Monday, January 21, 2013

The Broke School Counselor: Dealing With College Debt

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    College loan debt is a reality for most young professionals today. Since beginning repayment on my college loans in 2009, I've been coming to terms with the large amount of money exiting my bank account each month. To put things into perspective, my college loan payment is significantly higher than my mortgage payment every month. This post is not to whine about my bills. I chose my career path and I've been more fortunate than most as far as support from my parents (both financial and emotional) and obtaining a job in a field that I love. I hope in sharing my experience, it helps someone else. I also hope someone reading this might have some feedback, tips, or suggestions for me.

    Recently, I've learned about some resources that are helping ease my financial stress. I'm keepin' it real and showing my actual financial stats. I was very hesitant to put my salary out there for anyone to see. I'm not embarrassed anymore, because I know there are many people just like me, trying to navigate the murky waters of college loan debt. This is my reality and it is what it is. We always hear the median or average salary when researching careers. I wanted to show the reality of a third year counselor in Pennsylvania, so new counselors and those considering the profession, have an accurate idea of what to expect. Below are links to resources that may  help lower your monthly college loan payment and reduce the total number of years you spend paying. Hallelujah!

    MY FINANCIAL FACTS:
    • Current Year 3 Salary: $43,000 (plus per diem summer pay)
      • Per Bi-Weekly Net Pay: $1,141  (this is with Union dues, health insurance, & taxes deducted)
    • Current Monthly AES Payment: $758.00 
      • I pay $591 for graduate loans
      • My parents still pay $167 from undergraduate loans

    MY BACKGROUND:
    My undergraduate degree came from the University of Pittsburgh. I did not receive any scholarships. My parents are married and employed as a public school teacher and emergency room nurse. I did not qualify for any financial aid, other than Stafford loans. Since I was an in-state resident, the yearly cost at Pitt was about $15,000, not including room and board, meal plan, and additional fees. I am EXTREMELY blessed that my parents agreed to pay all of my undergraduate expenses. The deal was, they would pay for four years of college. Anything after four years was on my tab.

    My senior year of college I decided I wanted to be a school counselor and go straight to graduate school. So, I did. I graduated from Pitt in April of 2006 and began Duquesne University's School Counseling Program less than a month later. I remember talking to my parents about the cost of graduate school, particularly my dad. However, we never talked specifically about what my monthly loan payments would look like in comparison to what I'd likely be earning. Finding out I owed AES $758 each month for the next ten years was pretty overwhelming. I don't remember ever having a conversation with my high school counselor, my academic advisor at Pitt, or my academic advisor at Duquesne about finances or what my monthly responsibilities would look like after graduating. To be honest with you, I don't know that it would have made much difference in my decision to go right to a high price private institution for graduate school. I can be pretty hard-headed and my mind was made up.

    I looked extensively for graduate assistantships, scholarships, and grants. I'm talking hours of internet research, trips to career services, and the financial aid office, but I did not get any! Once again, I was relying solely on Stafford loans to finance my education. This time, however, the bill was all mine. The cost at Duquesne was roughly $960 per credit times a 60 credit school counseling program. Bringing my grand total to right around $57,600. Oh I forgot, I served as an AmeriCorps volunteer for six months during graduate school, which shaved off about $2,700. I worked full-time throughout graduate school to pay for my rent, food, and living expenses. My first year I worked as a waitress and lifeguard and the second year as a TSS. I graduated from Duquesne in December 2008 with a MS.Ed. and a large amount of debt.


    FINDING SOME RELIEF:
    I recently learned about some helpful options for school counselors. It still bums me out that school counselors and librarians are excluded from the loan forgiveness many teachers are eligible for after five years. I've been on an ongoing search to discover any programs available to help school counselors with educational debt. What I found is, in most cases, we are eligible for loan forgiveness after working as a school counselor and making monthly loan payments for ten years under the new Public Service Loan Forgiveness Program.


    Under the Public Service Loan Forgiveness Program, you may qualify for forgiveness of the remaining balance due on your eligible federal student loans after you have made 120 payments, the equivalent of 10 years, on those loans under certain repayment plans while employed full time by certain public service employers. This includes school counselors! 

    What federal student loans are eligible for forgiveness under this program? This is where is gets a little tricky. ONLY DIRECT LOANS ARE ELIGIBLE. Since my loans were through AES, they were part of the Federal Family Education Loan Program (FFEL). This meant the last four years I've spent paying $758 a month, essentially don't count towards the 120 months. What I've had to do is transfer my loans from AES to the Direct loan consolidation program. It's actually not as big of an ordeal as it sounds. It doesn't happen overnight though. I began the process back in November and just received notification January 14th that my loans had been switched to the Direct Consolidation Program. In order to switch your loans from FFEL to Federal Direct Consolidation Loans, you need to complete a paper application or apply online. In order to apply online you will need your Federal Student Aid PIN.

    Since I knew the process of switching my loans might take some time, I applied for forbearance with AES back in November. My application was accepted since I met the financial hardship requirements, meaning I have not had to make a payment in December, January, or February. I did this, because any payments I made to AES would not count toward the 120 payments for the Public Service Loan Forgiveness Program. Why throw money out the window?

    The best way to cut your monthly payment and fully utilize this program is to repay your college loans using the Income Based Repayment Plan (IBR). I've selected this option. It is important to point out, payments on this plan are based on your family size, income, and are adjusted each year. It is always lower than a monthly payment on the standard plan. However, you are only eligible if you can prove a partial financial hardship.You have a partial financial hardship if the monthly amount you would be required to pay on your  loans under a 10-year Standard Repayment Plan is higher than the monthly amount you would be required to repay under the Income-Based Plan. To find out if you are eligible for an IBR Plan and to get an idea of potential payments, the Income-Based Repayment Calculator is a very helpful tool.  The biggest pain is probably submitting the annual documentation for this plan. For me, the pros largely outweigh the cons.  Initially, I was paying using the Standard Repayment Plan. If you continue to pay using the standard plan, there is essentially no benefit in utilizing the Public Service Loan Forgiveness Program, because your loans will be paid off in ten years, regardless.

    What has the Income Based Repayment Plan and the Public Service Loan Forgiveness Program done for me? Since I'm still relatively new to this whole process, I can't fully answer this question yet. I still haven't gotten my first official bill from the Direct Program under the IBR Plan. According to initial estimates the IBR Plan should significantly lower my $758 monthly payment (according to the calculator more like $280). For right now anyway, it's giving me hope, hope that my monthly financial expenses will be much more manageable and won't go on forever (30 years can seem like forever). I am starting to see light at the end of the tunnel and dream of the day when I will be free from college loan debt.

    Photo by DieselDemon, "Hope" January 21,2013 via Flickr,  Creative CommonsAttribution
    Jess

    9 comments:

    1. Just an update...I received my first official bill since converting my loans to the Direct Consolidation Program. On the Income Based Plan, my monthly total has gone from $758 to $265! Can't tell you how relieved I am!

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      1. Amen! I am so happy for you to have found some substantial relief. I too am a school counselor in a VERY similar situation and have found what I much needed (HOPE!!!) Thank you SO much for the information you provided. I know in which direction to go in now...thanks to you again! :)

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      2. I am thinking about this option but can't find what the interest rate is... do you mind sharing?

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    2. After 20 years as a school counselor I now make just over $80,000. It gets better.

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    3. I am a school counselor in NC and thought that I qualified for the 5 year reduction. I, too am in a lot of loan debt and am hoping that things get better. My salary is very low so I am HOPING for some outlet soon.....I am currently on the IBR plan but my income is so low that it is difficult for me to pay! HOPE!! HELP!!

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    4. I am a school counselor in NC and thought that I qualified for the 5 year reduction. I, too am in a lot of loan debt and am hoping that things get better. My salary is very low so I am HOPING for some outlet soon.....I am currently on the IBR plan but my income is so low that it is difficult for me to pay! HOPE!! HELP!!

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    5. Excellent information ! We should analyze technically at best. payday loan debt consolidation companies

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    6. Very informative blog, thanks to author for sharing great posts. Please visit at http://www.synocate.com/

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    7. It is my understanding that the only loan forgiveness for school counselors is after a 10 year payment history???

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