Improving Graduate Student Financial Literacy
Finances are a key aspect of graduate school, and graduate student financial literacy is a topic of increasing discussion nationally. The Office of the Dean for Graduate Education (ODGE) is committed to enhancing graduate student financial knowledge to support informed and effective decision-making regarding financial support, budgeting, and long-term planning. In this article, we will discuss practices for promoting graduate student financial literacy that graduate programs have found useful, the resources available to MIT graduate students, and possible new avenues to increase graduate student financial literacy. The information contained within this article was obtained via a poll of MIT graduate programs, the Office of the Provost/Institutional Research, and publicly available sources.
Financial Offers in Admissions Letters
A graduate student’s financial journey begins even before she arrives on campus. Transparency and clarity in admissions offer letters is important, for example, articulating the amount and length of financial support committed; the definitions of different types of financial support and their associated responsibilities (e.g., research assistantships or RAs, teaching assistantships or TAs, fellowships or traineeships, student loans, self-funding, and combinations thereof); the breakdown of financial support (e.g., living stipend, tuition, fees, health insurance, etc.); the process of applying for support after the program financial commitment period is over; as well as a list of financial resources (e.g., Student Financial Services, ODGE, Housing Office).
First-year fellowships can be effective in terms of recruitment competitiveness by providing graduate students with the intellectual freedom to explore and choose an advisor and research topic, or non-conventional research areas. They may also give graduate students motivation and self-confidence to pursue external fellowship opportunities.
Care should be taken with students who are admitted with no committed funding, as lack of stable financial support can contribute to stress and to the quality of a student’s educational experience. In addition to admissions letters, some departments send general information to admitted students about how RAs and TAs are awarded, as well as information on costs associated with attending MIT, including housing. Setting clear expectations can be of particular benefit to international students, so that cultural differences do not lead to ambiguity and so as to avoid unnecessary complications with the financial aspects of procuring visas.
Orientation and Transition to MIT
Once on campus, the first large-scale opportunity to interact with students around financial literacy is during orientation. The Graduate Student Council (GSC) informs first year graduate students of financial resources on campus during orientation via Grad School 101/102 and a free USB Drive. The Sloan School of Management takes advantage of this opportunity via the Associate Director of Student Funding, who coordinates presentations during orientation and in the fall of the second year, organizes webinars, videos, and frequently asked questions (which are available on the Sloan intranet), and meets with students one-on-one, including exit counseling sessions. Every MIT student begins their tenure with a student account through which funds are moved for their tuition and fees. Each student also has an account representative at Student Financial Services who is available to provide guidance about MIT billing and payment procedures.
As a resource to both students and administrators at any time of the year, the ODGE maintains a student finances Website which includes an extensive list of fellowships, including opportunities for international students. ODGE Administrative Officer Keiko Tanaka is also available to assist with the often complex task of explaining procedures for student fellowships that need to be supplemented by partial RAs and TAs. Looking ahead, students should be encouraged to seek out funding a year or more in advance of the expiration of their departmental commitment. ODGE Manager of Graduate Fellowships Scott Tirrell is available to counsel students and to provide sessions on fellowship acquisition to graduate programs. Regarding financial support planning, a number of departments mandate progress reports each semester between the student and thesis advisor to discuss funding for the following semester.
Stipends and Cost of Living
A key component of graduate student support is the living stipend; each year the GSC partners with the ODGE to analyze graduate student living costs and makes a recommendation for the percentage increase to the Dean’s Group. In 2013-2014 the standard Doctoral RA stipend was set at $31,969 (graduate programs have the option of deviating -10% or +15% from standard stipend rates without approval) and the corresponding annual Masters level stipend was set at $29,224, while tuition and fees are listed on the Office of the Registrar’s Website. The 2011 Graduate Student Cost-of-Living survey carried out by the GSC breaks expenses down by category, the largest of which are housing (~52% of income) and food (~23% of income); other expenses include health and dental insurance, transportation, books and supplies, and the student life fee. All figures are available on the GSC Website to aid in student budgeting. This year the MIT Housing Office within the Division of Student Life offered new webinars to all graduate students that covered both on- and off-campus housing, with an overview of the Boston rental market. The Housing Office has many online resources and staff members who are available to meet with students individually about both on- and off-campus housing, including reviewing leases before a student signs.
Students may take out federal and private loans (offered by banks, credit unions, and other financial organizations), and many professional Masters degree candidates utilize this option. The SFS Website includes tips on how to be a smart borrower, as well as information on the types of loans available.
Each MIT student has a financial aid counselor who is available to assist with applying for federal or alternative loans.
SFS also has two loan officers who ensure that all students complete an online loan entrance session and an in-person loan exit interview, ensuring that students have the time to consider their specific student budget and all payment options. For more general education, SFS makes staff members available for departmental and other presentations.
While MIT provides some general information to students, taxes are widely cited as the area where additional resources are desired. However, MIT cannot legally give tax advice. In order to provide aid to our students, every April the ODGE and the International Students Office within the ODGE sponsor separate workshops with tax professionals for domestic and international students that are exceedingly popular. In the future, the ODGE will also send a message to all students in January reminding them where to find their W2 statements, their responsibility to understand their individual tax situation, and pointing them to the available resources.
Additional Financial Resources
A variety of financial literacy offerings are available to students during Orientation, Independent Activities Period (IAP), and throughout the year by the MIT FCU, the MIT Alumni Association, and MIT Human Resources.
• Independent Activities Period Workshops. Multiple organizations have basic financial planning sessions that cover how to construct a budget and the importance of establishing an emergency fund; tax planning; savings vehicles; credit fundamentals; basic investment concepts, including risk tolerance and the difference between pre-tax, after-tax and tax-deferred investments; and insurance planning (search: web.mit.edu/iap/).
• The MIT Work-Life Center offers the service Work-Life Resources 24/7, which provides round-the-clock phone consultations and guidance to any member of the MIT community on the many financial, medical, and social issues that arise when providing care for children and elderly family members. For example, they can provide a listing of local childcare resources and their associated costs, and speak in general terms about budgeting for care.
• The Council for Graduate Schools (CGS) recently launched “GradSense,” a new Web initiative that provides information and tools to help students make smart decisions about graduate school finances. It includes an “Add it up” feature that encourages saving by allowing you to calculate how much compound interest you can earn by cutting back on typical expenses, and a “Loan repayment” feature that provides a guide to understanding the many loan repayment options for federal loans.
The calculus on the financial impact of graduate school has longer-term implications than just the graduate school years, however. Students are also interested in their earning potential after they have a degree in hand. Most departments do not make this data publicly available, though some provide it on request to prospective applicants and others. MIT Sloan prepares detailed annual employment reports that include base salaries (also by industry, job function, geographic location, and professional experience), top hirers, top industries and functions, and reason for accepting the position. The MIT Global Education and Career Development Center (GECD) provides survey data by broad degree type each year. Externally, the CGS GradSense Website has a “By degrees” feature that helps calculate what a degree might be worth in terms of annual income.
As an additional point of financial literacy, savvy students affect their baseline pay through negotiation with a potential employer.
MIT GECD organizes periodic sessions on negotiating job offers; this topic is also a part of the ODGE “Path of Professorship” workshop each October. The GradSense “Job tips” feature gives helpful advice on evaluating a job offer, negotiating terms, and financially transitioning out of graduate school.
The MIT Atlas site is available to students and provides self-service functions such as paystubs and an interface for direct deposit. Beyond Atlas, a “Student Dashboard” project was initiated this past spring as part of the Education Systems Roadmap, a strategic plan to modernize applications and processes central to the Institute's educational priorities. The goal of the Student Dashboard is to create a personalized, transactional hub that enables students to use a single interface to conduct key academic and administrative functions. While still in the conceptual stage, the Dashboard concept includes financial transactions.
While financial heath will vary by each student’s starting point, field of study, and individual decisions, faculty and administrators can play a positive role by contributing to financial literacy wherever possible.
As articulated by Joshua DeMaio, Associate Director of Student Funding at the Sloan School, currently the best departmental practices on financial literacy “involve as much outreach as possible for all programs, as early as possible.” This is especially helpful for students with combinations of funding types; the Department of Aeronautics and Astronautics is starting new sessions for these students this fall. The ODGE is working to increase conversation on graduate student financial literacy, the sharing of useful practices, and will be exploring the development of Institute-wide resources. We welcome your comments and ideas at email@example.com.
We would like to thank departmental graduate officers, administrators, Student Financial Services, Joshua DeMaio, and the Graduate Student Council for their contributions.