Cautionary Tales, Part I

This is the first of three student loan debt case studies

Let's meet Jan. Jan is the sister of a good friend of mine who agreed to tell me her story. While she isn't too shy about telling people about her plight, she did ask that I only use her first name, sort of.

Jan went to a private liberal arts college in the Chicago area. Her grades were good enough to get in, but not good enough to qualify for a real scholarship. She was awarded a $1,300 a year scholarship, but it did little to cover the cost of tuition, much less room and board.

Since she was a little girl Jan always wanted to be a teacher. She also wanted to live somewhere urban and cold, as opposed to the rural South where she grew up. So when it was time to pick a college, she applied to three, all in the Chicago area. As luck would have it, her first choice accepted her.

She enrolled in the college and signed her life away to get student loans to pay for it all. You see, Jan's parents are what we call the working poor. They both work, but don't make much money. They do however make enough to not qualify for most need-based aid.

Jan worked all through school, except when she did her teaching practice, and during summers to help pay for her room and board.

To make a long story short, Jan graduated with $87,000 in student loan debt and a monthly payment of over $650.

She accepted a job in Chicago teaching at a private school, making less money than even an underpaid public school teacher. It wasn't long before the student loan payment overwhelmed her. Between her rent, utilities, car and insurance payment, and small credit card debt, she couldn't keep up with the student loan.

After two years of struggling, she resigned from her position, broke her lease and moved back down south to live with her parents. She spent more than a year substitute teaching before she found a teaching job, again in a private school.

That was four years ago and she is still living with her parents, unable to make it on her own due to the crippling student loan payment. She has been out of college for seven years and is no closer to financial independence than when she went to college.

Her Mistakes

Going to Chicago. She should have chosen a local college where she could have lived at home and saved on room and board.

Choosing a Private School Knowing that she was going into a relatively low paying field, she should have chosen a public university. The degree will still get a job, and the debt load would be much less.

Accepting Low Pay Knowing how much she was going to have to repay each month, Jan should have taken a position at a higher paying public school until she was more settled and had her car paid for. Also, with a few years teaching experience under her belt, she would make more money.

What She Did Right

Working Working to help defray the costs saved her more than $18,000 of debt, not counting interest. It was definitely a smart move on her part and one that many college students don't make.