Life After College: Dealing With Student Loan Debt

62 percent of students in the graduating class before COVID held student loan debt when they walked the stage. Even with access to the best private college loans, the average loan cost was $28,950, which illustrates the fact that higher education in the US costs nearly twice what it does almost anywhere else in the world. Some students in Luxembourg, the tiny European country slightly smaller than Rhode Island, pay slightly more—but only some.

There are fewer than 650,000 people there, and public university options are available. Any student—domestic or foreign—can attend the University of Luxembourg, which charges €400 (roughly $475) for the first two semesters and €200 (or about $240) for every semester after that.

But Wait, There’s More

That $28,950 figure is just the average, and that’s just for a Bachelor’s degree. Grad school? That more than doubles to $71,000, or about the same amount a fully kitted-out four-wheel-drive vehicle would cost. A Master’s degree might take you farther, but it won’t be as fun.

Want to get your law on? That JD degree will run you over $145,000. If you’re feeling sick and need to call a doctor, know that medical school debt is around $201,490. Here’s another figure you can chew on: dental school debt will run $292,169 by the time someone is ready to put the DDS after their name.

It Goes On and On

This is a lot of debt to be hauling around, fresh out of school. You won’t be rid of it for a long, long time—the Standard Repayment Plan for federal student loans is ten years. It takes most people longer to pay off the cost of their higher education. If you don’t want to fork over around $460 every month for that four-year degree, you may be pleased to know you have several options.

Forgive and Forget

Frugal living is great, but will only help so much. A better way to knock down some of that student loan debt may be forgiveness. It can mean you’re exempted from being responsible for paying back the entirety of the loan.

Forgiveness also has certain restrictions. Only loans made by the federal government are eligible for forgiveness. Direct or Stafford loans are the most common, but if you received other federal money and are now staring down the prospect of having to pay it back, it’s worth checking out.

If your student loan came from a private lender, you’re very likely stuck with it, though there are options to make even this less painful, as we’ll see below.

Make Yourself Useful

Another way you could get away from the massive financial burden your education probably caused would be to teach or work for a not-for-profit organization or tribal, federal, state or local government. Public Service Loan Forgiveness is a pretty sweet deal, provided you can make 120 payments on your student loans first—you have to qualify.

Did someone say teach? Teachers have a similar program, called the Teacher Loan Forgiveness Program, though it’s limited in scope. It will only erase about $18k of your student loan debt, meaning you would still be on the hook for about ten grand even if you “only” had a Bachelor’s degree. You would also need to teach special education, science or math at a primary or secondary school to qualify. Another complicating factor? These forgiveness plans only kick in after about ten years.

Juggling Numbers

The restrictions on the programs mentioned above are stringent. Even if you do everything needed to qualify, you’re still stuck with paying back tens of thousands of dollars. However, there’s a way to minimize the amount of sacrifice you’ll be faced with. Even if you don’t want a life of public service, it can be a solution in itself.

Refinancing your student loan is a way of lowering the interest rate on your debt and has the bonus of being an option whether your loan came from the government or not. Refinancing is free and will enable you to get a lot more out of your income than the “satisfaction” of making on-time payments every month for decades after you leave school.

Rate Better

Being able to qualify for better student loan refinance rates can help you pay off debt faster as well as pay less interest over the life of the loan. It’s almost guaranteed to lower your monthly payment and if you had a co-signer, student loan refinance is a step that can release them from that obligation.

Refinancing involves getting a private lender to pay your existing loans in exchange for a repayment schedule and a lower interest rate. You’ll still have monthly payments, but they’ll be more manageable and save you money over the long term.

To qualify, you’ll need a credit score in the high “fair” range, in the 600s or mid-700s, so watch your spending habits. The better your credit, the better rate you’ll be offered. You’ll also need to prove income sufficient to handle the new payment and other expenses—silly things like rent and food.

The decision to refinance student loans is a no-brainer if you can qualify for a lower rate and don’t feel like you need whatever benefits might be granted by government loans.

Getting Out From Under

Education shouldn’t be expensive, but until we figure out a way to change things, we’re stuck with the current system. Getting student loan forgiveness isn’t trivial, but it is possible. It takes a long time and depending on how you approach it may not ultimately matter.

Getting better student loan refinance rates is, however, guaranteed to help and provides relief in a variety of ways. It can be the more attractive option and if it’s a possibility for you at all, it would be kind of stupid to pass it by.