I Graduated From College With So Much Debt, There is No Hope


Dear Steve,

I am over $150,000 in debt from students loans, approximately 100k is from private student loans, 4 separate loans, while the remainder is various federal loans.

I am 24 years old and got this debt from undergraduate education where I got a sociology degree and now at my first job make less than 35k/year before taxes.

In retrospect, I see how this was a stupid decision to acquire that much debt from undergraduate education and a degree that would not lead to reasonable income, but I was young and the first generation college student who was not informed on the financial implications of those decisions.

My credit score is mid 600s because of medical bills from college (no insurance at the time) and maxed out credit cards I used for my family so my credit is already kind of low to begin with.

My question is would it be smart or advisable to simply stop paying my private student loans and continue paying federal loans since the government can garnish my wages?

I am really up to my neck in bills and do not see an end in sight. I can’t even go back to school to get a graduate degree to hopefully make more money because I would need to get another loan and my credit wouldn’t allow me to do that.

And given my bachelor degree, I do not anticipate a huge jump in my income in the next decade. Not to mention I have not started saving for retirement and have not a dime put aside for emergency savings. I don’t know if it’s a smart decision to simply stop because then I won’t be able to get a lease, utilities, etc. but if I continue making these payments I can’t move out of my mother’s house.

I’m in a frustrating cycle of debt that dictates everything I do but I do not want to stop making these payments and then getting a house later down the road becomes difficult because of my bad credit and the I regret it. Please help!

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Dear J,

Do You Have a Question You'd Like Help With? Contact Debt Coach Damon Day. Click here to reach Damon.

I wish your situation was unique and uncommon, but it’s not. I can’t even tell you how many people have contacted me over the years in the same situation. It seems most have general degrees or degrees like sociology or social work.

When entering college there is little to no help to educate students about the reality of income based on the degree they hope to achieve. And you are luckier than 75% of students who have debt and no degree.

At some point you need to put responsibility first for life ahead, rather than behind. This means developing emergency savings and doing something for retirement, starting now.

The fact so much of your debt is in federal student loans that gives you some options. I would suggest you read “The Ultimate Guide to Dealing With Student Loans You Can’t Afford.” But keep in mind, those income based repayment programs have a big gotcha involved. Read “Why Income Based Student Loan Payments Can Be a Terrible Trap.”

When it comes to the private student loans I wonder how much of that debt was not used for qualified educational expenses. Private student loan debt that was not used for that purpose may be discharged in bankruptcy. See “These Private Student Loans Can Be Easily Discharged in Bankruptcy.

Considering the totality of your situation and other debt, it’s probably time for you to meet with a local bankruptcy attorney who is licensed in your state. It is your right for a legal fresh start from your unmanageable debt so you can do better moving forward. In fact it is a right afforded you by the U.S. Constitution.

Damon Day - Pro Debt Coach

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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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