This Is How We Ended up With Over $600,000 of Student Loan Debt

Hey everyone! As the site has grown, I've come across more and more stories that are similar to this one. While obviously, student loans are tough for everyone that has them, I think people with professional degrees are overlooked because we just assume that their high salaries help them overcome all financial obstacles quickly.

But in reality, that's not the case. That's why I wanted to share Amber and Danny's story today. They run the personal finance blog Red Two Green and are working on over $600,000 of student loans. Enjoy! ~M$M

When we started dating in 2007, we were both exactly $0 in debt. Over the last decade, that beautiful $0 ballooned into a colossal $649,000. The question that we get asked all too often– how did this happen?

How we ended up with $600,000+ in debt

After getting married, we graduated with our bachelor’s degrees in 2010 fairly unscathed. Danny had NO student loan debt, and I graduated with a measly $3,500 that I had to borrow my last semester. While measly, it was still a negative number. I had never had debt before. It made me uncomfortable.

Our plan was always to go to law school (me) and dental school (Danny) and we knew that student loan debt would assuredly accompany our higher education. What we didn’t know was just how much debt we would walk away with.

What we did

Danny went to graduate school to amp up his application for dental school. In total, that Master’s of Biomedical Science degree cost us about $60,000. We justified that if that degree could get him into dental school, it would be worth the cost.

I was lucky to attend a very affordable law school, where the cost of tuition was low. I earned my J.D. in 2015 with about $44,000 in student loan debt. I ended up applying to law school one year earlier than we anticipated.

Our original plan was for me to start one year after Danny started so that we could graduate together. This would allow me to work full time for a year to save up a little for school. At the last minute, we decided it would be better if I started school as soon as I could.

I would become a lawyer one year faster, meaning I would be earning a lawyer’s salary one year earlier. It seemed like I would earn more money as a lawyer than as a “sociologist.” (Also, hey p.s. there just aren’t that many sociology related jobs for undergrads.)

But making this last minute decision meant that I had already missed deadlines for scholarships. That did not come without a cost and should have been factored into my decision of whether to wait one year or apply immediately to law school.

And then there was dental school. Oh, my lucky stars there was dental school.

I think we were just so grateful that Danny got into dental school that we didn’t take the time we should have to choose the right school for us.

Danny’s school cost about $84,000 a year. At 6-7.9% interest, that added up FAST and left us with more than $600,000 in combined student loan debt by the time Danny graduated in June 2016.

During school

We lived frugally. We used coupons. We didn’t buy fancy things. I was able to work during some of my summers and part-time as a research assistant which helped us to have something to live off of besides our loans.

We did not think too much about our student loans. It never occurred to us that we could (and should) start making payments while we were still in school. We had heard of income-based repayment plans and were familiar with a few different strategies to paying off the debt, but we never stopped to consider what we were going to do.

I think we assumed that things would magically work out for us.

We did not use a budget while we were in school. We rationalized that it was too difficult to calculate what our budget should be when we weren’t even earning significant income. Our thought process was to spend as little as we could.

But student life is a trap for eating out too often and drinking too much soda. We fell into those traps.

Then I graduated law school, and everything changed.

I took a job as a judicial law clerk when I graduated. It was an AMAZING experience, but let’s just say it was not a huge money maker. I had student loan payments that were then coming out of their “grace period.”

We had a new son to worry about. No one that I talked to (faculty/professional development/financial people at my law school, other law students, other dental students) seemed to have solid advice for managing student loans.

Most people I talked to were convinced that finding the way to lower your monthly payments as much as possible was the way to go.

I didn’t know much about money, but I knew that lower payments meant it would take longer to pay off, which meant more interest was accruing, which meant school was costing more in the long run (this is true even if your loans are going to be forgiven using any of the IBR plans).

I got stressed out. Me being stressed out lead to a furious journey, seeking the best solution for how we were going to handle our loans. I wanted to know every single thing there was to know about money and student loans, and how to get out of debt as quickly as possible.

I read every personal finance book I could get my hands on.

P.S. – Some of my favorites for starting out:

• Total Money Makeover
• 7 Years to 7 Figures
• The Millionaire Next Door
• Rich Dad Poor Dad.

If there is a book, blog or a forum dealing with finances, student loan debt, investing, and or becoming a millionaire, I have likely read it.

What we would have done differently in school

There are a few things we definitely would have done differently:

1. Hunted for scholarships before and during school
2. Had a more solid application for dental school so we could have chosen to attend a cheaper dental school
3. Done something to create passive income while in school (we could have purchased a duplex and rent out one side)
4. Side hustled during school (we could have started our blog sooner, sold things on e-bay, sold plasma, anything to make a few extra bucks)

Here's what we are doing now to get ahead

We now have a budget and a financial plan in place. Our goal is to have no student loan debt by the end of 2021 (5 years after graduation). We live off of about $3,000 per month and the rest of our combined income and income from side hustles (like our physical and financial a fitness program) gets dumped into student loans.

We paid off my law school ($48,000 after interest) in less than 18 months and so far, we are on track for paying off Danny’s dental school by 2021!

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Posted in: Student Loan Debt