Are unpaid internships wise if you have debt?

An internship is the foot in the door of a new career, a hands-on experience that you can put on your resume. In some industries, an internship may be the only way in. But some internships are unpaid and if you're shouldering debt, you may have a hard time accepting such a position. On the other hand, if you don't take it on, your chances of getting a better paying job to help you climb out of debt get slimmer.

"It's a very, very muddy situation," says Graham Donald, founder and president of Brainstorm Strategy Inc., which helps employers recruit talent. "Just because a person has debt and has done a master's degree and so on, it doesn't say to me that they shouldn't do an internship. It's risky, but the older you get with less real world work experience applicable to the job, the harder it can be to get you to be a contributing employee."

Here's how you can decide if you can afford an unpaid or low-paying internship and how you can make it work, even if you're carrying debt.


Consider your circumstances
Pat White, executive director of Credit Counselling Canada, says that
if you have debt, you have to think thoroughly about unpaid work,
more so than your counterparts who have a financial safety net. Someone who's struggling from paycheque to paycheque isn't in the same boat as someone living with parents or a spouse who has a cushy income. Consider your circumstances honestly.

"If they have rent and other expenses, plus debt to look after, I'd be concerned about how they'll afford to live," White says.

If you can't rely on parents or a spouse to help you, you should consider keeping a second job; you need income from somewhere. Even if you do have some income, you might have to cut back on
your paid hours to make time for the internship. Or if you get lucky
and nab a paid internship, the pay might not be much. You may have to trim your budget, White says.

"You'll have to scale back on everything that isn't an absolute essential," White says.

Consider the investment
It's your job to figure out if the experience will be a worthwhile investment for you, says Donald. Evaluate the internship and don't be afraid to ask questions during the interview process -- you may be trying to impress the employer hiring for the posting, but they need to win you over, too.

Some questions to ask include:

  • What are my chances of getting hired post-internship by this employer?
  • What skills will I be putting to use on the job?
  • Is there an opportunity to build a network that will facilitate my job search?

"Evaluate it like it's a real job and assess whether it will be a good learning experience that'll expand your network, advance your access to job opportunities, look good on a resume and get you a good reference," Donald says.

If there's little chance of a good payoff for you, it's likely not worth cutting back and living tight, just to be in the same situation in a year or two when your career should be starting to take off. Your debt won't get any smaller (in fact, if you defer payments during the internship, there's a chance it could grow, thanks to interest) and you'll still be struggling to stay afloat, perhaps even more than before.

Alternatives to internships
If an internship is off the table for you because of debt or other financial and time constraints, there are other avenues to consider. For instance, Donald recalls a man in his 50s who came to him and offered to work part-time for free with the social media team so he could gain skills in digital marketing. The man couldn't afford to quit his day job, but had some time to dedicate to learn a skill he needed.

If you can't afford the pay cut or time to do a full-time internship, you may want to consider this path to at least get started on your new career.

Donald suggests this script: "I don't have experience but I'd be hardworking. If you could give me an opportunity over the next few weeks, I'd make it worthwhile for you. I need practical experience and I won't get paid but if I can put your name on my resume, do some work and gain a reference, it's worth the time for me."

Volunteering, booking informational interviews or attending networking events are some other ways you can foster your future career.

In the end, whether you're fresh out of university with student loans hovering over your head, or need to make a career change while you still have student or credit card debt, an internship -- or some other form of unpaid work -- might be the best way to prepare for a job with better wages that can help you repay what you owe.

See related: Should you switch careers while in debt?, When paying less than your full card balance makes sense
Published April 15, 2015

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