Many parents mistakenly believe that if their children will just become highly paid professionals, such as doctors or a lawyers, “they’ll be able to easily pay back their student loan debt.” Is this true?
No — it’s not true.
Increasingly, even highly paid medical doctors struggle to keep their heads above water when it comes to student debt.
At one conference I spoke at, a 55-year-old physician came to the edge of the stage when I was finished speaking and said to me: “If I’d have heard you speak when I was 20 years old, I’d have been debt-free years and years ago. There are so many loans I’d have never taken out. Nobody told me I’d still be paying on these student loans 28 years after med school, at the same time I’m trying to send my own kids to college, take care of my aging parents, and plan for my own retirement.”
And what are the consequences if a doctor just gives up on paying the debt and defaults on a student loan? Michael Smith, attorney with The Health Law Firm (a Florida-based company that provides legal services to the health-care industry) warns that “a federal student loan default for a doctor effectively eliminates 98% of your employment opportunities.” Why? Because a student loan default automatically causes a doctor to be excluded from the Medicare program. And as Michael Smith tells doctors: “If you’re excluded from the Medicare program, no other provider that takes Medicare can contract with you in any form . . . you can’t even cut the grass at a hospital, or they will lose their Medicare (status).”
If this doesn’t scare you badly enough, consider this heart-wrenching article on the connection between student loan debt and suicide, produced by the independent Economic Hardship Reporting Project and featured on the blog of Huffington Post contributor C. Cryn Johannsen, author of Higher Ed, Greater Debt: The Student Loan Crisis. Johannsen and her team of editors tell of 47-year-old John Koch of Oyster Bay, Long Island, who borrowed what seemed like a very reasonable $69,000 in 1997, using it mostly to pay for law school. It seemed like a financially sound decision at the time, but after his law school graduation Koch was unable to find steady work as a lawyer. His student loans slid into default, and the moment they did he was slammed with penalties in excess of $50,000, burying him under total debt that he was even less likely to be able to pay off. Since that time Koch’s total student loan debt burden including interest, fees, and penalties has ballooned to over $320,000. That, though, is not the most upsetting part of Mr. Koch’s story.
Since graduating from law school, Mr. Koch has made his living primarily as a housepainter. Like many other former students hopelessly buried in suffocating student loan debt, he struggles with thoughts of suicide and admits to self-destructive behavior.
And, at age 47, he is still living with his parents.
“(A $320,000 student loan debt) sounds staggering but it’s hardly unusual,” the Johannsen article reports. “Once a person defaults on a student loan the balance grows exponentially, with interest compounding on interest, penalties and fees. By the time he ‘retires,’ in 23 years (at age 70), Koch figures he will owe close to $1.9 million.” And woe to any family members who cosigned on these loans for him; they are just as much in debt as he is.
Parents, it’s actually possible for you to keep your son or daughter completely out of student loan debt. I can help. For free, clear, step-by-step help getting your kids through college debt-free and into jobs they love afterward, click on your child’s age in the “WHAT TO DO WHEN” section on this website.
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Question: Do you know anyone who struggles with overwhelming student loan debt? What strategies are they using to cope with it?