Reporter’s note: Reader submissions have been lightly edited for clarity.
The option to refinance your student loan is rare. New companies have arrived to help, but only the best borrowers qualify. And efforts to pass national refinancing legislation have stalled. As America’s total student debt burden hits $1.3 trillion, we off debt-management perspectives from people across the country:
Name: Sara Davis
School(s)/Graduation year: ITT Tech, did not graduate
Job: Secretary at a trucking company
“I did not graduate. I found out I was pregnant with nine credits left. Now, I have a good job. It pays $35,000. But I’m struggling every day to pay off my student debt.
I have consolidated my federal loans, and I have an affordable payment: $258 each month. The private loans, however, are hard to pay for: more than $900 each month. I have tried to refinance and was turned down by everyone. I am stuck.
Refinancing to get a manageable payment would be a godsend. I would be able to breathe and sleep at night without worrying to death about how I am going to afford to live next month. I honestly wish I never set foot in college. It ruined my life.
I basically have nothing left. I pray every day I don’t get sick or injured. I feel like I am on a boat with a slow leak. One minor thing happens and I will sink.”
Name: Gaurav Bajaj
School(s)/Graduation year: Long Island University
Location: Rockland County, N.Y.
“My student loan balance currently stands at $210,000. I have considered refinancing my student loans but only for the private loan portion of Sallie Mae, $60,000. I do not want to refinance my $150,000 — 7 percent interest rate — of federal student loans because I am hoping to qualify for Public Service Loan Forgiveness in another seven years.
It’s like a hefty mortgage without an actual house. Financially, it puts you behind the curve at life. Half of my pay goes to student loans. I am about two to three years into repayment. I still have eight more years to go. And, thankfully, I have a good-paying job. But even with that, it is a struggle. I can’t even imagine somebody who is without a job.”
Name: Elizabeth Hunt
School(s)/Graduation year: University of Oregon, 2004; University of Denver, 2011
Job: Small business owner
“I was progressing on paying off my loans while I was teaching English in South Korea before and after graduate school — but had to put my loans into forbearance so I could move to Italy. I’m an Italian-English translator, so this is the best place for me to find work and build my career.
Also, I think living in the U.S .is more expensive. Where I live I don’t need a car and have free health care. The cost of living is decent, and I live a very minimalist lifestyle. My apartment came furnished and has the perfect amount of space for me to run my business, so I maintain a very low overhead.
I’m back in repayment now and don’t make enough to cover my payments, so I’m applying for economic hardship. I feel that it will help me position myself to actively pay off my debt once my income picks up.
I’m scared to refinance because I don’t want to lose the possibility for economic hardship deferment if something happens and I can’t work.”
Name: Greg Lyons
Location: Gaithersburg, Md.
“We’re paying off my wife’s student loans. She attended George Mason University and graduated in 2008. She’s a stay-at-home mom.
We could not afford a bigger house because we had this payment of at least $500 every month. As parents of two children it is tough to make the decision to buy a smaller house in a not-as-desirable neighborhood because of these payments.
We have been paying interest only on the loans for about two years now. I am looking into refinancing now.”
Name: Zina Kumok
School(s)/Graduation year: Indiana University, 2011
Job: Communications, nonprofit
“I live in a duplex with my fiance and a friend (rent is 14 percent of my take-home pay). I keep my discretionary spending low, I drive a 15 year-old car and I keep a strict budget. I make about $31,000, and if I only paid the minimum it would be easy to balance that with my living expenses. Since I’m trying to pay off my loans within three years of graduating, it’s harder to balance wants, needs and paying off my loans.”
Name: Michelle Hinze
School(s)/Graduation year: Kitchen Academy in Hollywood, Calif., 2008
Location: Ann Arbor, Mich.
Job: Pastry chef, looking for work
“Paying the minimum balance each month takes a huge chunk out of the money needed to pay other bills — like my husband’s student loans, which are way higher than mine. We survive on Medicaid and food stamps. It has been a dream of mine to become debt-free; however, that dream slips a little further away each year. I would love to refinance, however. No bank will touch me with a 10-foot pole.
I understood the cost of school when I signed up, but the incredibly high interest rates I pay makes paying my bills so unsatisfying. I want to pay them — I feel good when I do — but the balance doesn’t go down after years of paying. I feel like giving up. But I keep on paying, because that is what people do. The sharks at lending companies know this.”
Name: William Gorman
School(s)Graduation year: Xavier University, 2008; Northern Kentucky University, JD, 2013
Location: Phoenix, Ariz.
Job: Account manager for Thomson Reuters Legal
“I am one of the lucky ones where I am able to afford to pay back my student loans from undergrad and law school. So often, I hear politicians say the student loan crisis is actually a jobs crisis. That is only partially accurate. Yes, more recent graduates would be able to pay their loans back if there were more high-paying entry-level jobs available. But the politicians completely miss the point when it comes to me.
I am paying outrageous rates on my private loans and only slightly less outrageous rates on my federal loans. Because I do have an income, I am able to manage the loan repayment. But I can only imagine what I could do with the income saved if student loan interest rates would be reduced. Student loan payments are holding me back from purchasing my first home, luxury items, etc. — all items that could move our economy forward.”
Name: Allison Glass
School(s): Boston University, American University
Location: Washington, D.C.
“I am really struggling. I have Income-Based Repayment, which helps with my federal loans — but I have private loans that are not eligible. I have considered refinancing, but then I would lose all the protections of IBR. And what happens if I lose my job? I pay $1,100 a month in student loans. Until I got a new job last month (!!) I only had $400 to live off of after rent and my student loans, which isn’t much in the DMV.
Now, I got a new job, which makes $60,000 a year, and it’s better, but I’m still struggling. If I hit a big expense I have to use my credit card. My mom also still pays my car insurance and phone bill. If she didn’t do that, I would be even worse off.
Most of my student loans were from graduate school. It’s just rough because I graduated in 2011. My choices were grad school or Starbucks job. I think I made the right choice, but I will be paying for it.”
Name: Kristen Spicker
School(s)/Graduation year: Ohio University, 2012
Location: Cambridge, Ohio
Job: Newspaper reporter
“While looking for a full-time journalism job, I was a full-time server in a bar in downtown Columbus. I freelanced on the side with local magazines to stay in the field. I rented a really cheap, crappy apartment and walked two miles to work to save on gas and downtown parking. I only spent $20 a week on groceries so I was able to keep personal expenses to a minimum.
Now that I’m a full-time reporter, I make less money than I did as a server.
I’ve had a job since I was 16 and always was very aware of my finances because my family is in the working class. I watched my parents work so hard to be able to afford a private education for me and my siblings. So, I’m in a much better place than most of my friends. But I still worry. All it takes is one health or car emergency and my savings could be cut in half.
It’s frustrating that I spent $50,000 on a journalism degree but would almost be better off if I never went to school and just continued serving and waiting tables.”
Name: Mike Bird
School(s)/Graduation year: Michigan State University, BA; University of Arizona, JD, MLS
Job: Librarian at a law school
“I haven’t had any difficulty paying off my student loans, of which $22,000 remains out of initial $75,000 or so that I started paying about 6 ½ years ago. I have not gone into forbearance/deferment since starting my career in early 2008, nor did I bother registering for Income-Based Repayment when it became available.
My initial monthly payment was about $550, and since digging into savings to eliminate the high-interest loan it’s been about $320. This ends up being about eight or nine percent of my income. It’s insignificant.
It is rather difficult for me to talk to others in my peer group about the incredible ease with which I’ve dispensed my educational debt as a primary breadwinner with a good-not-great salary (which is, of course, the motivating impulse behind the incoming blather). And the pricing has changed so radically since I was a high school senior (1998) that I doubt my advice is worth anything, but here it is anyway:
Treat selecting a college like you would buying a used car. There is no question a 2012 Accord is better than a 2006 Elantra by almost every metric. But if the Accord’s $15,000 and the Elantra’s $5,000, keep in mind that you are on the lot for a CAR and nobody’s really made a straight-up bad one since the PT Cruiser.
Even if a student today would find my exact situation difficult to replicate, many of my law school classmates finished with two or even three times as much debt as I had — even in 2006 — and other than access to a slightly more impressive selection of sweatshirts it is hard to identify a way in which their school choices paid off better than mine.”