Smart SpendingSmart Spending

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.

By MSN Money Partner Aug 20, 2012 1:43PM

This post comes from Honey Smith at partner blog Get Rich Slowly.

 

Get Rich Slowly on MSN MoneyMy 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.

 

Image: College graduate (© Corbis)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:

145Comments
Aug 21, 2012 2:33PM
avatar
please, everyone, please share your own story, and brag about how you have handled your finances. 

We are all terribly interested.



Aug 21, 2012 2:14PM
avatar
What the hell is the matter with you people ....THERE IS NO FREE LUNCH....AND .....I don't want to pay for your college .What ever happened to working your way through ......MANY OF US DID ....the whining about having to pay back the money comes from the wimps and panty waste. will they keep sucking at the public tit as adults? Gemmy gemmy ...I'm sick of it.
Aug 21, 2012 2:10PM
avatar
i really *don't* want to bring politics into this, but for those who are complaining about student loan rates, didn't obama try to pass a bill lowering student loan rates about a year ago?  then got blocked by the republicans?  i'm no expert on this, so don't crucify me if that's wrong.
Aug 21, 2012 2:03PM
avatar
While little can be done for those who are already debt slaves due to student loans, I would like to highly recommend an excellent book I recently read on the subject:  "Debt-Free U" by Zac Bissonnette.  I don't know the author and have no financial stake in the success of the book.  It is simply an awesome book that speaks the truth on this subject.  Having a son who is starting his junior year of high school this fall, it is a subject my family has a great deal of interest in.
Aug 21, 2012 1:56PM
avatar

This is to the author. Hang in there. after 11 years and being broke most of the time, I am down to my last $192.66 of my student loan. Where my loan was not as much as your loan, I managed to to pay the minimum + 10 or 20 more every month but for one year, and I was on a program for economic recovery (like that happened). Anyway, I am also disabled and could have had my loan wrote off, but by the time it would have taken me to go through the three year wait program, I decided that I would go ahead and just pay the loan out. So if I can do this you can too.

You also might want to consolidate your loans to one loan. If you do this, see if you can go through MOHELA. Mohela will own the loan and not resale it. It makes sense to go with a company that is education wise and not a bank. They have a good percentage rate and they are by far the most knowledgeable and friendliest people to work with. Again, they do not resale their loans.

avatar
The business and professional service industried are still demanding college degrees but the tuition and lving costs have been inflated grossly by higher education institutional greed and inflation based on the open checkbook of college loan programs funded by our overspending government.   Along came a recession and the demand for college degrees deflates as consumers cut back and businesses respond in kind in employment demand.   On a life time carer timeline this is a small couple year setback from growth in our and the worlds economies.   The future is unknown but I believe more education is more valuable but the current value vs cost is too high.   The educational costs exceed what present employers will pay with the exception of science and specialized high value careers.   The one area that would offer the greatest logic and help students with the cost of edcuation is to have our government treat students like they have big business and banks during the economic crisis, lower the student loan interest rates!   With our Federal Reserve system so eager to keep interest rates so low for our economy why the heck does our government feel it appropriate to gouge our students?!   We should at least put student loans in line with other long term asset loans like those in housing right now.  3.4 to 4% is of huge assistance to students to aford and take the risk of taking on education loans for a degree!   If our government is going to track down and force all students with government backed loans never to default on them why does it have to harm them with high interest rate costs.  It's one more example of the babyboom generation abusing it's majority power to steal from our children for it's own selfish retirement entitlement mentality.   It will create long term toxic animosity between retirees and the generation who has to fund their retirments!   The tale end of the boomers will suffer for this unreasonable burden on our present student youth, mark my words!  
Aug 21, 2012 1:50PM
avatar
Just go without documentation, undocumented students are not required to file federal financial aid applications (FAFSA) forms in order to receive federal financial aid or any aid based scholarships because they might fear deportation if the federal government had any documents filed by them under oath, so US citizens should be entitled to the same benefits as illegal aliens and not be required to file FAFSAs because of the fear of not obtaining the highest financial aid packages if the form is filled out under oath, just like any undocument student can
Aug 21, 2012 1:49PM
avatar

It is extremely unfortunate that people are constantly bombarded with advice that education is so critical to making a living that paying any amount for a degree is considered a good investment.  The sad thing about this story is that this individual actually achieved that four year degree without incurring debt and then went into massive debt to acquire advanced degrees of no real value.  Professional degrees are about the only ones worth trying to get directly after finishing an undergraduate degree.   People should go get a job and see what is out there before deciding to go and get an advanced degree in most fields.  PhDs are generally only useful in teaching and research.  You certainly don't need one to be a writer and any school that advises you otherwise is not looking out for you they are only trying to mortgage your future for their own benefit.

Aug 21, 2012 1:45PM
avatar
You can always work as an escort to pay back your loans.
Aug 21, 2012 1:41PM
avatar
Making $14k plus borrowing $12.5k does not equate to $26.5k of "income."  Just wow.
Aug 21, 2012 1:29PM
avatar
Your experience is so much like mine. 

I graduated from a state school with no debt. Then I decided to go to law school, where I ended up taking $125,000 worth of student loan debt. I graduated from law school in 2008, right when the economy tanked. I was geographically restricted (had a fiancee who had a job), ended up becoming so ill I couldn't work, job market was terrible, and I decided that I really hated working in law. 

Eventually,  my fiance (now husband) and I moved to follow his passion. He had also graduated from a state school without debt but wanted to pursue a different career. So, he went to vocational school and racked up probably close to $50,000 of debt (I don't know, nor do I really want to...). While we lived in that city, I also went to vocational school because there were still no jobs, adding a couple more thousand dollars worth of debt. Then we moved back to my husband's home town where he found a job he loves (which makes me so happy). But I still struggle to stay employed, layoffs during the summer are common here. 

Honestly, we get by -- barely. We have a place to live and can eat and pay off the vocational school debt for both of us, but that's about it. I'm not sure I'll ever be able to pay off my law school debt, my average income is around $14,000 a year...., while my law school debt payments are over $1,000 per month. And even though I have deferred my law school debt, the fact that they keep capitalizing the interest means that I will be further in debt when I finally do make enough to pay it back. It's already up to $150,000 four years after graduating, $25,000 higher than what I actually borrowed... 

We do the best we can and try to be happy... and things are getting better for us. But it would be a relief to be debt free. 

I agree with you that students are not really told how student debt can be a bad investment. My husband and I were never told how much we needed to make to pay back the debt, we even tried looking up information like that but it isn't accurate. My advice to friends in college/looking to go to college is that if someone offers a college education for free take it, even if it isn't the school you dream of going to, vocational school can be worthwhile but *very* expensive for how much you will make out of school, and NEVER go to grad school simply because you don't have a job at graduation, the job market is bad, or because you don't know what you would do in the real world (you will go farther into debt than you will be able to pay back...)

I wish that there were more programs to help students in such extreme debt, not just those who have defaulted. Especially since the job market tanked after many of us took the debt. One thing that would help my husband and myself a lot is if we could deduct ALL of the student loan interest payments we make, instead of just $2,500. Sucks when we pay over $10,000 in interest alone every year. 
Aug 21, 2012 1:10PM
avatar
To many kids bought into the fiction that hollyweird peddles that if they just pursue their dream, a great life will just fall into their lap. Sure you may enjoy creative writing or basketweaving, but when you spend 100K to get that degree, don't whine that you can't find a job that will pay off your debt. To many people have believed that lie that everyone must get a college degree. There is nothing wrong with earning a votech degree from a technical college, you will probably earn a lot more than us meager little accountants.
Aug 21, 2012 1:10PM
avatar
Anyone who acquires stundent loans of that magnitude is not very wise.  Education is good, but not that necessary.  Working ones way though college saves the student loan debt problem.   What is wrong with people, anyway!
Aug 21, 2012 1:10PM
avatar
I feel so bad for those straddled with student debt.  We have a daughter who has two degrees in elementary education. For the two degrees as a family we were fortunate to put mom and dad money, her working part time, brother, sister and scholarship funds into her education. Thankfully student debt was only six thousand dollars after college. Her dream job is teaching youngsters from K-6. Since she received her second degree and having interviewed with many school systems, she is unable to land that so elusive teaching position. She tutors reading whenever possible and it is giving her some teaching experience however she feels she wasted her education. She is working in a totally different field however she says " I paid my student debt, am paying my bills and have a job". 
Aug 21, 2012 1:09PM
avatar
Sounds like a case of being shortsighted when it comes to finances.  Please excuse me while interject  some reality into this poor me fest.  Don't complain about the costs of college and how expensive it is.  Tuition has always been expensive when adjusted for what the average college student is making.  I lived at home, went to a state university and graduated in four years.  Yes, it was tough but worth it.  I did not run up student debt, did not eat at the cafeteria and did not drive.  Common sense should tell you that borrowing more money than you will make annually upon graduation is not a good idea.  You should not go to university to do what love.  You should go to university to prepare for life and a career.  Unfortunately the two do not always jive.
Aug 21, 2012 12:41PM
avatar

I graduated in 94 from CSU engineering, 23k in the bank, and no debt.  During college, TV repair business paid college expenses.  After 17 years as EE, saved up 1/2 million+

 

Tuition increased 10 fold since 1979.

 

1979  $ 327  / quarter

1989  $ 800  / quarter

1994  $ 1200 / quarter

2012  ~ $ 10000 / year

Aug 21, 2012 12:40PM
avatar

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.

Aug 21, 2012 12:39PM
avatar

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.

Aug 21, 2012 12:27PM
avatar
Although my M.S. was an enriching experience and I made some deep friendships, I would NEVER do it over again.  The degree entitled me to work in early childhood education for HALF the money I was earning before.  It became impossible to continue the "new" career, due to financial stress. The $100K+  debt has been a nightmare.  I'm working in a city that has twice the cost of living as the national average, and my current debt load is twice my annual gross income.  I defaulted on all my credit cards when I moved to this city and was in between jobs.  Twelve years after graduating, I am slowly chipping away at credit card settlements (even though I have judgments, and attorneys recommend bankrupty).  This is all in ADDITION to a $49K Federal Student Loan debt.  Yes, this is the land of the free and home of the brave, with unlimited opportunities - as long as one is willing to endure poverty from extreme debt. 
Aug 21, 2012 12:16PM
avatar

i got my ma from the #1 statistics program in the country (if not world) and graduated with ~80k in debt.  however, because i studied an in-demand subject that virtually nobody understands (let alone lives and breathes), i landed a job that pays me 85k.  paying off my debt is annoying, but i do it without any real strain on my finances...obviously i could live even more luxuriously if i didn't have to pay 1200 in loans a month, but things could be worse.  i have a studio apartment in a luxury apartment building in a nice part of the city, i drink multiple times a week, go out to dinner, go on frequent vacations, and still save more money for retirement each month than i'm sure 95% of americans do.  i also only work 40 hours a week.  life is good.  (in case anyone is curious, i'm 25 and have had this job since i graduated 2 years ago.)  oh, one more thing...i also went to grad school because i was too scared to grow up and leave the playpen that is school.  doing so has been, by a significant margin, the best decision of my life.

 

don't get me wrong though, there was definitely an element of luck involved--i was lucky to be born this smart and land this job.  i am grateful everyday. 

 

unfortunately, i am still lonely and am looking for an older woman to enter my life.  (hahaha sorry, couldn't resist.)

Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

ABOUT SMART SPENDING

Smart Spending brings you the best money-saving tips from MSN Money and the rest of the Web. Join the conversation on Facebook and follow us on Twitter.

VIDEO ON MSN MONEY

TOOLS

More