What’s it like to be $200K in debt? (Interview with Kelli Space)
In May 2009, 23-year-old Kelly Space graduated with a top-notch education from Northeastern University. And a degree in sociology. And, uh, $200,000 in student loans.
How did an intelligent, responsible young woman find herself in an impossible situation with a humungous debt and an unmarketable degree? I’ll get to that, but first let me breakdown some of the financial particulars….
-Northeastern tuition cost $30,000/year. Room and board was an additional $10-15,000/year.
-To pay for it, Kelli took out $163,000 in student loans.
-While in school, the interest accrued, so by the time Kelli graduated, the debt was $200,000.
-Kelli owes $11,000 in low-interest government loans and $189,000 in a multitude of private loans, some of which have interest rates as high as 9 percent.
-After graduating, she entered into a two-year program in which her monthly bills were momentarily reduced to $900/month. At the end of this program, she will owe $1,656/month.
I spoke with Kelly about a year ago (and never got around to transcribing our interview till now). At that point, she was still in the midst of her “fifteen minutes of fame,” which began when she asked for donations on Gawker. The response to her plea was mostly negative, with commentators claiming she was begging for handouts and not taking responsibility for her actions, even though she’d been working 60 hours a week, residing at her parents’ home, and living a frugal, barebones lifestyle—and despite all the sacrifices and hard work—hardly putting a dent in her debt.
What’s remarkable about Kelli is just how unremarkable her situation is. Like her, many students find themselves caught in a perfect storm of bad counseling, poor financial education, and blind hope.
KI: Forgive me for putting the question this way, but I think a lot of people are wondering the same thing. So… ummm… What the hell were you thinking?
KS: I was thinking that I’d get a really good education. Everyone always asks me, ‘Didn’t you know [how much you were going to have to pay back] when you were going to school?’ And the answer to that is ‘Yes, of course.’ But I don’t think I understood the gravity and the enormity of that number. [A high school student] thinks it’s normal to borrow when everyone borrows money to go to school. To a lot of people, this sounds like an excuse, but honestly, if you’re not taught something, how are you supposed to know?
Were you at all “financially aware” before you attended college?
In high school, you don’t learn personal finance. You hardly learn about economics. I think that’s a huge issue. I don’t think I was stupid. You only know what you’re taught. I thought I was doing the right thing.
How should we educate young people so they don’t make the same mistake?
I think it’s so necessary [that we educate them]. If we’re going to teach kids geometry and English, why shouldn’t we teach them [personal finance], which will affect their lives directly?
What made you want to get into the best school you could get into, no matter the cost?
My parents expected me to go to college. It wasn’t expected of them. I had blinders on. It was only [college] that I could see at the end of my tunnel. During my high school sophomore year, my history teacher told us, ‘The one requirement I have of you guys is that you go away to school. Don’t live at home.’ Stuff like that was instilled in me over and over. [It was all about] going away and having this adult life starting at age 18 at the best possible place you can get this education and get the best career. There was no talk of money.
In college, when did it hit you, when you thought, “wow, I have all this money to pay off?”
My first year, I was loving being away from home. In my sophomore year, it started to hit me a little bit. ‘How am I going to do this?’ I knew I needed to sit down and figure out how what kind of jobs I could get and what I should do after graduation to ensure that I got the highest paying job. I was more optimistic than anything. Junior year, it got a little worse. The recession hit, and I thought, ‘The last thing I need is to graduate in a terrible economy and not get a job with all this debt.’
You’ve been paying it off for a little over a year now. Has the debt gotten any smaller?
At first, when I made a payment, the number didn’t move at all. I was just paying interest basically.
How awful. ::sympathetic laughter::
Yeah, it’s so depressing. ::laughs::. In October—when I was like, ‘oh no, I only have 13 more months of these low payments.’ Low! They’re $900 a month! ::more laughter:: And soon I’ll have to start paying $1,600 a month. Nothing says depression like putting $1,000 toward a loan payment and not seeing the debt decrease at all. Or even if you see it go down a little bit, the interest shoots it right back up. It’s just so depressing. So when I got some contributions, it was just such a great day to see that number go down.
Has the debt affected your personal life?
The depression has gotten increasingly worse since graduation. I don’t think it’s affecting my job, but I do think it’s affecting my relationship with friends and family. All I can think about is my debt. It’s just such a burden. My posture… If you saw me standing… I can’t stand up straight. It just feels so heavy. I’m constantly upset. It’s so overwhelming.
Do you think it’ll affect your decision to have a family (if that’s something you want)?
There’s too much of a wall in front of my face to see the future. If I still have this debt in 10 years, in 15 years—which I’m hoping I don’t—I don’t think I’ll have a family. I don’t think I’ll be married.
I’m okay with sitting at home. I’m okay with not spending my money. I’m okay with putting all my money toward my debt. Yet it doesn’t feel like the debt is coming down at all. It just feels like I’m giving, giving, giving to this debt. I’m making all these sacrifices for it. But there’s no positive result yielding yet.
When do you think you’ll be out of debt?
This is something I need to be clear of before I can move on, be happy, and do things for other people. I don’t know exactly when I’ll be out of debt, but I definitely know it will not be 25 years from now. It’s going to be sooner than that.
What would you say to an 18-year-old girl who wants to go to the best school she could get into, regardless of the cost?
I dream of this. I’d tell her that she should start off at a community college for a year or two. Get credits and good grades, and reapply to these great schools she wants to go to. Maybe she’ll get more scholarship money. Maybe she’ll be able to save up money so she doesn’t have to take out any loans. I think those two years in community college—and maybe two years just working—would give you such a different perspective.
[The other day I asked Kelli about her progress. Her debt is down to $140,000 and she expects it to be as low as $120,000 by June. She’s working in the legal department of a large media company and has moved out of her home and into a $500/month apartment just outside of NYC. She has raised $12,000 on her site, on which she calls for better youth financial education and is trying to raise awareness about student debt. You can follow her on Twitter here, or buy what’s left of her possessions on sale here.]