DAVID GREENE, HOST:
MORNING EDITION recently asked young adults, members of the millennial generation, to talk about some of their biggest worries. Almost two-thirds of their responses had something to do with college debt. At more than $1 trillion, student loan debt in this country is bigger than credit card debt. As part of our look at how Americans are paying for college, we got in touch with three people who responded to our call-out, Amber Michael, Emily Garvey and Jen McGarvey.
We asked them just how much they owe on their student loans. Amber went first.
AMBER MICHAEL: About $92,000. I guess I didn't really think too much about how fast it was adding up at the time. I mean I worked part time through undergrad and grad school, but it adds up really fast and then plus interest and then, you know, after I graduated I had, like, 12 different student loan payments so I decided to consolidate some of them and just seeing it all come together, it was like, wow, that's a lot of money.
GREENE: Now, it's 92,000. You've come down from something that was even bigger?
MICHAEL: Yeah. I'm not sure what the actual start number was, but it was like 116.
GREENE: You say these numbers and when I first sort of read about your situation, I thought you were going to come in and sort of say 92,000 and sort of - you would hear the stress in your voice, but you sound pretty calm about it.
MICHAEL: It is what it is. I make enough money to pay my bills every month so I'm not too overstressed about it, and one day I'll take care of it. But it is stressful to think about. It does kind of hold you back from doing other things sometimes, but...
GREENE: Like what?
MICHAEL: Like getting married, having kids, those things would be great, but I'd like to be in a better financial position before we take those on.
GREENE: You say we.
MICHAEL: Yeah, me and my partner.
GREENE: How long do you think it would be before you sort of have things in a place where you can get married and move on to marriage and kids confidently?
MICHAEL: Hopefully in like the next five years I'll have things on a better handle and be able to do that. You know, I'd still be paying them off, but to get them down to a more manageable level.
GREENE: Emily Garvey, let me turn to you. You have much smaller loans. Give me a sense of what you're owing right now.
EMILY GARVEY: Currently, I owe between, like, my loan, which was 12 grand, and then I owe about 5,800 in penalties so I'm at about 18 grand.
GREENE: And explain to me - I know these penalties became sort of an unexpected added burden. What exactly happened?
GARVEY: My undergrad, I was lucky that I had gotten a lot of scholarships, a lot of grants and I didn't have very many loans. My loans were about 35,000. The last loan, the one I'm paying on currently, I had kind of forgotten about, which sounds awful, but I had used it to study abroad. I came back, school was paid, no one was bothering me, and it just didn't really ever occur to me that I still owed this fairly small amount of money that was for 12,000.
It wasn't until earlier this year when I got a letter from the IRS saying that they wanted to offset my wages that I realized that I was in default with this loan.
GREENE: So you actually had been paying off these 35,000 and thought that you were, you know, getting into pretty good shape and you were going to have paid off all of your debt.
GARVEY: Yeah. The other problem with this fourth loan and why it wasn't consolidated is because it was a private loan, not a loan through Sallie Mae.
GREENE: Is there something you wish you had known, something that someone could've done for you that would've put you in a better situation?
GARVEY: Well, I think that, I mean the reason I took the loan out was so that I could study abroad, and honestly it would have been less money for me to just put that on a credit card and pay off a credit card company versus trying to go through student loans.
GREENE: I wonder, what do you think it says about the whole student loan process if you're literally looking back and saying, I wish I had just put this on a credit card?
GARVEY: I think the student loan process is good for a lot of people. I don't know anyone who would've just been able to outright go to school with no student loans, no help, federal assistance, anything. On the other hand, there's a lot of confusion and I think it's because it is 18, 19 year old, 20 year old students who are making these really big decisions, and I for one had never made a purchase like $40,000 before, so I didn't really understand what that would entail or what that meant in the long run.
GREENE: Well, let me turn to Jen McGarvey, and Jenn, you did something that a lot of experts have actually been suggesting is a good way to save money on college. You went to a community college first and then transferred to a four-year program. Tell me exactly how that worked out financially.
JEN MCGARVEY: I did. So I started at my local community college and I got my Associates Degree in art, and then I started looking for four-year schools that would allow me to work in film and animation. They accepted my credits from the two-year transfer, but the program was structured such that you had to take classes in a certain order so it would've worked out that I had to be there for four years, and I went full time because I had to stay on my parents' insurance at that point.
You know, I was past the age where I could stay on their insurance unless I was a full-time student.
GREENE: And how much debt do you have for those, both the community college and the four-year college that you did?
MCGARVEY: Oh, gosh. I didn't really have any scholarships and my parents, unfortunately, were unable to save up any money so it was all through loans. The biggest one is my private student loan, which is right now at about 90,000, but, you know, I've been out of school for a few years and paying it back. So it was well over 120,000 to begin with.
GREENE: And you're the first generation in your family to go to college, is that right, Jenn?
MCGARVEY: Yeah. My parents didn't go to college so they really weren't able to help me kind of navigate through that and there really weren't any counselors at the two-year school to help with the transition into a four-year school, so I felt a little bit lost during the whole process. When you're 18, 19, 20, you really don't comprehend the magnitude of $100,000 and what that looks like.
GREENE: And you feel like you're carrying that burden right now.
MCGARVEY: I am. You know, my husband and I, fortunately, he got a great job out of college and with his income and then mine, we're able to pay our bills and we bought a house just recently. We got married a year ago and - but there's more things that we want to do that we really haven't been able to do that we've just been, you know, trying to save up and plan around my student loans.
GREENE: Amber, let me just ask you, when do you expect to have paid off all of this?
MICHAEL: If I stick to the payment plans that they've laid out, 34 years, but hopefully, you know, within the next 15 to 20 years.
GREENE: And Emily, when do you think you will have paid off everything and be debt-free?
GARVEY: I am scheduled to be done with this loan, if I pay the minimums, I think they said 12 years. I'd like to be done in five.
GREENE: And Jenn, when do you expect to be done?
MCGARVEY: Oh, gosh, 30 years or more. The loan is set up for 30 years. My biggest private loan, and I try and pay as much as I can. I've just upped a few of my payments to get them paid off a little bit sooner, but sooner is a relative term. I mean, it's just like having a mortgage, I'm finding.
GREENE: Amber, Jenn, Emily, thanks to all three of you for coming in and talking about this.
GARVEY: Thank you.
MCGARVEY: Thank you
GREENE: That was Amber Michael, who now works for a federal contractor near Washington, D.C.; Jen McGarvey, a Web editor near Dallas, Texas; and Emily Garvey, who works in marketing in Ann Arbor, Michigan. Tomorrow we'll find out about the long-term impact of this kind of debt, both for graduates themselves and for the U.S. economy. Transcript provided by NPR, Copyright NPR.