The Student Loan Ranger loves to help consumers with their student loan and other financial aid questions. Every day, we receive emails from borrowers about how to handle their student loans.
We also try to respond to inquiries posted on social media sites, such as Facebook and Reddit. We know that for every one person who asks a question, 10 times as many need the answer.
Below is an inquiry we recently received. We wanted to share this with our readers, since it represents a scenario that could happen to anyone. We have edited this for clarity and style and share it with the borrower’s permission.
I’m a 28-year-old female who went to a top university during the recession and graduated with a bachelor’s in history and a minor in German. I then went to graduate school at another top university and graduated with my master’s degree in library and information science with an archival administration certificate.
The Free Application for Federal Student Aid said that my parents made too much money for me to qualify for grants or other free or subsidized aid. As my parents didn’t help with school, I only had loans available and during the recession the interest rates were at 8 percent-plus (sometimes as high as 10 percent).
Most of my debt is in private loans although some are federal. I have consolidated since graduation and lowered my payments by $200 a month. Right now I am paying about $800 a month on the loans plus $200 for minimum credit card payments.
I hated being an archivist and almost hated being a librarian. There’s no way to advance and the job market is swarming with recent grads. The income is low at about $15 an hour for a master’s degree in some places. The only way to advance is to become the head of the departments or management and that takes years, sometimes decades.
I don’t know what to do. I am considering going back to school to work in the medical profession, but am scared to add more to my debt. -Natascha S.
[Know the 10 questions to ask before borrowing a private student loan for college.]
This post is a real-life example that sums up advice we’ve given borrowers over the years about keeping their college debt low and researching college stats, including the return on investment, job placement and starting salary of their chosen field of study.
So often we see students and families feeling pressured to just find the money, whatever it takes, and worry about it later. Then later comes and they find they can’t afford their loan payments or they can afford their loan payments but not much else.
Or, like Natascha, they hit the trifecta of student debt regret: Their student loan payments are high, their income and advancement potential are low and, to top it all off, they don’t like their career.
So where did she go wrong? It wasn’t picking her major — that was fine.
The issue was the amount of debt she took on — especially private loan debt, which in almost all cases, doesn’t offer an income-driven repayment option, considering the average salary of someone in her chosen profession. Natascha should have been eligible for federal unsubsidized Stafford loans regardless of how much income her parents reported on the FAFSA. Unsubsidized Stafford loans are not based on need, so we hope she at least maxed out federal loans before turning to private options.
[Read these strategies for students too rich for financial aid but too poor for college.]
What she could have done — and what we would have recommended — is attend a less-expensive school for at least the first two years of her bachelor’s degree and try to pay out of pocket for these general credits. Then she could have transferred to her dream school.
If necessary, she could have also attended part time so she could have worked and paid as much as possible out of pocket — although some experts warn against this, since working too much while going to school may be a distraction and can diminish your chances of completing your degree.
[Discover ways to attend classes or earn a degree for free.]
Student loan borrowers who drop out and are left with the debt but no degree are significantly more at risk of defaulting on their loans. Only you can find the right balance on this issue.
The ultimate goal should have been to keep the borrowing down to no more than the average starting salary of her chosen profession. This would have given her a payment of about $650 for 10 years — about $400 or less if consolidated like she has done — and even less than that if she’d stuck to just federal loans and participated in the income-driven repayment plans.
While this is not most students’ college life dream scenario, it’s certainly preferable to being in significant student debt for 10-15 years. She also wouldn’t necessarily be hesitating about returning to school and possibly accruing additional debt.
So what advice did we and other readers give Natascha? We certainly didn’t advise her to take on additional debt.
We had some concern that what she didn’t like about her current profession may also exist in the new profession she was considering. Many readers gave her great suggestions for alternative, perhaps better-paying and hopefully more enjoyable careers she could pursue with her existing bachelor’s and master’s degrees.
Natascha said she wants others to remember to be thoughtful when choosing a college and major and ensure that both are the best financial fit. She also said that if these aren’t, make sure you don’t end up feeling trapped by that debt in a career you can’t stand.
More from U.S. News
How I Repay My Student Loans: Real Borrowers Share Stories
4 Incorrect Reasons Students Don’t Apply for Financial Aid
Consider School Accreditation When Determining a College’s Value
A Cautionary Tale of Student Debt Regret originally appeared on usnews.com
