A 38-year-old with $38,000 in student debt tells other generations, 'I highly recommend finding a way to avoid taking out loans' | Fortune

Millions of Americans started repaying their federal student loans again last October, with monthly payments averaging hundreds of dollars a month. Borrowers had to start cutting expenses, taking on additional work, and looking for options to reduce their monthly payments.

Megan McClelland, 38, said last year that she started asking for more shifts with a catering company and a winery to help supplement her income.

McClelland’s main job is as a counselor at Petaluma High School in California. During the more than three years payments were suspended because of the pandemic, she paid off her car loan and was able to save for the first time. She’ll put the $235 she was spending on her car payment toward her student loan, but that still leaves another $270 or so in her budget she had to reallocate or earn.

“It had been a huge relief the past few years to not have that financial burden,” she said. “In the next months, I’m looking to see where I can scale back in my budget. Probably less going out to eat, and more picking up side gigs.”

And Justin Cole, 35, of Little Rock, Arkansas, said he didn’t know how he was going to come up with the $166 a month once repayments restarted. That’s the estimated payment on his roughly $19,000 of loans from paying for college more than 10 years ago.

“I’m already in a mountain of debt, and while I just got a raise at work, it doesn’t go into effect until we’re full staffed at my family practice clinic,” he said.

Cole works the front office at a medical practice, checking in patients, handling records and managing payment collection. Some of his other debt comes from medical expenses after a car accident early in the pandemic.

“If those loans were forgiven, I could finally work on getting my credit up and actually saving money for once,” he said. “If they were forgiven out of the blue, I’d be ecstatic.”

Unfortunately for borrowers, the Supreme Court rejected a plan by President Joe Biden’s administration to wipe away $400 billion in student loan debt.

The Public Service Loan Forgiveness program is one of several avenues for relief still available to many with student debt. After Biden’s original plan for forgiveness was struck down by the Supreme Court last July, the White House has said it will use the Higher Education Act to bring cancellation to more borrowers. It’s currently undergoing a process known as “negotiated rule-making” to determine the details of that plan.

Other sources for relief for borrowers include: false certification, borrower defense, closed school, total/permanent disability discharges, and alternate repayment programs like income-driven repayment.

McClelland, for her part, said she now spends a lot of time counseling high school students on how to avoid taking on burdensome loans.

“I had no financial guidance when I was younger, from my own parents or from school,” she said. “I didn’t ever understand the long term impact.”

Despite working while in school and since — moonlighting at Starbucks, wineries and restaurants as well as counseling — McClelland still has a balance of about $38,000 in debt, from original loans of $10,000 towards her undergraduate studies and $40,000 for her masters in counseling at Sonoma State.

“I knew I wanted to go to college, and my parents didn’t have any money,” McClelland said. “I tell kids all the time, openly, ‘As someone who was once in your shoes, I highly recommend finding a way to avoid taking out loans.’ When you’re 17 or 18 years old, you think, ‘Oh, sure, I’ll figure this out.’ Then it’s frustrating to still be in this financial situation.”

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This story was originally published on September 30, 2023.