Taming Your Student Loan

Graduating was the easy part. Now, here's how to tackle one of your biggest debts.

It was only a stack of paper in a rainbow of pastel shades. Two inches thick, it couldn’t have weighed more than a couple of pounds, the size of the Yellow Pages in a city like Memphis. But the minute Virgil Hilliard started reviewing his student loan documents five years ago, he could have sworn someone had dropped a slab of lead in his hands.

There were promissory notes, schedules and agreements to wade through. And, there was that grand total of $70,000 to ponder, the amount he’d taken out during four years of medical school at the University of Southern California to cover everything from tuition to $300 textbooks. It was little wonder that just days before he’d pick up his diploma in anesthesiology, Hilliard was in a panic. “The day of my exit’ with a financial aid counselor, it seemed I’d spent every week going through those papers and fretting over just how my life was going to change.”

Five years later, Hilliard is still alive-in fact, thriving quite well, thank you. And that’s after five lean years of residency, putting in 20-plus-hour workdays in surgery and on call at State University of New York Hospital in Brooklyn, while earning just $36,000 a year. He and wife Angie, 32, who then was marketing pharmaceuticals for Bristol-Myers Squibb, have worked together to pay off about half of Hilliard’s original student loan balance. After a few more months at the Mayo Clinic in Jacksonville, Florida, Hilliard plans to move the family, which includes his 20-month-old daughter, Lena, downstate to Port St. Lucie. There, Virgil can look forward to being in practice with a friend and earning $100,000 or more a year. The couple plans to hit the market for a house soon, and Hilliard’s outlook is fixed on the future, despite the $700 a month he’s paying on his loans. “I’m lucky Angie and I kept at it,” says Hilliard, 33, “but I’ll tell you it’s certainly had an effect on a lot of the decisions I’ve made.”

Hilliard has plenty of company these days. No matter where you went to school, whether you went to work after earning a B.A. or continued on for a graduate or professional degree, the story is the same. The minute you tuck away your diploma, get ready for a crash course in bill payment. According to figures compiled by the Education Resources Institute in Boston and the Institute for Higher Education Policy in Washington, D.C., undergraduates today leave campus with an average $7,594 debt from public four-year campuses, $10,000 if they opt for private schools. That figure is increasing rapidly since tuition rises on average about 7% annually. Graduate students have it worse, particularly those who enrolled in professional programs. On average, law students graduate owing over $40,000–a monthly bill close to $500, assuming a 10-year payback period and an 8% interest rate. Doctors and dentists, meanwhile, finish school owing an average $64,100 and $67,800, respectively, in debt. That makes for monthly payments of $777

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