A Women’s History Month feature. Read more stories of student loan debt here.
Molly Monk, a 2016 college graduate with $27,000 of student loan debt, discussed with NerdWallet how her modest lifestyle choices have made it easier for her to repay her debt. Monk is the latest woman in this series to share her thoughts on her relationship with her student debt, as well as her perspective on the gender gap and how she’ll feel to be student-debt-free.
More women than ever hold college degrees, but they face a more daunting debt burden than their male peers.
The number of American women 25 and older with a bachelor’s degree increased from 22.8% to 29.7% between 2000 and 2013, according to the Institute for Women’s Policy Research. Women may have more education than ever before, but they’re still earning less than men: Women with graduate degrees earn a median $29,000 less per year than men with graduate degrees and $5,000 less than men with just bachelor’s degrees, according to the institute.
Those lower earnings make it more challenging to repay student loans. One year after graduation, women’s student loan debt represented a higher percentage of their earnings when compared with men, according to findings from a 2015 study by the Institute for Women’s Policy Research, released by AARP. The higher proportion was true across all ethnic groups but was even greater for black women.
This is Molly Monk’s story.
Occupation: Program manager for Iowa Startup Accelerator, a program by the nonprofit NewBoCo in Cedar Rapids, Iowa
Location: Cedar Rapids, Iowa
Degrees held: Bachelor’s degree, double major in political science and international studies, triple minor in math, French and religion
College attended: Simpson College in Indianola, Iowa
Student debt: $27,000
Monk is a recent graduate who lives a frugal lifestyle to pay down her $27,000 federal student loan debt. “I didn’t want to have to move back in with my family to pay off my loans, so that led me to think about where can I live so I can pay off my loans and still have a comfortable life,” she says.
Monk pays $500 a month for a one-bedroom apartment in Cedar Rapids, Iowa, across the street from her job at a nonprofit. By pursuing work in the nonprofit sector, Monk knew her salary would be lower, but, she says, “Living in a city that’s affordable made doing that work possible for me.” She picked up a part-time job and sends every paycheck from this directly to her loans.
On her thrifty lifestyle: Monk drives a car with over 355,000 miles on it since she knows she can’t afford a car payment on top of her student loans. “I bought it off my parents because no one else would buy it off of them, and it was the car I could afford,” she says, “and I need to make it last as long as it can.”
On what she would have done differently in college: “I went to the most affordable college that I was accepted to, and it gave me the best financial aid package, but I wish I had been making payments. I wish that I had gone into freshman year thinking about what my monthly payment would have been. Since I had unsubsidized federal loans, I wish I had started paying off the interest while I was in college or making payments when I was in school instead of waiting.”
On what being student-debt-free would mean: “It would mean freedom. I wouldn’t have to make some of the decisions I have to make. I could have a vacation to see friends who live across the country without worrying about if I could afford it. I’d have $400 extra each month that I could go places with, invest in other people, help my younger cousins, and I could give back more to the community I’m in. That would mean a lot to me.”
On the student loan gender gap: “I didn’t know about it, so it’s surprising in that regard, but I could see a lot of women having to take longer to pay off their loans. Or women like myself who go into social-good careers who don’t make enough money. If I was a computer programmer, it would be a much different situation because they’re going to make a lot more money in that regard. It makes sense when I hear it, but it’s surprising.”
On advice to other new grads: “Living in a city that might not seem as glamorous can make your life a lot easier, and you can live a lot more comfortable. I can have my own apartment instead of having to share with three roommates. I would like to eventually live somewhere else, but right now, living here makes a nice quality life. Give Iowa a try.”
How to make loan payments more manageable
Monk is making her loan payments easier to afford through her lifestyle choices. But there are additional options to consider if you’re having trouble making payments.
Federal loan borrowers may opt for income-driven repayment, in which your monthly payments will be capped at a percentage of your income. Your standard 10-year loan will extend to 20 or 25 years. Private loan borrowers may benefit from student loan refinancing, in which your existing loan would be replaced with a new private loan with a lower interest rate. To qualify, you need stable income and a credit score of 650 or higher.
Both options have their drawbacks. With income-driven repayment, you’ll pay less each month, but you’ll end up paying more in interest over the length of the loan term. If you refinance federal loans, you’ll be giving up federal protections like loan forgiveness as well as payment options like income-driven repayment.
Monk’s is one of 44.2 million stories of student loan debt. For more on these women and additional stories of student debt woe and triumph, follow the “Female Faces of Student Loan Debt” series.