Student loans: Lessons learned, choosing a major, and overcoming regrets

By Holly Johnson

For the Deseret News

Published: Wednesday, Nov. 20 2013 9:58 a.m. MST

In this Oct. 6, 2011, file photo, Gan Golan, of Los Angeles, dressed as the "Master of Degree," holds a ball and chain representing his college loan debt, during a protest in Washington.

Jacquelyn Martin, Associated Press

Enlarge photo»

Editor's note: This blog post originally ran on the personal finance blog Get Rich Slowly. It has been reprinted here with permission.

In 2009, Kasey O. graduated college with a Bachelor’s of Fine Arts in Media Arts & Animation. With the support of her family, friends, school guidance counselors, and high school teachers, she had finally earned a college degree in a field that fulfilled her passion. Kasey was proud, hopeful, and ready to begin her dream career. But unfortunately for Kasey, things weren’t exactly what they seemed.

What Kasey didn’t know was that she had borrowed nearly $80,000 for her degree. She didn’t realize that interest accrued while she was in school either, which came as quite as a surprise. Upon graduation, the interest on Kasey’s student loans capitalized, leaving her just under $100,000 in debt. And, even after making over $17,000 in payments over the last three years, Kasey still owes around $95,000.

Kasey’s student loan debt remains a hardship to this day, mainly due to the fact that she’s never been able to find employment in her field. But, even if she had, it’s unlikely that she would be much better off.

“During my final quarter, there was a graduate meeting where they went over the job prospects of the past years’ graduates. The average grad in my field was making less than $26,000, nowhere near the $56,000+ mark they put on my degree when I first applied,” says Kasey.

A surge in student loan debt

Although Kasey’s story may seem outrageous, her situation is way more common than many realize. As it currently stands, the average student loan debt is hovering around $27,000. And, even though the costs of higher education are reportedly slowing down, they’re still increasing at twice the rate of inflation, making it increasingly difficult for families to keep up. According to the Institute for Colleges Access & Success (TICAS), student loan debt has tripled to $1.1 trillion dollars over the past eight years, with the percentage of 25-year-olds carrying student loan debt rising as well, from 25 percent to 43 percent.

Of course, Kasey knows that her debt load isn’t the norm. After all, not everyone is unfortunate enough to owe six figures at the age of 24. Now 28, Kasey blames her (much) higher-than-average student loan debt on the fact that she went to a for-profit school, and that she was young and naïve when she made these life-altering decisions.

“Going to a for-profit school was the biggest mistake of my life, and it’ll likely continue to affect me beyond retirement, if I even get to retire,” says Kasey. Since student loans cannot be discharged in bankruptcy, Kasey continues to focus on paying her private student loans first since her federal loans are under Income Based Repayment. Kasey’s federal loans will reach forgiveness in 2035. By then, she’ll be 50 years old.

Is six-figure student loan debt ever a good idea?

Richard C. also borrowed six figures for college, with a starting balance of $107,000 after loan consolidation. For a six-figure price tag, he earned a bachelor’s degree from Cornell University and a master’s degree from Albany Medical College. Like Kasey, Richard’s student loans are also on a multi-decade repayment plan, with the final pay-off date scheduled many years down the road. Also like Kasey, Richard wasn’t fully aware how much he was borrowing at the time.

“I realized I spent too much while trying to gather all my separate loans together for my consolidation,” says Richard. “To be perfectly honest, I really didn’t have ANY idea that I had amassed six figures in school loans. When I got my MINIMUM monthly payment quote from Nelnet, I couldn’t believe what I had done.”

Richard blames his high debt load on a handful of factors that he didn’t recognize until it was far too late.

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