Home > Student Loans > How a Mother of 4 Racked Up $410K of Student Loan Debt

Comments 2 Comments

Going to college is probably the easiest, fastest way to get into a ton of debt. You’re making an investment in your future, but you can just as easily lose that future to thousands of dollars in student loan payments or wage garnishment if things don’t go according to your plan.

Six-figure debt isn’t the norm — borrowers who graduated in 2015 have an average of about $35,000 in education loans — though the sum doesn’t have to be huge to be unaffordable. Of course, for some people, it’s both. That’s the story of Liz Kelley, a 48-year-old Missouri high school teacher and mom to four, who found herself buried under a massive pile of debt from college, grad school and her kids’ educations. Kevin Carey, who directs the education policy program at New America, recently wrote about Kelley’s experience and how she ended up with $410,000 of federal student loan debt for the New York Times.

It started with an undergraduate degree from a private college, and when she graduated in 1994, she had $26,278 in loans. She followed that with a stint in law school, for which she borrowed $37,000, but she had to drop out because of a life-threatening illness. Kelley combined the loans, by then totaling $68,518 with interest, at an 8.25% annual interest rate. She then decided to pursue teaching, for which she went to graduate school from 1999 to 2004. During that time, she borrowed federal student loans to not only cover her education expenses but also her living expenses, which included childcare. This added $60,700 to her principal balance and left her with $194,603 in student loan debt by 2005.

Over the next few years, she and her husband were hit hard financially by the recession, lost their home to foreclosure and divorced. Kelley deferred her student loan payments (which you can do for up to three years for economic hardship), but the balance continued to accrue interest. To help her kids pay for college, she took out a $12,000 parent PLUS loan. Still working on her teaching career, Kelley briefly enrolled in an education Ph.D. program (she withdrew) that added $7,458 to her loans. When her loan deferment expired, Kelley enrolled in federal loan forbearance, which further pushed off the payments. Eventually, that will end and Kelley will need to make her first student loan payment, more than two decades after she first borrowed. Her balance of $410,000 will only continue to grow as interest accrues through the remainder of the forbearance.

It’s not a particularly complicated story: Kelley just seems to be someone who wanted to set herself up for a successful career and take care of her family, but bad luck and the ease of borrowing made an expensive mess of those plans. That’s the sort of story a lot of people can relate to, even if they don’t have six-figure student loan debt.

It’s a situation that doesn’t have many great outcomes. She could find relief through public service student loan forgiveness, but even then, she doesn’t have much time or spare cash to save for retirement (she cashed out what she had during the recession). Who knows how all of this affected her credit score and how that will impact other aspects of her financial life.

Whether you’re dealing with $10,000 or $100,000 of student loan debt, you have to make a plan to deal with it. The options may be few and sometimes intimidating, but your education debt isn’t going anywhere, and as long as you owe it, it will affect your financial health. Contact your student loan servicer and research your student loan repayment options, as well as keep an eye on how your student loan debt affects your credit. You can check two of your credit scores for free every 30 days on Credit.com to see where you stand.

More on Student Loans:

Image: iStock

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

  • JamesHayes

    Kelly has very poor financial literacy skills. If you do not make payments or do not even pay the interest each month common sense would tell you your loan is growing larger and larger. Kelly made some incredibly bad choices and we can all hope a majority of teachers have better financial skills and would not make similar bad choices. College is an investment. If you overpay it no longer brings a return on that investment.

    • Rob Jones

      Kelly surmised she would never have to pay the loans.

Credit.com receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team