Student loan debt affects borrowers at all income levels. There’s a misconception that, if you only earned more money, it would be easier to pay off your loans — but that’s not always the case.
Many people with advanced degrees earn at least $100,000 a year. However, graduate school is more expensive than pursuing an undergraduate degree, often resulting in higher loan amounts. And when you combine undergrad and grad school loans, the amount can be staggering — and difficult to repay, even for high earners.
The psychological impact of student loans
Dr. Karla Ivankovich is a clinical counselor and CEO who works with medical students and grad students who are so deeply in debt that their income will never meet their student loan payment.
“From the psych side, they [borrowers] are depressed and anxious, and it is impacting their future,” she says. “Many of my clients have admitted to suicidal ideation revolving around the fear of failure because the debt looms so largely.”
She says a lot of these individuals come from middle class families, whose parents earned too much for financial aid but not enough to assist with college.
“Because of this, the student has taken out a large amount of loans as a means of staying in school.” But as they prepare to graduate, she says fear takes hold and they end up seeking counseling to deal with their anxieties.
“Because their debt often exceeds $100,000, they worry they will never be able to afford to buy homes, have children, etc., and this causes them to have diminished hope for the future.”
We asked a few high earners to tell us how they’re managing their student loan debt, and how it affects their day-to-day lives.
Moonlighting to make ends meet
Daniel Cicala, who lives in Wilmington, Delaware, is the marketing director of a small consulting firm. He and his wife had in-state tuition with scholarships for undergrad studies, but when they finished graduate school, they owed a combined $150,000. In seven years, the Cicalas have paid the debt down to $50,000 and refinanced portions to reduce “exorbitant interest rates.”
Their minimum monthly payments are approximately $1,500 per month, which is more than their monthly mortgage amount.
Cicala has resorted to moonlighting 10 to 20 hours a week to help pay off the loan. He earns extra income from playing poker, which also involves a significant amount of study time. Cicala got into online poker as an undergrad, at first just for the fun and challenge of it.
After their first child, his wife cut her hours at work, they crunched the numbers and they saw there was a manageable shortfall in the budget he could easily cover by playing 10 to 20 hours per week.
“Based on my win rate, 15 hours per month could, in theory, close the gap, but … I had to book as much volume as I could to pad myself against the inevitable downswings and breakeven stretches that can last months at a time,” he explains of the process of turning the game into a a side hustle.
Cicala isn’t home most weekend nights, so he and his wife rarely spend time with the kids together. She works nights three days per week. “And obviously, there are a lot of stressors and unknowns when it comes to our month-to-month financial situation,” he adds.
Cicala admits that his family is in a fortunate situation that doesn’t require more drastic sacrifices. “I work from home with flexible hours; also, we are both from upper-middle-class families and received help from my parents when purchasing our home.”
But student loan debt continues to effect the family. The amount they owe was a deciding factor in how quickly Cicala’s wife went back to work after the birth of each of their two children.
“We are fortunate enough that she works less than 40 hours per week, but she would opt for working less than three nights per week if we could make the budget work,” he says.
“We are holding off on deciding if we’d like to have a third child until we have finished off paying student loans.”
Making sacrifices to reach the finish line
“Making a six-figure salary, one would expect paying off loans to be a piece of cake,” says Lisa Cue, an attorney in Washington, D.C.
Cue graduated from law school with $92,000 in student loans, none of it from her undergraduate education. She was on a 10-year repayment plan with a minimum payment of $1,000 a month.
However, she paid approximately $5,000 monthly and paid off her loans in 18 months.
“To be fair, I could have done fine on a 10-year loan payoff timeline, but I wanted to have the freedom of being debt-free before buying a house, starting a family, etc.”
“For the first six months, I was an extreme miser,” Cue says. “I figured I could just power through for a year, then I could relax.”
She didn’t purchase any furniture, and she kept her 15-year-old car and her six-year-old laptop. She didn’t have a smart phone or a TV, and says she would skip meals rather than eat out.
“I wasn't taking any vacations or going to the movies, but after those several months, I thought this was too extreme.” Cue says she was working all the time and not having any fun — and sometimes, she had nightmares that something bad would happen and she wouldn’t have any savings to cover an emergency.
“So I diverted some money toward savings, and I bought a couch, and I stopped berating myself if I forgot my lunch at home and had to buy one out.”
She did end up having an unexpected medical emergency that resulted in a four-day hospital stay, and she was glad she had emergency savings. And she doesn’t regret loosening her original one-year payoff deadline, because she still paid off the debt in just 18 months.
Cue had also worked for four years before attending law school. She says this allowed her to save a lot of money, and her debt was half of what it could have been. “If I had had more debt, it would have increased my debt timeline a lot,” she says.
Learning to live on next to nothing
Matthew W. Burr of Elmira, New York, is a human resources consultant and owner of Burr Consulting, and he’s also an assistant professor of business administration at Elmira College.
Burr’s debt is from two master’s degrees: an MBA he completed in 2017 and a second he’s still working on. After years of aggressive payoff, he’s left with a balance of $36,000.
Burr’s loans are in deferment while he’s in grad school, but he still pays on his loans to stay ahead of the interest.
“I make payments four to five days per week to ensure no interest accrues and all goes to [principal],” he says.
He says it was a major risk to start his consulting company in 2015 and start his MBA in early 2016.
However, he says the student loan debt has not impacted his daily life because he is learning to live frugally. Burr rents a house for $600, including utilities. He limits his cash budget to $40 to $100 a week, does not have high-speed internet at home, and has a five-year-old cell phone.
“I've learned to live on absolutely nothing and extreme budget,” Burr says.