully which would end around 2020 or 2021 at 28-29 years old, working until 60 in both cases. Hopefully I would not have to take much debt this route seeing as I would save as much as possible the few working years I had.

[Janelle]

I may not be the best person to crunch numbers for you, but I can say that there is a whole lot of benefit in having flexibility and a bigger range of job options that it sounds like you'd get with the np scenario. I teach students with special needs and have really benefitted from being able to get a job any time and anywhere. IMO this is a bigger plus than a higher salary would be.

 Are there graduate programs you'd be able to complete while working full time? If you're looking at the school website for the cost of the program, make sure you're just looking at tuition because the rest of the cost estimates are usually flexible/ optional. They list costs for housing, food, books that are very anti mustachian. If you can work while doing the program, you really only need to consider the direct tuition.

[prefrontalfinance]

It's good that you are thinking long term, FN. It seems like you have several options for promising careers ahead of you. One thing I would like to throw out as a friendly reminder is that none of these things are mutually exclusive. That is, if you decide to try the RN->Managerial pathway and after a few years it doesn't work out, I don't see why it wouldn't be possible for you to apply to the graduate programs to get your NP degree.

Management- I have family who has gotten in to management which basically takes the physical labor out of the job, they get a slight increase in pay each time they get promoted up the ladder. The person I know who does this is salaried working for the state for over 6 figures per year (if you work for the state you don't need a bachelors degree) it took him around 5 years to get into management and around 10 to break 6 figures. The problem with this route as I see it is you back yourself into a corner. You climb the ladder, get your pay up, but if you leave you have to start new on a different pay scale, likely back to floor nursing. Also if I chose not to get my bachelors and work for the state, if I ever wanted to leave I would likely have to get one then (programs run about 10k online.) I would prefer not having to be tied to a job.

These two features of this career path stand out to me. The first, it seems like your relative was very dedicated to following that specific path to reach their current level of income. The second, because it seems like you have some reservations about whether you are that committed. I think you are capable of achieving that outcome if you commit to it - I also think it would be ok, if after 4 years of floor nursing you realized you didn't like your employer that much and couldn't 'make it' to the management position, and you would rather move elsewhere/change jobs/go back to school.

Graduate school- nurse practitioner school specifically- if I went this route I would work a couple years as a floor nurse to save money, get experience, and finish my bachelors (programs require you to have a bachelors degree before starting np school. Nps pay scale from the listings I have seen start at around 96k/year. Being an NP would give me the opportunity and freedom to go where I please. If I happen to think a workplace is toxic, I would be able to go start fresh without such a big hit to the wallet. Problem here is programs run 2 years for a masters degree, or 3 years for a doctorates. Both can practice as an np. The np program itself runs 50-80k currently (likely to go up before I can get in.) what I should add is in my state nps can practice independently, meaning they can open their own office, pay all of the overhead, and pocket whatever's the rest themselves (nps who work for hospitals typically take a salary, everything is covered for them, but the hospital then keeps the leftover seeing as it is a business.)

It seems like the NP career path has a lot of features that you value. I know you are worried about the cost of a degree, but I think the finances would probably be alright.

Starting as a RN ~35 per hour means an annual $78,400 pre-tax. Back of the envelope, lets say you take home 75%, or 58,800 of that. You are a young single person, correct? If you have a high cost of living area, while living on Mustcahian principles, maybe it costs you $20,000 per year (rent, food, occasional clothes/entertainment). That leaves 38,800 saved per year. I live in a medium-low area, and I live on ~12,000 per year, so its also possible this could be higher.

For a program that cost 60k, you could theoretically save up enough money within 2 years to enter without any debt. Work another year and you could cover a fancy-pants 80k program, or cover your cost of living while in school.

My current advice is definitely finish your bachelors and work for 1-2 years as an RN, as for either management OR NP is going to require this.

[Murse]

@prefrontalfinance, there is actually only 1 program (np) I am interested in in my state. There are online np programs, but I personally feel I learn better in a more traditional kind of environment (in person lectures) the program I am looking at is 50k for a masters or 80k for a doctorates, also the difference between 2 and 3 years. I think I would rather go the doctorates route if I were to do it just because tuition prices are out of control so just in case I ever wanted to get it, I would get it for the cheaper price. Also it would just be nice to know I had reached.

Also the program I am looking at does not list out what the 80k is for, just that it is the cost of the entire program.  I am sure it is possible to get scholarships for this to bring down the price a bit as well. I would definitely work part time when/if able.

[SDREMNGR]

Never stop learning.  Don't be content to stop your personal and educational growth.  I support the NP pathway.  Depending on your financial situation, either get the AA nursing degree, work then get the RN or just get the RN and then work, then get the NP. 

[Argyle]

I would talk to a number of people who have followed these various actions and ask them what they wish they'd known and how they would have proceeded if they knew what they know now.  There's nothing like first-hand experienced advice.

[Balance]

My wife is an RN.  She went through the same schooling as you did.  She started with an associates degree, then got her BSN and finally her MSN.  All her studies were very inexpensive due to grants and scholarships. Her starting pay at her hospital was $60+/hr.  She is now making $78/hr.  She prefers being a floor nurse.  I guess its personal preference.  She has been asked to apply for managerial positions several times.  But her and her coworkers don't want anything to do with management.  Part of the motivation is that the time goes by faster apparently when you are on the floor, less politics, and being non-union.  It is interesting because my wife went to very low budget schools including the community college to get her AA. She has coworkers that have degrees from Stanford making less or the same as she does. Also, I found it interesting that my wife's immediate nurse manager as well as the nursing director at her hospital only have AA degrees.  We live in the Bay Area/Silicon Valley for reference.     

[Murse]

Wow, I was expecting to get at least one person saying "80k would be better off invested that early in your life." Seems like everyone unanimously is saying go for it.

[prefrontalfinance]

I hadn't thought to do the compounding interest math, but since you asked:
80,000 invested at age 24 (assuming 2 years of working), then allowed to grow at 7% interest per year for 40 years. No additional investments, interest is calculated once per year:

80,000(1.07)^40 = $1,197,956.63

It would you would have about 1.2 mil in the bank at age 64. But I think it is a false comparison to compare this # to 0. Increased earnings from higher paying jobs, saved over a few years in your late 20s and then invested for 35 years might get you to the same number. Ex:

112,000(1.07)^35 = $1,195,777.13

I think the reason many are saying you should go for it is  1) you have indicated you plan to work for many years, regardless of FI 2) you seem to prefer the features of the NP track 3) there doesn't seem to be a need for foolhardy financial decisions to reach that goal (massive debt).

[Murse]

Prefrontal, thank you very much for that, I really appreciate it.

[Murse]

New question related to this one, would it be best to "pay myself first" in say a Roth IRA during my first couple years working/saving for school?  Or save all the money in the hopes to remain debt free during school?

[Cpa Cat]

The only reason not to become an NP would be if you were really focused on ER as a goal. If you wanted to retire by 30-35, then there's no point in sinking a lot of time and money in the extra education.

But if you're serious about having a lifelong career, then you should invest in that career.

I would also note that being an NP sets you up for well for independent/part time work, so that if your plans ever change (due to health, family, whatever), you can adjust more easily as an NP than as an RN.

[Murse]

Wanted to bump this to try to get an answer for my second question a couple posts up

[Glenstache]

If you are bumping to reactivate the "pay yourself first" question... you should compare what the interest rate on a student loan will be relative to a conservative rate of return on an investment in an IRA. Whichever one pencils out better wins. If it is a draw, take the student loan because if you pass away before it is repaid, the balance is wiped out (read the fine print).

As an aside, I think nurse practitioners are awesome and I wish our healthcare system had more of them and made better use of them. Good luck!

[Murse]

Thanks glen, but I actually meant before getting to the point of a student loan, during the working/saving phase prior to grad school. The reason I ask is because Roth ira's are not something that can be made up for in the future, because of the yearly limit, if I understand correctly.

[Glenstache]

You are correct about the limits on Roth IRAs. If I understand your approach correctly, you will be saving to reduce the amount of student loans you will be taking out during school. Therefore, money you allocate to a Roth will reduce your savings rate and either delay going to school or increase the amount of the student loan you take out. There are a number of factors: Roth investments are pre-tax, but you will be paying of the student loan with post-tax dollars; student loan interest is often a tax-deductable item; your Roth investments will be earning for you while you are saving up and increasing your assets; your tax rate will change with your income level. You would have to sit down with an excel spreadsheet to really factor all of these in to project how things balance out. You can get a quick approximation by using a calculator that simply asks if it is better to invest or pay down debt depending on the tax status of the loan. Here's one example of that:
http://www.calcxml.com/calculators/pay-off-debt-or-invest
or
http://www.hughcalc.org/payoff_v_borrow.cgi

(there are plenty more of these out there)

Hope that helps.