How much debt will you risk to build the life you envision?

Today is March 21 and the Navigate the Chaos question to consider is “how much debt will you risk to build the life you envision?” For Bradley Cooper it was a $70,000 loan he took out to attend graduate school. For Best-selling author Cheryl Strayed it was $85,000. After studying at Villanova then transferring to Georgetown where he graduated with a BA in English, Cooper took out a $70,000 loan to earn a Master of Fine Arts degree in acting from the Actors Studio Drama School at The New School in New York City in 2001. He acknowledges that his parents could have, would have, offered to pay for his moonshot but, as Cooper admits, he couldn't "deal with the guilt" he felt about choosing such an arty-farty, insecure career over, say, stockbroking like his father. It would take another 8 years for him to reach breakthrough status.

In the anthology "Scratch: Writers, Money, and the Art of Making a Living" by Manjula Martin, Strayed told the story on her dire financial past. Strayed took almost 10 years to pay off her debt. She received a $100,000 advance for her first book Torch in 2003 but those payments were spread out over four years and it “wasn’t enough to live off of. She supplemented her income by teaching college writing courses and freelancing.

In 2009 she sold her next book Wild and received a $400,000 advance. At that time, she was $85,000 in credit card debt. With the Wild advance she paid off her credit card debt and her college loans but after taxes and agent fees her finances were still strapped. It wasn’t until 2013, almost 10 years after her first book was published, that she started to earn royalties for Wild’s global success. American science fiction writer Ray Bradbury noted "Living at risk is jumping off the cliff and building your wings on the way down." Much like Cooper and Strayed, college students often go into debt as they jump off the cliff and attend college in order to launch their careers with a diploma.

Among the Class of 2019, 69% of college students took out student loans, and they graduated with an average debt of $29,900, including both private and federal debt. Meanwhile, 14% of their parents took out an average of $37,200 in federal parent PLUS loans. Americans owe over $1.71 trillion in student loan debt, spread out among about 44.7 million borrowers. That’s about $739 billion more than the total U.S. credit card debt.

Med school and law school students are a small yet important subset of the student debt. According to the latest research on medical school students:

· The average medical school debt is $215,900.

· The average total student debt among medical school graduates is $241,600.

· 76-89% of medical school students graduate with educational debt.

· 43% of indebted medical school graduates have premedical educational debt.

· $4.3 billion is the total educational debt owed by medical school graduates each year.

The same holds true for law school students. According to the latest data from the National Center for Education Statistics, the average law school debt is $145,500 — that’s 77 percent higher than it was in 2000. What’s more, according to Law School Transparency, a nonprofit organization, almost 73 percent of law school graduates from 174 of the top law schools in the U.S. had student loan debt.

Home ownership is another area where people go into debt. According to the latest U.S. Census Bureau data 65% of Americans own a home. As Christina Majaski noted “The biggest myth about renting is that you're ‘throwing away money’ every month. This is not true. You need a place to live, and that always costs money in one way or another. While it's true that you aren't building equity with monthly rent payments, not all of the costs of home ownership will go towards building equity.”

College students, medical school students, law school students, and homeowners all have debt. For today’s reflection, the only one in this entire Navigate the Chaos series that focuses on money, the question you should consider is “how much debt will you risk building the life you envision?”