The Truth About Life with a Huge Student Loan

One of the issues of this presidential campaign as well as of the recent Occupy movement is the cost of higher education and the burden of student loans. I’ve heard some people remark that people who complain about the cost of student loans are “whiners” and that they should have realized what they were getting into and acted more responsibly. Others trot out the old maxim, “I worked my way through college – today’s young people should do the same.”

I would like to start this article by saying that I am not, in any way, whining. I merely want to share some facts, including real dollar and cents information, on what life is like with a huge student loan and why something truly needs to be done about this growing problem.

I was very fortunate. I received a large scholarship for my undergraduate education, and my father generously covered the small percentage that we needed to pay for. I attended graduate school one class at a time which was paid for by the college since I worked there full-time.

My husband was not so lucky. He came from a poor background. After high school, he worked for several years and helped support his family. He returned to college in his mid-twenties. By attending a community college and a four-year institution at the same time, he was able to complete his undergraduate degree in three years. He then went on to law school – working full-time and attending school part-time in the evenings. In 2001, he graduated the month after our first child was born with $111,000 in debt.

That first student loan payment came due that November. Even with consolidating loans and the thirty-year graduated payment plan, the bill was for $800. It could have been a million dollars. The reality was, we simply didn’t have the money. We firmly believe in paying our bills, but there was no way we could pay that one. We worked with the Department of Education which holds the loan and were able to obtain a forbearance. We would pay $300 a month. It was a stretch, but we were able to pay it. I believe we paid that for two years. We then went up to $450 a month and $600 and finally the full amount which we have been paying for several years now. We currently pay $860 a month – more than we pay for our mortgage payment.

The issue is that during the years we couldn’t pay the full amount, the interest kept accruing. At its highest point, the loan reached $130,000. We have now been paying on this loan for over ten years. During that time, we have paid $73,964.98, yet the principal amount is still $126,082.58. I will repeat that so that it can sink in – we have paid over seventy thousand dollars yet the amount we owe is still fifteen thousand dollars more than we started out owing! Can you understand why this can make people throw up their arms in frustration? As much as I would like to honor this debt and pay off this loan, pending an unexpected financial windfall, we will most likely die before it is paid off.

Meanwhile, it has impacted every financial decision we have made. It affects our ability to save for our children’s education and retirement. Plus, there is the psychological weight of knowing that we owe this money.

I stated in the beginning that I was not whining and that is true. We have been blessed. We are able to make the payments. My husband’s education allowed him to pursue a career which gives him fulfillment and allows me to work part-time from home and home-school our children. Plus, at least he received both an undergraduate and graduate education for the amount we owe. Today, that amount of loans can easily be accumulated simply obtaining an undergraduate degree. If both a husband and wife have this amount of loans, the result is truly financially crippling.

Unlike home loans or car loans, which are based on income and what you are buying and can be made as prudent financial decisions, student loans are based on hope – the hope of future earnings. I know that when we were signing for these loans, we knew the amount was large, but we had no concept of what it would take to pay them. We certainly didn’t have the money to pay for the classes out-of-pocket. They were necessary for him to obtain his education. We simply hoped it would all work out.

Today, as a parent, I don’t know how to advise my children. I want them to be able to fulfill their potential and obtain a higher education if that is what they want. At the same time, I know the reality of living with large student loan debt. Something must be done about the high cost of higher education and the burden of student loans. This is a very real issue that isn’t going away anytime soon.