Is a degree worth college debt? Via Shutterstock.
While I’m fortunate to have zero college debt – I went to school in-state and lived at home three out of four years – my boyfriend isn’t so lucky. He now owes $153,000. YIKES! He pays $2,000.45 per month out of his $3337.46 a month salary. That’s more than half of his monthly income going to college debt!
Even paying this large monthly sum, he has only decreased his debt by $6,000 in the past year! Most of my friends are in the same, if not worse, situation. And my boyfriend has a good job. Some of my friends are earning less per year than it cost them to go to college! My boyfriend, my friends, and I don’t know much about how to begin paying off these massive debts. Maybe you can answer the question that we are struggling with.
How can a recent grad pay off big college debt?
Should I consolidate my loans? This is a question that many of my friends have asked me. I’m honestly not sure what happens when you consolidate your loans, especially if you have different interest rates. I know there are debt calculators, but is this worthwhile and can anyone do it?
If my field is low-paying, should I find a cheaper college? College is a great investment because you are investing in yourself and increasing your potential earnings after you graduate. But, when college costs $40,000 a year and you’re studying to work in a field, such as teaching, where the average starting salary is $30,000, does it really make sense to take out loans you won’t be able to pay off for many, many years?
Is there any way I can get out of paying my loans? Is there any way to make these loans just vanish? Is bankruptcy an option? This sounds ridiculous but it’s a question that my friends ask all the time. Panic can do that to you.
Is deferring your loans a good option or should you just start paying immediately? Many of my friends are stuck deferring their loans because they haven’t gotten “real” jobs yet. Not having the income to spare can make paying loans seem impossible. But, will deferring loans become a problem in the future?
Should I pay as large an amount as possible a month as I can afford? My boyfriend is putting as much money towards paying his loans as he possibly can without becoming homeless or starving. Is this the best strategy? As his salary increases should he could continue to increase the amount of money he puts towards his loans a month?
What’s the best way to save money to pay for loans? My friends want to know what else they should be doing to pay back their loans. Should they be couponing, staying in, living at home, or pursuing any other money saving options?
Welcome to Bargain Babe! I’m Mara, and I’m so glad you’re here. I am an obsessive bargain hunter and penny pincher, and I am determined to live a full life without EVER paying full price.
My biggest advice for collegians is to Swagbuck. Especially if you have an iPhone or and Android, you can VERY easily make 50 cents a day (I know it doesn’t seem like a lot, but it does add up) just by clicking through videos on their SBTV mobile. If you are willing to do surveys, the amount you earn can go up substantially. And they not only have coupons available, but they give you 10 cents for every coupon you use.
By doing Swagbucks, we have completely been able to pay for all of my sons books on Amazon (another tip, don’t EVER buy your books at the college bookstore unless it is a special imprint made specifically for the university — my son did have a couple of these overpriced monsters). Buy (used if possible), don’t rent and keep your books nice — depending upon your college bookstore’s policy, you may actually MAKE money on some of your texts by turning them over from an Amazon purchase to a university bookstore buy back (works best on science and math books).
Also, opt out of the meal plan if you can AND if you will actually continue to eat if you are paying for it for each meal. My son was finally in housing which allowed him to opt out (if you didn’t have a kitchenette, they wouldn’t let you — rural campus and they want to be sure the kids actually eat!)…. Instead of paying close to $3000 per term on the meal plan, he is going to be paying about $1500 without skipping any meals. Go for the low-hanging fruit when it comes to food — depending upon organizations you join and what the campus life is like, you may be able to snag a few free meals a week.
Keep you mind open when applying for scholarships. My son applied for a fine arts scholarship based upon some videography work he did in high school, and ended up snagging an $8000 overall scholarship for this — so few kids applied for it and his work was quirky enough that they awarded him the scholarship.
@Sarah I just signed up for Swagbucks! I’m already seeing how easy the points add up. This seems like a great way to save. I’m definitely going to take advantage of the coupons too. I also have to say that all of your advice for college grads is very true. Many of my friends were only on the college meal plan as freshman because they realized they weren’t getting much for their money. Also, scholarships are great! My boyfriend actually was given grants for school for $6,000 a year. It doesn’t seem like much considering the debt he still has but it’s definitely great to not have to pay it back!
I am so saddened to hear these stories over and over about college graduates straddled with this debt. I have heard that filing bankruptcy does not forgive college debt. I would advise writing down a budget on paper where you can actually see it. Write up all of your expenses, including gas and food and an occasional movie night. This should show what you can put towards your college debt without starving.
Keep to your budget. I once read that’s its better to use cash than a debit card while on a budget because there’s no emotion in swiping a card. There is emotion in handing over a wad of cash. You could use the envelope method of cash for food and gas expense. This is where you stock your “gas” envelope each week with the cash you have budgeted for it. Stock your “food” envelope with cash for your weekly food budget, etc.
Coupons are great. Matching up coupons to store sales makes for great savings. The Dollar menu at fast food places is thrifty!
You can sign up to do surveys like car surveys where you actually go to locations and fill out surveys. They can pay up to $300 a survey.
Obviously if you know in advance that your career is a low paying one, then not spending a fortune on your college is a good plan.
I just hate debt and can’t stand that our youth are in this situation.
My daughter went to a 6 month culinary school for $15000. She’s graduated now and is a personal chef and very happy. More people need to look into these other options. 4 year colleges are not for everyone and they aren’t the only option out there.
Good luck!
@Robin I love your point about how there is more emotion in paying cash than swiping a card! It’s so easy to lose track of how much you’re spending when using a credit card. I’m definitely going to try your envelope method of budgeting. I think that would help make us realize what we spend our money on! I’ve never heard of surveys paying that well but I’ve also never really been interested before. I’m going to start checking to see if there are surveys near me now. Making an extra $300 would be very helpful right now.
I also agree that college is not the right choice for everyone. I have friends who went to college for fashion but they really wanted to work in retail. They are now in debt for college but are working at jobs that don’t require a college degree! I think many people go to college because it’s just the next step and since it is such an investment that’s not always a good plan. Your daughter sounds like she made a great decision!
@Robin ~ These “college students straddled with . . . debt” are not “victims.” Please see my previous comment. They knew–or should have known–what they were getting into. Now it is their responsibility to pay what they agreed to going in.
Parents need to have the college financing talk when kids are in 9-10 grade! Summer jobs including babysitting when 13-14 years of age, putting half of all earnings or holiday checks into college savings……some should go,to community college and save and the. Transfer to their dream school for the last two years. Apply to all scholarships and most colleges have jobs on campus. If you made the mistake of accumulating college debt, then you may need to do more than one job to get out of debt. If you listen to Dave Ramsey on radio you will hear how many families have done the rice and beans diet and paid off college loans, mortgages and more……but not by having iPhones, cable tv, newer cars, and buying coffee drinks! Bottom line is facing reality and being smart enough with decisions not to get into debt in the first place!
@Janet I definitely agree that making financially smart decisions is better (and easier) than dealing with debt later on . That’s why I made the tough (less fun) choice of living at home during college. For me, not being in debt was more important than living at school. I think that saving for college at an early age is a great idea. If your child decides not to go to college they still have savings to pursue their dreams. In my opinion, teaching children to save money will only benefit them in the future!
How about getting a second job – one that is for a few evenings a week or on the weekend.
@yardsalequeen My boyfriend and I are long distance so getting a second job for us means that we wouldn’t really get to see each other. Currently, we see each other every weekend. I live in RI while he lives five hours away from me in PA. Unfortunately, it’s starting to seem like getting another job is going to be necessary to pay back these loans. We might even need to cut back on the amount of time we see each other due to the cost of gas and traveling.
As with any costly investment, the prudent thing is to RESEARCH THOROUGHLY IN ADVANCE what it entails and then make a mature decision accordingly. Where is the logic in plunging ahead when there is a price to be paid eventually? Every decision has consequences.
@Diane I definitely agree with you! My boyfriend is lucky that his job as a computer engineer pays enough to pay back his loans. Since he loves his job he feels that even though having so much debt is horrible, it was worth the investment. I do have many friends that are questioning whether they want to work in the fields they studied in college. It’s hard at 18 to know what you want to do with your life and if you’re not sure maybe you should consider waiting. I agree with you that an investment of $40,000 or more a year should be carefully considered and researched.
I’ve got to say it terrifying to see that in the US education is so expensive that when you’re finally done with it you might have as much as $150,000 debt to cover. I was fortunate enough to get education in Poland where it’s free. Anyways I am quite surprised that your boyfriend paid off only $6,000 during the whole year when his monthly installment was $2,000. It suggests that the interest on this loan is very high which almost seems unbelievable. So if that’s the case I would firstly look into this problem and analyze the whole loan properly in order to find the reason for such slow progress in loan repayment. Where does the other $18,000 goes from the $24,000 your boyfriend places on the banking table each year?
@Piotr Great questions! I agree, Dacia’s boyfriend should look into his interest rates and see if there is any way to lower them. He is paying a HUGE amount of money each month to interest, instead of to principal. Going to take a very long time to pay it all off that way.
Bargain Babe is correct, if you take out a 10 year loan for $150,000 at say 6% interest rate (This can be high depending on the credit score of the parents who took out the student loan for their child). In the end, after 10 years you end up paying $200,000 and the bank makes $50,000. Makes me think, why don’t I start a bank…
When I married my husband 28 years ago he had switched majors at grad school at a very epensive and top private university– which meant no more fellowship and grant funding– we had to pay back close to 2 years for his tuition (in today dollars would have been close to $70,000) and did it by cutting back drastically– and both worked more than one job. We did it and then did it again to buy our first house. 8 years later we decided to survive Los Angeles with one car and did that for 4 years so we could save up to move to a house we wanted in a community we thought was best for our needs. So it is not just college grads who need to be creative……think outside of that box– I did yard sales with ” donated” things from friends and family, market surveys, coupon clipping, repairing items vs buying new, limiting errands to save on gas and sought out work after hours. The economy over the last five years has meant many people in their 40’s to 50’s have been out of work and have needed to do everything from pizza delivering, babysitting or late shifts to make ends meet…….
@ Janet ~ I applaud you and your husband. Rather than bemoan the consequences of decisions you/he made, you both took RESPONSIBILITY (the dreaded “R” word for some) and did what was necessary to pay back what you rightfully owed. Some may see me as hard-hearted; however, I just don’t believe in a “victim mentality.”
@Janet Wow that is an amazing and inspiring story! It’s great to hear that getting out of debt is possible through hard work. Your tips for being creative apply to anyone struggling with debt or finances in general. I completely agree that the current economy has effected people of all ages. This is the time that everyone should be thinking outside of the box to save!
@Diane I agree that college grads are definitely not victims. Of course students should pay for the education they received. I think that a big problem is that many students aren’t aware of how much interest will accumulate to. Unfortunately, many loans have very high interest rates which make paying back this debt much more difficult than college students are led to believe.
@ Dacia ~ That’s exactly my point: “many students aren’t aware . . .” It is their responsibility to be aware, to do the homework necessary to make an informed decision. The interest rates are clearly stated from the outset. How are they “led to believe” otherwise? Who is trying to trick them? There’s that victim mentality I mentioned in another comment. Also, instant gratification is a sign of immaturity: “I want it NOW and will worry about how to pay for it later.” Obviously, that’s not a characteristic of being mature or responsible.
Another creative easy way to save is to be sure to donate unused things to charity and if you itemize on taxes, you can deduct the fair market value…..seems that you can claim up to $5,000 in donations (taking 20% of new value is usually standard for deduction amount but check with whoever does your taxes!) so if you reduce your taxes, that is like a pay raise! Of course if you are just starting out, you probably do not itemize on taxes. Consignment stores are good for selling clothes, toys or children’s things. And I did the envelope method where I had envelopes for food, gas, and other expenses and put receipts in for a month……amazing to actually see where each penny goes!
One idea, and I know it is not for everyone is to join the Army Reserves, National Guard. Its one weekend a month, two weeks during the year for annual training and since she/he has a degree, she/he would start at a higher rank. Plus if she/he joined a needed position, they have cash bonuses, that she/he could use to pay off debt faster. The follow on is Active Duty, of course. They have a Loan Repayment Program that can pay back the loans IF they are Stafford type loans with only a few years service. I had 32K paid for my education by the US Army for 3 years of service
I know to some it is not the choice they may not wish to make, but it is viable option. Another thought is the Peace Corps, they have similar programs too.