Dear Liz: I’m starting to think that I made a huge mistake when it came to my choice for an education, but I was accepted to my “dream school” and I couldn’t pass up the opportunity to attend. As of now, I have a degree from a top-rated university as well as a master’s degree and about $115,000 of debt. I’m only making about $27,000 a year and must remain in my job for the next two years. I am paying over one-third of my monthly income towards these loans and don’t know how I am going to survive with this amount of debt. I really hope I don’t come to regret my schooling decision and all of the hard work I put into it. Right now, though, I have nothing to show for my effort other than a piece of paper. What’s your advice?
Answer: Unless your income will shoot dramatically higher in the next few years, the amount of debt you incurred was insane.
Generally, you shouldn’t borrow more for school than you expect to make in your first year out of college. If you have to take on much more debt than that, then you really can’t afford the education you’re buying, “dream school” or not.
What you’ve done is saddled yourself with debt that will inhibit or even prevent you from pursuing other important goals, like buying a house or saving for retirement. You’ve dramatically increased the chances that you’ll fall further into debt just trying to live day-to-day, since so much of your income is going toward these loans.
This is not a burden that you can escape, either. Unlike most other unsecured debt, student loans can’t be erased in bankruptcy court. Lenders are allowed to pursue this debt virtually to the grave: the U.S. Supreme Court recently ruled that student lenders could garnishee the disability check of a senior citizen for unpaid loans.
You might be able to put a small dent in the amount you owe with a loan forgiveness program, which typically pays part of your debt in exchange for activities like teaching in an inner-city school or enlisting in the armed forces. You can explore the details at a financial aid information site like FinAid.org.
But the real solution to your problem is pretty basic: you’re going to have to find a way to earn a lot more money. You didn’t explain why you have to keep your current job for two years, but if you really can’t move on then you should spend the time readying yourself for the highest-paid profession for which your degrees qualify you. This might not be your “dream” job, but it could save you from the nightmare of excessive debt.