When you think of college, you might recall football games, frat parties, lifelong friends, and the freshman 15. But if you're among the 71 percent of newly minted graduates who took out student loans, you'll start getting sobering reminders of undergraduate life in the form of payment due bills just six months after the ink has dried on your diploma. Overall, 39 million Americans carry student-loan debt, to the tune of more than $1.2 trillion—more than all credit card debt.
How did we get here? Tuition prices are increasing at about twice the rate of inflation, while state governments are slashing billions from their higher education budgets, leaving students to foot more of the bill. While the average debt is $29,400, it's not hard to find people like Aisha Gayle Turner, 33, of South Orange, New Jersey, who owes more than $200,000 in federal and private loans. "My parents told me, 'The sky is the limit—do whatever you want, be whomever you want,'" says Gayle Turner, the managing director of corporate and foundation relations for Teach for America's New York region. "But if I'd realized the price tag all of that came with, I would have asked myself, 'Are you sure?'"
What's certain is that women are more likely to borrow money for college than men and have a tougher time paying it off, thanks to the gender pay gap (women earn 77 cents to a man's dollar) and because we are more likely to pursue fields that don't pull in bank. The longer we take to pay, the more interest accumulates, so we spend more of our earnings on retiring debt than men do. The upshot? Debtees are less likely to own a home, take out a car loan, or even make rent payments. "It's great that more women than ever are going to college, but they're mortgaging their futures with amazing amounts of debt," says Lisa Maatz, vice president of government relations for the American Association of University Women.
The unemployment rate among those who finish only high school is triple that of those who go on to get a college degree. So higher education has value—but at what cost?
HOW THESE FOUR WOMEN ARE PAYING OFF THEIR STUDENT-LOAN DEBT
Name: Beza Ayalew
Education: B.A. at Denison University; M.A. at Boston University
Occupation: Fellow at the Centers for Disease Control and Prevention
Annual Income: $45,000
Total Student Debt: $58,000 Financial Path: "Even with scholarships, part-time jobs, and living rent- free with my parents as a grad student, I had to take on loans."
Payment Plan: "Seeing my debt added up after graduation was daunting, but I qualified for Income-Based Repayment, which made me feel a bit more confident that I could manage."
Was It Worth It? "My job was a direct result of my master's in public health. Seventy-five people applied for my position; without my degree, I wouldn't have been considered."
Name: Melodie Vernet
Education: B.A. at Loyola University in New Orleans
Occupation: Analyst at a tech consulting firm
Annual Income: $60,000
Total Student Debt: $100,000
Payment Plan: "I pay $1,000 a month to Sallie Mae, about $600 in interest alone."
Trade-Offs: "I'd love to get an MBA, but there's no way I can justify more debt. Also, I'd like to start a family someday. But I wonder: Is that even an option for me? Can I afford children?"
Was It Worth It? "I work with brilliant people who don't have college degrees. My degree has never come up—not even in my job interview—so I don't think I needed it. My brother, who has no degree but is entrepreneurial, makes twice what I do and doesn't carry the burden of being in debt."
Name: Xiomara Ferrera
Hometown: Las Vegas
Education: B.A. at the University of California-Berkeley; law degree at Fordham University
Occupation: Deputy public defender
Annual Income: $75,000
Total Student Debt: $200,000
Payment Plan: "I'm in the government's Public Service Loan Forgiveness program. After 10 years of making payments and working in the public interest, what remains of my federal loans will be forgiven. But I have to pay a $17,000 private loan in full."
Trade-Offs: "I don't get to buy the fancy suits lawyers are supposed to wear in court. I scour the racks at T.J. Maxx to look presentable."
Was It Worth It? "I love my job, but I still feel like I'm an indentured servant. You practically have to rob a bank to pay back these things."
Name: Darrelle Beeler
Hometown: Spokane, WA
Education: B.A. at Washington State University
Occupation: Pharmaceutical sales rep
Annual Income: $55,500, plus commission
Total Student Debt: $17,000
Financial Path: "I received a $5,000 scholarship and worked part-time all four years, but it wasn't enough."
Payment Plan: "Every month I pay $430 to three lenders—I cringe because so much of what I pay is interest. It makes me wonder if I really needed that extra $5,000 for living expenses."
Trade-Offs: "Saving money for a down payment on a house is hard. I also neglected to set up a 401(k) at my first two jobs."
Was It Worth It? "I don't have pride over my debt, exactly, but it's nice to say I paid my own way. It's made me more responsible."
YOUR STUDENT DEBT RELIEF CENTER:
These Sites Help You With Your Student Debt
Help on the Web: Your Representatives Can Help You
This Senator Is Fighting for Student-Loan Reform
Are Recession Proof Degrees Really Worth the Six-Figure Debt?
Till Debt Do Us Part: His Student Loans Are Now Yours
Expert Financial Advice to Pay Off Your Debt