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A Story of Life Burdened by Student Loans

Everyone has a story and, while we’ve previously shared that of our CEO, our broader goal is to unite people and emphasize our common human experience in education. In pursuit of this endeavor, Impact Capital Funds will occasionally and anonymously share stories, both via video and on our blog, that help bring people closer together.

Stories help to unite people. They can educate and inspire us, drive us to think more deeply about a subject or push us to action. Most of all, by helping us to feel connected to each other – like we are part of a crowd at a concert – they allow us to empathize with one another and identify with one another across typical boundaries.

One of the great storytellers of our time, Bruce Springsteen, has been sharing the tales of people from all walks of life, for over forty years. He has painted pictures of their American experience through his songs and, because his lyrics are personal, they have the ability to draw listeners into a shared history.

If you are reading this, it is likely because of a shared commonality – student loan debt. It can be a painful subject to discuss, and millions of borrowers are looking toward the future, wondering if they’ll ever actually pay off their loans. At the same time, more optimistic thinkers might be filled with gratitude to even have the opportunity to attend college or graduate school. Either way, for many, monthly loan payments are in the forefront of their minds.

The Best Laid Plans

It’s almost inevitable that even the best laid plans will run into trouble. Every life will take detours and face unexpected hurdles; it may be cliché, but part of life depends on the way you manage despite them. Take this story of J.K. (not Rowling). I recently interviewed her to learn more about her education, hopes, dreams, and – of course – borrowing and paying off student loans.

She received her undergraduate degree, a BA in Art and Psychology, in 1999. Paid for by her parents, at the time of her graduation she was lucky enough not to have any student loan debt. One year spent as a Jesuit Volunteer turned into another in which she worked in a drug rehabilitation halfway house. She was married in 2001 and was successfully working as a therapist (she maintains a practice counseling those who seek marriage and family therapy) when, in 2004 she decided to apply to graduate school.

J.K. completed her education in 2006 and, upon receiving her Master’s in Social Work, accepted a position as a school district social worker. In the intervening years, she has shown that she is dedicated to the position despite the challenges she faces. Throughout her tenure at the school district, she has helped students through difficult circumstances, including truancy checks, teen pregnancies, suicides, drug use, poverty, and domestic abuse.

Student Loans by the Numbers

Despite the fact that she and her husband (who was employed full-time) lived frugally, over the course of her graduate education, J.K. assumed $74,000 in student loan debt. She was able to pay for her tuition using federal loans, and used private loans to help pay for housing, groceries, car insurance and utilities. Upon graduation, J.K. deferred payments for as long as she could (6 months) and immediately enrolled in an income-driven repayment plan.

When you include her husband’s $18,000 in student loan debt, and, after consolidating her loans several years ago, here is where they stand today:

  • 3 private loans, consolidated into one loan at 2.3% APR (J.K.)
  • 4 federal Stafford loans, consolidated into one loan at 1.4% APR (J.K.)
  • 1 federal loan (her husband)

Even as J.K. and her husband have remained diligent throughout the process, paying a combined $678 every month, they still face a loan balance of $57,000 and aren’t scheduled to clear the debt for another 18 years. For J.K. and her husband (who are currently in their mid-40s) their student loans will be paid off in the same year as their mortgage, when they are just 5 years away from retirement.

The Possibility of Forgiveness?

I asked J.K. about student loan forgiveness as she works in the public service sector. Her response was eye-opening. She said, “The whole student loan industry is confusing. I knew nothing about what I was getting myself into all those years ago. I haven’t even bothered to try to have my loans forgiven.”

Federal student loan forgiveness programs are available for:

  • Teachers
  • Those who work full-time for a government or non-profit organization
  • Those who repay their student loans under an income-driven prepayment plan
  • Military service members
  • Those who have served in AmeriCorps

To qualify for the Public Service Loan Forgiveness (PSLF) program, a borrower must have 1) made 120 qualifying payments on 2) Federal Direct Loans using 3) an income-driven repayment (IDR) plan while 4) employed full-time, 5) for ten years, by 6) a qualifying employer. J.K has met all of the criteria. She has never been in default and has never been late in making a payment.

An Update: I sent J.K. the link to fill out the PSLF application for forgiveness after writing this article. She recently contacted me to say that she was rejected. After refinancing, she held a Direct Consolidated Loan instead of a Federal Direct Loan at which point she no longer qualified. She is now looking into the potential to be forgiven under the “Temporary Expanded Public Service Loan Forgiveness (TEPSLF)“.

The Grim Reality

In many ways, J.K.’s story is like that of many other individuals burdened by student loan debt. Education to set yourself up for a lucrative and fulfilling career seems like the right choice, taking out loans to do so is often the only option. After the fact, loan consolidation and income-driven repayment plans seem like the next logical steps. At the end of the day, however, the plan she developed almost twenty years ago doesn’t allow for the day-to-day lifestyle that J.K. had hoped for.

In retrospect, J.K. wishes she had researched grants and scholarships when applying to graduate school, and that she avoided taking out private loans. While she maintains that her graduate degree was “worth it” and laid the foundation for the work she does now, she isn’t where she thought she’d be in life.

Diagnosed with Multiple Sclerosis at age 40, the ensuing medical bills have taken a toll on both J.K. and her husband. Childless and living in a small home, the monthly mortgage payment takes a chunk out of the budget and limits the contributions they can make to retirement accounts.

I asked her what she missed out on as a result of having student loan debt, and she noted that she and her husband haven’t taken a vacation in the twenty years they’ve been married. In her words, she believes her loan debt has kept her from “having fun…and a cuter wardrobe!” Additionally, she acknowledged that if she had more money available each month, she would have spent more on “better self-care.” She is in a professional field and has a position that is emotionally draining, and she would have liked to be able to “recharge.”

To be clear, J.K. said she “loves her life, and is grateful for her education,” but she never thought she’d be paying off her student loan debt until she was 62. “I am embarrassed and ashamed to be dealing with this and I wish I’d learned more about the effects of student loan debt while I was growing up.” This, I have found, to be a common refrain.

The Purpose Behind the Story

J.K.’s ordeal – assuming student loan debt in order to pay for a graduate degree and struggling in the aftermath – isn’t unique, or even uncommon. Many will see echoes of themselves as they read her story. When we hear about other people’s experiences, we feel connected, we empathize. We rationalize our own plights, assess our present situation, and adjust our goals. We soldier on.

In a now 20-year-old NY Times interview, Bruce Springsteen said that many of his songs depict “characters trying to navigate their way through a morally, financially, and emotionally uncertain world, weighing their dreams against their reality and trying to decide which path to follow.

That’s what we’re all doing, and our stories lend themselves to “how we cope with the random trauma-inducing chaos of life as it plays.” Yes, the burden of student loan debt can be overwhelming, even debilitating, but, in the face of life’s detours, hurdles, and chaos we can come together. We can recognize our commonalities, our collective human experiences, and work to achieve our dreams. May all of yours come true, J.K., and thank you for sharing your story with Impact Capital Funds.