How I got deep in student loan debt
After 8 years of postgraduate education, the author was surprised to find herself $100,000 in the hole.
This post comes from Honey Smith at partner blog Get Rich Slowly.
My mother was quadriplegic by the time I was in high school. My dad was a real estate agent who worked on commission, so he worked long hours to make ends meet. As a result, I took on a lot of responsibility at a young age.
I cooked and cleaned and did all the grocery shopping. I did the laundry and paid the bills (in the "balancing the checkbook and writing the checks" sense, not the earning money sense). I took my mother to the bathroom, fed her and tracked her pill regimen.
I knew my parents couldn't afford to send me to college, and I wasn't allowed to have a job because of my responsibilities at home. So, in lieu of saving for college, I threw myself into everything school had to offer.
I was salutatorian. I was on the dance team and the academic team. I was secretary of the service club and president of the math club. And it worked: Not only did I get in, I graduated from college with a 4.0. Then I went on to get a master's and a Ph.D. Unfortunately, I got $100,000 of debt to go along with it.
What leads a (relatively) smart person to make almost 10 years' worth of poor financial decisions? As immoral as universities may be, there's more to any individual's decisions than external influence.
Undergrad: An auspicious beginning?
When she was young and healthy, my mother had a full ride to Boston University. She dropped out because she wasn't doing well in her premed classes. What she really enjoyed was writing. I remember asking her, "Why didn't you just change your major?" She said it never occurred to her.
She eventually got an associate degree from the local community college. However, she always regretted not completing a bachelor's degree. Her experience led her to believe that the best degree was the one that you finished. She also believed that if you picked something you enjoyed, you would be more likely to do well and be happy.
When I started thinking about college, my dad said smart people major in business. He suggested, "Not that I'm telling you to follow in my footsteps, but female real estate agents make a lot of money." My mom would nod sagely at his advice. Then after he left the room, she would stage-whisper, "Do whatever makes you happy."
I attended a state school, since the Florida Bright Futures lottery scholarship paid for 100% of my tuition and a book allowance. I was a National Merit Finalist. I received Pell grants and a variety of other scholarships. Since my education was paid for regardless of major, I followed my mom's advice and did what made me happy. I was a creative writing major and a psychology minor. I worked as a server and a tutor at the writing center. As a result, I graduated with no debt. (Post continues below.)
Grad school: The downward spiral begins
I was intimidated by the thought of graduating and getting a "real job." Instead, I decided to keep doing what I had always been successful at: school. I started an M.A. in creative writing. I also worked on campus 35 hours a week, teaching and tutoring. However, graduate tuition was expensive. Luckily, Stafford loans were there to fill the hole. I knew it was a loan, but I'd never borrowed any money before. I didn't have a concept of what borrowing really meant in terms of paying it back.
During this time, I loved my job so much that I decided I wanted to run a writing center. My boss had a Ph.D. in rhetoric and composition. I researched Ph.D. programs, applied to three, and accepted an offer from a top five program. It entailed moving across the country, which I couldn't afford. I wouldn't get financial aid until fall. Enter credit card debt.
The cost of living in my new city was also much higher. Again, Stafford and Visa filled the hole (though there were still a couple of weeks between moving and financial aid kicking in when I didn't wash my hair because I couldn't afford shampoo).
Yes, I was taking out more loans. But I was making only $14,000 a year, and my paychecks were $750 apiece. The average starting salary of $50,000 was three and a half times what I was making. That could only mean my paychecks would be three and a half times bigger. Right?
Somehow the fact that this $14,000 was spread over nine months instead of 12 didn't seem significant. Taxes and payroll deductions for things like health insurance weren't even on my radar.
I also don't recall a single time when I saw a total of how much I'd borrowed until my degree was almost complete.
Graduation approaches: I'm in over my head
Even when I saw my total of about $100,000, it was poor math all the way. I thought, "OK, I was in grad school for eight years. That means I borrowed an average of $12,500 per year. I was also making $14,000 per year during that time, so my average income was $26,500 per year. But soon I'll be making $50,000. That's twice as much! This is no problem."
My program also claimed it had a 100% tenure-track job placement rate. It didn't occur to me that this couldn't be possible until after I was advanced to candidacy and took a job search class. Then this statistic was amended to "100% of students who wanted to be on the tenure track ended up with tenure-track jobs." "Who doesn't want tenure?" I thought. "This won't be me. This is no problem."
I did know, of course, that getting a Ph.D. in the humanities wasn't going to make me rich (although the professors in my program all had 3,000-plus-square-foot homes in the nicest area of town). But it was more important to be happy than to be rich. Besides, I grew up poor. I was familiar with it. It didn't sound scary.
Then I went on the job market. My hottest lead turned out to be in Punxsutawney, Pa., and I had a few realizations. I didn't want to live 200 miles from the nearest urban center. Not only that, I couldn't even if I wanted to: Jake and I had been dating for more than a year. Our relationship was getting serious enough that he needed to be a factor in my plans.
By this time he'd graduated from law school and had a job making $90,000 a year. He was traumatized from the bar exam, and the thought of taking another one only a year later gave him cold sweats. Even if he was willing to do it, he couldn't afford to make much less. A salary of $90,000 a year would be impossible to come by in a tiny rural town. Now my job search was what they called geographically restricted. That's academic speak for "it's your own fault if you don't end up on the tenure track."
Suddenly, unexpectedly
So I moved to Jake's city and geared up for another year on the job market. I got a full-time administrative position in summer 2008, right before the economy tanked. The week after they hired me, my institution implemented a hiring freeze. Six months later, they instituted furloughs.
I combed the national job lists in my field, but I was geographically restricted. Even if I wasn't, it was one of the worst job markets in memory (and memory didn't have a lot of good years anyway). And then there was the unexpected -- though, given that I think I'm psychologically predisposed to happiness, maybe I should have expected it.
It turns out I love my job. I love the work I do and the people I work with. I love the city I live in (even if it's 109 degrees outside right now). I have family in the area. Jake grew up here. At this point, he has more than five years of business connections here, and I have four.
At some point, the life I was living for now had become the life I want to live. I have a 10-minute commute. I leave work at 5 p.m. every day and don't need to think about it until the next morning. I don't check email during my off hours. I don't work in the evenings. I have pets, I am a hobby chef, I read novels. I think I would have enjoyed the tenure track, but I don't need it to be happy.
I just need to get our financial situation under control so I can keep living this life.
This is my story. This is only my story. I cannot speak for others with student loan debt. But I know many, many people with high student loan debt (including lots of folks with totals higher than mine). So I know you're out there, fellow student loan debtors.
What's your situation? How is it different from mine? How is it similar? I am especially interested in:
- Your total student loan debt.
- What degree(s) you have.
- When you went to school.
- Whether anyone talked to you about student debt or the job prospects in your field.
- Whether the information you received about student loan debt or the job prospects in your field was accurate.
- What you wish you had done differently/advice for others.
- How you're dealing with your debt.
There are obviously many decisions I could have made differently. It's undeniable. But since I can't go back in time and make different decisions, I'm declaring a statute of limitations on regret. Plus, I'm taking responsibility for my errors in judgment and paying the loans back. I have to, because you can't discharge student debt in bankruptcy.
However, as Robert Brokamp pointed out, there are systemic problems with student debt in this country (check out this paper (.pdf file) for some facts on six-figure student loan debt). Those of you who have been through the system, how would you change it?
More on Get Rich Slowly and MSN Money:
I do not understand how all of these supposedly smart people can get themselves in this much debt. Saying I just didn't think about it until near the end isn't going to cut it. This is real life now, not your parents money, EVERYTHING costs money! Parents here is the advice you give your children if they have the ambition to actually attend class and study. Go to the closest reputable college, most likely a state college and get a useful degree meaning science, business, math, engr, nursing etc. Get your 4 year degree and get out into the workforce! Find out if you love this work, if so and you want to advance tell your employer to send you back to school on their dime. This is how you get a grad degree without huge debt. If you find out you don't love what you do, start doing what you love, you'll start at the bottom, but at least you have a college degree which can get your foot in the door of many jobs including those not directly related to degree.
I'm lucky enough to have my parents helping with my education. I'm required by my parents to take out any federal student loans that are offered in my financial aid package, to pay for my own books and lab costs, and to work on campus part-time during my studies. Additionally, I work internships every summer (and even opted to take a semester off to work a few extra months at an internship that paid especially well), and I try to stash away at least 50% of every paycheck in order to pay down loans and take any burden off of my generous parents that I can. The other 50% is budgeted towards food, utility bills, car repairs (I bought a 2003 Nissan to commute to my first internship that I've already paid off in full), gas, dental insurance (though I'm still on my parents medical insurance), any co-pays, and any recreational activities. I manage my debt by watching what I borrow, getting advice from the financial aid office when I need it, and budgeting everything to a T. I probably apply to at least a dozen scholarships a month. Most turn up nothing, but occasionally luck strikes. My loans and scholarships cover about 75% of tuition costs. My parents cover my housing and the other 25% of my tuition, mostly from a college fund they started for me when I was born- thanks mom and dad. That 25% actually decreases every semester, and I’m keeping track of so I can pay them back.
To new grads who are having difficulty making ends meet, I’d tell them to budget like crazy. Save all your receipts and ACTUALLY LOOK AT WHAT YOU’RE SPENDING. Look at what is absolutely necessary. Learn how to responsibly use a credit card. The main point is, you’re a real adult now. You need to hold absolutely no one but yourself accountable for your actions. If you overspent and need to take a second job to make ends meet, stop whining and do it. No one is cleaning up after you anymore. Do what needs done.
if you want to pursue your muse do so but it doesnt have to be in college.
college should be a means to an end, that being a decent paying job.
while I am not in love ith my studied discipline engineering, I have always been able to get a job
I could have pursued my love, marine biology but there were never many jobs in that field.
to satisfy my desires I watch Nat Geo, Discovery, etc and get up the next morning to go to my well paying job
I have a BA in a social science and it took longer, because I worked FT during school. I paid as I went and used jc's to minimize the cost and graduated with no debt. I attribute this to parents that were always frugal and taught us to be cautious with credit and loans. I was accepted into a private grad program for clinical psy that would have cost me over 100k over 5 yrs, and I backed out last second. I couldn't justify 100k + in loans for a job that may start me at 55k/yr and require me to move away from a local safety net of our family.
College is under a partial falsehood...if some is almost necessary to make good money, more is better, and tons, is the best of all. A select few ivy league schools can justify the high tuitions. If you aren't in a profession that will make 100K + in a year, find a way to get the education cheaper. Go to a state school, work through college and/or stay at home and save on housing. It makes so much more sense. This is essentially the Dave Ramsey perspective on education. He gets millions of listeners every week on his radio show, because he is so rational about finances.
I graduated from journalism school in 2009 with around $45,000 in student loan debt. After my 6 month grace period ended, I began repaying my loans on a 15 year plan. I was fortunate enough to land an internship, which turned into a job and have never missed a student loan payment. While no one talked to me about the job prospects or repaying the loans, I worked very hard to get a job (they’re out there, sometimes you might have to settle and work your way up) and look at my situation realistically. I pay around $450/month and making extra payments when I receive any tax returns and bonuses. I try to stick to a budget and have stayed away from grad school as it’s not a smart financial decision right now.
I am also crushed by student loan debt. I went to an Ivy League for my Bachelor's in a hard science. Stupidly, I went out of state for the name of the university, and did not qualify for aid. My parents' income was too high for that, but not high enough for them to be able to help me in any way. I took the whole thing out on loans, and it amounted to something like $100,000. In that field, job prospects were terrible unless I went on to get my Ph.D, but I wanted to change fields. So I went to grad school in neuroscience, and 6 years of capitalized interest later, I owed $148,000 (one consolidated federal loan and two very large private loans). I had a small stipend, but that went towards rent, food, and paying down my credit card which I racked up during college. Nobody bothered to talk to me about job prospects, and I didn't bother trying to find out becuase it's not like I have many job options outside of academia, given my experience.
I just finished a very difficult (financially) 1.5 years of a postdoc position which paid little more than my grad school stipend and I had to relocate to a place where I have higher living expenses. My monthly payments are about $850, and if I weren't married, I would not be able to survive (not that my spouse makes much money). To save money, we have indefinitely postponed our honeymoon, almost never spend money on luxuries like eating out, and still sometimes barely can feed ourselves. Thankfully I am no longer on a postdoc salary, and I am trying to pay down my loans with some of the extra money, while also saving for a house (though now I hear I might not be approved for a mortgage because of too much student loan debt).
I think the system is broken. Education costs way more than it did, and the cost has gone up much higher than the cost of living or inflation. Tuition is twice what it was less than 20 years ago!
I have a BS and MA in psychology. I wanted to go on to complete my PhD so that I could practice as a licensed psychologist, but I ran out of money. I finished my MA with $91,000 in student loan debt. I was well aware of how much debt I was accumulating, but I believed the lies people told me.
Do well in school, get your education, and getting a good job that pays for it will take care of itself. That's the lie.
I now make $30,000 a year, and it's the best job I can get. At my current rate of repayment, I will be paying student loans until I'm 57 years old! But it is all I can afford. I had no help getting through school; I did everything myself. I started out the day after graduating from high school with no money and only the belongings that I could fit into a Pontiac 6000 (which wasn't mine). Everything I have I have earned. I want to pay off my loans, but in 6 years of repayment I have taken about $1000 off the principle.
If you want people to go to college, if you want people to make our world better, be ahead in science and technology, you need to help them fund it. Or more people like me will give up. I couldn't finish my PhD because I couldn't affrd any more school. And that is the way it is going.
I am not a conservative, and I think it is close to a crime that there are all the vultures out there that are willing to enslave students to long-term debt before they ever enter the workforce. However, and I really hope this doesn't sound heartless, too many stories like this and I might give a lot more credibility to conservatives venting about personal accountability. I almost wonder if the story might be a conservative plant to make a point.
Complete freedom to choose whatever you want to do w/o regard to financial liability in the future is an alternative very few of us can do. Most need to be realistic on choices, and we should be held accountable to our choices. Geographically committed? Nonsense. Because I liked it I chose work w/no pay? Irresponsible, unless you were willing to take a second job to pay the bills. To look back after incurring all the obligations and say oops, I didn't consider that, as if that is enough to wipe away years of bad choices? Sorry, don't buy it. Too many people successfully do it better.
I won't go into my own trials and tribulations through the college years. Will just say that I made some mistakes early on that blew some opportunities, I had to go through some years of fixing those mistakes after I finally got my head in the right place. I now am a successful, well paid professional with a master's degree. If I had done everything right, I could be even more successful. As part of this, I would have loved to have been able to be a part of the frats, the clubs, the non-paying internships, etc. I knew that I needed to pay the bills, so instead worked 50+ hours a week at low-paying service jobs.
Almost everyone in the country wants to be successful. We all start with different advantages and liabilities. Do it all right so you capitlize on the opportunities, hats off to you. Make some mistakes? No problem, most of us do. Just suck it up, fix them, readjust your dreams to be a little more realistic and move on to fix it. Saying oops, I made mistakes as if that is enough to wipe them from the record is a sad example of a no-blame, no-accountability entitlement mentality.
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