I've Paid $18,000 To A $24,000 Student Loan, & I Still Owe $24,000

by Kaitlyn Cawley

It all became real the summer before my senior year of college. It was 2010, and my home phone still had a cord, which I wrapped around my fingers as I waited not-so-patiently for the apathetic representative on the other end to tell me the bad news about my student loan debt. My father was in front of me, his typically ruddy face redder than usual. “A 9.25 percent interest rate?” he yelled, “How can you put that on a kid?” It was clear he was worried, and he had every right to be — as the cosigner of my loans, my debt would be his responsibility, too.

The loan, ironically called a "Smart Option" loan, has a variable interest rate that fluctuates based on changes in the financial market — which may have been explained to me at the time (I truly don't remember), but I know I didn't fully grasp what that meant. Either way, neither of my parents wanted me to take it — I could tell that much. My mother didn’t even have to say it, as she sat wordlessly next to me on the couch. Like most working-class parents, she couldn’t fathom paying more than $30,000 a year for my education (let alone $60,000). My father, an electrician who worked nights driving Amtrak trains to put himself through trade school, only earned his associate’s degree in his mid-30s. My mother held a few random part-time jobs over the years while she devoted herself to raising my brother and me, but she never graduated from high school. The concept of attending a private college, let alone paying for it, was completely foreign to them. They wanted me to chase something bigger than they ever had access to. They just didn’t want “bigger” to mean drowning for the next 20 years in an all-consuming pile of debt.

At this point in my education, after two years of private college (and one in a public university), I had already taken out eight substantial loans totaling over $67,000, whose repayment I hadn't even begun to contemplate. Knowing how much debt I had already amassed, my father tried to impress upon me the difference between this new loan and all of the others I had already taken out — whose average interest rate meted out to a little under 6 percent — and why this loan would be harder to pay in a sea of already-hard-to-pay debt. I knew racking up one more loan and another $24,000 wasn’t ideal, but what was the alternative? Dropping out? Transferring to a new school and hoping my credits would translate? Leaving all the relationships I had cultivated with students and professors alike behind? So I chose to take the loan. In my final year of college, with my back against the wall, Sallie Mae made me an offer I did not know how to refuse.


Now, eight years later, that loan — one of nine that left me $95,000 in debt upon graduation (because, yes, interest does accrue while you’re in school) — very clearly marks the exact moment when I lost control of my own financial destiny.

According to a February 2018 study published by the Levy Economic Institute, a nonpartisan policy think tank at Bard College, there are 44.2 million Americans with student loans, which adds up to about $1.4 trillion in debt. There already exists a myriad of research-driven articles that wax on the impact of the student loan crisis on the future of this country (screwed), our economy (broken), and the weight of the loan crisis (crippling). Those are all important to read, but this story isn’t one of them. I've learned that citing the national student loan debt totals in the trillions doesn’t get across how this massive problem impacts us individually, in real life. So, I'd rather talk honestly about what it’s like to live this… to explain in everyday dollars and cents how I get by living in a debt spiral, month to month, paycheck to paycheck.

When I was 18, I fully believed that taking out student loans was the only way to achieve my dream and my parents’ dream for me — to transcend my working class upbringing. I was desperate and uninformed and, because of this, I entered into a dangerous relationship with a loan company that will last half my lifetime. Now, I’m finally facing up to the brutal details (after years of sticking my head in the sand) and learning the ins and outs of my debt — and the truth is mind-blowing.

I had no idea so much of the money I was paying did nothing but abate rising interest, barely touching the principal sum.

Part of the problem lies in how complicated it is to find that truth in the first place. Navient, as Sallie Mae’s student loan division is now known after it splintered into two companies in 2014, doesn’t make it easy to access the specific details of your loans; sure, it's online portal does have a tab that says “Loan Details,” but inside that section, only the money you still owe is listed (not the money you’ve already paid).


(You can also see here that the interest rate for that loan isn’t 9.25 percent anymore. Because it's a loan with a variable interest rate, it’s up to 11 percent — a fact I only learned when I called to ask why my monthly payments had increased. As my lender matter-of-factly loan-splained, “We’re not legally required to disclose when we change your interest rate, as per the contract.” I had missed that clause in the multi-page contract I signed when I was 20.)

In order to determine how much money you’ve actually paid to a loan, you have to browse your “Account History” and download a jumbled Excel file that’s filled with extraneous details that don’t make simple addition or subtraction easy. (That's if the files work at all — my browser crashed repeatedly for weeks just trying to get this information. When I called Navient to report this, they offered to mail me the details, which they said would arrive within 18 days.)

Maybe it’s technically difficult to list what a client has paid thus far on that details page… or maybe that information made readily available and visible to the world would catapult most borrowers into fits of rage. It’s hard to tell, and my repeated calls to Navient media reps for comment received no reply. No matter why it's so difficult to find, the truth behind my payments and how they were allocated stopped me dead in my tracks. I had no idea so much of the money I was paying did nothing but abate rising interest, barely touching the principal sum.

For example, the worst of my nine loans looks like this:


Yes, I’ve paid more than $18,000 to my original $24,000 student loan — and, yes, only $171 worth of my back-breaking monthly payments (more on those soon) even manage to skim the original amount. If, like me, you didn't receive a ton of financial education in high school, and you're wondering how that's even possible, welcome to my boat.

Here's how I now know student loans work: When paying any money toward the loans, the amount you send over is immediately applied to interest before it can touch your principal balance. Each day a percentage of interest on your outstanding debt (including yesterday's unpaid interest) is calculated. If you don't pay that interest, that amount gets added to your total due, and tomorrow's interest charged will be a percentage of that new total. Every day that you don’t pay off your loans, more interest piles on.

At my current rate, I accrue $16 in interest each day over all my nine loans, meaning that $480 each month goes directly to interest, and anything I pay after that is divvied up to defray my principal sums. If my monthly payment is late or I miss it all together, I’m charged late fees that are added onto my principal sum (so I have to pay even more in interest).

Missing payments is what led to my current interest rate and thus, my balance, but the reason I missed those payments is also worth looking at.

After graduation, most student loan borrowers are provided with a six-month grace period before they need to start making monthly payments. (That doesn’t mean your loans aren’t accruing interest in the meantime, though — they absolutely are. You just aren't expected to make payments yet or punished for not making them.) One way to extend that grace period is by attending graduate school. Theoretically, when you decide to continue your education, you don’t have to worry about making any payments until you graduate. That wasn't the case for me, as I decided to attend graduate school outside the United States (a master’s degree I don’t have any student loans for because universities outside of America don’t believe in charging $60,000 a year).

My choice meant that my undergraduate student loan payments of $450 a month couldn’t be deferred while I pursued another degree. Sallie Mae’s explanation? The school didn’t have a code they could punch in their system. And without a code, the system couldn’t recognize that I was in school. I recently called Navient again to ask what determines whether a university gets a code or not and his reply was, “It depends on whether your school provides a code or is listed at the National Clearinghouse.” The National Clearinghouse is a nongovernmental organization that collects educational data and reporting. A third-party data collection firm determined whether or not I was responsible for thousands of dollars in payments while in graduate school. Follow-up questions about the sense of this left me in the same place: code-less and alone.

I would wake up at 6 a.m., take a bus and three trains to work, and every night, I would crawl into my house at 11 p.m. for an extra $120 in overtime a week.

As I was doing my master’s and researching my thesis, I had very little time left over to work. I got a part-time job in a pizza place to support myself as I continued my education, but the dismal amount of money I was bringing home went entirely to books, food, and housing. I couldn’t afford to make my student loan payments and had to default on them for the entire 12 months I attended the program. When I graduated with my master's in September 2012, I wasn’t given another grace period (despite my many frantic calls and hours spent on begging anyone at the call center who’d listen). Over that year, my inability to make my loan payments added $5,000 in compounded interest to the principal sum of my $24,000 loan, settling its total at $29,000.

That bump sent my total student loan debt to $95,000. It was clear I had to find a job right away — and so I passed my resume out in a flurry, firing off cover letters and cold emails, applying to jobs I wanted and jobs I didn’t. The response was unanimous and deafening: silence. In the age-old catch-22, I needed experience to get a job, but I also needed a job to gain that experience. So, I began waiting tables while my interest kept piling on.


When I finally got my first full-time office job at the start of 2013, it paid less than $20,000 a year. I would make $1,400 a month and send $750 to Sallie Mae. In New York City in 2013, the average one-bedroom apartment rented for about $3,000 a month, and with more than half my net pay going directly to loans, I made the “choice” to live with my parents in the Bronx, on the last stop on the 6 train. It was nearly a two-hour commute each way to my office, which wasn’t so terrible until I started working overtime and my hours shifted from the typical 9 to 5 to the very long 9 to 9. Every morning, I would wake up at 6 a.m., take a bus and three trains to work, and every night, I would crawl into my house at 11 p.m. for an extra $120 in overtime a week.

Unfortunately, variable interest rates on student loans are just that — variable — so my monthly payments amounts were, too. If I wanted to prevent the principal from rising as the interest rate went up (usually without my knowledge) because of fluctuations in the average interest rates offered by banks in London (another head-scratcher), I had to up the amount I forked over each month. And so, the more money I made, the more money I paid. Every raise I received was a double-edged sword.

I was only paying enough to keep the interest at bay. It cost me $750 a month just to make sure my balance wouldn’t increase.

Eventually, my dedication at work paid off, and I advanced in the company, finally making enough money to rent an apartment with a roommate on the Upper East Side around January 2014. My commute became bearable (a swift 30 minutes), but my student loan payments grew larger, too, as the variable interest rates increased over time and my steadily-rising balance dictated I pay more just to cover basic interest costs (and not even touch my principal balance). One paycheck went to rent and the other to loans, and that was it. I was successful at work, but at home, I was living a dorm life, scarfing down ramen and arguing with my roommate about splitting the $10 Netflix bill. I slept with my mattress flush against the floor for a month after I moved in — because it took that long for me to scrape up the cash for a bed frame.

When you’re barely making enough money to survive, living from one paycheck to the next, you can feel every cent you spend. Every time you swipe your card, a little part of you shudders in fear you’ll be declined. You don’t go out; you don’t go on dates. You sit in your apartment and wait for the next check to arrive that you don’t have to dedicate to rent.

Any of this struggling might have felt worth it if I was actually making a dent on my principal balance. But I was only paying enough to keep the interest at bay. It cost me $750 a month just to make sure my balance wouldn’t increase.


And it’s not like I can just ignore my debt, either. If I miss a payment, I not only get charged more interest, but my credit is affected, and my father’s is too. If I die before my debt is paid off, my loans won’t die with me — my dad will be on the hook or, depending on the terms of the loan, even the poor soul who marries me.

In the seven years since I flipped my tassel, I’ve dutifully paid a total of $57,170 toward the $95,000 debt I accumulated across nine loans from my undergraduate education. If life existed in an interest-free vacuum, my debt would be more than halfway paid. But it doesn’t, and my principal sum has been reduced to just $69,000. Yes, that means only $26,000 of those $57,170 dollars I siphoned off my paychecks and life have touched my principal balance. And, yes, that means I’ve paid over $30,000 just to be pretty much in the same financial situation I was in when I graduated.

In the year 2018, I make a bit more money than I used to, but moving out of that roach-riddled closet meant paying more in rent, and making more money still means paying more to my loans. These days, I send off $1,200 to Navient a month. The interest on student loans is tax deductible, but I am disqualified because of how much money I make. I wouldn’t complain if my payments were making a dent in my principal. But the way these loans are set up, I’m barely even scratching the surface.

By the time I finally finish paying off my loans, I will have paid nearly $170,000 to my original $95,000 loan.

And there’s no sense that it’s getting better (the interest rate increase that happened while I was writing this article has increased my monthly payments yet again). I have 10 years left on this loan, and there’s no telling how many more times the variable rate will increase in the meantime.

According to its website, in 2013, Sallie Mae celebrated 40 years of helping make education accessible to families around the country,” and that carefully-worded phrase isn’t entirely wrong. I wouldn’t have been able to afford college without a student loan provider. I wouldn’t have had access to an intellectual and competitive learning environment, I wouldn’t have been able to meet and make friends with people from all over the world, and I wouldn’t have the same tools to think critically and dynamically about complicated subjects that I would otherwise have no idea how to approach. It’s obvious that college is an invaluable experience. Still, should it really cost the next 20 to 30 years of my life?

In January 2017, two states brought lawsuits against Sallie Mae, detailing how the company took advantage of students by selling them subprime private loans (with expected default rates at 92 percent) at a massive profit to only the company itself. The lawsuits claim that the lenders knew borrowers would never be able to pay, “ensnaring students in debt traps” for the better part of their young lives.

If we can’t afford bed frames, we can’t afford weddings, children, or mortgage payments. We can’t afford much of anything at all.

And a “debt trap” is exactly what this whole thing feels like. While I acknowledge my role in landing my high interest and payments, the difference between an agreed-upon interest rate in theory and paying that rate in practice isn’t easy for a teenager to wrap her head around. Kids are taking loans out at 17 or 18 that they won’t be able to pay back until they’re 40 or 50. And the companies they’re borrowing from aren’t out to help them — those companies only make more money when students can’t pay.

With the interest accruing at my current rate, by the time I finally finish paying off my loans, I will have paid nearly $170,000 to my original $95,000 loan. That amount feels much more real to me now, too — I know exactly what my apartment could look like (livable), what clothes I could own (not just Forever21), what basic amenities — like a MetroCard I could afford if I didn't owe so much. Those numbers bring a frightening sort of insight. Student loans are not only clipping an entire generation’s wings, they’re also crippling their spending power. If we can’t afford bed frames, we can’t afford weddings, children, or mortgage payments. We can’t afford much of anything at all.


The fact is, a choice I made when I agreed to my first loan at 18 (to better myself, I thought at the time) will sit on top of my finances almost until I’m middle-aged. If I can appreciate anything about this struggle, it’s that it was ultimately in the pursuit of something bigger than I would have achieved if I had taken a job just out of high school in the Bronx. I just wonder if that opportunity should cost so much.

All they wanted was to for me to have more — and now I’ll have almost $200,000 less.

Our current mode of paying for higher education doesn’t benefit anyone in the long term except student loan providers and for-profit universities. Is this really what we want for future generations? Do we want people seeking an education to be punished by their own ambitions? Do we want to saddle young Americans with debt so astoundingly debilitating that they’re forced to accept the jobs and paychecks and limited opportunities that they went to school to avoid in the first place? Do we believe that only certain people — essentially, people with rich parents — should be allowed to access the jobs and resources and networks to which college is still the best gateway? We don’t want to look at higher education as a class issue, but anyone struggling to pay off their loans, or contemplating whether to take them on in the first place, understands that it is.

I can recall my father’s red face that afternoon so clearly now: the pained, pleading look in his eyes. All he and my mother wanted was for me to have a better life, one unencumbered by the difficulties they had always associated with money. All they wanted was to for me to have more — and now I’ll have almost $200,000 less. It’s not fair to them, to me, or to anyone else with student loans.

Sometimes, I struggle to imagine a future in which life doesn’t swing from one paycheck to the next, like a crushing pendulum of debt, but I know it exists. The year 2030, with its flying cars, hoverboards that don’t explode, and a long-awaited cure for brain freeze, is good for me financially. I’ll have finally paid off my student loans — and now I can finally consider having a big wedding, becoming a mother, or buying a house. It might seem a little late in life to you, but I know many of my peers, so long in debt and ignored, will be in exactly the same place. Forty will actually be the new 20. What a comforting and not at all terrifying thought.