<p>If your college debt is over $80k, does it really affect your life that much? From reading these boards, and especially mom2collegekids' posts, it seems to me that everyone says to avoid debt like the plague. Is it really that bad though? Does anyone have any success stories after debt? Thanks.</p>
<p>If you have not yet accumulated $80k in college debt, figure out how to not do that if at all possible. To inspire you, read some of the tales of those who have been unsuccessful in dealing with their college debt, see [Project</a> on Student Debt: Voices](<a href=“http://projectonstudentdebt.org/voices_list.php]Project”>http://projectonstudentdebt.org/voices_list.php)</p>
<p>If you are asking because you are nearing the end of college, and you have just realized that you have $80k in student debt, then you need to come up with strategies that will allow you to pay that off in a reasonable amount of time. For successful tales of Debt Defeaters (not just from college debt) check out the articles and radio programs of Michelle Singletary. Here is a link to her articles in the Washington Post [Michelle</a> Singletary - Personal Finance Advice From Washington Post Columnist Michelle Singletary - The Color of Money](<a href=“http://www.washingtonpost.com/wp-dyn/content/linkset/2005/03/24/LI2005032400142.html]Michelle”>http://www.washingtonpost.com/wp-dyn/content/linkset/2005/03/24/LI2005032400142.html) Singletary has a very clear-headed approach to getting yourself out of debt.</p>
<p>Undergrad debt of $80K is usually too much because those with just a BA/BS often don’t start out with a $75K salary. That would be the minimum salary needed to realistically afford the payments on $80K @ 6.8% under a standard (10-year) repayment plan - and that would consume slightly more than 15% of income before taxes. It gets very difficult to afford taxes, housing, car, food, insurance, work expenses if more than 15% of your income is going to student loans and, at the 10 year rate, you will still pay more than $30K in interest alone. Stafford loans do have an income-based repayment option, but the undergrad loan limit is $31K.</p>
<p>I have known people who started out with $80-100K debt coming out of grad school though. One was able to pay off his loans early, through a $10K signing bonus, picking up extra per diem work, and living simply for the first few years. In other words, he lived like a student, drove the same car his folks had given him in college, and did not take expensive vacations or buy many things that most young adults with a 6-figure income would be tempted to splurge on…but he is in a high-demand, high income field and that level of debt is fairly typical for his degree. </p>
<p>Finaid.org has loan calculators and info available and there are many budgeting and employment data resources on the web. If you use these to project what your budget would be after taxes, living expenses, and loans the “right” debt level for your degree should be apparent. </p>
<p><a href=“Your Guide for College Financial Aid - Finaid”>Your Guide for College Financial Aid - Finaid;
<p>The other one is still paying on her loans but was able to take advantage of special loan forgiveness programs for some of them and over time that reduced her monthly payments to a more manageable level. Her parents helped her out a lot in the first few years and she did have to give up the freedom to move from employer to employer and is working with a very low-income population, although afaik she likes her job. She also has a Master’s degree, which is where a good share of the debt came from.</p>
<p>$80k in undergrad debt is more than double what you should have.</p>
<p>Undergrads shouldn’t have more than $20k-30k in debt when then graduate.</p>
<p>The federal limits are set because newish grads do not earn that much. Many students make the following mistakes.</p>
<p>1) Assume that they’ll be earning a lot more when they graduate than what they really will be earning.</p>
<p>2) Underestimate how much of their future income will already be “spoken for” and therefore will not be available to be put towards loan repayment. What I mean is…Much of a person’s income will already have to be dedicated to: rent, utilities, car expenses, food, clothing, insurance, entertainment, cell phone bill, cable bill, internet bill, etc. That’s why there is very little money left-over each month to put towards loan repayment.</p>
<p>3) After a year or two of paying back loans…it gets REALLY OLD seeing such a big chunk of your income going towards debt that was NOT necessary.</p>
<p>4) Debt repayment is during the ages of 23 -33. Those are important years in an adult’s life. If those years are strangled by bid debt, then that will affect how you can “move on” in your life. Your peers will be buying homes, etc, but you’ll be stuck with big student loan debt.</p>
<p>5) For every $25k you borrow, then the repayment is equal to about an extra car payment. Ask other people who are in their 20s and 30s if they have enough extra money each month to be paying an extra car payment (or two or three) in addition to their own bills (and likely their own real car payment). </p>
<p>6) Some wrongly assume that they’ll “live at home” for cheap while they’re paying back their loans. There are few things wrong with that assumption. A) your job may not be located near your family’s home. B) you may not find living under “family rules” to be very conducive to your lifestyle. C) you may find yourself in a “committed relationship” and living at home just won’t work well with that. </p>
<p>7) Borrowing that much requires co-signers. Parents aren’t usually willing to co-sign such debt because they would be liable. Also, sometimes parents will agree, BUT they only qualify for a year or two, and then get rejected…this leaves the student “high and dry” for his later years in college.</p>
<p>The debt that you’re considering will be like paying back THREE extra car payments for 10 VERY LONG YEARS. I don’t know of ANY young adult who can afford to make THREE extra car payments in addition to all their other expenses.</p>
<p>please also consider that even if you can “afford” the loan payments for college loans when you get out of school those payments will crowd out other financial goals … such as saving for a mortgage, kid’s college, or retirement. I’m pretty much a good school snob however I would never recommend a student taking out more than about $25k in loans to go to a better fit college … carrying the dept is not worth it … personally, paying for a “better” college is fine if it can be done out of savings or cash flow … but not if it involves a lot of debt or parents delaying retirement a lot.</p>
<p>please also consider that even if you can “afford” the loan payments for college loans</p>
<p>That’s the problem…</p>
<p>I forgot to include “taxes” in my #2 point above. Many kids are thinking…"hmmm, I’ll be making $40k per year when I graduate, so if I have to pay $10k of it to student loans, I’ll still have PLENTY of money left over.</p>
<p>The problem with that thinking is that a single person who earns $40k per year, is NOT taking home $40k per year. After paying fed taxes, FICA, state taxes, and other misc payroll deductions, the paycheck is a LOT lower. </p>
<p>Plus, kids often grossly overestimate what they’ll be earning and grossly underestimate what their “living expenses” will be since most haven’t really ever paid for all of them. Few students are paying for their cell phones, health insurance, internet service, cable bills, or full rent. Many aren’t paying for their cars or food either.</p>
<p>Borrowing at the highest level possible leaves no room for the many unexpected things that can, and do, go wrong - i.e. recession hits and you don’t get a job within 6 months of graduation, you have to put your loans in deferrment for some period of time and accumulate interest and fees in the proces, thus you debt grows rather than shrinks. Most important, you have no bankruptcy protection for student loans should health issues or lack of employment make it impossible for you to pay and your debt can multiply into an inescapable nighmare. </p>
<p>It’s far easier to prevent this kind of financial disaster than to escape it.</p>
<p>It’s far easier to prevent this kind of financial disaster than to escape it.</p>
<p>The above should be the words heard by every students who is contemplating big debt. </p>
<p>JDE…what are your school choices? There are choices that won’t require that kind of debt.</p>
<p>Honestly, if you’re not homeless or displaced, you can probably attend college without borrowing $80k. It might require that you don’t live on-campus at NYU though, and you might have to either start at a community college or pursue colleges with generous need-based aid policies or merit aid. </p>
<p>This is going to sound hrash, but I feel that no one should attend a college where they needed to borrow loans that were less favorable than the Stafford loans their freshman year. It’s just too risky. It’s one thing if you had some troubles and you needed a private loan to graduate when you’re, say, a senior, but if you’re borrowing the full COA your first semester it’s kind of a big deal.</p>
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<p>As you said above, huge debt is extremely disruptive. Even brief stretches of unemployment can lead to hardship, and unless you have a high income or exceptionally affluent and generous parents, you’re probably going to have to tighten your belt so much that even saving up for anything will be problematic.</p>