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Disclaimer
These are just my opinions, based on my experience. I recommend you speak with several professionals and professors before making any decisions about your future.
Ph.D.
vs.
Psy.D.
If you have decided that you want to focus on clinical practice as a licensed psychologist, then a common question is whether to pursue a Ph.D. in psychology or a Psy.D. Many students are not clear on the differences between the degrees, and what they would allow one to do in a career. I've tried to summarize the differences below.
Degree Types
In psychology, there are broadly 3 categories of doctorates in psychology: A Ph.D. that is aimed toward getting licensed as a psychologist, a Ph.D. that is aimed toward training you as a researcher or professor, and a Psy.D. that is aimed toward getting licensed as a psychologist (but emphasizing different things than a Ph.D.). After I explain the differences, I'll then describe some alternative options. It's important to remember that some Ph.D. programs prepare you to become licensed as a psychologist, and others prepare you to become a professor or researcher. License-focused programs are generally clinical or counseling psychology. Others that are probably not aimed toward licensure are in general psychology, developmental psychology, legal psychology, neuropsychology, and many other specific subfields of psychology. If you are aiming for licensure, find a program that is "APA accredited." A program that is not accredited by the American Psychological Association will make the path toward a license much more difficult.
License-eligible degrees
Among the license-eligible degrees, there are clinical or counseling psychology Ph.D. programs and Psy.D. programs. In brief, the difference is that a Psy.D. is a doctorate that focuses more on the practical application of psychology, and a Ph.D. is a doctorate that is more focused on theories, study, and research on the way toward a license. They are not exclusively practice- or research-oriented, but they do differ in their emphasis. That difference in focus has some important implications for what courses you will take, how much the program will cost, how long it will take to complete, and what you can do after graduation. I'll now break it down a little further.
A clinical or counseling psychology Ph.D. is a doctorate in philosophy, demonstrating that you are an expert in the field's theories, research methods, assumptions, and so on. Because of the clinical or counseling emphasis, you will also become proficient at the practice of psychotherapy and the use of psychometric tools (e.g., a structured IQ test).
A Psy.D. is a doctorate in psychology. The degree signifies that you are an expert in the practice of psychology, which is usually in the form of psychotherapy. This type of degree is exclusively geared toward licensure to practice as a psychologist. This degree limits you in some ways to the clinical subfield of psychology; you can still do research, but it probably would not be a major focus of your career. You may also obtain a teaching position at a college or university, but it would most likely be teaching in a program with a heavy clinical emphasis.
Coursework
The coursework you take in either a license-focused Ph.D. (clinical or counseling) or a Psy.D. program will look somewhat similar. You will learn about psychological evaluations, including psychometric tools. You will learn about the theories of psychotherapies, and learn clinical skills that therapists use. One difference is that the coursework for a Ph.D. will also likely include research methods and advanced statistics, but such courses are more likely to be optional or less intense in a Psy.D. program.
In a non-license-focused Ph.D. program, you may learn about clinical psychology, but there will be no expectation to practice it. Many researchers (like I) focus on clinical issues for their research, even if they have no interest in doing clinical work themselves.
Practicum & Research Expectations
Because both degrees set you up for licensure, you should expect to do some sort of practicum—where you practice therapeutic techniques and psychological evaluations under the supervision of a licensed psychologist. A Ph.D. program will also usually require you to get a good deal of experience in designing and conducting research, usually in the form of a dissertation (and probably a thesis on your way toward the doctorate). Some Psy.D. programs will also require some research experience, but it is usually less intensive than in a Ph.D. program.
For example, a dissertation for a Ph.D. program usually requires that a student come up with a novel research idea, conduct a thorough and exhaustive review of the related literature, design a carefully controlled study, and then carry it out, including analyzing the gathered data with modern statistical techniques.
A dissertation for a Psy.D. may be a less rigorous project, and sometimes does not require the collection of new data, or even the analysis of data (e.g., a thorough literature review of a topic may suffice). The exact nature of the project depends on an agreement between the student, the dissertation chair, the dissertation committee members, and the guidelines of the program.
Expense and Time Commitment
As far as expense, for either type of degree, you should expect to incur a lot of debt. The exact amount depends on the program, of course, but as a general rule, Psy.D. programs tend to be more expensive than Ph.D. programs. There are typically fewer stipends, scholarships, and assistanceships for Psy.D. students, so this is important to consider. Additionally, the time requirements are quite strenuous, so the possibility of working a job on the side are limited, and some programs even ask you not to hold external employment during your enrollment.
The time each program takes to complete is approximately the same. Between 5 and 7 years is fairly standard (assuming you enter the program with a baccalaureate degree in psychology or a closely related field). If you enter the program with a master's degree in psychology, it may cut some time off of your time to complete the doctorate, but it depends on what courses you can transfer and whether a master's thesis you completed fits the standards of the doctorate program (if it's even required).
Competitiveness
Psy.D. programs often accept more students than Ph.D. programs, and because Psy.D. programs are sometimes used as "backup" schools for those interested in doctoral programs, a Psy.D. program is sometimes easier to get accepted into than a clinical psychology Ph.D. program.
However, counseling psychology Ph.D. programs usually are less competitive than clinical psychology programs, so they are often easier to get accepted into also. Naturally, your likelihood to be accepted to any program depends on your qualifications and fit for the program, so build your skills and experience early.
Summary
In summary, a Psy.D. is more expensive, easier to get into, limited some in its versatility, emphasizes clinical experience, and has less focus on research.
A Ph.D. is often cheaper, harder to get into (although clinical programs are more competitive than counseling programs), mostly more versatile for career options, and emphasize research more heavily than a Psy.D. program.
Both types of programs allow you to become licensed as a psychologist in most states, so that you would be qualified to perform psychotherapy and psychological evaluations. You are called "doctor" with either degree, and would still be a psychologist.
Other Options
If the idea of roughly 6 more years of college is daunting or impractical for your situation, but you still want to be licensed to practice therapy, there are other options.
Several master's degrees are eligible for a license to practice psychotherapy. Each state differs a little, so check with the licensing body where you want to live. Although you would not hold the title of "doctor," and would not likely be able to teach at a university, you could still practice psychotherapy.
The time commitment is usually more like 2 to 3 years of school, and about 2 years of supervised work before licensure.
Consider a master's degree in clinical social work, or some license-track master's of psychology or counseling programs. Marriage and family therapy master's degrees can also lead toward a license to practice therapy.