Student Loan Debt Repayment Using Career-Specific Income

Everyone knows about the Student Debt Crisis.

It’s also common knowledge that different careers earn different levels of income.

However, despite the different levels of income that come from various careers, for college graduates with student loan debt all that matters is how they are going to pay off their often gargantuan college-related balances.

The New York Fed tells us there are 37 million student loan borrowers in the country, and the ASA says that each year, 12 million new students borrow student loans in order to pay for their educations. These student loan borrowers have accumulated a total debt of $1 trillion, now surpassing the country’s total outstanding credit card debt.

According to the Project on Student Debt, the average student loan debt per individual in 2011 was $26,600. However, this year the average student loan debt is estimated to be $35,200.

In effect, this is equivalent to a cash purchase of a new car, or a down payment on a new home. But that figure is just an average, meaning that some students graduate with much more college-related debt. In fact, it’s not uncommon to see students strapped with debt topping six figures.

For such a massive payment and a massive investment into their future, borrowers should be aware of what they are getting themselves into when they select a certain major that will lead them down a certain career path. After all, while the costs associated with different degrees are relatively comparable, the incomes generated by these degrees certainly are not.

In order to view how different majors and occupations have helped (or hindered) student loan borrowers in repayment, loans.org compiled average incomes and repayment durations for various types of degrees and career paths.

A Look at Careers, Income, and Debt Payments:

According to a report on Consumer Expenditures by the Bureau of Labor Statistics, the average consumer spends, 33.8 percent of their income on housing, 16.7 percent on transportation, 13 percent on food, 10.9 percent on personal insurance and pensions, 6.7 percent on healthcare, and 5.2 percent on entertainment.

That is a grand total of 86.3 percent in consumer spending. This leaves 13.7 percent of one’s income that can be put towards monthly student loan payments.

Below is a list of disciplines associated with common college majors and the average income yielded by their related career paths. This list shows how much a student in each related career field can afford to pay towards their college debt, assuming they devote 13.7 percent of their income to their debt and assuming they have a student loan balance equal to 2011’s national average of $35,200 with an interest rate of 6.8 percent.

Career Path: Business

Average Annual Income: $53,900*

Average Monthly Income: $4,491.66**

Student Debt Payment: An employee in the business field can afford to make monthly payments of $615.35 towards his or her student loans each month.

Repayment Timeline: Assuming an employee in the business field remains steadily employed, he or she will repay $35,200 in loans after 5 years and 10 months of steady payments.

Career Path: Communications

Average Annual Income: $43,717*

Average Monthly Income: $3,643.08**

Student Debt Payment: An employee in the communications field can afford to make monthly payments of $499.10 towards his or her student loans each month.

Repayment Timeline: Assuming an employee in the communications field remains steadily employed, he or she will repay $35,200 in loans after 7 years and 7 months of steady payments.

Career Path: Computer Science

Average Annual Income: $59,221*

Average Monthly Income: $4,935.08**

Student Debt Payment: An employee in the computer science field can afford to make monthly payments of $676.10 towards his or her student loans each month.

Repayment Timeline: Assuming an employee in the computer science field remains steadily employed, he or she will repay $35,200 in loans after 5 years and 2 months of steady payments.

Career Path: Education

Average Annual Income: $40,668*

Average Monthly Income: $3,389**s

Student Debt Payment: An employee in the field of education can afford to make monthly payments of $464.29 towards his or her student loans each month.

Repayment Timeline: Assuming an employee in the field of education remains steadily employed, he or she will repay $35,200 in loans after 8 years and 4 months of steady payments.

Career Path: Engineering

Average Annual Income: $61,913*

Average Monthly Income: $5,159.41**

Student Debt Payment: An employee in the engineering field can afford to make monthly payments of $706.83 towards his or her student loans each month.

Repayment Timeline: Assuming an employee in the engineering field remains steadily employed, he or she will repay $35,200 in loans after 4 years and 11 months of steady payments.

Career Path: Health Sciences

Average Annual Income: $49,196*

Average Monthly Income: $4,099.66**

Student Debt Payment: An employee in the health sciences field can afford to make monthly payments of $561.65 towards his or her student loans each month.

Repayment Timeline: Assuming an employee in the health sciences field remains steadily employed, he or she will repay $35,200 in loans after 6 years and 6 months of steady payments.

Career Path: Humanities and Social Sciences

Average Annual Income: $36,988*

Average Monthly Income: $3,082.33**

Student Debt Payment: An employee in the humanities and social sciences field can afford to make monthly payments of $422.27 towards his or her student loans each month.

Repayment Timeline: Assuming an employee in the humanities and social sciences field remains steadily employed, he or she will repay $35,200 in loans after 9 years and 6 months of steady payments.

Career Path: Math and Sciences

Average Annual Income: $42,471*

Average Monthly Income: $3,539.25**

Student Debt Payment: An employee in the math and science field can afford to make monthly payments of $484.87 toward his or her student loans each month.

Repayment Timeline: Assuming an employee in the math and science field remains steadily employed, he or she will repay $35,200 in loans after 7 years and 10 months of steady payments.

As the data research above shows, selecting a major and a career field is massively important to one’s own ability to repay their student loan debt.

*All of the annual income-related figures have been compiled using the NACE Salary Survey.

** Monthly income-related figures assumed using annual income figures as baselines.

Major Headaches

As sobering as the data above is, and as devastating as it is to the myth of “majors don’t matter,” then even more profound are the comments of an insider well-versed on student loans.

Evan Rose, Co-Founder of the internship matching service Ecruit, told loans.org just how much student loan debt, majors, and income all relate to one another.

“A college student’s major strongly influences their entry level job opportunities,” said Rose. “Because of their lack of experience, recruiters often look at the major as a measure of a student’s knowledge and abilities.  A liberal arts major does not signal quantitative thinking skills the way that an applied mathematics major does. It also does not confer many directly applicable workforce skills.”

However, despite the recent and massive acclamation for STEM (science, technology, engineering, mathematics) majors, those with liberal arts and nontechnical majors can still make themselves competitive in the modern job market.

“For students whose passions lay under the liberal arts umbrella, consider using extracurricular involvement and internships to build and signal the skills you need to demonstrate to be considered a solid candidate,” said Rose.

He cautions students to not jump into the STEM fields in a desperate bid to secure income. Forcing oneself into an area of study without the proper amount of interest and passion can be a recipe for disaster.

Still, students are responsible for knowing that their major will affect their options after graduation. However, there are ways of minimizing the limitations a major may display on resumes.

“I studied Anthropology in college but my summer internships were all related to finance,” said Rose. “This allowed me to demonstrate my interest and abilities in the finance space without having spent my time studying it.”

STEM and non-STEM fields aside, the average student loan debt of $35,200 is essentially a year’s wages for some. Such a massive amount of debt borrowed by teenagers and young adults does raise the question of whether college is even worth the cost.

To College or Not To College

Rose feels that college can essentially be divided into two aspects: knowledge conferred and the socialization process.

Knowledge conferred is increasingly available online. In due time, online educations will probably signal competence equivalent to a diploma earned in person.

“From the socialization side, I think it is very much still worth it,” said Rose. “College students go through an incredible maturation process over their four years of school that helps them to grow, learn about themselves, figure out their passions and test their abilities against similarly skilled peers. The value of the experiences and the social interactions that take place in college cannot be underestimated.”

In the end, a college degree is a piece of paper that conveys the earner is competent enough to be paid for their time.

College, now justified as a pathway to a job and income, is something to be strived for. Assuming that a student must borrow student loans in order to attend, just how much debt is too much debt to manage?

“Student loan debt can’t be thought of as an absolute or universal value for everyone,” said Rose. “When taking on debt, you need to tabulate what your expected earning potential is, your chances of securing employment, and what your plan B is if you can’t find a job or are fired. Decisions about debt should be made with thoughts of the college you’re going to, your course of study and your career in mind.”

As far as decision making goes, it may be asking too much to expect 18-year-olds to make life-changing decisions.

Into the Unknown

“When deciding on a major, 18-year-olds should take into account their interests and their career aspirations,” said Rose. “Finding a subject that you enjoy learning about but that also has bright career prospects is difficult but not impossible.”

For students currently attending college, they should take advantage of resources at career services offices. After all, choosing a difficult, time-consuming major and then performing at a mediocre level serves no one. Student loan borrowers are better off being the best in a smaller or less difficult major than in the 50th percentile.

“The process of self exploration should begin when a person is young and continue throughout their career,” said Rose. “Not everyone will (nor should they) come to concrete conclusions by age 18, but they should certainly have an idea of the directions they want to explore. Nothing is set in stone and students are free to pivot into new majors and career paths.”

Whatever paths students decide to explore, they should look at the hypothetical young professionals listed above. Students could very well end up with similar incomes and similar student loan debt obligations. Like many decisions in life, deciding on what to study and what field to enter may not be an easy decision, but it is certainly a decision with massive repercussions. Choose wisely, and more to the point, borrow wisely.