As of this year, Americans owe a whopping $1.6 trillion in student loan debt—a burden collectively shouldered by 45 million borrowers. Democratic candidates like Elizabeth Warren and Bernie Sanders have proposed plans to tackle the Sisyphean task of loan repayment, through a combination of debt forgiveness and free tuition at public colleges. Warren’s proposal, for example, would cancel $50,000 of student loan debt for families with a household income of less than $100,000. Sanders, on the other hand, wants to eliminate all student loan debt regardless of income.
But in the meantime, countless Americans are forced to choose between paying their bills and delivering on monthly loan repayments. College graduates often believe it will only take them a few years to pay off their loans, but data from education tech company Cengage indicates that it takes borrowers two decades on average to rid themselves of up to $40,000 in student loan debt. We asked some millennials how they manage their student loan debt—if they’re paying their loans back at all—and how those payments have impacted their finances.
Student loan debt: $53,000
Income: About $50,000
Jason Butler graduated from college in 2008, as the recession hit, and struggled to find a full-time job. For a year and a half, he cobbled together an income through retail jobs and bussing tables. “I had to make some decisions of whether to pay my rent and my cell phone bill or to pay my student loans,” he says. “Anybody in their right mind, if they only had a little bit of money coming in, would pay the rent and the cell phone bill.”
When he went back to school, he had to take out another $12,000 in loans, bringing his total balance to about $50,000. By 2015, that number had inched up to nearly $60,000. Butler decided it was time to confront his debt. “I made a pact with myself to get focused and start paying it off,” he says. “I started reading financial blogs and saw that people were paying off their student loan debt and living the life that they wanted to live.”
Over the last few years, Butler has brought his sizable debt burden down to $53,000. His loan repayments clock in at about $330 each month, but with a base salary of $38,000, Butler has found that additional sources of income are key to making those monthly installments. “There were times where I had to short another bill or pay the minimum of a credit card to make sure that I had that money available,” he says. “I would be [living] paycheck to paycheck if I didn’t have side hustles.” Between his personal finance blog and eBay store, Butler brings in an average of $1,000 each month. “A lot of jobs have a cap on what you can earn,” he says. “There are hundreds of side hustles out there. You just have to have the discipline to make it happen—and not try to keep up with the Joneses.”
Butler believes that paying off student loan debt under $100,000 is within reach for many people. “Nobody is going to save me except for myself,” he says. “I can wait forever for Bernie Sanders or Elizabeth Warren to cancel this debt—or I can just make it happen.”
Student loan debt: $37,000
Income: More than $55,000
When Isabelle Simil graduated from college in 2010, she had accrued a little over $15,000 in student loan debt. Eventually, she opted to consolidate her loans, a decision she made with little understanding of how much interest that could add over time. Now she owes $37,000 and counting. “It’s like you’re driving somewhere, and you think you’re going somewhere, but you’re just going in circles,” Simil says.
Over the last nine years, Simil has only delivered four to five installments of her loan repayment—no more than about $2,000 in total. She works for the Boston Public Schools but also has several other paid gigs, from babysitting to personal care assistance; in total, she earns close to $40,000 annually after taxes. Eventually, she hopes to improve her credit and invest in property that she can rent out, to help foot the rest of her loan repayments.
Part of the reason Simil hasn’t paid off more of her student loan debt is that she isn’t motivated to set aside more than $400 each month for the government. “I feel like, why should I give you all this money?” Simil says. “I have my own stuff to do with my life. You guys can wait.”
But Simil admits that her inability to pay off her loans is a reflection of her financial life. She could likely afford the loan repayments if she spent her money differently. “It’s not that it’s difficult to pay it,” she says. “The problem is I haven’t really been wise with money management.” She says a significant portion of her earnings goes toward things like food, vacations, and Uber rides.
Well into her mid-thirties, Simil is still struggling to shift her mindset and learn healthier financial habits, though she has slowly started budgeting more carefully and building her retirement savings. After almost a decade, the student loan debt she has accumulated weighs heavily on her. “You can’t live a life and be happy if you’ve got mounds and mounds of debt,” Simil says. “So as much as I want to live my best life, I have to have a safety net.”
Student loan debt: $1,200
Income: More than $70,000
Just five years after college, Eric Haque is nearly debt-free, aside from an outstanding $1,200 from a business school loan. Since he graduated, Haque has steadily paid off the $15,000 loan he took out for his undergraduate degree. After years of shelling out more than $400 in monthly payments, Haque settled the last of his debts—about $4,000—in one fell swoop. “I probably got halfway through it, and then I called them and I was like, ‘What’s the payout amount?'” he says. “And I sold almost everything I owned, including my car.”
Despite working in finance, Haque says he didn’t have a grasp on how interest was applied to his student loan debt. The driving force behind his monthly payments was fear, rather than the knowledge that the debt would only grow larger. “To be honest, the main reason I [paid] was because those statements that would come in the mail would just scare me,” he says. “I was just afraid of J.P. Morgan.”
Haque now lives in Houston and earns more than $70,000, which helped him pay off his debts—including more than $9,000 in credit card debt, which he racked up starting at 18. But when he graduated from college, he was living in New York and making just over $40,000; paying off his student loans wouldn’t have been feasible had he not been living at home at the time. “Luckily I was still staying at home,” he says. “I wasn’t the average person [in New York]. If I was, I don’t know how I would have made that.”
Still, Haque believes paying off debt is largely a matter of shifting your priorities—as much as works for your lifestyle. “It’s a mindset,” he says, pointing to people who chip away at $100,000 in debt on a $40,000 salary. Some people may swear off eating out until their debts are paid off; others may live with roommates well into their thirties to pay off loans. “You have to have the correct mindset of ‘Hey, I don’t want this to be a detriment to my life,'” he adds. “And you make your priority changes. These are the tough decisions you have to make.”