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Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: oloxo on June 29, 2014, 10:42:46 PM

Title: Reader Case Study: $180,000 dollars in student debt
Post by: oloxo on June 29, 2014, 10:42:46 PM
Hello Mustachians!

I'm a freshly-minted graduate from a very nice university, currently living in Philadelphia while I look for a job. Despite my academic scholarships, I still had to borrow a considerable amount of money to go to school (about $180 grand to various parties) and now that I'm out and haven't begun my career yet, I'd love to get some input on how to overcome having a debt big enough to buy a house with.

Income:

I'm not making any formal income yet--I do make around $100/month freelancing, and am trying to ramp up my career. I'm trained as a product designer, and have some talents in graphic design, photography, writing, and farming/gardening, so I'm optimistic about that but not sure I'll be making much more money any time soon.
INCOME: $100/month

Current expenses:
Rent is $585/month until the lease is up in August. I'm making $25/month payments on loan interest (with the grace period running out in December of this year) and $3.99/month on Pandora One, since the ads drive me crazy and I refuse to pay for iTunes.
I spend about $43.00 a week on groceries and average $20.00 on transport and beer/entertainment per week. Having seen the wisdom of some of Mr. Mustache's principles regarding luxury spending, I estimate that I now spend $15/week on Miscellaneous Items, averaged out over the year (since some weeks I buy nothing, and some weeks I need to buy things like clothing and shoes without holes).
TOTAL EXPENSES: $922/month or $11064/year at the current rate

I don't have any assets, but I also don't have any debt aside from that $1600/month loan payment I can look forward to come December. The average starting salary in my field is about $36,000, so I do have that to look forward to. So:
TOTAL MONTHLY DEBT (outside expenses): $1600
ESTIMATED FUTURE SALARY: $36,000/yr

I hope that is sufficient--I'm not used to writing things out like this yet (or letting strangers review what there is of my finances, either). My parents have been muttering anxiously about me paying $20,000 of my gross income on student debt, and it makes me wonder if there's any hope of my becoming financially secure by age 35. I'd love to move into an apartment I don't have to share, too, which would raise my expenses past the nice slim $11,000/year that I'm currently coasting at.

Any suggestions for a junior Mustachian? Punches in the head for having eaten pizza with my potential savings during college? A glimmer of hope in the long, dark tunnel of significant student debt? A free lesson in Cohabitation for Introverts 101? Your attention is 100% appreciated.
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: iris lily on June 29, 2014, 11:00:13 PM
Your debt is monumental, my dear. I can't wrap my head around that plus your desire to be financially secure at age 35 (does this mean retired?) plus you don't want to share an apartment, plus you have job prospects in-- what, exactly?

And you are prattling on about payment to Pandora? Your monthly expenses are $922 and you are making about $100/month?

This almost seems like a joke thread. I rather hope that it is.

Well, onto practical advice: You have advantage in that you are young and you don't have family responsibilities (wife, kid.) The only thing I can think of is something along the lines of doing what the guy who lived in his van did to knock off about $75,000 in student debt. He wrote a book about it, and mainly he spent a lot of time in Alaska, earning decent money, living VERY simply, and socking away money for the debt. He was disciplined and principled. Pandora didn't figure into his lifestyle.

Google his story: Ken Ilgunas, and the book is Walden on Wheels.
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: oloxo on June 29, 2014, 11:10:14 PM
Oh no! I don't want to be a joke thread.

I'm not looking to be retired by 35 (I love what I do for a living)--just to be out of debt and have some nice savings built up so I don't have to worry constantly about money like my parents do.

I'm in an awkward stage right now with expenses and income--I'm still riding out the end of my lease and haven't secured a job yet. I do have a $3000 dollar stipend from winning an entrepreneurship fellowship, which is paying those expenses, thank goodness (but which I apparently forgot to mention. Silly me.) If I don't secure a job by September, I'll be moving home with my tail between my legs, and my expenses fall to about $80/month for things like gas.

I hope that clarifies things more? (Except for the Pandora subscription, which I accept with shame.)
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: Nudelkopf on June 29, 2014, 11:17:35 PM
Any suggestions for a junior Mustachian?
Welcome.

1) Get a job that pays money, greater than $922/month.
2) Pay off your student loans.
3) Save.

Done.
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: thepokercab on June 29, 2014, 11:24:56 PM
If I were you, i wouldn't think about moving back home as a bad thing.  Your debt is huge my friend, and if you can get some free rent from your parents while working; and can attack that student loan with gusto, i would do that.

Unless you plan on landing a 100K job, living in an apartment by yourself is a luxury you can't afford. 





Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: MDM on June 29, 2014, 11:50:55 PM
I'm not making any formal income
^ Everything else pales in comparison to this.

In brief, you can either "get a job" or "start your own business".

Seems you should be spending more or less every waking moment on applying for jobs and/or developing your own business opportunities, whichever appeals more to you.  What things are you doing toward these ends?
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: surfhb on June 30, 2014, 12:13:29 AM
Yeah you need to find work and move home with the parents to tackle this debt.    I don't see any other option. 

My entire college education cost $8000 only 20 years ago....how did this happen in this country?

What was your line of study?
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: bobsmiley on June 30, 2014, 01:24:20 AM
first off welcome to the forums. A lot of the people here are much more aggressive then most other forums, but you seem like you can handle it.

I graduated in 2010 with $130,000 in private student loan debt and a music degree with very little potential of making a lot of income. I married that summer, and was faced with the same prospect you are now. I decided to freelance programming before trying to get a job with my degree that doesn't apply to any field, and I made around $900 / month for the first few months, my wife, despite her pregnancy, worked and made around $1000 / month. I was determined to make it work and become "stable", and I spent every waking hour prospecting and working the freelancing gig to stave off a crappy job.

in 2011 my wife stopped working to be a stay at home mom. In 2012 we bought a house, and in 2013 we had our second kid. I now live right on the bay in California making six figures programming for a startup because one of my clients happened to like me.  Throughout the hardship of finding a job on top of that we had a minimum debt payment of $16,000 a year (why taxes don't take this into account I don't know.) and we were still fairly happy. Now that I have a decent income we are making headway on the debt, we have around $105,000 total $95,000 of which is the original student loans. I'm hoping to be debt free by 2020 regardless of whether or not this job is around for another 6 years.

Don't give up you can make it. My first year I made $25,000 freelancing. You just never know where your next big windfall will come from.

I am always looking for good techies, you should drop me a line and show me what you got - BradSpark.com

best of luck
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: little_owl on June 30, 2014, 03:19:18 AM
Oh no! I don't want to be a joke thread.

I'm not looking to be retired by 35 (I love what I do for a living)--just to be out of debt and have some nice savings built up so I don't have to worry constantly about money like my parents do.

You love what you do....freelancing for $100 a month?  And you somehow racked up over $100k for a degree in....design?  Oh, my.

So you need to get a real job, yesterday.  And move in back with your parents if they will let you.  Until you start making real money (based on your debt, over $55k, ideally more.) What are you doing to fid a job???  This should be the focus of your every waking moment.  And possibly your dreams, too.

You are typing about things like roommates, Pandora....YOU HAVE NEGATIVE MONEY!  Good luck finding gainful employment.
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: boarder42 on June 30, 2014, 05:04:54 AM
i'm really curious how/why debt of 180k was run up to obtain a degree that you're hoping pays you 36k per year.  my mind is currently blown
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: Gray Matter on June 30, 2014, 05:58:19 AM
How does this level of student debt happen?  I know MMM is all about personal responsibility, but I think the lenders have some culpability here as well.  It's ridiculous to lend someone with few job prospects $180K!

And are young people not told the "rule" that your total student debt when you graduate should not exceed your expected first year's salary?  Things would feel very different if you were facing $36K of debt right now instead of $180K.  Many people here have proved you can dig out from this hole you're in, but it's going to require lots of dedication and making this your number one priority for years to come.

As others have said, I would not even contemplate sharing an apartment right now, much less having your own apartment.  Move back home, put your nose to the grindstone and start digging!
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: totoro on June 30, 2014, 06:00:13 AM
From the stranger on the internet perspective your choice to borrow $180,000 to get a degree for a job that pays $36,000 a year was not wise.   That said, you've done it and maybe it will all work out very well for you. 

However, in the meantime, if I was in your shoes I'd be trying to get a job.  I would have started applying in my last year of school  knowing that I would have to pay back the loans. 

I would also research the loan terms.  What are the rates - are some higher than others?  Maybe it makes sense to pay those first.  Some people have posted about loan forgiveness and reduced payments over time due to low income.  I'm Canadian so I'm not sure.  Here loan repayments are scaled to income.   In short, you need to understand the rules and knowing that you are paying $1600 a month come December is not enough. 
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: dude on June 30, 2014, 06:17:36 AM
holy shit, I have no idea what the earning potential for someone trained in "product design" is*, but $180K?  Wow, just wow.

*and if it's not much more than $36K, I really can't imagine how anyone would be free of such debt in anything less than like 50 years . . .

Sorry, not helpful, I know.  It's just that, like others, I find it pretty mind-blowing.

But I wish you the best of luck.  Stay optimistic, is all I can say.
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: Neustache on June 30, 2014, 06:45:37 AM
If I were you, I'd be looking for anything (AND ANYTHING MEANS NOT IN YOUR FIELD).  Entry level positions at big corps pay close to 30K a year, plus decent benefits, depending on your skillset, and then get a part time job on top of that.  Make sure you have a day off to shop and meal plan, though, otherwise you'll blow all the extra money you could have sent to debt.

Move to your parents house, STAT!

You can do it.  But you are going to have to act like this is an emergency.  You could, easily, make 40K working two jobs assuming you can get the jobs in the first place.  If you do this while living with your parents, and with minimal expenses, you could have this mess cleaned up in 5 or 6 years.  Because...wow.  Alternately, start looking for a doctor/lawyer who has already paid their loans back and marry!  That's seriously the only way I see you getting out of this before 6 years, while living with your family that entire time. 

Good luck to ya!  Hope to see you've accepted a job, any job, by the end of next week. 
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: oloxo on June 30, 2014, 07:09:24 AM
Thank you everyone!

Anyone who knows me knows I'm not afraid of work, so in a macabre sort of way I'm pleased to see that the biggest chorus in the thread has been to (keep) applying for jobs.

In response to some of the consternation about my low level of freelancing income: being aware that I was spending altogether too much money for university, I was determined to get the most I could out of the place, and spent the last four years doing 17-19 credit hours per term in a rigorous program based on ten-week cycles (which, if you aren't familiar, attempts to squeeze entire 15-week semesters into less than two months. This was a heart-pumping education, my friends.) on top of working at the local library for pocket money. I just graduated about a week ago, so I'm still on my wobbly first legs as a freelancer, if you will.

Since I'm tied to Philadelphia for the aforementioned entrepreneurship fellowship until August (and hopefully launching my first product this year, fingers crossed) I do have the opportunity to expand my client list and hone myself as a freelancer. I understand at least some of you are probably pros at self-employment by now, so if you have any tips on getting yourself out there (and PAID!) I would be delighted to hear them. I have a broad range of skills, having done everything from becoming bilingual English/German to getting woodshop certified during my time at university, and it's been interesting at best trying to describe "what I do".
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: horsepoor on June 30, 2014, 07:54:41 AM
You need to develop a side hustle if you can't ramp up the freelancing and/or if it's not something you'll be able to continue to do once you get a job.

With a $36K job and that amount of debt, you need to be working evenings/weekends to bring in more cash flow.  Plain and simple.  Work at Starbuck's, mow lawns or anything else you can think of.  I do hope that your earnings potential ramps up substantially from that starting salary, otherwise, you've got a long row to hoe.

And yeah, move home now if you can.
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: nereo on June 30, 2014, 07:56:15 AM
oloxo

welcome.  your debt freaks me out, but I've also seen worse.
Two points. 
First point: Your debt from your SL will be $19k/year.  If you add on a very mustachian budget for the next decade, you'll likely need another $12k-15k to live on.  THat means your after-tax expenses will be a bit north of $30k.  A $36k/yr job will have you just treading water after taxes.  Consider moving back home, living with (many) roomates, etc.    Anything to keep expenses down. And of course you need to find a way of earning a lot MORE than $36k if you hope to do more than tread water. Which leads us to...

Second point: Make sure you know and understand the income-based repayment options.  These may apply to you.  But beware that it can be a double-edged sword - you may lower your monthly SL payments and get debt forgiveness after 15 or 20 years, but the equation can flip on you if you suddenly get a well-paying job several years after you've payed just the minimum (and accumulated lots more interest).

If you'd like some further advice (and if you'd like to give several readers of this forum heart palpitations) list out what loans you have, what their interest rates are, and any special circumstances (e.g. Stafford loans or Parent loan).
Cheers and good luck
N
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: AH013 on June 30, 2014, 08:15:45 AM
I'll echo some of the statements previously cited

You need a job.  Regardless of how much you cut your expenses down to, your net will always be negative when your income is $0 (or $100/month).

$180k for an education in a field that pays $36k IF YOU CAN FIND A JOB, with seemingly not great job prospects (seeing as you're unemployed working what I'm hoping amounts to less than 2 hours / week of work if you are only pulling $100/month)...regardless of how hard you worked in school, this was not a smart move.  You'll be paying half your salary towards just that debt alone for the next 15 years before you're finally out from under it.

Move back home.  As embarrassing as this may be, you won't survive on $100/month freelancing or even the tiny amount leftover from $36k gross after $19.2k net is paid to Uncle Sam.  Pay your parents rent.  Pray to god your earnings capacity accelerates quickly, because you could have earned $31k in certain parts of this country flipping burgers and it wouldn't have required you to spend $180k learning a little bit of everything.  Sorry if this pops your bubble, but moving into your own apartment or how annoying ads are is the last thing you should be thinking about.

 
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: randymarsh on June 30, 2014, 08:28:05 AM
Reality check:

36K per year is about $1,100 every 2 weeks. Most months you'd have $2,200 to work with. After your SL payment, you have $600 to live off of. Even with roommates, I don't see how you can survive. Rent, health insurance, cell phone, car insurance, gas, groceries, etc. Even if you could, you wouldn't be saving anything and your debt wouldn't be paid off until 2027. If you're 22 now, you'll be starting to save/invest when you're 35.
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: rmendpara on June 30, 2014, 08:30:59 AM
Yikes. That's terrifying.

First priority is to start working. Don't be picky (it seems you are). We need more entrepreneurs, but most entrepreneurs are working 2-3 different jobs in the beginning while building their business(es). You may have to work away for 1, 2, or 5 years until you find a product that sticks and you can grow... but in that time you still have to eat, sleep, and pay your loans.

Get used to the fact that you'll be working 55+ hours/week for the next decade (whether working on your business, part-time work to pay the bills, whatever).

I'll resist the facepunches for taking on $180k in debt for a degree that won't help you. Do you need a degree to be an entrepreneur? Anyway, I hope you make smarter decisions in the future. Own your mistake(s), and more importantly, learn from them. That is what a successful entrepreneur does.

Good luck!
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: Malaysia41 on June 30, 2014, 08:51:25 AM
Enough people have been stating the obvious on what to do here so I'll skip to my question:

Did that $180k buy you a BA degree?  A masters?  A PhD? 
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: Frugal Father on June 30, 2014, 09:17:57 AM
Just remember to resist the temptation to spend windfalls. If you have a good month/year/bonus/whatever, put it straight towards the debt.
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: big_owl on June 30, 2014, 10:05:06 AM

In response to some of the consternation about my low level of freelancing income: being aware that I was spending altogether too much money for university, I was determined to get the most I could out of the place, and spent the last four years doing 17-19 credit hours per term in a rigorous program based on ten-week cycles (which, if you aren't familiar, attempts to squeeze entire 15-week semesters into less than two months. This was a heart-pumping education, my friends.) on top of working at the local library for pocket money.

 I have a broad range of skills, having done everything from becoming bilingual English/German to getting woodshop certified during my time at university, and it's been interesting at best trying to describe "what I do".

Not to pile on, but I am very interested in what school program you ended up in and how it worked out to be $180k!?  I went to a private engineering college with a similar program - 12 weeks on/12 weeks off (co-op'ing) and the credit load was usually 20-24 credit hours per 12wk term.  The lowest number I ever had was 18 in a term and the max was 24.  I graduated with a BSEE, over 190 credit hours total, and 6 credit hours short of a minor in applied mathematics.  All that for about $60k in a private school...plus the co-oping at $12-16/hr during the off periods! 

I could have gone to college three times and had BS-engineering degrees in mechanical, electrical, industrial, chemical, and computer science for what you ended up paying.  Woodshop certified!?  Are college costs really this out of control now?  Something just isn't adding up to me on this one.
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: Jack on June 30, 2014, 10:33:32 AM
Current expenses:
Rent is $585/month until the lease is up in August. I'm making $25/month payments on loan interest (with the grace period running out in December of this year) and $3.99/month on Pandora One, since the ads drive me crazy and I refuse to pay for iTunes.
I spend about $43.00 a week on groceries and average $20.00 on transport and beer/entertainment per week. Having seen the wisdom of some of Mr. Mustache's principles regarding luxury spending, I estimate that I now spend $15/week on Miscellaneous Items, averaged out over the year (since some weeks I buy nothing, and some weeks I need to buy things like clothing and shoes without holes).
TOTAL EXPENSES: $922/month or $11064/year at the current rate

If I don't secure a job by September, I'll be moving home with my tail between my legs, and my expenses fall to about $80/month for things like gas.

Your expenses are not $922/month (or $80/month if you moved back home)!

Your expenses are $2522/month (or $1680/month if you moved back home).

And that's (almost) bare-minimum, without including anything that actually provides enjoyment to your life!

I don't care if your loans are currently in deferral; it still means that you are currently operating at a $2422/month deficit!

It is clear from your posts that you are in denial about this. (You may not think you are, but you are.) You need to go think about the situation long and hard, and only when you feel a sense of panic wash over you and say to yourself "holy shit, what have I done?!" will you fully understand the situation you are in.

You need to move home ASAP, regardless of any other circumstances. You need to drop your Pandora,  beer/entertainment, and miscellaneous items budgets to $0. You need to spend as many hours per week as possible working (and by "working" I mean "doing things that cause people to pay you," not putting uncompensated effort into your freelancing -- if you want to be entrepreneurial, do that instead of leisure activities). You need to find the highest-paying jobs you can, regardless of whether they have anything to do with your degree (and certainly regardless of whether you like them or not).
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: Chrissy on June 30, 2014, 10:52:04 AM
Live with your parents, cut every expense and luxury, get as many jobs as you can.  Look for house-sit/pet-sit gigs, which sometimes pay a little money, require no real giant commitment, and put a roof over your head.

Your college advisor, professors, and career office should help you land a job, but you should be persistent.  Like in their faces.  You paid them a ton of money, and, until you have a job, they're not done working for you.

Mustachians, did you notice that 180k in SLs is on top of scholarships???  Doesn't it seem like someone scammed this student?  I'm interested to hear other posters' thoughts about oloxo attempting to declare bankruptcy.  I've heard that SL debt can be discharged in extreme situations, and oloxo's situation is bonkers. 
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: neophyte on June 30, 2014, 11:13:23 AM
UPenn?  I think 4 years there is approaching $250,000 now....

Basically echoing other posters.  Drop the Pandora. Use Jango if you can't take the ads; if you login through Facebook, I think you only get 1 ad per day. Strike alcohol/entertainment/eating out from your budget. Walk/bike as much a possible to cut transportation costs. You don't say how many hours per week your unpaid work is, but you should try to find work, any work, that you can do outside of that. Waiter, cashier, etc. whatever brings in any money. Bonus if it is in your field, but you don't have the luxury to wait for that. Do you have things you don't need or don't use much?  Can you sell them on craigslist/yardsale to make a few bucks to throw at the loans? You have roommates, will they pay you a couple dollars to wash and fold their laundry? Walk their dog? Another idea to consider is teaching English in a foreign country, if you find a gig that provides an apartment, you can be pretty frugal and throw most of your salary at your loans.
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: rmendpara on June 30, 2014, 11:14:49 AM
Live with your parents, cut every expense and luxury, get as many jobs as you can.  Look for house-sit/pet-sit gigs, which sometimes pay a little money, require no real giant commitment, and put a roof over your head.

Your college advisor, professors, and career office should help you land a job, but you should be persistent.  Like in their faces.  You paid them a ton of money, and, until you have a job, they're not done working for you.

Mustachians, did you notice that 180k in SLs is on top of scholarships???  Doesn't it seem like someone scammed this student?  I'm interested to hear other posters' thoughts about oloxo attempting to declare bankruptcy.  I've heard that SL debt can be discharged in extreme situations, and oloxo's situation is bonkers.

The barrier to getting student loans discharged is VERY high.

It typically involves personal injury or health issues which prevent you from working full time, or getting employed in your field. At some point, the judge/mediator/whoever has to believe you are unable to repay your loans due to extreme circumstances.

$180k in loans, while alarmingly high, is not yet approaching impossible to pay back over a lifetime.

Not to put more salt on the wound, but it doesn't work for people who made dumb decisions and want out.
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: totoro on June 30, 2014, 11:24:47 AM
Thank you everyone!

Since I'm tied to Philadelphia for the aforementioned entrepreneurship fellowship until August (and hopefully launching my first product this year, fingers crossed) I do have the opportunity to expand my client list and hone myself as a freelancer. I understand at least some of you are probably pros at self-employment by now, so if you have any tips on getting yourself out there (and PAID!) I would be delighted to hear them. I have a broad range of skills, having done everything from becoming bilingual English/German to getting woodshop certified during my time at university, and it's been interesting at best trying to describe "what I do".

Sorry to come back and be so direct but did you apply for any and every job you could get?  Is no-one willing to give you PT employment in any field? 

Why are you not working right now?  You are talking about expanding your client list and becoming a freelancer.  That me be well and good but you need to find work in any field asap.  You can keep going with the freelance work at the same time.

We are all alarmed about your situation.  Your level of alarm is not reflective of an awareness of the difficulties you are facing with this level of debt.  It is not about trying to describe "what I do", it is about getting a paying job.  Identify where these jobs are and get one.
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: Numbers Man on June 30, 2014, 12:08:22 PM
The key is to get a job in the $36k range. You need to live with your parents for awhile. I'm assuming that they didn't pay any of the college costs so you borrowed everything. I'm not going to judge regarding the amount of the loan. You'll be able to make your monthly loan nut. It would also help to work another part time job to whittle that loan down. In ten years your loan will be paid off if you borrowed from the government. But with your income rising over the years, you'll eventually be able to move out of your parent's home.

It will never be paid off if you don't start paying when it comes due. This is the trap that most people get into, deferring the loan or the income based payments while the loan balance balloons with unpaid interest.
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: LibrarIan on June 30, 2014, 12:10:13 PM
...On top of working at the local library for pocket money.

Being a librarian this caught my eye. During your schooling (which apparently cost a boat load) you were working for pocket money?! What in the literal fuck? What happened to that job? Get it back! Now! They pay real money. It might not be ton, but it's better than nothing until you find a higher paying one. Plus, with some experience you can get a higher paying job in libraries as well. I know Philly isn't the friendliest place on Earth to libraries right now, but dude, you need a job.
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: shotgunwilly on June 30, 2014, 12:20:44 PM
I too cannot fathom how in the world someone racks up $180k in debt on a (I'm assuming since job prospects are 36k/year) bachelors degree.  This is the kind of debt doctors have when they get out of school.  You had to have been blowing money on stuff other than tuition, books, and housing.  Blowing ALOT of it.  Sorry to be blunt, but this is the type of debt that people get stuck with the rest of their lives.  It's very possible to get rid of it, you are just going to have to suck it up and sacrifice alot and hustle.
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: Neustache on June 30, 2014, 12:24:00 PM
I too cannot fathom how in the world someone racks up $180k in debt on a (I'm assuming since job prospects are 36k/year) bachelors degree.  This is the kind of debt doctors have when they get out of school.  You had to have been blowing money on stuff other than tuition, books, and housing.  Blowing ALOT of it.  Sorry to be blunt, but this is the type of debt that people get stuck with the rest of their lives.  It's very possible to get rid of it, you are just going to have to suck it up and sacrifice alot and hustle.


Probably should be another topic, but I went to community college, then lived at home while I finished up at the local university.  I had some scholarships, and the whole degree cost maybe 15K.  This wasn't that long ago, I graduated in 2007.  I mean....wow.  Sorry, OP, we are just all a little shocked.  I hope you are, too. 
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: cbgg on June 30, 2014, 01:12:30 PM
Wow....

You need to work work work and you need to make a hell of a lot more than $36k/year.  If I were you I'd move to a city that has disproportionately high incomes (San Fran/New York/etc), get the best job you can, work on the side, and continue with a hardcore student lifestyle (that you maybe did not live in uni?).  Roommates, beans and rice, etc.  This is an extreme situation and you don't seem to realize that your hair is on fire...

Seriously though, how did you get this much debt?  And since you knew you were spending this kind of cash, why on earth would you spend your extra time piling on extra credits instead of working part time to reduce the amount of debt you needed to get by?  Education is a good thing, but there is a limit to it's usefulness.  It's highly unlikely that anyone will care that you graduated having taken 20 more credits than the next guy.

I'm sorry, but wow. 
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: 4alpacas on June 30, 2014, 01:22:33 PM
I'm going to try to stay positive.  Right now, you need to make money.  Try Taskrabbit.  Look for retail positions.  Scour Craigslist for positions or start selling your stuff.  Also, you could start donating plasma. 

Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: sleepyguy on June 30, 2014, 01:41:12 PM
WOW, close to 200k with zero job prospects... wow.  I'm all for university and higher level thinking or whatever IF you got the funds.  You clearly didn't do your research (or math) but i guess that's all in the past now and you gotta deal with what's in front.

I'll be blunt... if your field sucks... get something in SALES.  Why?  You can get a very high salary in a short time period... obviously you'll need the social skills and a bit of snakeoil (lol).  Go get your real estate license (wait do you even have a car?).  You need something with some earning potential right away.

Not sure what else to say, read the $50k+ jobs that MMM posted awhile back in a 2 part series.  $100/mth is doing you no favors.

Good luck!

I too cannot fathom how in the world someone racks up $180k in debt on a (I'm assuming since job prospects are 36k/year) bachelors degree.  This is the kind of debt doctors have when they get out of school.  You had to have been blowing money on stuff other than tuition, books, and housing.  Blowing ALOT of it.  Sorry to be blunt, but this is the type of debt that people get stuck with the rest of their lives.  It's very possible to get rid of it, you are just going to have to suck it up and sacrifice alot and hustle.
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: frugaliknowit on June 30, 2014, 02:06:38 PM
Sorry for all of the facepunches you've received.  What's done is done, so let's move on.

Reality check:  At 36k, my back of the envelope says you'll be bringing home about $2250. 

Paying rent (as in your own/shared place):  Fagetaboudit!  (sorry!).

You need to be freaking awesome in attacking this debt via multiple sources of income.  Travel, partying, going out to eat, is on hold.  Think of yourself as a warrior who has been drafted to go to war until his $180k is paid off.  The sooner you pay it off, the less overall pain you will experience.  You need to eat, sleep, and work (that's pretty much it).

Instead of working for someone else, can you somehow leverage living at home by starting a business that has good prospects of you earning more than you would as an employee?   Freelancing on the side?
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: Jennifer in Ottawa on June 30, 2014, 02:12:28 PM
... I'm optimistic about that but not sure I'll be making much more money any time soon.

Tough love incoming.  Dreamtime is over.  Fantasyland has faded away, and you have been deposited on the cold hard shores of Adult-land.  Time to wake the hell up.

Yes you will be making more money soon, and you will almost certainly not like it, but that's too damn bad.  You have a grownups debt.  You have borrowed other people's money and not paying it back is not even remotely an option, so you will be making more than 100/month in the near future.

You are going to have to set aside your dreams which other people have foolishly been entertaining for the past few years, and you are going to have to sell your time to other people.

Once you have established some level of work experience and credibility, you can feel free to become an entrepreneur.

In the interim, take any job that requires a breathing human being, at any wage.  You are not "too good", "too educated" or "too special" to flip burgers, sweep floors or guard warehouses at night.

While you are doing these things, keep applying to firms who would employ someone with your degree.  Working at the other jobs, while keeping body and soul together, you will be demonstrating many other things of value to employers: work ethic, ability to show up on time, initiative, problem solving, diligence, team work, maturity.

Once you are employed in your field, take college courses to expand your knowledge, skills and credentials.  If your expensive degree is valued so little that the average salary is below the American average, then you need to bust your ass to get the credentials that people will actually pay for.

Above and beyond adopting a mustachian way of life, you NEED to increase your earning capacity.  People will pay you to fill their needs.  If your aspirations are aligned with meeting those needs, fantastic.  But it seems that they aren't.  So bust your butt to change that.  I can dream of a life as a Wheel-wright all I want, but I've no-one to blame but myself when the wagons that need wheels fail to appear at my door.

You CAN repay this debt.  You CAN establish a life, own a home, own a car, save for retirement, have a family if you so choose, and retire earlier than most people.  But this requires you to get your head out of the clouds, roll up your sleeves and get dirty.
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: iampatriciag on June 30, 2014, 02:33:47 PM
Listen, I moved from Canada to America a few years ago (in my late twenties) and spent six months as a 'freelancer' while I waited for call-backs on the multitudes of applications I submitted for work in my field.  I have a Master's degree and for a while there, I thought I would never find "real" work and so I worked really hard to make freelancing my permanent, profitable, "real" job.  My average earnings during that time were $1200/mo.  Freelancing is simply not as profitable as a traditional job.  I know there are exceptions, I know, but you don't have the time to build credibility, a professional network, and experience in freelancing as your primary income right now.  Do it as your side-hussle, your 2nd, 3rd, or 4th job, but get a steady paycheck in a traditional job your top priority.

You've borrowed more for your education than I did for my first house, and I have 30 years to pay it off!  This is a serious, serious debt load.

Do not despair, but by all means, do not take this as lightly as it seems you are.

Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: Mr Mark on June 30, 2014, 04:01:32 PM
http://demotivators.despair.com/demotivational/mistakesdemotivator.jpg

Get cracking. You can't even bankrupt your way out of that. Maximise income and minimise expenses. Fast.
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: Neustache on June 30, 2014, 04:31:55 PM
I think there'd be less face punches for the past mistake if there was an indication that the OP realized the seriousness of the situation. 
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: MarciaB on June 30, 2014, 04:44:59 PM
And we still don't know what the degree is in, right?

Around here $36,000 is the starting salary for a public school teacher. So my first thought was something along the lines of an art degree that was going to be put to use by a high school teacher.
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: cbgg on June 30, 2014, 04:58:12 PM
Everyone here is trying to give you a great big wake up call, which I think is good, but I also wanted to give some positive encouragement.

On a salary of $45,000 I was able to save up $75,000 in 3 years.  Your debt load IS doable if you put your mind to it.  I don't think of myself as being too extreme, but I did things such as lived with roommates, was frugal with grocery shopping and going out, and continued to drive the (purchased with cash) car I had in uni.  There were many things I could have done to be more frugal (such as not owning a car) or to have earned more money (second job, job hopping).  I also had some advantages that you don't - since I was working to build my positive net worth, not climb out of debt, I was able to take advantage of some significant tax shelters that brought my taxable income percentage way down.

Anyway, I just wanted to tell you that while all the advice you are getting here is correct, if you dedicate yourself to this seriously you CAN and WILL eliminate this debt.  Get out there and get hustling.
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: daverobev on June 30, 2014, 05:29:07 PM
OP, along with everyone else, I'm sorry to say it reads like a troll thread. Good on you, if it's not, that you're asking for advice. Hopefully you can work your way out of it. You've probably had enough of everyone going 'OMG' at you.

Still, the US is nothing if not the land of opportunity. Rags to riches, and all that. Just... yeah don't kill yourself. (Both literally and metaphorically). There is more to life than money, and if you have dedication you can dig yourself out of what sounds like a huge hole.
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: Malaysia41 on June 30, 2014, 05:32:34 PM
http://demotivators.despair.com/demotivational/mistakesdemotivator.jpg

Get cracking. You can't even bankrupt your way out of that. Maximise income and minimise expenses. Fast.

Goodness.  I think we may be driving OP'er away.  He can recover (but dear GOD that is a lot of student loan debt).
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: mozar on June 30, 2014, 05:50:20 PM
I don't think it's a big deal if he is a troll.
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: neophyte on June 30, 2014, 06:31:35 PM
I'm not sure if it's a troll or not.  But I think it's entirely possible it's not. The top (priced) schools are now running about a quarter of a million for a 4 year bachelor's.

As for the OP's attitude, well, as my mother says "Sometimes you have to laugh so you don't cry."  So hopefully they keep laughing, but get to attacking that debt.  They're going to need a good attitude to get through the next few years.
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: zenandtheart on June 30, 2014, 07:37:07 PM
So... I'm new to this forum, and after reading MMM's positive blog posts, I'm surprised to see the level of cynicism repeated over and over in this thread. Over half the posts are a riff on "OMG you're screwed how did you rack up that much debt?!?". If oloxo is earnestly asking for advice, the point has likely sunk in. Are regular posters always this helpful?

First, let's reframe things a little bit. For anyone who hasn't been to college in the last 10 years, or hasn't been exposed to the world of private universities, $180K in loans is not uncommon if you weren't able to put up money yourself. Heck, places like George Washington U. charge $40K a year in tuition, and that's not even an "elite" school (cue angry alumni). Try any Ivy League or equivalent, and you're in the same ballpark. You can question the wisdom of taking on such loans (valid), or argue we're in an education bubble or that XYZ Community College taught you underwater basketweaving better than Harvard ever could. However, hundreds of thousands of people choose this path every year.

Now, for a way out: oloxo, it sounds like you need to change your expectations. You say your degree is in product design, from a good school. Yet the average starting salary for your position is $36K? Something is off here. Good product designers are in high demand, and a good education should open doors for you that aren't available to the "average" applicant. A cursory Google search tells me that the median for PD is closer to $50K, and some sites have an average of $75K. That's more like it.

Are you looking at design jobs that pay well? Find niches that do. Do you have a portfolio? If not, make ends meet until you get one. Have you practiced interviews? Do it. Finally, the most important thing: confidence. You'll never get a $75K position if you're only expecting a $36K one. You have the education and skills, so go out and use them. Even with no work experience, I'm guessing you can find a job that pays above average if you put in the work.
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: plantingourpennies on June 30, 2014, 07:49:13 PM
She isn't a troll.

OP-good luck.

Best,
Mr. PoP
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: randymarsh on June 30, 2014, 08:28:17 PM
So... I'm new to this forum, and after reading MMM's positive blog posts, I'm surprised to see the level of cynicism repeated over and over in this thread. Over half the posts are a riff on "OMG you're screwed how did you rack up that much debt?!?". If oloxo is earnestly asking for advice, the point has likely sunk in. Are regular posters always this helpful?

First, let's reframe things a little bit. For anyone who hasn't been to college in the last 10 years, or hasn't been exposed to the world of private universities, $180K in loans is not uncommon if you weren't able to put up money yourself. Heck, places like George Washington U. charge $40K a year in tuition, and that's not even an "elite" school (cue angry alumni). Try any Ivy League or equivalent, and you're in the same ballpark. You can question the wisdom of taking on such loans (valid), or argue we're in an education bubble or that XYZ Community College taught you underwater basketweaving better than Harvard ever could. However, hundreds of thousands of people choose this path every year.

Many posters have provided great advice. It's clear that the OP doesn't really get how massive their debt is and how badly they need income.

I graduated 2 months ago. It's EXTREMELY rare to have 180K in loans from undergrad. Period. Something like 3% of total borrowers have loans over 100K and that includes grad school. A large chunk of those are also doctors and lawyers who have much better income projections.

You're right that some do choose this path. And because of that choice, they need to fully realize what sacrifices will need to be made.
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: MrsPete on June 30, 2014, 09:12:26 PM
Okay, you're saying that you're $180,000 in debt and are hoping to score a $36,000 job -- I'm guessing you're an art school graduate?  AND at the same time you're hoping to upsize your lifestyle by getting your own place AND are hoping to retire in what will probably be about 15 years. 

You are in denial. 

The reality is that if you pay 50% of your salary towards your debt (including raises), you will need more than a decade to rid yourself of these loans, and every minute you wait the interest is piling up higher.  The reality is that you have already spent a decade of earnings. You are very much like an indentured servant. 

Other people have already suggested your best course of action:
- Move in with your parents NOW.
- Whatever money you have NOW, send it to the loan company TODAY.  It will forestall a small amount of interest from growing. 
- Spend 100% of your time searching for jobs (yes, jobs plural).  You need a full-time job AND sometime part-time. 
- Search for ways to cut back on . . . everything.  Search out free/low cost transportation, clothing, food. 
- Ditch all luxury spending.  Your hair is on fire, and this is not the time for luxuries.   
- Chart your loan payments.  Seeing your debt paid off can be rewarding, and it'll remind you of WHY you are doing this. 



Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: La Bibliotecaria Feroz on June 30, 2014, 09:17:05 PM
People have made good suggestions--moving in with parents if possible is certainly a great idea.

I don't know anything about your field and won't pretend to, but I will make this observation: The level of your debt is such that it will inflate the importance of your income. If you had no debt, the different between $30K and $50K would be in how long you needed to work and how many luxuries you could let yourself enjoy along the way. With your level of debt, it could be the difference between hanging in there and abject poverty.

If you are really determined to go freelance/entrepreneur, you could look for a job with hours opposite to when it would make sense to do most of your freelancing work (like tending bar at night--or if you are a night owl who does your best work at night, then the early shift at a breakfast restaurant or something). Good luck! Please check back in.
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: Miaow1 on July 01, 2014, 02:05:31 AM
As a Penn alum my suspicion would be Drexel not Penn. I am basing that on the trimester system. Also Drexel is unbelievably expensive.
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: YoungInvestor on July 01, 2014, 06:14:51 AM
If you're making 100$/ month, I'm guessing you're not working more than 5h/month on average. Saying you're building a network and all that is fine and dandy, but really, if you've never had a job, I doubt you can really build much of a network. Right now, if you haven't been able to double that income every month for the last few months (Which you haven't,from your post), what you're doing doesn't work.

Did you spend 4*40-5 = 155 hours looking for jobs in the last month? If not, job hunting is now your full-time job. Feel free to accept any freelancing that you may get, though.

Go ahead and find any job. Then find a second one. Then keep looking for a better one to replace either of them. Then replace the other one. Then that one. Nothing is beneath what you're currently doing

Eventually, you'll be making decent money. Right now, you're bleeding money at a rate of about 2500$/month. Even if you did find a job at 36k, I don't think you could pay for everything.

Being FI at 35 seems almost impossible. Being debt-free at 35 seems like a better objective.

At 180k + scolarships, I assume your university has a career center. Use it.
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: LibrarIan on July 01, 2014, 06:28:43 AM
I think we scared the OP away.
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: Jennifer in Ottawa on July 01, 2014, 06:29:38 AM
regular posters always this helpful?

This place is about tough love, not handholding and head pats, thus the term 'facepunch'.  Go back and reread the blog.  This place isn't for everyone, and that's ok.

However, hundreds of thousands of people choose this path every year.

Yes, which is why we attempt to facepunch people back to reality.  Massive debt with no means of repayment is just plain stupid.  It is a 'hair on fire' emergency.  Just because everyone around you manacles themselves to debt, drives big dumb cars, finances everything on credit cards, and has a massively negative net worth does not make it normal, or ok, or acceptable in any form.

This is why this place exists.  To wake people the fuck up.  This is a support group for the awakened. 


Good product designers are in high demand, and a good education should open doors for you that aren't available to the "average" applicant. A cursory Google search tells me that the median for PD is closer to $50K, and some sites have an average of $75K. That's more like it.

Are you looking at design jobs that pay well?

If you are going to attempt to help, at least try to get your head out of the clouds yourself.  You don't start at the middle or the top of a salary range fresh out of school.  This person needs cash and they need it now.  Any position that needs a breathing human will do for the time being.

Finally, the most important thing: confidence. You'll never get a $75K position if you're only expecting a $36K one. You have the education and skills, so go out and use them. Even with no work experience, I'm guessing you can find a job that pays above average if you put in the work.

Confidence isn't going to pay the bills and a kid that walks in with the "I'm so special" syndrome is going to have a hard time of it.  She needs a bite of a reality sandwich, not more coddling.

Coddling forums exist somewhere, but not here.
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: Jennifer in Ottawa on July 01, 2014, 06:31:16 AM
I think we scared the OP away.

Perhaps.  I think the 'FI by 30' thing is the only thing some people see, and just aren't ready for the how and why.
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: darkadams00 on July 01, 2014, 06:35:00 AM
Whether or not a troll, this was a good thread for my son just starting college to read, if for no other reason than to support our discussions about avoiding student loan debt at all costs. It's good for him to hear even anonymous Internet inputs that are more reasonable than what his friends in high school last year were repeating ad nauseum.

To the OP--my son worked 14 hours yesterday and is working 6/7 days this week as he piles up cash during the summer prepping for college. He works hard, plays hard, loves to socialize, but he's learned over the last year how to approach his friends and social life with respect to his personal and financial goals. If your personal goals allow you to work 20 hours per week doing start-up freelance work, then that's fine. If not, then you need to find out how many hours per week/what kind of job you need annually at $X level of income to meet your goals. Be realistic about your goals. Since you earned a college degree, then the Search function on this site and nearly any respectable finance blog should offer enough examples and advice to figure out the details. Heck, call Dave Ramsey's radio program. He'll give you free, one-on-one advice that works (but it will be similar to what's been said here with a more pointed delivery). Getting out of debt is his forte even if his personal finance advice beyond that is sketchy.

Finally, unless your parents are complete idiots about life and finances, talk to them. If they work or have successfully retired, have demonstrated reasonable decision making skills, own their own home, and overall enjoy a lifestyle that you would like to have, then ask them how they managed. They have a vested interest in your success, especially if you follow everyone's advice here to move back home.
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: libertarian4321 on July 01, 2014, 06:43:10 AM
I think the OP, while continuing to look for a job in his field (or, better yet, a more lucrative field), should take ANY job, even a part-time job delivering for Pizza Hut.  At least that way he will be earning some money to chip away at the debt (and a couple of nights delivering pizzas or whatever can earn him as much as he makes in a month of "freelancing.")
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: randymarsh on July 01, 2014, 06:43:16 AM
I think we scared the OP away.

OP pls respond.
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: Neustache on July 01, 2014, 06:56:23 AM
We very well may have driven the OP away...but at least for me, what I posted was out of genuine concern.  It felt like I had more concern for the OP's financial future than the OP did.  He/she needs a wake up call, and even if they don't post again, hopefully this thread helped them realize the seriousness of their situation.
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: mooreprop on July 01, 2014, 06:59:57 AM
I think it is possible to pay back this much money, and that you have received some very good advice about how to do this.  It will take some serious planning to make this happen, but it is great that you are thinking about this and have asked for advice.  Lots of "kids" today are putting their heads in the sand and continuing to think that it will "take care of itself" only to find out that they are getting further in debt by the minute.  Choose the path that seems best for you.  I like real estate, so I would use that route to make enough profit to pay off that kind of debt.   

 Outside of the box ideas should be considered.  For example, my daughter and son-in-law are paying off his student loans very quickly (2 years) by renting out rooms in their house.  Perhaps you could rent or buy on contract a very large house and then rent out rooms.  Do you like to travel?  Perhaps you could become a citizen of another country and start over without ever paying back your loans.   I hear Australia is a beautiful place to live.  (I got this idea on a radio program where callers were suggesting solutions to a man with $360,000 in student loans who was earning $60,000 per year.  He was sarcastically writing suicide poems since he saw that as the only way to escape his debt.)
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: Cpa Cat on July 01, 2014, 07:06:30 AM
First, let's reframe things a little bit. For anyone who hasn't been to college in the last 10 years, or hasn't been exposed to the world of private universities, $180K in loans is not uncommon if you weren't able to put up money yourself. Heck, places like George Washington U. charge $40K a year in tuition, and that's not even an "elite" school (cue angry alumni). Try any Ivy League or equivalent, and you're in the same ballpark. You can question the wisdom of taking on such loans (valid), or argue we're in an education bubble or that XYZ Community College taught you underwater basketweaving better than Harvard ever could. However, hundreds of thousands of people choose this path every year.

This is a load of garbage. I went for a Masters degree within the last five years. It did cost close to $40k for one year. And guess what? It also had a 99% pre-graduation employment rate for students. That's right. 99% of graduating students had job offers before putting on the cap and gown.

The OP, and many like him/her, went to Pirate School. They robbed her blind and then shot her out, homeless, powerless and broke into the streets. This was a good student. She had scholarships and a fellowship. And $180,000 bought her nothing. Worse than nothing, given the lost time.

But wait! She went to a nice school! It totally taught her the skills she needs to get a lucrative position! It helped her build contacts!

Oh, wait. Nope. I forgot - it was a Pirate School. It prepared her to make as much as a manager at Walmart (which she would probably be by now, if she had gone to work at Walmart instead of Pirate School). It did not help her network. She is on her own, trying to network now. A real school (like Harvard or Generic State School in the Midwest) would have had the whole "networking" thing done while she was there.

"This is how it goes these days" is the crap they tell you when they're stealing your money.
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: slugline on July 01, 2014, 07:36:40 AM
I'd like to think the threadstarter has been too busy earning to continue to follow up.
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: Mr Mark on July 01, 2014, 07:57:06 AM




The OP is in big trouble, on several counts.
- most student debt, esp. If government subsidised*, is unreputable. If you are homeless and bankrupt, you still owe the debt. You can't bankrupt your way out. Parents should be careful co-signing notes (don't) because the debt is reclaimable on you, even after premature death of the student!
* ( this forbes article says all student debt)

http://www.forbes.com/sites/moneywisewomen/2012/08/29/3-reasons-to-never-default-on-your-federal-student-loan/

Unfortunately,  the dash to get a degree plus  government subsidised and encouraged student loans, a predatory private loan industry, and a new predatory class of 'Universities' to take advantage of many.... including a background of big fee raises for the real universities, it is a mess. There are payment plan options apparently, income based, so dont panic. This is still a huge debt though, and other readers should not get into such a position. Average student debt is 30k at graduation, btw.





Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: randymarsh on July 01, 2014, 08:01:21 AM
The OP is in big trouble, on several counts.
- most student debt, esp. If government subsidized*, is unreputable. If you are homeless and bankrupt, you still owe the debt. You can't bankrupt your way out. Parents should be careful co-signing notes (don't) because the debt is reclaimable on you, even after premature death of the student!
* ( this forbes article says all student debt)

The Parent PLUS loan will be discharged upon the student's death or permanent and total disability. Parents cosigning private loans should take out a life insurance policy however.
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: iris lily on July 01, 2014, 09:17:10 AM
First, let's reframe things a little bit. For anyone who hasn't been to college in the last 10 years, or hasn't been exposed to the world of private universities, $180K in loans is not uncommon if you weren't able to put up money yourself. Heck, places like George Washington U. charge $40K a year in tuition, and that's not even an "elite" school (cue angry alumni). Try any Ivy League or equivalent, and you're in the same ballpark. You can question the wisdom of taking on such loans (valid), or argue we're in an education bubble or that XYZ Community College taught you underwater basketweaving better than Harvard ever could. However, hundreds of thousands of people choose this path every year.

This is a load of garbage. I went for a Masters degree within the last five years. It did cost close to $40k for one year. And guess what? It also had a 99% pre-graduation employment rate for students. That's right. 99% of graduating students had job offers before putting on the cap and gown.

The OP, and many like him/her, went to Pirate School. They robbed her blind and then shot her out, homeless, powerless and broke into the streets. This was a good student. She had scholarships and a fellowship. And $180,000 bought her nothing. Worse than nothing, given the lost time.

But wait! She went to a nice school! It totally taught her the skills she needs to get a lucrative position! It helped her build contacts!

Oh, wait. Nope. I forgot - it was a Pirate School. It prepared her to make as much as a manager at Walmart (which she would probably be by now, if she had gone to work at Walmart instead of Pirate School). It did not help her network. She is on her own, trying to network now. A real school (like Harvard or Generic State School in the Midwest) would have had the whole "networking" thing done while she was there.

"This is how it goes these days" is the crap they tell you when they're stealing your money.

This is a really good post! Among many good posts here.

"That's how it goes these days" is the same as "But Mom!!!! EVERYONE'S doing it!"
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: Fishingmn on July 01, 2014, 09:49:23 AM
If she works in government or as a teacher for up to 10 years she may be able to get some of it cancelled. This may not have been the career path she had in mind but could be a way out of some of that obscene amount of debt.

http://www.studentloanborrowerassistance.org/loan-cancellation/job-related/
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: nawhite on July 01, 2014, 09:56:32 AM
My wife and I graduated in 2010 with $180k between the 2 of us. $60k for me and $120k for my wife. We're down to 90k now and will have them all paid off by 2017. But this was with us earning a combined 90k-140k. A couple of recommendations that haven't been mentioned yet, one serious, one semi-serious.

Serious: Get yourself on the Pay As You Earn repayment plan: https://studentaid.ed.gov/repay-loans/understand/plans/pay-as-you-earn. This will limit your total student loan payment to 10% of your income and will forgive the balance at the end of 20 years (note though that you'll end up paying taxes on the forgiven amount so be sure to budget to pay off about 40% of the balance at the end of 20 years). Unfortunately, this will only help with the federal loans. Private loans can get onto income based repayment plans but these may or may not be forgiven in 20 years.

Semi-serious: Get an M.R.S. or a M.R. degree (get married to someone who makes a lot of money). Worked for a number of women I know, only a couple of men though.
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: nawhite on July 01, 2014, 09:57:44 AM
If she works in government or as a teacher for up to 10 years she may be able to get some of it cancelled. This may not have been the career path she had in mind but could be a way out of some of that obscene amount of debt.

http://www.studentloanborrowerassistance.org/loan-cancellation/job-related/

That program will only forgive a maximum of $17,500 in debt. The rest you're on your own for.
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: mozar on July 01, 2014, 12:33:14 PM
I went to
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: Tyler on July 01, 2014, 01:10:45 PM
Assuming the OP is still around, as someone familiar with the product design industry I have some constructive advice.

Based on your description, I'm assuming your PD degree is in the Industrial Design arena.  If not, skip to the next post.  ; )  While I'm a mechanical engineer, I've worked in PD with designers my entire career and know the industry well.  I'd also guess that you have a masters in PD based on the debt load (I know a few others with 6-figure debt that started in fine art and moved to PD in grad school), but a that's neither here nor there.  Your primary goal is to get a job.

The thing with PD is that it's a fickle field concentrated in a few major cities, and frankly Philly isn't one of them.  So to expand your options, you need to look in the PD hotbeds of Silicon Valley, Chicago, Boston, New York, and (to a lesser extent) Austin.  There are simply far more jobs in these places than anywhere else in your field.  So get on Core77 to research design firms & Coroflot to browse job listings, and be willing to move if you have to.  Your German fluency also struck a chord, as there are a few companies with offices in Germany that may particularly value this.  So use that to your advantage.  And with the woodworking skills, you may even look at model shops or manufacturing companies -- my wife works at a 3D printing company where they hire art majors (sculptors) to do hand finishing work.

I'd also recommend applying for internships.  Even if they don't pay that well, they're highly looked at in the design field by hiring managers and will both pad your resume and also help get your foot in the door.  Make sure you stay on top of CAD software -- especially Solidworks and/or Alias.  These days, if you're not fluent in surfacing, you're at a major disadvantage.  And of course, always keep improving your portfolio and sketching skills wherever possible. 

Hope that helps.  The debt sucks, but what's done is done.  Getting a real PD job will go a long way to getting you on your feet.
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: lum8re on July 01, 2014, 02:39:44 PM
My fiance is was in a similar situation. She had over 230k in student loans when she graduated from law school.

Her student loan monthly payments were originally 2,600 a month.

Due to there being a large number of lawyers in our area and few jobs, she went mostly jobless for 6 months, working part-time at a coffee shop and eating through most of her savings.  She finally landed a job for around 50k in the public sector, non legal but a job with a decent salary.  Even after finding her new job, she was still spending nearly her entire salary after taxes on her loans.

Two programs helped lower the payments and have created a plan for how she can avoid paying a majority of the high interest fees.  While she had about 25k in private loans, majority were fed loans that we consolidated and enrolled in the two programs below.  Her fed loan payment dropped from $2,400 a month to around $500.

1)The IBR (Income Based Repayment) program limits the maximum they can take from you for federal loans to 15% of your earnings after taxes.  If you earn below 150% of the poverty level, your loans are reduced to $0 a month.  The first 3 years while your in the IBR, any extra interest in addtion to your payments is paid by the federal government, meaning your loans while maybe your not even paying enough to cover the interest, will not increase the first 3 years of the IBR.  After 3 years, loan interest will accrue normally. This is only for federal loans and certain plus loans, not valid for private loans.

2)PSLF, the public service loan forgiveness program will forgive all debt remaining after 10 years of public service, working for nonprofits, fed, state, local or tribal government employees, including military or schools\colleges, or service full-time in AmeriCorps or PeaceCorps. This also is only for federal loans and certain plus loans, not valid for private loans. The best part about this program is that the payoff for the loans is not taxable.  So there is no tax burden to the repayment of loans unlike the normal loan forgiveness, (25 year program)  This program requires you be either standard repayment plan or IBR.

Good luck!

http://www.ibrinfo.org/what.vp.html



Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: happyfeet on July 01, 2014, 03:37:55 PM
I just do not understand that type of debt - why a person would ever take that on unless they had high income potential like a doctor.  Why would a parent allow their kid to assume that much debt?  It is almost criminal what these colleges can do.  They take your money and lots of it  from 18 year old kids - you get nothing but a piece of paper in many cases is not worth a whole lot in the job market.

You can get a great education for a fraction of what OP spent. As a parent I would never OK my kid assuming that kind of debt.

DD has a great job - $70,000 - and to purchase a home for $140,000 with 10% down -the hoops she had to jump through!  Like the bank wanted her company to write a letter and state she got the job on her own merits(she did) not because her dad worked there(he does - he got her the connection though). The company would not do that BTW.  And yet, hundreds of thousands of dollars are readily loaned to kids who will not be able to repay/struggle to repay.
Boggles my mind. 

I wish you the best OP.  Get a couple of jobs - live at home and pay off that debt. It is going to take you a while.
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: nawhite on July 01, 2014, 03:39:48 PM
If she works in government or as a teacher for up to 10 years she may be able to get some of it cancelled. This may not have been the career path she had in mind but could be a way out of some of that obscene amount of debt.

http://www.studentloanborrowerassistance.org/loan-cancellation/job-related/

That program will only forgive a maximum of $17,500 in debt. The rest you're on your own for.
I've never heard this and a quick google make it look like it is currently not capped but there is a proposal to cap it at $57,500 (would apply to new borrowers only?).
Not that I think this is the way to go but just want to make sure correct info is out there

I stand corrected. The $17,500 only applies to STEM and Special Ed teachers in the Teacher Loan Forgiveness program (its $5500 for all other teachers). Be aware though that a student will still have to pay taxes on the full forgiven amount of the loans in the year they are forgiven. So even if you have $200k in debt forgiven, you'll still owe about ~$80k in taxes. The forgiveness programs can be double edged swords because they can cause your balance to go up by allowing you to not pay enough to cover the interest and then still hit you with a tax bill at the end. Be careful.
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: nawhite on July 01, 2014, 03:46:37 PM
I just do not understand that type of debt - why a person would ever take that on unless they had high income potential like a doctor.  Why would a parent allow their kid to assume that much debt?  It is almost criminal what these colleges can do.  They take your money and lots of it  from 18 year old kids - you get nothing but a piece of paper in many cases is not worth a whole lot in the job market.

You can get a great education for a fraction of what OP spent. As a parent I would never OK my kid assuming that kind of debt.

It's an education thing. My wife's parents didn't have an expansive financial education like most people on this site. Because they didn't know what $120k in debt would do to someone making $30k per year, they didn't know that they should say anything when their daughter got into a school that charged 40k/year even though they couldn't help her pay for it. To them, they were just so excited their daughter got into a great school and they wanted the best for her, so they only said "here let me co-sign that for you."

They aren't dumb people at all. They just didn't know what debt like that does. These cases present the best case for financial education in schools that I know of.
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: YoungInvestor on July 01, 2014, 04:10:09 PM
I just do not understand that type of debt - why a person would ever take that on unless they had high income potential like a doctor.  Why would a parent allow their kid to assume that much debt?  It is almost criminal what these colleges can do.  They take your money and lots of it  from 18 year old kids - you get nothing but a piece of paper in many cases is not worth a whole lot in the job market.

You can get a great education for a fraction of what OP spent. As a parent I would never OK my kid assuming that kind of debt.

It's an education thing. My wife's parents didn't have an expansive financial education like most people on this site. Because they didn't know what $120k in debt would do to someone making $30k per year, they didn't know that they should say anything when their daughter got into a school that charged 40k/year even though they couldn't help her pay for it. To them, they were just so excited their daughter got into a great school and they wanted the best for her, so they only said "here let me co-sign that for you."

They aren't dumb people at all. They just didn't know what debt like that does. These cases present the best case for financial education in schools that I know of.

I really don't like when people use ignorance as an excuse. If you sign your name on a 6-digits loan without "knowing what debt like that does", whatever happens next is on you.
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: Grateful Stache on July 01, 2014, 04:19:55 PM
Be aware though that a student will still have to pay taxes on the full forgiven amount of the loans in the year they are forgiven. So even if you have $200k in debt forgiven, you'll still owe about ~$80k in taxes.

The amount of loan forgiven under the Public Service Loan Forgiveness program is not taxable by the IRS.

P.S. Good luck, OP! And congratulations on your recent graduation! There is plenty of time to work things out.

Cheers.
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: Jags4186 on July 01, 2014, 05:21:25 PM
Perhaps move to another country permanently, try to gain citizenship there, renounce your US citizenship, and stop paying on the loans?

On a more serious note, my SO paid off $50k in SL debts making $35k/yr in 2 years living at home with her parents.  I hope you have parents who are willing to pay all your *must be modest* living expenses and all income you have goes towards your debt.  Hopefully you'll get raises and you can knock this out in 7-10 years.

Best of luck.
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: mxt0133 on July 01, 2014, 05:31:23 PM
And yet, hundreds of thousands of dollars are readily loaned to kids who will not be able to repay/struggle to repay.
Boggles my mind.

Then only reason private companies will loan someone hundreds of thousands of dollars is because the loan cannot be discharged, even trough bankrupcy, and they are partially counting on penalties and fees to improve their ROI.  It shouldn't boggle your mind if you follow who profits from this situation.
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: parsimonious on July 01, 2014, 05:47:33 PM
My fiance is was in a similar situation. She had over 230k in student loans when she graduated from law school.

Her student loan monthly payments were originally 2,600 a month.

Due to there being a large number of lawyers in our area and few jobs, she went mostly jobless for 6 months, working part-time at a coffee shop and eating through most of her savings.  She finally landed a job for around 50k in the public sector, non legal but a job with a decent salary.  Even after finding her new job, she was still spending nearly her entire salary after taxes on her loans.

Two programs helped lower the payments and have created a plan for how she can avoid paying a majority of the high interest fees.  While she had about 25k in private loans, majority were fed loans that we consolidated and enrolled in the two programs below.  Her fed loan payment dropped from $2,400 a month to around $500.


In scenarios like this do you delay (official legal) marriage until IBR is done? If you two get married, won't the payment skyrocket?
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: slugline on July 01, 2014, 05:54:15 PM
And yet, hundreds of thousands of dollars are readily loaned to kids who will not be able to repay/struggle to repay.
Boggles my mind.

Then only reason private companies will loan someone hundreds of thousands of dollars is because the loan cannot be discharged, even trough bankrupcy, and they are partially counting on penalties and fees to improve their ROI.  It shouldn't boggle your mind if you follow who profits from this situation.

In the quote you truncated, happyfeet was trying to draw a contrast with a daughter's struggle to get mortgage approval on a really affordable home . . . a home that could be actually foreclosed upon, unlike a diploma. It is boggling.
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: Mr Mark on July 01, 2014, 08:36:06 PM
A cautionary tale.
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: Red Beard on July 01, 2014, 09:23:10 PM
In these types of situations I immediately jump into the "what would I do if it were me?" thought pattern.  My first thought is the public service repayment option that has been discussed here. Ten years is a long time to do something I presumably have no interest in, so I would try to find an option that would minimize the time I spent outside of my desired field. The best option I can think of at the moment would be oil fields - either in North Dakota or West Texas - where you could earn six figures, sock away money like crazy and realistically be out of debt in 3-4 years, leaving you the freedom to pursue a career you would enjoy debt free. It would disrupt your life, sure, but not nearly as much as being buried in debt forever will.

Best of luck!
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: PenTeller on July 02, 2014, 11:56:05 AM
My fiance is was in a similar situation. She had over 230k in student loans when she graduated from law school.

Her student loan monthly payments were originally 2,600 a month.

Due to there being a large number of lawyers in our area and few jobs, she went mostly jobless for 6 months, working part-time at a coffee shop and eating through most of her savings.  She finally landed a job for around 50k in the public sector, non legal but a job with a decent salary.  Even after finding her new job, she was still spending nearly her entire salary after taxes on her loans.

Two programs helped lower the payments and have created a plan for how she can avoid paying a majority of the high interest fees.  While she had about 25k in private loans, majority were fed loans that we consolidated and enrolled in the two programs below.  Her fed loan payment dropped from $2,400 a month to around $500.


In scenarios like this do you delay (official legal) marriage until IBR is done? If you two get married, won't the payment skyrocket?

IBR does not take into account the spouse's income, but they do require the borrower to reapply yearly for the program.
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: Trudie on July 02, 2014, 12:25:51 PM
Sorry this thread can be brutal, but your debt is an emergency and you need to act accordingly.

My advice:
(1)  Move home.  You cannot afford a place of your own.
(2)  Try to get on your parents' health insurance until you are 26, then will need to find your own under the ACA.
(3)  Find a decent job -- including one outside of your field -- that pays good money.  Your goal is to maximize income.  This may mean that you have to plug your nose and jump in.  Accept that it is temporary.
(4)  No car, period... walk, bike, take public transportation everywhere.
(5)  You need to develop your artistic talents on the side, doing side hustle jobs -- photography for special events, freelance design work.  You should plan on working several nights and weekends the next few years.
(6)  I don't know if they could help you, but you should check with a non-profit debt consolidation service to see if you have an options with your loans to consolidate and get them under control.
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: 4alpacas on July 02, 2014, 12:44:50 PM
My fiance is was in a similar situation. She had over 230k in student loans when she graduated from law school.

Her student loan monthly payments were originally 2,600 a month.

Due to there being a large number of lawyers in our area and few jobs, she went mostly jobless for 6 months, working part-time at a coffee shop and eating through most of her savings.  She finally landed a job for around 50k in the public sector, non legal but a job with a decent salary.  Even after finding her new job, she was still spending nearly her entire salary after taxes on her loans.

Two programs helped lower the payments and have created a plan for how she can avoid paying a majority of the high interest fees.  While she had about 25k in private loans, majority were fed loans that we consolidated and enrolled in the two programs below.  Her fed loan payment dropped from $2,400 a month to around $500.


In scenarios like this do you delay (official legal) marriage until IBR is done? If you two get married, won't the payment skyrocket?

IBR does not take into account the spouse's income, but they do require the borrower to reapply yearly for the program.
IBR does include a spouse's income.  (https://studentaid.ed.gov/sites/default/files/income-based-repayment-q-and-a.pdf under Married Borrowers section)

If you are married and file a joint federal tax return, your eligibility for IBR will be determined based on
your joint income and the amount of your eligible loans. 

And if you do choose to file separately, there are a lot of drawbacks (http://taxes.about.com/od/filingstatus/qt/marriedseparate.htm). 
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: frugalnacho on July 02, 2014, 12:48:10 PM
First, let's reframe things a little bit. For anyone who hasn't been to college in the last 10 years, or hasn't been exposed to the world of private universities, $180K in loans is not uncommon if you weren't able to put up money yourself. Heck, places like George Washington U. charge $40K a year in tuition, and that's not even an "elite" school (cue angry alumni). Try any Ivy League or equivalent, and you're in the same ballpark. You can question the wisdom of taking on such loans (valid), or argue we're in an education bubble or that XYZ Community College taught you underwater basketweaving better than Harvard ever could. However, hundreds of thousands of people choose this path every year.

This is a load of garbage. I went for a Masters degree within the last five years. It did cost close to $40k for one year. And guess what? It also had a 99% pre-graduation employment rate for students. That's right. 99% of graduating students had job offers before putting on the cap and gown.

The OP, and many like him/her, went to Pirate School. They robbed her blind and then shot her out, homeless, powerless and broke into the streets. This was a good student. She had scholarships and a fellowship. And $180,000 bought her nothing. Worse than nothing, given the lost time.

But wait! She went to a nice school! It totally taught her the skills she needs to get a lucrative position! It helped her build contacts!

Oh, wait. Nope. I forgot - it was a Pirate School. It prepared her to make as much as a manager at Walmart (which she would probably be by now, if she had gone to work at Walmart instead of Pirate School). It did not help her network. She is on her own, trying to network now. A real school (like Harvard or Generic State School in the Midwest) would have had the whole "networking" thing done while she was there.

"This is how it goes these days" is the crap they tell you when they're stealing your money.

If they ever come up with a swashbuckling school, I think one of the courses should be Laughing, Then Jumping Off Something.

-Jack Handey
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: frugalnacho on July 02, 2014, 12:51:25 PM
I just do not understand that type of debt - why a person would ever take that on unless they had high income potential like a doctor.  Why would a parent allow their kid to assume that much debt?  It is almost criminal what these colleges can do.  They take your money and lots of it  from 18 year old kids - you get nothing but a piece of paper in many cases is not worth a whole lot in the job market.

You can get a great education for a fraction of what OP spent. As a parent I would never OK my kid assuming that kind of debt.

It's an education thing. My wife's parents didn't have an expansive financial education like most people on this site. Because they didn't know what $120k in debt would do to someone making $30k per year, they didn't know that they should say anything when their daughter got into a school that charged 40k/year even though they couldn't help her pay for it. To them, they were just so excited their daughter got into a great school and they wanted the best for her, so they only said "here let me co-sign that for you."

They aren't dumb people at all. They just didn't know what debt like that does. These cases present the best case for financial education in schools that I know of.

Uh, what's not to get? You borrow a fuck ton of money, you pay a fuck ton of money back.  It can't get any fucking simpler.
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: Angie55 on July 02, 2014, 12:57:07 PM
Its not that obvious to the regular 16/17 year old. Most schools don't teach accounting in High School instead you learn various levels of geometry/calculus without any practical use. Add on a typical middle class family with parents that save a little but otherwise spends most of their salary. Its not so obvious anymore...

Most people are kids when they take out student loans. Want everyone to rail on the dumb decisions you made as a kid?
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: frugalnacho on July 02, 2014, 01:12:59 PM
Its not that obvious to the regular 16/17 year old. Most schools don't teach accounting in High School instead you learn various levels of geometry/calculus without any practical use. Add on a typical middle class family with parents that save a little but otherwise spends most of their salary. Its not so obvious anymore...

Most people are kids when they take out student loans. Want everyone to rail on the dumb decisions you made as a kid?

What kind of high school did you go to that they didn't teach you basic arithmetic?  And yes it is painfully obvious that taking on such massive debt is a bad idea. 
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: Doomspark on July 02, 2014, 01:40:03 PM
My high-school didn't teach me how to THINK or how to apply what I was being "taught" to real life situations.  It taught me how to memorize answers and spew them out on tests. 
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: rmendpara on July 02, 2014, 02:01:21 PM
I just do not understand that type of debt - why a person would ever take that on unless they had high income potential like a doctor.  Why would a parent allow their kid to assume that much debt?  It is almost criminal what these colleges can do.  They take your money and lots of it  from 18 year old kids - you get nothing but a piece of paper in many cases is not worth a whole lot in the job market.

You can get a great education for a fraction of what OP spent. As a parent I would never OK my kid assuming that kind of debt.

It's an education thing. My wife's parents didn't have an expansive financial education like most people on this site. Because they didn't know what $120k in debt would do to someone making $30k per year, they didn't know that they should say anything when their daughter got into a school that charged 40k/year even though they couldn't help her pay for it. To them, they were just so excited their daughter got into a great school and they wanted the best for her, so they only said "here let me co-sign that for you."

They aren't dumb people at all. They just didn't know what debt like that does. These cases present the best case for financial education in schools that I know of.

Uh, what's not to get? You borrow a fuck ton of money, you pay a fuck ton of money back.  It can't get any fucking simpler.

Hahahha, best analogy ever! +1,000,000
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: totoro on July 02, 2014, 03:05:27 PM
You forget the effects of denial and magical thinking.  At play is lack of experience with real consequences to temper magical beliefs such as:

1. education always pays off
2. it is always better to be a homeowner than a renter
3. you are judged on your car so it is worth it to have a nice one
4. clothing makes the wo/man
5. interest charges don't get counted in the cost

Sometimes the math part is not obvious. Like compound interest on student loans which is not clearly pointed out in understandable numbers when a student who has never paid for anything themselves takes them on.

I can see how someone who is not thinking about it carefully can get into some trouble they did not expect with student loans, although this example is pretty extreme.
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: BayIslandSaver on July 02, 2014, 03:35:59 PM
I agree a cautionary tale.  There are probably thousands of young adults facing similar situations with the OP.
What's to happen if they can't pay their debts?  Are we stuck with a generation of homeless able-bodied adults?

Glad I stayed in-state and got out with my piece of paper debt free.
DW had close to six-figures in debt, but luckily I found this site during that period (2012) and paid it off in 2 yrs. by tracking every penny and throwing everything else at the nasty beast that is private student loans of variable nastiness (interest).
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: happyfeet on July 02, 2014, 04:06:29 PM
I agree a cautionary tale.  There are probably thousands of young adults facing similar situations with the OP.
What's to happen if they can't pay their debts?  Are we stuck with a generation of homeless able-bodied adults?

I wonder this too.  DD ex had $60,000 + in student loans.  We kept getting the you are not paying letters for his debt.  I finally opened them to call the creditors and saw the amount.  What happens to these kids?  The interest keeps building and debt keeps climbing.  They garnish your SS?  Then what?
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: randymarsh on July 02, 2014, 04:23:50 PM
I agree a cautionary tale.  There are probably thousands of young adults facing similar situations with the OP.
What's to happen if they can't pay their debts?  Are we stuck with a generation of homeless able-bodied adults?
I wonder this too.  DD ex had $60,000 + in student loans.  We kept getting the you are not paying letters for his debt.  I finally opened them to call the creditors and saw the amount.  What happens to these kids?  The interest keeps building and debt keeps climbing.  They garnish your SS?  Then what?

You enter default, your credit score will be trashed. Wage garnishment will happen without a court order ((administrative garnishment they call it). Tax refunds will be applied to the debt. SS is garnished (limited to 15% I believe). The worst thing is that you can have professional licenses suspended: law, CPA, medical. That could cause a problem for a very small number of people.

If the federal loan default rate rises too much, I would't be surprised if they add penalties like no passport renewal. More likely, I think they'll continue to come up with these payment plans that push the fallout 20+ years into the future.
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: Cpa Cat on July 02, 2014, 04:27:32 PM
In these types of situations I immediately jump into the "what would I do if it were me?" thought pattern.  My first thought is the public service repayment option that has been discussed here. Ten years is a long time to do something I presumably have no interest in, so I would try to find an option that would minimize the time I spent outside of my desired field. The best option I can think of at the moment would be oil fields - either in North Dakota or West Texas - where you could earn six figures, sock away money like crazy and realistically be out of debt in 3-4 years, leaving you the freedom to pursue a career you would enjoy debt free. It would disrupt your life, sure, but not nearly as much as being buried in debt forever will.

Best of luck!

I want to second this. A lot changes in 10 years. A mind-boggling amount can change in 25 years. With either IBR or Public Service Forgiveness, you're locking yourself into a lengthy debt-repayment scheme (10 years for Public Service and 25 years for IBR). The most reasonable solution to paying off 180k in debt is to make 180k as quickly as possible and paying it off.

In ten years, I have changed my career twice, gotten married, emigrated from my country of origin, moved a bunch of times, etc. Do you really want to be 5 years into a Public Service scheme when you decide you'd like to stay home with your baby? Or when an opportunity for an awesome job presents itself in Europe? Or when your spouse needs to move for his/her career? Or when you get sick and need to take some time off work?

Even if you only ever get a job with a salary of $36k and never get a raise or make another penny, you could  pay this off in 10 years without any loan forgiveness - just by living frugally and chucking every penny at it. It's not worth it to lock your life down into some 10-year (or 25 year) plan for forgiveness.
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: YoungInvestor on July 02, 2014, 08:41:41 PM

At this point, does it matter much whether the debt is 180K or 250K?   They are all crazy high video game numbers at this point, and you need to find a way to create a crazy high video revenue stream for yourself.


Plenty of people here made more than 180k in a relatively short time. These are not crazy high video game numbers. With a 50-60k net job, which the OP should have relatively soon, I can see it being paid in 5 years or less, with raises, bonuses, etc. Especially if he lives with his parents for some time.
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: capital on July 04, 2014, 06:06:43 PM
The thing with PD is that it's a fickle field concentrated in a few major cities, and frankly Philly isn't one of them.  So to expand your options, you need to look in the PD hotbeds of Silicon Valley, Chicago, Boston, New York, and (to a lesser extent) Austin.  There are simply far more jobs in these places than anywhere else in your field.
If that's the case, the target should be ChicagoŚ it has a significantly lower cost-of-living than any of the alternatives, except maybe Austin. But it's much harder to be carfree in Austin that Chicago, by my understanding.
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: Frugal Father on July 06, 2014, 05:38:25 PM
The thing with PD is that it's a fickle field concentrated in a few major cities, and frankly Philly isn't one of them.  So to expand your options, you need to look in the PD hotbeds of Silicon Valley, Chicago, Boston, New York, and (to a lesser extent) Austin.  There are simply far more jobs in these places than anywhere else in your field.
If that's the case, the target should be ChicagoŚ it has a significantly lower cost-of-living than any of the alternatives, except maybe Austin. But it's much harder to be carfree in Austin that Chicago, by my understanding.
I've been on Chicago for the last year and the public transportation has been excellent.
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: WiseGuy on July 06, 2014, 08:56:53 PM
first off welcome to the forums. A lot of the people here are much more aggressive then most other forums, but you seem like you can handle it.

I graduated in 2010 with $130,000 in private student loan debt and a music degree with very little potential of making a lot of income. I married that summer, and was faced with the same prospect you are now. I decided to freelance programming before trying to get a job with my degree that doesn't apply to any field, and I made around $900 / month for the first few months, my wife, despite her pregnancy, worked and made around $1000 / month. I was determined to make it work and become "stable", and I spent every waking hour prospecting and working the freelancing gig to stave off a crappy job.

in 2011 my wife stopped working to be a stay at home mom. In 2012 we bought a house, and in 2013 we had our second kid. I now live right on the bay in California making six figures programming for a startup because one of my clients happened to like me.  Throughout the hardship of finding a job on top of that we had a minimum debt payment of $16,000 a year (why taxes don't take this into account I don't know.) and we were still fairly happy. Now that I have a decent income we are making headway on the debt, we have around $105,000 total $95,000 of which is the original student loans. I'm hoping to be debt free by 2020 regardless of whether or not this job is around for another 6 years.

Don't give up you can make it. My first year I made $25,000 freelancing. You just never know where your next big windfall will come from.

I am always looking for good techies, you should drop me a line and show me what you got - BradSpark.com

best of luck

This is a great example/story.  It can be daunting to tackle huge debt with a small income.   But with creativity and some luck you could find a high paying job.

To the OP: since your education is in product design, I'd look to see how you set yourself on a path to make a very high income.  It might mean moving cities.  It might mean adding skills.  But look around and find examples of people who started out with similar skills as you but are making very high incomes (over $200k/year) and find out how they did it.  If you are open to learning programming, then that could be a very valuable skill to add to your design skills.  In Silicon Valley you could probably find a decent ply high income job if you had programming and design skills.
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: zenandtheart on September 03, 2014, 12:12:57 PM
Good product designers are in high demand, and a good education should open doors for you that aren't available to the "average" applicant. A cursory Google search tells me that the median for PD is closer to $50K, and some sites have an average of $75K. That's more like it.

Are you looking at design jobs that pay well?

If you are going to attempt to help, at least try to get your head out of the clouds yourself.  You don't start at the middle or the top of a salary range fresh out of school.  This person needs cash and they need it now.  Any position that needs a breathing human will do for the time being.

That's an absurd statement. Was it a good education or not? If not, then sure, OP is probably screwed. If so, there's nothing stopping them from obtaining the median or higher for your target position. I didn't say senior product designer or product manager, I said product designer. That's easily achievable straight out of college. I beat the median salary for my chosen profession after graduation, as have other people who shared their stories on this very thread. It happens all the time.

Confidence isn't going to pay the bills and a kid that walks in with the "I'm so special" syndrome is going to have a hard time of it.  She needs a bite of a reality sandwich, not more coddling.

Coddling forums exist somewhere, but not here.

Confidence has nothing to do with an "I'm so special" attitude. You are thinking of arrogance or entitlement, which are completely different things. As several others have observed, advising the OP to take whatever menial job that comes their way is potentially the worst course possible. Minimum wage, while better than nothing as a stopgap, will not even put a dent in $180K unless it's a short-lived stepping stone. I was reacting to the OP's perception that their job prospects were extremely poor, which suggests either that they don't believe in themselves, or that there are underlying issues with their described educational background.
Title: Re: Reader Case Study: $180,000 dollars in student debt
Post by: zenandtheart on September 03, 2014, 12:31:36 PM
To the OP: since your education is in product design, I'd look to see how you set yourself on a path to make a very high income.  It might mean moving cities.  It might mean adding skills.  But look around and find examples of people who started out with similar skills as you but are making very high incomes (over $200k/year) and find out how they did it.  If you are open to learning programming, then that could be a very valuable skill to add to your design skills.  In Silicon Valley you could probably find a decent ply high income job if you had programming and design skills.

Totally agree. Dealing with the situation requires quick moves, but you should always build on the assets you have to get the assets you need. $200K/year is obviously very ambitious, but there are lots of ways to make $180K of debt manageable. Moving in with the rents may be a viable step as long as it is only step 1 of a more ambitious plan.