And another reader wants to know if she use a credit card or a debit card.

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Question: I can’t believe how much student loan debt I have. It feels like I can barely get by each month and there is no way for me to ever get out from under these loans.

I have both federal and private student loans that add up to over $125,000. I graduated with a degree in graphic arts. I’m ashamed to admit it but a lot of my private student loans were used for living expenses and just enjoying the college experience. I can’t afford my payments and soon my private loans will be coming out of deferment with balances that are already higher.

— Stressed Out Beyond Belief

Steve Rhode answers…

There are so many people who contact me who are in the same situation. It may be of little comfort but you are not alone.

Schools have little need to make sure the degree program you are pursuing is going to allow you to earn enough money to repay your loans. The job of the school is to sell students into seats so they can offer their product: education.

Student financial aid offices seem to be mostly focused on helping students to get loans to afford the tuition. They are not there to tell you if you are making a smart move by getting the loans.

Society places a high value on having a college degree and the conventional wisdom is that getting one will be worth it regardless of cost. Yet nearly 75 percent of people with student loans never finish their degree for one reason or another. They are saddled with debt and have no tangible benefit to show for it. There is a growing student loan debt crisis.

One step that seems to escape, students, parents, and schools are some cost versus benefit analysis of what a specific degree will allow the graduate to earn and how much debt will be sustainable on that salary.

When it comes to repayment, the good news is there are some programs, like the Income Based Repayment program for federal loans, that will allow you to keep your loans current at a reduced monthly payment. Based on your income, payments can be as low as $5 per month. After 25 years of low payments, the balance will be forgiven. Your payment will adjust annually.

On the private student loans, you mentioned a very key point. It seems your private student loans were not used for qualified educational expenses and thus not excluded from elimination in bankruptcy. For more on this, see my article and find out why many student loans are eligible for discharge in bankruptcy regardless of the common myth they are not.


Crushed by student loan debt and worried you’ll never pay it off? There is help available.

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About the Author’s writers are journalists, personal finance experts, and certified credit counselors. Their advice about money – how to make it, how to save it, and how to spend it – is based on, collectively, a century of personal finance experience. They’ve been featured in media outlets ranging from The New York Times to USA Today, from Forbes to FOX News, and from MSN to CBS.

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