April 17, 2008 by Mara Strom
If you’re a recent college grad straddled with a sizeable chunk of student debt, you’re in good company. In fact, a study by The National Center for Education Statistics indicates that 50% of all college grads have an average of $10,000 or more to pay back on their college loans.
Let’s say you’re a little better than average and take out $18K in loans. Here’s what you’ll be looking at: $207 per month for 10 years, if you’ve got a Stafford Loan with a (relatively low) fixed interest rate of 6.8%. And P.S. On the original principle, you’ll be paying back another $6,900 in interest. If you want to see the breakdown for your specific loan, check out the nifty student loan calculator at finaid.org.
Now consider that the average starting salary for an 18-25 year old college grad is $36,000 per year, according to payscale.com. After taxes and deductions, your take-home pay on $36,000 will be something like $2300 per month (to figure out exactly how much you’ll take home, plug in your numbers on paycheckcity.com’s paycheck calculator.)
All this means that your student loan of “just” $18,000 is going to eat up 10% of your take-home pay. When rent, utilities and food seem impossible to handle on your salary, adding in another $200 will probably have your head swimming. Rather than helping you get a leg up, a college degree earned via student loans is chaining that leg to a 10-year+ ball and chain.
Clark University graduate Luke Livingston wanted to break free of his college loan, but couldn’t even make his monthly payments. So he got creative: He launched sponsormyloans.com, where he sells ad space in exchange for his $200 monthly loan bill. In his website’s FAQ section, Luke explains that even with his good job – which he landed thanks to his degree from a good school – he was still struggling to make ends meet and pay back his debt.
Luke’s definitely not alone in that struggle. Which is why, in addition to finding the cash to pay off his own college debt, Luke is also using his website to raise awareness about the long-term costs of student loans.
Some have called Luke a pan-handler, begging for charity when the loan should be his responsibility. But I say Luke’s just being entrepreneurial, which is the spirit that has time and again moved mountains in this country. Will his entrepreneurialism move enough mountains to pay off all his student debt? Only time will tell, but right now, the future is looking bright: Luke’s blog reports that he’s got advertising commitments through September ’08.
So, what about you? What steps — creative or otherwise — are you taking to cast off the yoke of your student loan debt?
If you’re really worried about paying back your student loans, be sure to check out our