Some of the student loan debt stories I heard this week from readers were the stuff of anxiety dreams. Except these people weren't dreaming.
"I just stopped opening my mail," said a woman who owes more than $150,000.
Her story is extreme but had the same ingredients as a half-dozen nightmare stories I heard after I asked people on Facebook about their student loans. She had undergraduate debt, and then borrowed again for graduate school in counseling, which she thought would mean decent pay. She was in her 30s. She never really calculated how much her total month debt payments would be, but figured her salary would cover it.
"I was naive," she said. "It's nobody's fault but mine." (Lots of people used a version of this phrase)
Her plan was to become a psychotherapist, but then, like a lot of people, her life took an unexpected turn. She had a child. She got divorced. She needed to go through more steps to be certified to practice, but that didn't work out. She negotiated with loan companies about her payments and found work that made enough to cover her basic expenses and her loans, but then her car broke down. And she couldn't cover the loans. Things just kind of snowballed. She's had some other personal problems and is still out of work.
"I'm at the point where I have about a month left before I have to go to work at McDonald's," she said, and then began to cry. "The thought of having a masters degree and having to work at McDonald's just says what a failure I am."
Then there's the young woman who took out $150,000 in loans for law school and didn't pass the Alaska bar exam. Now her loans are deferred, but she isn't sure what she'll do to cover the payments when they come due. People have this idea that going to school will open all these doors, she said. But sometimes doors don't open.
"I think I probably would have figured something else out, instead of going to law school," she said. "I do regret it, I think."
Those are the extreme horror stories. On the other hand, there were people like a nursing student I talked with. She is about to graduate with around $17,000 in debt. She plans to live with her parents for a while and pay it off. She figures she'd get a job easily and knew that her starting salary will allow her to cover it. She's in a pretty ideal situation. But a lot of people are somewhere in between, paying off debt they can mostly manage, but at a cost they didn't really understand when they applied for loans.
Education-related debt has never been higher in the U.S., mainly because college costs more than ever. (The cost of college has increased 400 percent between 1982 and 2007). There's also the issue of the type of interest that students are paying on both private and government loans. On average, debt for students who graduated in 2011 was $26,600, according to American Student Assistance, an non-profit that provides guidance on student loans. It may be higher now. Of the close to one trillion dollars American students are paying back, approximately $85 billion is delinquent. According to ASA, 5.4 million borrowers have at least one account past due. Over the past four years the annual default rate for the Alaska Supplemental Education Loan Program has risen from 4.6 percent to 7.4 percent.
Debt has been a major topic in Washington, D. C. Just this past week, Alaska Sens. Lisa Murkowski and Mark Begich voted for a bill that links student loan rates to financial markets. That means rates will fall in the short term, but will increase if the economy improves. It's also an ugly fact of life for a good number of people of my generation and younger in particular. According to statistics, 2 in 5 borrowers are under 30.
All of which explains why I was interested in Nathan Havey, a 31-year-old who recently conquered his $60,000 in student loans with the help of the Internet.
Havey lives in Anchorage and owns a small consulting company now. But two years ago he was unemployed and in debt. He had a graduate degree and had worked as a Senate staffer Washington, D.C. but then he fell on some bad luck. He took a job doing social media and got laid off. It was the middle of the recession and he couldn't find another job. He went on unemployment. He had to start making payments on his loans. He was 28. He couldn't stop thinking: "Shouldn't I have my s--- together by now?"
So he began a video blog about his attempt to find work and pay off his private student loans by his 30th birthday. To do it, he needed to pay $875 a week for the next 80 weeks. He figured the blog would help keep him accountable. He planned to share it with his 1,200 Facebook friends every week.
"And at the moment, I don't have a job. I have a bunch of random skills and talents, I have dedication and passion to spare, and I have zero money in savings," he wrote on week one.
(I'll mention here that the stakes weren't as high for him as they are for some people. He didn't have undergraduate debt. He had a supportive family, including his parents, who own a documentary film company. He was living with his girlfriend, who would soon become his wife. She has a law degree from Harvard.)
What happened next had the feel of a very long reality television show. He made a long list of his marketable skills (dancing, party hosting, being a clown among them). And he tried everything he could to make money. He dug foundation holes in the middle of a Massachusetts winter. He panhandled. He took donations on his website (he didn't get many.) He chipped away slowly. And he started to get noticed for his ability to tell his own story via social networks. The economy improved. Slowly, he began to pick up clients who wanted help with websites and social media.
About 50 weeks in, he got pancreatitis. He didn't have health insurance. He ended up in the hospital, which cost (lucky for him) only $8,000. It was in the hospital that he had a revelation. He'd been making all these videos for his blog, but he'd never offered to do them professionally.
When he got out of the hospital, he added making videos to his list of skills and, as he said, things started "poppin.'"
Approaching his 30th birthday, however, he was still close to $30,000 away from his goal of getting out from under his graduate school debt. And that's when something miraculous happened. A person knew very distantly on Facebook sent him a message.
"They wrote me and said they'd been inspired by my blog and would like to pay off the remaining balance," he said.
And they did.
"In the space that was opened up for me when my debt went away, I decided to start a company," he said.
Thrive Consulting Group now has four employees.
In terms of finding work, he told me that he learned that you have to be persistent, use your network, take the work you can, work hard and get good at telling your story. On the subject of student loans, he though it should be easier for borrowers to see what their monthly payments will be after they graduate and be able to compare that to their earning potential with their degree. His experience made him question why education is so expensive when it's good to have an educated populace. Shouldn't politicians be working on that problem, rather than fussing over student loan interest rates?
Debt keeps people from taking risks, whether it's starting a family or starting a company, he said. He was fortunate to have found a creative way out of his, he said. But why couldn't everybody be so lucky?
What is your debt pay-off story? What's your advice about how to deal with college debt? Write me at jomalley@adn.com. Or post a comment below. We'll revisit the issue in a future column.
Julia O'Malley writes a regular column. Reach her by phone at 257-4591, email her at jomalley@adn.com, follow her on Facebook or Twitter: @adn_jomalley.
By JULIA O'MALLEY