Paying Off Twice Your Student Loan

Editor’s Note: This article previously appeared in a different format as part of The Atlantic’s Notes section, retired in 2021.

Earlier this summer, a Canadian reader, Kristen, voiced the “Unpopular Opinion” that she’s “tired of hearing about people’s student loan debt,” given her dogged efforts to pay for her own college tuition without loans and thus forgo “the ‘university life’ that I saw on TV: brick buildings, living on campus, and fun parties every weekend.” But a reader who grew up in poverty, Mary, responded to Kristen that “without those loans that I ‘chose’ to take out [while working as a single mother of three], I would likely still be working for minimum wage and living in poverty.”

Here’s another key perspective from Olivia in Dayton, Ohio:

I appreciate the comments of others from Canada and from Kristen that show how university can be less expensive in that country but still a burden that has to be paid. I really wish I would have walked Kristen’s path, because she is so smart for making the choices and sacrifices that she did. I hope she is rewarded for those good choices throughout her life.

However, I am disheartened by the constant attention to the newer grads. I am mid-forties and graduated during the 1990s. It is my friends and peers who are having an awful time paying these loans, some 20 years later. Why? In the ’90s, the interest rates were at 8 percent … guess who is STILL paying those rates.

None of us were paid what we had hoped (or were told to expect) in the years after graduation, so we went on income-based repayments—which translates to paying a bit of the interest but not all of it and no principal. Because of those situations, most of us still owe our principal and now owe years of interest on top of it, even though we’ve been making payments consistently. Many of us now have balances that are two times what we actually borrowed.

No politician is talking about this group. No one in the media is talking about this group. Our rates cannot (or will not) be changed, so we are paying 8 percent, while the banks borrow money at zero percent and new grads get 3 or 4 percent. [CB: Those figures indeed roughly correspond to this timeline of federal student loan interest rates.]

I know that we should have taken Kristen’s path, but she has no idea how we were spoken to and coerced by guidance counselors and financial aid reps. We feel very duped and just keep paying … probably forever, because with the interest, most of us now owe less on our mortgages.

Interest rates might be lower, but the costs of college are also much higher, as reader Renie notes:

One factor that hasn’t been discussed much about American students today is how quickly the situation has changed and just how much the price of tuition has gone up. I can’t speak to this as a student, since during my undergrad days my middle-class parents paid everything, and during my grad school my tuition was mostly paid by the state university I attended and I was able to work as well.  When it came time for my children to attend college, my husband and I were able to pay for our children’s tuition and room and board with our incomes and help from college accounts set up by their grandparents.

We were well aware that the money was finite, however, and that the costs were going up exponentially as our children were in school. By the time the younger one was in her last year, we realized that if she had been a few years younger, we would have had a much harder time paying for everything. Tuition and room and board were going up way faster than our salaries—and we both worked at universities.

I don’t blame families who have difficulty paying their children’s tuition or children who aren’t aware of just what they are signing away when they sign for student loans.  However, it’s now necessary for students to educate themselves about the debt they are incurring.  It’s also time to seriously consider the kind of approach that Kirsten took.