Dealing with a large amount of student debt
What do you do when your student loans pile up?
OK, let's get this straight, right out of the gate: Most students do not graduate with horrific amounts of debt -- roughly $27,000 on average. But that's nearly double the amount students owed in 1993 -- and that's adjusted for inflation. And student debt loads are rising. That has big implications for the economy, as heavy debt loads make it hard for people to borrow. That stops them buying cars and homes, prevents them from starting businesses and saving for retirement. In the worst cases, people find themselves buried under their student debt, unable to escape as costs mount.
Justin Geary and Dexster Adair know what it's like to be burdened by student debt. Geary lives in Oklahoma City and is carrying nearly $150,000 in student loans. He has a bachelor's degree in Sport Wellness and Recreation Management and he works two jobs, but says he still can't afford his payments. Meanwhile, Adair owes a little more than $300,000 for his bachelor's degree and an MBA in Entertainment. He's currently unemployed, living in Fort Hood, Texas.
Adair says as his loans started to rack up, he thought he'd be in a position to repay them after he graduated. But that wasn't the case.
"I didn't think for once I wouldn't be in a position or have the opportunity to maybe pay them back," says Adair, who currently lives at home with his parents.
Once he graduated, Adair got a job at a studio in Chicago. But he was overqualified for the position. Since then, he's applied for 250 jobs, but it's been hard for him to find work. His loans are currently in deferment, but he knows that eventually he will have to pay them off.
"It's hard when you have so much debt," says Adair, 31. "There's a lot of expectations of what someone my age should have or where they should be at this point in life."
Adair has a 2-year-old daughter and receives aid from his parents to help raise her. But as far as settling down, he says he doesn't have the resources to do that right now. He says his degree wasn't a good financial investment, though he values the information and knowledge he learned while studying in school.
"It's kind of hard when you invest so much in your school and then it's almost like you have to go into a whole other field," says Adair. "I basically got myself into a bunch of debt for information that I'm not even able to use."
Loan forgiveness and discharge programs may help ease -- or even erase -- your student loan burden.
Geary, 26, was the first person in his family to go to college. A financial adviser told him that she could help make it affordable, and encouraged him to pursue a college degree. It took him five years to graduate and his parents couldn't help him out. He took out a large amount of federal and private loans to pay for school.
If he paid the absolute minimum on his loans, Geary says it would cost him about $1,600 a month. Right now he's only paying off his interest and is in default on one of his loans.
"My credit has suffered. It's suffered a lot. Every time you miss a payment or go into deferment they still report it. So it's been rough," says Geary. "More recently I just decided it's something that I can't stress about. It's going to be there and it's going to be there for a while. But I just try to go on with life."
Geary says if he could do it over, he might not go to college.
"I got a sports management degree in a market where there's not a lot of sports, so it didn't do a whole lot of good. So now I'm working in the finance department. I think there are opportunities without college these days if you just start young and just work your way up," says Geary.
Geary says he's sought help from organizations on how to deal with his federal loans. As for Adair, he's started to explore teaching as a way to help resolve some of his debt issues. He says he may go into the teaching field to utilize some of the loan forgiveness options available to him.
Geary offers this advice to prospective students: "Seek out the resources that are available. Look into scholarships and grants. Know what you're going into before you go into it."