Neither of Deanna Brooks’ parents finished college, but they had high hopes for her.

She has lived up to them by earning a master’s degree in accounting and becoming a certified public accountant, a profession that would free her from the constant money struggles she saw growing up.

But she also ended up borrowing $76,000 and is struggling to pay it back.

“I created a bad hole for myself,” said Brooks, 26, who has a job as an auditor in the Chicago area.

Brooks is one of about 44 million Americans with outstanding student loans, with about one-third in default, deferment or forbearance because of financial stress, according to U.S. Department of Education data. Her difficulties are common for a first-generation college graduate from a low-income family.

Headlines often convey horror stories about people with more than $100,000 in debt, but those big numbers are for graduate school tuition and go hand-in-hand with higher pay.

Only 9 percent of graduates paying for four-year degrees have more than $50,000 in loans, according to Brookings Institution research by economist Adam Looney.

Those who struggle the most with debt actually take on very little — half of those who defaulted on their loans in 2015 had less than $10,000 in student loans, Looney found.

Frequently, students who defaulted come from lower-income backgrounds and quit college before graduating.

Without a degree, students typically cannot get jobs with salaries that are high enough to pay off debt.

One way to combat this is to check graduation and default rates at a particular school before applying, said Sandy Baum, a nonresident fellow at the Education Policy Program at the Urban Institute.

As a rule of thumb, the average debt of $30,000 should be manageable if the student has a bachelor’s degree and earns at least that much annually, Baum said.

The fear of debt

People in a situation like Brooks’ need to worry the most. Her mother was supporting a household of eight people — children, grandchildren and an ill husband — on a $35,000 nurse’s-aide salary.

After Brooks finished school, she not only had her student loans but also $40,000 in credit card debt from covering her costs and helping her family, including $10,000 for her father’s funeral.

Many low-income college students try to limit loans, terrified of too much debt.

They often work 30 or more hours per week in low-paying jobs, leading them to drop out with low grades and missed opportunities for unpaid internships, according to Anthony Carnevale of the Georgetown Center on Education and the Workforce.

Brooks bucked the trend, earning bachelor’s and master’s degrees in five years, but many do not.

Only 11 percent of low-income students from families without college finish undergraduate studies in six years, according to the Postsecondary National Policy Institute.

That’s very different from moderate-income parents who have degrees, where the completion rate jumps to 55 percent.

There is help out there

Dropping out puts students in the greatest danger of default.

According to U.S. Department of Education data, 45 percent of college dropouts default on student loans compared with only 8 percent of those that earn bachelor’s degrees and 22 percent with associate’s degrees.

Black students are at a far greater risk of default even if they finish a bachelor’s degree, with 21 percent defaulting vs. 4 percent of whites, according to Brookings Institution research by Judith Scott-Clayton, a professor at Columbia University.

Once students borrow money but don’t get jobs with a solid future, it is difficult to undo the damage. The Department of Education’s program to reduce loan payments for people with low incomes can help.

Under the “income based repayment” program, the government lowers monthly payments for federal student loans so they are affordable based on an individual’s salary.

After 20 years, if the loans are not completely paid they can be forgiven.

To qualify, one must have relatively low earnings. The program did not help Brooks since it does not consider credit card debt.

Her financial adviser, Cortlon Cofield, suggested bankruptcy. Generally, bankruptcy will not free people from student loans but can relieve credit card debt.

Nevertheless, Brooks is optimistic.

“In 10 to 15 years I will be at the place in my career when I should be making bonuses and won’t have to worry anymore,” Brooks said.


Gail MarksJarvis writes for Reuters.