Taking on more Debt for an Internship

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BigSteve79
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Joined: Thu Apr 01, 2021 8:22 am

Taking on more Debt for an Internship

Post by BigSteve79 »

Hello fellow Bogleheads! This is my very first post on here, I learned about this awesome place by reading Bogleheads' Guide to Investing (I just started reading it!).

Anyways, I am currently in my junior year of college, majoring in personal financial planning. I was saving up to pay for my senior year of college in cash. Then, I received an offer to an internship for a financial planning firm in Texas (I reside in PA). As a result, all of the money that I was saving up for my senior year must now be redirected to pay for my housing for this summer.

In summary, I am taking on more debt so that I can pursue something that will hopefully be worth it down the road. Even if I don't land a full-time job here after graduation, this experience will still look wonderful on my resume. But it comes at a cost, more student loan debt.

In your opinion, was this trade-off worth it??

Thanks!

**EDIT: Thank you guys so much for all the replies! And to answer a lot of your questions - Yes, this is a paid internship (the pay is actually quite nice, more than I was expecting), but I wanted to save up for the cost of my living before I head down, I know that wouldn't be absolutely necessary, but I don't want to have to worry about that while I'm down there.
Last edited by BigSteve79 on Fri Apr 02, 2021 8:45 am, edited 1 time in total.
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LadyGeek
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Re: Taking on more Debt for an Internship

Post by LadyGeek »

Welcome, and congrats on landing the internship!

For privacy concerns, please don't mention the name of the company. Even though you'd be an intern, companies data mine the internet looking for their name. It would be fairly easy to figure out who the new intern is.
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sport
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Re: Taking on more Debt for an Internship

Post by sport »

Doesn't the internship pay a salary? They should pay you enough to cover your living expenses.
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dziuniek
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Re: Taking on more Debt for an Internship

Post by dziuniek »

Well, how much are we talking about here?
What's your total financial picture?
Is this debt going to be material?

Things to ponder:

Is TX somewhere you might want to end up after college?
Is the company nationally known? As in, will anyone where you want to live post-college know this company?

I might do it just to see if I like living in Texas. Or whether I like this company or the nature of work you're going into. Or even whether the degree you're getting something you might want to do long-term or at all.

1 vote from me if the $ amount isn't earth shattering.

edit:some spelling
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rgzeta
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Re: Taking on more Debt for an Internship

Post by rgzeta »

Just how expensive is your proposed housing (or how cheap is your tuition) that this makes enough of a difference? Obviously it's preferable (and in many sectors expected) to be paid at least modestly for an internship, but maybe that's just not possible.

Say we ballpark your summer expenses as $5k, and that you pay the Direct Parent/Grad PLUS rate of 5.3% (worst-case analysis; I don't know which undergrad options you already would have used). On the default 10 year plan, that gets you a monthly payment of ~$54 a month. That seems survivable to me, especially if this is the junior-to-senior year internship, which is very important in my field for future development. (But in my field, the expectation is to be paid...)

What you probably want is advice from someone within your expected field about whether 1) you're getting fleeced (aka you should be getting paid) and 2) if this specific opportunity is useful (some fields don't need it; not all opportunities are equally useful).
Jacotus
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Re: Taking on more Debt for an Internship

Post by Jacotus »

Is this an unpaid internship?
boogiehead
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Re: Taking on more Debt for an Internship

Post by boogiehead »

I would be looking for a different internship if this was an unpaid internship especially if you had to move and pay for everything yourself. Most unpaid internships are just companies looking for someone to do some cheap labor for them vs. truly wanting to hire the person in the future. I recall back in the day when my roommate scored an unpaid internship with Salomon Smith Barney and they basically had him do cold calls for potential client the entire summer :(
Zillions
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Re: Taking on more Debt for an Internship

Post by Zillions »

steven2000myers wrote: Thu Apr 01, 2021 8:45 am Hello fellow Bogleheads! This is my very first post on here, I learned about this awesome place by reading Bogleheads' Guide to Investing (I just started reading it!).

Anyways, I am currently in my junior year of college, majoring in personal financial planning. I was saving up to pay for my senior year of college in cash. Then, I received an offer to an internship for a financial planning firm in Texas (I reside in PA). As a result, all of the money that I was saving up for my senior year must now be redirected to pay for my housing for this summer.

In summary, I am taking on more debt so that I can pursue something that will hopefully be worth it down the road. Even if I don't land a full-time job here after graduation, this experience will still look wonderful on my resume. But it comes at a cost, more student loan debt.

In your opinion, was this trade-off worth it??

Thanks!
1. How well known is this company? What are the chances they'll hire you when you graduate?

2. Will the internship be paid or at least reimburse some of your costs? Do you have a car to use in TX?

3. Between now and the summer, can you possibly find a local internship (preferably a paid one)?
boogiehead wrote: Thu Apr 01, 2021 4:04 pm I would be looking for a different internship if this was an unpaid internship especially if you had to move and pay for everything yourself. Most unpaid internships are just companies looking for someone to do some cheap labor for them vs. truly wanting to hire the person in the future. I recall back in the day when my roommate scored an unpaid internship with Salomon Smith Barney and they basically had him do cold calls for potential client the entire summer :(
If the "employer" was the primary beneficiary of the unpaid "internship" then your roommate would have had cause for a labor lawsuit against them. You can't use unpaid "interns" to cut costs by making them do menial tasks, run errands etc while not providing them with actual exposure to the work / business.

Given that the company OP will be "interning" for is likely fully aware that OP has to move states and will incur costs, it reeks of bad business practices to not even reimburse incurred costs (such as housing, mileage, gas etc) because you (OP) are presumably going to be doing actual work for them? Very few people can afford to survive unpaid internships (it's local, they can live at home or they have money to cover costs) but I would not take on more student loan debt just to get "experience", You can start looking for local part-time opportunities in your area of specialization to gain work experience, while you're in college. That minimizes expenses as well.

I'd pass this opportunity on, if it were me. But YMMV.
delamer
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Re: Taking on more Debt for an Internship

Post by delamer »

If you don’t take this internship, what are your other options for the summer?

That’s life — trying to pick the best of the available options.
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. - Alexandre Dumas, fils
hi_there
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Re: Taking on more Debt for an Internship

Post by hi_there »

You would be at a significant disadvantage if you don't have some kind of internship experience by the time you finish college. So, it's probably worth the living expenses for the summer. How much could this possibly be?
Grt2bOutdoors
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Re: Taking on more Debt for an Internship

Post by Grt2bOutdoors »

Ironic, it's April 1st, April Fool's day for others, we are being asked a personal financial planning question by a future practitioner of the science.
Assuming this is not a troll post, what would a CFP think of offering an unpaid internship to a fellow future member of the industry? Seems fishy to me.
Unless this position offers true real-life exposure to the daily in's and outs of financial planning and not making copies or answering phones, then perhaps I'd accept the offer with the knowledge that real life practical experience would give you a leg up on the competition which may not have such experience. However, the OP should quantify just how much debt they are contemplating in taking on? Is it $5K, $10K or something else?
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
Grt2bOutdoors
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Re: Taking on more Debt for an Internship

Post by Grt2bOutdoors »

boogiehead wrote: Thu Apr 01, 2021 4:04 pm I would be looking for a different internship if this was an unpaid internship especially if you had to move and pay for everything yourself. Most unpaid internships are just companies looking for someone to do some cheap labor for them vs. truly wanting to hire the person in the future. I recall back in the day when my roommate scored an unpaid internship with Salomon Smith Barney and they basically had him do cold calls for potential client the entire summer :(
Yeah, it's a known thing for financial advisors and life insurance companies to advertise about entering their "training program" being paid a salary and responsible for their own success. Only for the "trainees" to find out they had to call X number of people a day and if they could land just 1 or 2 "marks" they would pay for their weekly salary, if they didn't produce they were out. I felt bad for the nice young guys and girls who dialed me up at the office looking for referrals and to meet with them for coffee because they just so happened to be scheduled for an "event in my office building" the following week. You could sense the desperation on the phone.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
Zillions
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Re: Taking on more Debt for an Internship

Post by Zillions »

Grt2bOutdoors wrote: Thu Apr 01, 2021 7:00 pm
boogiehead wrote: Thu Apr 01, 2021 4:04 pm I would be looking for a different internship if this was an unpaid internship especially if you had to move and pay for everything yourself. Most unpaid internships are just companies looking for someone to do some cheap labor for them vs. truly wanting to hire the person in the future. I recall back in the day when my roommate scored an unpaid internship with Salomon Smith Barney and they basically had him do cold calls for potential client the entire summer :(
Yeah, it's a known thing for financial advisors and life insurance companies to advertise about entering their "training program" being paid a salary and responsible for their own success. Only for the "trainees" to find out they had to call X number of people a day and if they could land just 1 or 2 "marks" they would pay for their weekly salary, if they didn't produce they were out. I felt bad for the nice young guys and girls who dialed me up at the office looking for referrals and to meet with them for coffee because they just so happened to be scheduled for an "event in my office building" the following week. You could sense the desperation on the phone.
NAL, but this may actually be ILLEGAL (at least in California). Unpaid internships that benefit the employer, and not the "intern", may be a violation of state labor laws. The "purpose" of an internship is for the "intern" to gain REAL LIFE experience and exposure to the PAID job that they eventually hope to do. In return for gaining these skills and "experience", the employer gets the RELEVANT work done for free.

"Employers" who exploit "unpaid internships" to hire students to do tasks not relevant to the field and which do not provide the experience the unpaid intern is seeking, open themselves to a lawsuits. Many unpaid interns HAVE successfully sued, including bringing class action lawsuits, and won against employers who pushed such exploitative "work" arrangements. If the OP's "employer" is serious, s/he/it would AT LEAST reimburse costs incurred by the OP to move states and essentially work for "free", in exchange for gaining valuable RELEVANT work experience. That the OP is instead considering taking on more student loan debt to "afford" this work experience raises red flags that all is not well in the state of Denmark.

If this young man was my son or nephew, I'd be livid at this "arrangement" and advice him to look for a local part-time job to pick up some experience before graduation. Up to him, but I think this is a bad, bad idea.
smitcat
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Re: Taking on more Debt for an Internship

Post by smitcat »

steven2000myers wrote: Thu Apr 01, 2021 8:45 am Hello fellow Bogleheads! This is my very first post on here, I learned about this awesome place by reading Bogleheads' Guide to Investing (I just started reading it!).

Anyways, I am currently in my junior year of college, majoring in personal financial planning. I was saving up to pay for my senior year of college in cash. Then, I received an offer to an internship for a financial planning firm in Texas (I reside in PA). As a result, all of the money that I was saving up for my senior year must now be redirected to pay for my housing for this summer.

In summary, I am taking on more debt so that I can pursue something that will hopefully be worth it down the road. Even if I don't land a full-time job here after graduation, this experience will still look wonderful on my resume. But it comes at a cost, more student loan debt.

In your opinion, was this trade-off worth it??

Thanks!

"In your opinion, was this trade-off worth it??"
No , it is not a trade-off I would have chosen or supported.
Auream
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Re: Taking on more Debt for an Internship

Post by Auream »

I didn’t think unpaid internships were even still a thing except in niches like fashion and film/TV production.
stoptothink
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Re: Taking on more Debt for an Internship

Post by stoptothink »

Auream wrote: Fri Apr 02, 2021 7:54 am I didn’t think unpaid internships were even still a thing except in niches like fashion and film/TV production.
They definitely are, my current employer (health products megacorp) and my last employer (public health) both have unpaid internships. Most of the time it was undergrads trying to get their community service hours for med school applications. One of the worst parts of my last two jobs was findings things for unpaid interns to do (didn't want them, they were forced on me). If they didn't go on to medical school they did often get hired. My right-hand man was an unpaid intern for me at a my last employer; he decided not to pursue med school, so I got him a job there before he even graduated and then brought him to my current employer about a year after I left.
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