Psychologist Salary: Is It Worth the Huge Student Debt?

The field of psychology is growing at a rapid pace. As more people understand the importance of mental health, they’re seeking counseling. This often comes in the form of meeting with psychologists. People are looking for help dealing with issues like depression, anxiety and other mental disorders. Other areas of concern are marriage and family problems, stress and addiction. These issues often require the expertise of mental health professionals. But does earning a psychologist salary provide enough money to pay off the average student loan debt for psychologists?

Although psychologists are in demand, that doesn’t mean they’re compensated accordingly. Learn how the average psychologist salary compares to the amount of student loan debt you’ll amass earning the required degrees.

Average psychologist salary

According to the Bureau of Labor Statistics, the median salary for psychologists in 2022 was $85,330 per year. That’s less than half of the median debt burden of students seeking an advanced degree as a Doctor of Psychology (Psy.D.).

There are currently over 196,000 licensed psychologists in the U.S. — and that number is on the rise. By 2032, there’s projected to be an 6% increase in employment within the field. The psychology field is growing and doesn’t look to be slowing down. Salaries and job opportunities will depend on the specific work setting as well as location.

Average student loan debt for psychologists

While you pursue a psychology degree, you could rack up major student debt. According to a recent study by the American Psychological Association (APA), the median student loan debt for current psychology students is $110,000. Keep in mind this number excludes undergraduate debt. For students pursuing a Psy.D. graduate education, that number jumps to $160,000.

While those average student loan debt for psychologists statistics seem alarming, our experience has shown those numbers to be conservative. At Student Loan Planner®, our average psychologist clients have $224,000 in student loan debt — though some have had as high as $500,000. As the costs of psychology graduate school programs continue to rise, numbers like this may start to become the norm. A psychologist salary might not be enough to handle debt this large.

Student loan repayment options for psychologists

A psychologist salary doesn’t match up to the mounting debt that comes with a psychology degree. Because of that, there are a lot of people stuck with huge debt who are unsure of how to get rid of it. What options do psych grads have for repaying student loans?

Public Service Loan Forgiveness

Something many psychologists should turn to is the Public Service Loan Forgiveness program or PSLF. This federal program allows borrowers to have their loan balance completely forgiven after 10 years of public service and 120 qualifying payments. The forgiven amount is tax-free.

To be eligible for PSLF, you must work full time for one of the following:

• Any federal, state, local or tribal government organization.
• Not-for-profit organizations that are tax-exempt under Section 501(c)(3) of the Internal Revenue Code.
• Other types of not-for-profit organizations that are not tax-exempt under Section 501(c)(3) of the Internal Revenue Code, if their primary purpose is to provide certain types of qualifying public services.

Working for a qualifying employer is just one requirement. You also need to be enrolled in an income-driven repayment (IDR) plan. There are four IDR plans available to students with federal loans:

• Pay As You Earn (PAYE)
• Saving on a Valuable Education (SAVE), formerly called REPAYE
• Income-Based Repayment (IBR)
• Income-Contingent Repayment (ICR)

Only Direct Loans can be forgiven through PSLF. If you have other non-Direct federal student loans, you need to consolidate them into a Direct Consolidation Loan before you’ll be eligible. Any payments made before consolidating won’t count toward your 120 loan payment total, though.

Income-driven repayment loan forgiveness

For psychologists not working in the public sector, there’s another federal student loan forgiveness option: IDR loan forgiveness. To be eligible, you need to sign up for one of the four eligible IDR programs and make payments for 20 to 25 years (depending on the specific plan). Any debt remaining after that time is forgiven.

There’s a downside to IDR forgiveness, however. Unlike PSLF, any debt forgiven by IDR loan forgiveness is considered taxable income. There could be huge tax implications, depending on the forgiven amount. It’s important to factor taxes into your decision when choosing to pursue IDR loan forgiveness. Because you have 20 to 25 years of monthly payments, you have plenty of time to plan and save for this large tax bill.

National Health Service Corps Loan Repayment Program

Another option for psychologists is to check out the National Health Service Corps (NHSC) Loan Repayment Program. It’s possible, depending on where you work and if you’re full-time or part-time, to get up to $50,000 for loan repayment.

The NHSC Loan Repayment Program offers health-care professionals loan assistance in exchange for working in a Health Professional Shortage Area (HPSA).

According to the NHSC, Health Service Psychologists qualify for this loan repayment program.

The commitment to working in a HPSA lasts two years. There are half-time and full-time options available.

National Institutes of Health Loan Repayment Programs

Psychologists can also receive loan forgiveness through the National Institutes of Health (NIH). The NIH Loan Repayment Programs (LRPs) are established by Congress. They’re designed to attract qualified health professionals to careers in biomedical and biobehavioral research.

There are eight NIH LRP programs:

• Clinical Research
• Pediatric Research
• Health Disparities Research
• Contraception and Infertility Research
• Clinical Research for Individuals from Disadvantaged Backgrounds (Intramural)
• Clinical Research for Individuals from Disadvantaged Backgrounds (Extramural)
• AIDS Research
• General Research

Psychologists with a Psy.D. degree are eligible for loan forgiveness programs through the external programs, which include:

• Clinical Research
• Pediatric Research
• Health Disparities Research
• Clinical Research for Individuals from Disadvantaged Backgrounds
• Contraception and Infertility Research

Awards can be up to $35,000 annually. Be sure to check the NIH website for all of the programs’ qualifications.

Is becoming a psychologist worth the cost?

Although student loan debt can be a major issue for people who graduate with a Ph.D. or Psy.D. degree, becoming a psychologist is a great career path. There’s a demand for qualified professionals in the workforce. That won’t change for a while.

The possibility of large student loan debt from your bachelor's degree, master's degree or doctoral degree just means you need to form a solid plan for loan repayment.

According to the Bureau of Labor Statistics, almost half of psychologists work in the public sector. Having the option of PSLF makes psychology an even more desirable career path, especially if you attended an expensive PsyD. program.

If your total loan debt is minimal and you make a decent psychologist salary, student loan refinancing could be an option as well. When you refinance, your loans turn into private loans, and you lose access to PSLF and other federal protections. But you can benefit from a lower interest rate and score cash-back bonuses using our partner lenders. However, other repayment options may be a better choice if you might need access to these benefits.

Figuring out if becoming a psychologist makes sense financially can depend on several factors, such as:

• Debt-to-income ratio.
• The degree program you choose.
• What school you attend and its location (e.g. tuition, living expenses, etc.).
• What career path you choose within the field of psychology.
• Your life goals.

If you’ve earned a professional psychology degree or are pursuing one, make sure you have a solid repayment plan. There are tons of factors to consider. If you need extra help figuring out the right path for you, think about speaking to one of the consultants at Student Loan Planner®. We’ve helped thousands of clients formulate custom repayment plans that make sense. We can do the same for you.