Friday, April 29, 2011

Request for Reader Responses: Did you pay off your student loan debt?

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I have interacted with thousands and thousands of student loan debtors, and have spoken to hundreds of them by phone. We all know that a majority of people who have college degrees, professional degrees, etc., etc. are stuck with a great deal of student loan debt. It's likely that most of these student loan debtors will never pay off their debt. The student loan debt clock is now at $907 billion. With the passing of each minute, that number increases dramatically. That provides us with some pretty concrete evidence that there are millions of student debtors (not to mention their co-signers).

I only know of a few people who have paid off their student loans. One person is the President of the U.S. He has admitted that he would still owe student loans if he hadn't written two successful books. The other person is also an author, but that's not how he paid off his debt! Nope. He had to get a movie deal to do that. So, a successful book ain't gonna cut it. You'll need that successful book to be turned into a movie. Then you'll be able to pay off your debt.

Since this site is dedicated to research on the student lending crisis and sharing testimonials from student debtors, I would like to hear from those of you who have paid off your loans. If you are willing to share, I'd like you to answer the following questions:

(a) How much debt did you owe?
(b) What sort of loans did you have? Federal? Private? Both?
(c) How would you describe your economic background?
(d) Where did you go to school? (If you went to more than one, please list all the schools you attended)?
(e) Are you the first person in your family to graduate?
(f) What did you major in?
(g) What professional degree(s) did you obtain (if applicable)?
(h) When did you graduate?
(i) What were the interest rates on your loan(s)?
(j) How were you able to pay off your loans, i.e., did you inherit money, did your family help you, etc., etc.?
(k) What advice would you give to someone asking you about paying off their student loans?


27 comments:

Mr. Smartypants said...

I won the lottery. Ha! Just kidding, I'll never pay them off.

JDpainterguy said...

I did have a friend who paid his debt off, and a long time ago.

He was paranoid about it way back then, and made 4 or 5x the payments.

Today, he is able to raise a family and keep them.

He is also experiencing a normal life cycle, as in: First there is Youth, and then the young person chooses a career path hopefully, and then raises a family perhaps, and then hopefully comes old age and death.

Too bad America is not the place for such a simple concept, and life cycle progression anymore.

Just what is a "Country" supposed to be anyway, anymore?

I stare at that face on the nickel sometimes, but he ain't talkin', and neither are the living.

Anonymous said...

LOL no...not even close. In order to pay back loans, I first need a job, and yeah I'm kinda stuck at that point.

JDpainterguy said...

Does anyone remember that old 1980's TV show called "Family Ties", with Michael J Fox playing the quasi-businesslike, and tweedy-jacketed, but also redemptively jean-clad kid character, that wanted to become the businessman and conservative guy, and as a sort of representative of a better future after the 60's and 70's?

I'm trying to remember if there was canned laughter after all the jokes in Family Ties, or if it was like Laverne and Shirley, where they always announced that it was filmed before a live audience.

My point being that while we all sat in front of our TV sets while watching that old show,the Student Loan Travesty, be it intentional or accidental, coincidental or a corollary or whatever (and a travesty of Justice as well)
was beyond the imagination of everyone alive, on the earfff.

And how bitterly do the moral aims of the MJF character, in the seemingly benign pursuit of wealth during those times (the conception and genesis of the Student Lending concept), in that show, kind of rankle the heart and mind. (Though I am still trying hard to figure that show out in a Historical perspective, and could be completely wrong.)

Anonymous said...

I borrowed 85K to go to school. Since then I have paid back nearly 50K, yet I still owe over 100.

After never defaulting but utilizing deferment and forbearance, I am in deep.

Anonymous said...

Since your target audience is recent grads, I'm sure there's very few or none who have paid the loans off. I'm sure you'll be able to twist this into a "look nobody has ever paid off their loans" story, which is utterly false. Maybe you should be asking people who have been working for 10-15 years?

C. Cryn Johannsen said...

@Anonymous 10:00 PM - my target audience, as you claim, is not recent grads. Yes, they do read this work, but many readers whom I'm in touch are much older - it's a mix. So, you're wrong. Moreover, I am genuinely interested in hearing from people who have paid off their loans.

C. Cryn Johannsen said...

@Anonymous 10:00 PM - if you read my work carefully, which you clearly haven't, you'd find that I have written about older debtors. In fact, I submitted a paper to a panel I was invited to speak at in June of 2010 that discusses older debtors. I also have a piece in the NEJHE that discusses older debtors with health problems.

- https://docs.google.com/Doc?docid=0AXU4ZrTrfBWmZGNtZHN6ZzNfMWY0cTJjd2Rj&hl=en

- http://www.nebhe.org/thejournal/the-new-indentured-educated-class/

Anonymous said...

I borrowed approximately 60K. I paid it back in 6-7 years. I built up a small emergency fund and after that threw every extra dollar I made at the debt. I drove the same older model car for the whole period and lived in the least expensive apartments I could find. I lived well below my means the whole time. Although, to be fair, I have always lived below my means.

After paying them off I still live very modestly. The difference now as compared to when I had loans is the speed at which my liquid net worth accumulates. Life is great.

C. Cryn Johannsen said...

@Anonymous 10:28 PM - when did you attend school? Did you take out private loans? Did you take out federal loans?

Thanks for the response.

John in Boston said...

@Anonymous 4/30 10PM - I've been out 20 years now, and my outstanding debt exceeds what I borrowed. Never in default, by the way.

Anonymous said...

Never will. I recently threw in the towel and decided to strategically default on my private student loans. Coughing up over 900 dollars a month for the next 20 years is just not going to happen. Considering I am trying to eke out a living on a public servant's salary, I have come to the realization that putting food on the table and a roof over my head takes priority. Unless there is bankruptcy reform soon on these pernicious private student loans, I am planning to expatriate for good.

DJ said...

Older person here (class of '98). Things were easier back then than now, though it didn't feel like it at the time. My parents paid most of my tuition so that I "only" had 10k of loans on graduation.

I went to grad school, deferred the loans, and got a good-paying job afterwards. I paid off the loans in one year. This was back in 2003, before recent changes made the loans really draconian. Back then, the experts were all saying that student loan was good debt (amazingly, some still say this), since interest rates were really low (mine was 3% I think), and they were tax deductible. But (and this is 100% truth) I could tell back then that the conventional wisdom was bullshit. To be honest, I saw the writing on the wall, and I knew that if I did not get rid of these loans then they would come back to bite me. That's why I went through hell and high water to pay them off within a year, and I'm damn glad I did.

JDpainterguy said...

April 30, 10:28PM Sums up the heart of the whole delimma.

Those that have paid their loans off will never accept the restoration of bankruptcy rights for others.

It is a real mess, and the only clean way out, and to get one's life back is to pay them all off, even if that means paying a tripled or quadrupled debt.

I have tried to look at the situation from many angles, and that is the only solution there is for me unfortunately. I have to do it, because I do not want to flee the country.

The good news is that if enough people are warned about Student Loans, and they then simply forego undertaking the debt, perhaps the problem will go away in time.

C. Cryn Johannsen said...

@JDpainterguy - why would those who have paid off their loans never accept the restoration of bankruptcy rights for others? I know of people - two of which were on my board - who wanted the restoration of bankruptcy rights for debtors. They had NO student loan debt. I'd say many student loan debtors think that it is an important piece of the problem. So, I disagree.

JDpainterguy said...

Cryn@ 2:14

I wish I could disagree with what I say also.

But suppose bankruptcy protections somehow became available again? What do you tell the guy who now wants his money back, because he paid the loan off in good faith, and slogged it through hell and high water to do it?

The argument will always involve morality in that sense.

C. Cryn Johannsen said...

Let's entertain the hypothetical question for a moment. I'd say to the guy, "well, you know? Laws change. The law changed."

DJ said...

@JDpainterguy,

DJ again. For the record, I want to see the laws changed to restore bankruptcy rights for student loans, even though mine are paid off. It was never clear to me why student loans need different laws in the first place.

I have a kid who will be in college in 20 years. We're not likely to be able to qualify for grants. I'd like to see college tuitions go down, or at least stop going up as fast. I'm intelligent enough to realize that the easy availability of student loans is the gas that fuels the tuition inflation fire. Restoring bankruptcy rights will make student loans harder to get, which is a good thing. In fact I hope it will make student loans impossible to get. We need to stop pouring gas on the fire.

I speak only for myself. I do not claim to know the opinions of an entire group of people, and I don't think you should make such claims either.

Anonymous said...

Middle class family, both parents have college degrees. Graduated law in 2000... Borrowed only $10,000 because had in state tuition at amazing top ranked school. Prices there are much higher now. Paid back about $350 a month. Went back and did Ivy league MBA... Repaid the law loans with cash and then borrowed $65,000 for business school. Graduated in 2008. Now repaying $800 per month. Very low interest private loans about 5 percent. My dad cosigned but I'm making all payments. Now I owe about $45,000. Will take another 4.5 years to pay off. I was very careful during my MBA not to borrow too much... People did crazy things... Such as borrowing $100,000 or even $200,000 and leasing new cars or going on school sponsored "educational" trips to China and India! But even though I'm thankfully above water, I feel that my loans will delay home ownership and children until I turn 40.

I guess my advice would be not to borrow living expenses and to think hard about lifecycle events such as weddings, homes, and children. Don't borrow so much as to forego ever being able to afford these things.

JDpainterguy said...

@DJ:

OK, and I don't know.
I don't know.
I don't know.

In the end it is a lot of money. A mountain of beautiful and Wonderful and glittering Money that can do so much good, and so much harm.

It can control, but also liberate.

It can give life, and be very kind, but can also kill.

Loosely quoted, but as Mr. Dombey said:

"Money is that which causes a man to courted, feared, respected and admired; and it makes him powerful and glorious in the eyes of all men."

"Money can do EVERYTHING (And ANYTHING)

With smiles all round:) :) :) :)

Anonymous said...

This is Anonymous 10:28 PM.

I graduated in 2001. When I chose my graduate school I took into account the low end of starting salaries and used that to estimate the amount I would borrow for school, room, and board. I decided that a law degree was worth, at most, $60K. I did get into prestigious schools, but knew that you cannot eat prestige. Prestige is really nothing more than a sales pitch.

I had quite a few relatives who were college professors and began their careers before the Great Depression. Their advice and experience is what helped form my strategy on education.

I believe in getting an Ivy League education, if you are on full scholarship.

With the tuitions today I would likely have gone abroad to go to school rather than play the government loan subsidized tuition bubble game.

All my loans were federal. There was no way in hell I was going to take a private loan based on the terms I was seeing at the time.

C. Cryn Johannsen said...

@Anonymous 10:28 PM/8:32 PM - thanks for providing us with more details. I appreciate it. I will say, most people who go to an Ivy League don't take out private loans. Now, it is clear, people do take out loans to go to those schools (I taught several students who talked to me about that fact). What I find troubling is the fact that state-funded universities are attracting out-of-state students, and actually turning their back on in-state students. As you are all probably aware, tuition for out-of-state students is higher. In saying these things, I'm certainly not downplaying your comments.

Anonymous said...

Here are my responses to your questions -

(a) How much debt did you owe?

Undergad - nothing (in-state school that I paid for with the money I saved from working in high school and summers in college)

Law School - about $88k or so.

(b) What sort of loans did you have? Federal? Private? Both?

federal subsidized and unsubsidized. Also some loans directly from the law school that required parents as co-signers


(c) How would you describe your economic background?

Middle class, lived in a good suburb that had great public schools

(d) Where did you go to school? (If you went to more than one, please list all the schools you attended)?

undergrad - Big ten
Law - top 14 private law school

(e) Are you the first person in your family to graduate?

no - at least 3rd generation to graduate college

(f) What did you major in?

undergrad - accounting/finance

law - corporate & securities law

(g) What professional degree(s) did you obtain (if applicable)?
(h) When did you graduate?

Law -1997

(i) What were the interest rates on your loan(s)?

federal loans started out in the 7% range and the university loan was fixed at 5%. ultimately due to prepayments, good payment history and lower interest rates, the federal loans went down to around 2%.

(j) How were you able to pay off your loans, i.e., did you inherit money, did your family help you, etc., etc.?

Starting legal salary - $80k. After about 4 years up to around $160K. Saved my money & lived within my means. After a couple years I repaid/prepaid about 1/2 of my loans - this dramatically dropped my payments and the interest rates on remaining loans.


(k) What advice would you give to someone asking you about paying off their student loans?

Dont borrow more than you can reasonably expect as your initial annual starting salary. Don't go to a law school outside the top 14.

MrsSki said...

(a) How much debt did you owe?
Approx $40,000
(b) What sort of loans did you have? Federal? Private? Both?
Both
(c) How would you describe your economic background?
Middle Class
(d) Where did you go to school? (If you went to more than one, please list all the schools you attended)?
Ohio State
(e) Are you the first person in your family to graduate?
No
(f) What did you major in?
English Lit
(g) What professional degree(s) did you obtain (if applicable)?
None
(h) When did you graduate?
March, 2008
(i) What were the interest rates on your loan(s)?
7%-9.5%
(j) How were you able to pay off your loans, i.e., did you inherit money, did your family help you, etc., etc.?
My husband won a lot of money in a poker tournament, we bought a house with the money. Then we got a mortgage from the bank at 4.5% interest, the mortgage covered the taxes, 30% of what he won, and both of our student loans, $40,000 for me and $20,000 for him.
(k) What advice would you give to someone asking you about paying off their student loans?
We were extremely lucky. Had he not won the money in that poker tournament, we would be renting a crappy little apartment, eating ramen noodle, and still be paying off student loans until we were 40. My best advice is to make sure you don't borrow more than you can pay back, and to make small payments every week. That way the money is gone and you can't accidentally spend it on something else.

Anonymous said...

(a) How much debt did you owe? around 18K at graduation.
(b) What sort of loans did you have? Federal? Private? Both? All loans were Stafford subsidized.
(c) How would you describe your economic background? single parent teacher mom. While considered middle class, I knew we were hanging in there all the time.
(d) Where did you go to school? (If you went to more than one, please list all the schools you attended)? small private women's college.
(e) Are you the first person in your family to graduate? no.
(f) What did you major in? International Relations, Music
(g) What professional degree(s) did you obtain (if applicable)? BA
(h) When did you graduate? 1999
(i) What were the interest rates on your loan(s)? 6.8%? I think.
(j) How were you able to pay off your loans, i.e., did you inherit money, did your family help you, etc., etc.? Moved in with boyfriend (and his family) immediately after college to consolidate rent and food expenses. Got a job within6 weeks, started saving the estimated payment (good to get used to it anyway), plunked it down at 5.5 months before interest started accruing. When salary at work improved, paid $50-75 more than the monthly. Learned how to cook and almost never went out to eat. Consolidated my loans from my first year of grad school to lower the interest rate even further, combo of the last 2 allowed me to pay off in 8 yrs, 2 months. Want to be clear... have not paid off grad school loans and am struggling to do so now. While loans are with different "lenders," since they are now all owned by the gov't they can't be consolidated.
(k) What advice would you give to someone asking you about paying off their student loans? Don't take out more for your BA than you can expect to make in an entry level position in your field or a related field. I got started working before the dot-com bust, but I've dealt with some significant unemployment in the last 10 years (grad school was supposed to help, and instead it just costs me $).

Advice as a student... live like a poor college student and love it. Wear sweats or jeans every day because you probably only need 2 pairs, whatever. Do not use credit cards to pay for anything except maybe airfare two and from home while in college,

Lose your job? Consider moving in with parents or some other less expensive living situation before not paying your loans. If you have to negotiate a payment plan, do something so you pay every month. Protect your credit.

My husband didn't understand debt as well as me (I was willing to take on some, but because of my upbringing, I was wary of it). He did the 3 semesters a year thing so needed private loans for the third semester since Stafford's limit is 2... if his mom had not come through, sold stock options to pay off nearly 40K at 11% interest (we pay her) we would be RUINED as a couple, instead of hanging in there, as it is, we still own 60K still. Don't do private loans. Period. Don't do Stafford unsub'd if you can help it, although that's harder not to do as a grad student. Pay the interest while in school, so it doesn't balloon. After all, my car and the average mortgage are less interest than gov't loans. Constantly re-evaluate as a student, and every year you sign financial aid forms, know what that year's addition means for monthly payment. Your exit interview is a bad time to learn.

Know that student loans can prevent you from qualifying for a mortgage, any mortgage, if the total balance exceeds your income.

Always remember the money your parents plunked down for your education and expenses as a college student were their blood, sweat and tears. Don't squander it.

C. Cryn Johannsen said...

@Anonymous 5:24 PM - good point about protecting one's credit. That is great advice for prospective and current students. I wrote about that recently here: http://www.edulender.com/blog/how-do-student-loans-affect-my-credit-reports-and-credit-scores/

Unknownx said...

I just paid off my student loan last month. I'm 24 and graduated June 2010. I've been teaching in Korea since September. I was able to save a lot of money a month. I paid it all off before interest started accruing. Suck on that you bankers!