Student loans can be difficult to repay

By Gertha Coffee

The Atlanta Journal-Constitution

Twice a week, lawyer Jessica Youngs leaves her Buckhead office and heads to Chamblee, where she changes from business attire into a swimsuit and spends a couple of hours teaching kids to swim.

On Saturday mornings, Youngs, 24, teaches swimming for four more hours. Saturday afternoons and evenings, she spends another four-to-six hours working as a lifeguard. Sundays bring no rest, for she is back at the pool, working 9-to-12 hours as a lifeguard.

While it’s fun, “I don’t like being in the water so much,” said Youngs, an instructor at Dynamo Swim School.

But facing $25,000 in student loan payments and another $22,000 in school-related debt -- including a credit card and personal loans from family -- Youngs is at the pool to keep her head above water.

Her situation is hardly unusual. Many students use loans to finance college and repaying them can be a challenge. Two-thirds of college students borrow money for their education, graduating with an average debt of $23,200, according to the Project on Student Debt, an initiative of the nonprofit Institute for College Access and Success.

The high unemployment rate left many students graduating this spring without pending jobs but with hefty student loan debt. Some will have their first payments come due as early as July, if they don’t get a forbearance, deferring payment. When they can find work, some are working two and even three jobs to cover their loans.

One-third of Youngs' income goes to household expenses for the Buckhead apartment she shares with boyfriend Alp Kirmizioglu, a civil engineer. The rest of her salary goes to cover her student loans and other college-related debt, health insurance and auto insurance. A litigation attorney with Mark V. Spix P.C., Youngs has worked seven days a week since early May and will continue to do so until the end of September, when the lifeguard duties end.

Youngs came to Dynamo to find Lauren Lamb in the same boat. Lamb has a master’s in sports administration and is working seven days a week in three different jobs. The Florida State graduate earned her postgraduate degree last summer from Georgia State and owes about $15,000 in student loans.

Normally, Lamb said she works two jobs. She is a site director at Dynamo but also works part time as a sales associate for Bath & Body Works. Because it’s summer, she picked up a third job coaching a swim team.

“I can live on the salary from my main job,” said Lamb, 24, who leases a Buckhead condo from friends. “Once the student loans kicked in, I said I need to do something else.”

Her loan payments amount to $150 a month, she said, and her parents had planned to pay them off, until "the recession cost [her father] his job.”

Lots of her co-workers hold down two jobs, Lamb said. Some friends have more than $100,000 in loans and are worried about repaying the money.

“If you find something you want to do, I would definitely say get a loan,” she said. “But watch how much you get.”

According to the U.S. Education Department, federal student loan disbursements in the 2008-09 academic year rose 25 percent over the previous year, to $75.1 billion. The amount has long been on the rise, experts said, but has grown dramatically recently because of the weak economy.

“Obviously, people are going to go to college and it’s expensive," said Paul Golden, spokesman for the nonprofit National Endowment for Financial Education. "But getting a higher degree doesn’t have a downside. It’s an investment in what you do.”

A heavy debt load can delay a person’s ability to leave home, buy a house, purchase a car or even marry and start a family, experts said. Student loans can’t be discharged in bankruptcy.

Some people have no choice but to defer because they have no income, said Rodney Tullie, a certified credit counselor with CredAbility in Atlanta, formerly Consumer Credit Counseling Service.

He has counseled some clients who've left college with $50,000 to  $100,000 in student loans. He recalled one person who had more than $100,000 in student loans, but had failed to earn a degree and had no job.

“He was going into the Air Force, which would give him a solid stream of income to help service that debt,” said Tullie.

Students need to look at all options to finance their education, Tullie said, even before they even start college.

“If you are looking at a career making $25,000-to-$30,000 a year and you’re going to have $70,000 in student loans, you need to look at a different school,” he said.

Scholarships covered Youngs’ undergraduate degree from Eastern Illinois University. She entered law school at age 19 at the University of Illinois, footing the bill largely through federal student loans and credit cards. She graduated in May 2008 and is licensed to practice law in Illinois and Georgia.

“My first job out of law school was in Illinois and that firm ended up dissolving. I had all those loans and no income,” said Youngs. She moved to Atlanta in December 2008 and started working for Mark Spix two months later.

When her Illinois firm dissolved, her parents chipped in to pay off one of her three credit cards. She has since managed to pay off the second and now has just a $7,000 balance on the last one.

She has had to revert to some of her earliest job experience. Youngs first worked as a lifeguard in high school and started teaching swimming at 16.

“It pays better than minimum wage and it’s a skill that has served me well,” she said. “Who would have thought I’d need it now?”

Payment options

Some options for graduates having trouble repaying federal student loans:

• Borrowers can request a deferral or forbearance, which suspends payments temporarily.

• The extended-payment option makes monthly payments smaller by increasing the loan term.

• Income-based repayment allows the borrower to pay based on his or her monthly discretionary income.

•  Starting July 1, all new federal student loans will come directly from the federal government. The move will eliminate fees paid to private banks that act as intermediaries, saving the government billions of dollars. The government expects to use much of the savings to boost the Federal Pell Grant Program for low-income students starting in 2013 and make it easier for some workers to repay student loans.

Sources: U.S. Education Department and National Endowment for Financial Education.