Student Debt Guide for High Schoolers

1. What’s Student Debt, Anyway? 🧠

It’s a loan you take to pay for college stuff like classes, books, or dorms. You borrow now, but you owe the money back, plus a fee (interest) for using it.

Fact: 45 million Americans owe $1.77 trillion in student loans—that’s like buying 17 million cars! (Federal Reserve, 2025)
Fact: The average borrower owes $37,338. 62% of 2025 college grads have loans. (College Board, 2025)
Fact: 20% of borrowers are over 50, still paying loans from years ago. (U.S. Department of Education, 2025)
Example: You borrow $25,000 for college. With 6% interest, you pay back $39,972 over 10 years—$14,972 extra! 😱

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2. What Kinds of Student Loans Are There? 📚

Loans come in two types, like choosing between a cheap burger or a fancy one. Each has different costs and rules.

Federal Loans: From the government. Cheaper interest (4.99% for need-based, 7.54% for others, 2025). Subsidized means no interest while you’re in school; unsubsidized means interest starts right away.
Private Loans: From banks like Sallie Mae. Interest can be 3% to 15.49%—way higher! (Bankrate, 2025) You might need a parent to co-sign.
Fact: 92% of loans are federal ($1.63 trillion), 8% are private ($140 billion). (College Board, 2025)
Fact: Private loans don’t offer forgiveness or easy repayment plans, so they’re riskier.
Example: A $20,000 federal loan at 6% costs $266/month for 10 years. A private loan at 12% costs $317/month—$6,120 more total!
Tip: Fill out the FAFSA form to get federal loans or free aid before trying private loans.

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3. Interest: The Extra Cost Explained 💸

Interest is like rent you pay for borrowing money. It adds up, making your loan bigger if you don’t pay it early.

Fact: Federal loans average 6.53% interest; private loans, 9.2%. Some private loans hit 15.49%! (Federal Student Aid, 2025, Bankrate, 2025)
Example: Borrow $15,000 at 6%. Over 10 years, you pay $4,993 interest, so $19,993 total. At 12%, it’s $8,617 interest—$23,617 total!
Compound Interest: If you skip payments, interest grows on itself. A $15,000 loan at 6% unpaid for 4 years becomes $18,936 before you start paying.
Fact: 30% of borrowers owe more than they borrowed because interest piles up. (U.S. Department of Education, 2025)
Example: Pay $50/month on interest during college for a $15,000 loan. You save $3,936 in extra debt by graduation!
Tip: Even small payments in school (like $20/month) keep interest from growing wild.

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4. Why Do People Take Loans? 🤔

College costs a ton, and loans help you afford it when you don’t have cash. They have upsides but also downsides.

Fact: Public 4-year college tuition is $11,260/year (in-state); private, $41,540. Living costs add $12,770–$15,510. (College Board, 2025)
Upsides: You can go to your dream school, study without a full-time job, or aim for high-paying careers like doctors ($200K+ salaries).
Downsides: You’ll pay $200–$440/month after college, which cuts into money for rent or fun. 20% of borrowers can’t pay on time. (U.S. Department of Education, 2025)
Fact: 55% of grads say loans stopped them from buying a house, traveling, or saving. (Sallie Mae, 2025)
Example: Borrow $30,000 at 6%. You pay $399/month for 10 years. That’s like giving up a phone plan, Netflix, and coffee runs every month!

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5. Public vs. Private Schools: Costs and Debt 📊

Public colleges (run by states) are usually cheaper than private ones (run by organizations). This affects how much you borrow.

Public Costs: $11,260/year tuition (in-state), $29,150 (out-of-state). Add $12,770 for room, food, books. Total 4 years: $96,120 (in-state), $178,640 (out-of-state). (College Board, 2025)
Private Costs: $41,540/year tuition. Add $15,510 for room, food, books. Total 4 years: $228,200. (College Board, 2025)
Debt Difference: Public school grads average $30,800 debt; private school grads, $43,700. (U.S. Department of Education, 2025)
Fact: 70% of private school students borrow vs. 55% at public schools. Private loans are more common at private schools (14% of borrowers). (College Board, 2025)
Example: Public college: Borrow $30,000, pay $399/month for 10 years at 6%. Private college: Borrow $60,000, pay $798/month—double the payment!
Tip: Compare financial aid packages. Private schools offer more scholarships ($20K average), but costs are still higher.

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6. Paying Back Loans: What’s It Like? ⏰

You start paying loans 6 months after leaving college. It’s like a monthly bill, and there are different ways to do it.

Standard Plan: Pay the same amount for 10 years. For $37,338 (average debt) at 6%, it’s $440/month, totaling $52,800.
Income-Driven Plan: Federal loans base payments on your income (10–20% of “extra” income). On a $40,000 salary, pay $200/month instead of $440, but it takes 20–25 years.
Forgiveness: After 20–25 years, income-driven plans forgive what’s left. Public Service Loan Forgiveness (PSLF) forgives after 10 years if you work for government or nonprofits (e.g., teacher, nurse).
Fact: Only 7% get PSLF because of tricky rules. (U.S. Department of Education, 2025)
Fact: 43% of borrowers miss payments or pause them within 3 years. (Federal Reserve, 2025)
Example: A $20,000 loan at 6% is $266/month for 10 years. Miss a year, and interest adds $1,200 to your debt!
Tip: Pay an extra $20–$50/month to save thousands in interest over time.

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7. What Will You Earn After College? 💼

Your salary decides how easy it is to pay loans. Different jobs pay way different amounts.

Fact: Average starting salary with a bachelor’s degree is $62,360/year ($5,197/month). High school grads earn $41,160 ($3,430/month). (BLS, 2025)
By Major: Engineering ($80,340, $6,695/month), Computer Science ($76,890, $6,408/month), Nursing ($68,450, $5,704/month), Business ($60,120, $5,010/month), Education ($45,890, $3,824/month), Arts ($42,670, $3,556/month). (BLS, 2025)
Fact: Top 10% of grads earn $120K+; bottom 10%, under $35K. (BLS, 2025)
Fact: College grads have 2.2% unemployment vs. 3.7% for high school grads. (BLS, 2025)
Example: A nurse ($68,450/year) pays $440/month for a $37,338 loan (6%). That’s 7.7% of their monthly pay. An artist ($42,670) pays the same $440—12.4% of pay, much tougher!

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8. How Loans Shrink Your Paycheck 🏠

Loan payments take a chunk of your salary, leaving less for rent, food, or fun. Let’s see how it hits your wallet.

Fact: Monthly living costs (rent, food, transport) average $2,500 in smaller cities, $3,500 in big ones like New York. (BLS, 2025)
Fact: Average loan payment is $200–$440/month ($20K–$37K debt at 6%, 10 years). Private school loans ($60K) hit $798/month. (Federal Student Aid, 2025)
Taxes: About 20% of your salary goes to taxes. A $60,120 salary ($5,010/month) drops to $4,008 after taxes.
Example 1: Teacher, Public School, Small City: Earn $45,890/year ($3,824/month). After taxes, take home $3,059. Pay $399/month for a $30,000 public school loan and $2,500 living costs. You’re left with $160/month for savings or fun—super tight!
Example 2: Engineer, Private School, Big City: Earn $80,340/year ($6,695/month). After taxes, $5,356. Pay $798/month for a $60,000 private school loan and $3,500 costs. You have $1,058/month left—still okay!
Example 3: Artist, Private School, Small City: Earn $42,670/year ($3,556/month)., take home $2,845. Pay $798 for a $60,000 loan and $2,500 costs. You’re $-453/month—you can’t afford it!
Debt-to-Income (DTI): Your loan payment should be under 15% of income. $399 on $45,890 (10.4%) is okay; $798 on $42,670 (22.4%) is risky.
Fact: 55% of grads skip big purchases (houses, cars) because loans eat their cash. (Sallie Mae, 2025)
Tip: Borrow less than your first-year salary (e.g., $50K salary, max $50K loan) to keep life chill.

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9. Skip Loans: Other Ways to Learn 🚀

College isn’t the only way to get skills, especially with AI taking over jobs (30% may automate by 2030, per McKinsey). Try these cheaper paths!

Scholarships: Free money for grades, sports, or talents. $7.4 billion given out yearly—1.5 million options on Fastweb! (Scholarship America, 2025)
Grants: Free cash for low-income students. Pell Grants give up to $7,395/year; 34% of students get them. (NCES, 2025)
Work-Study: Work 10–20 hours/week on campus, earn $2,000–$5,000/year for tuition.
Community College: Costs $3,900/year. Study 2 years, then transfer to a 4-year school for a degree. (College Board, 2025)
Coding Bootcamps: 12–24 weeks, $10K–$15K. Learn coding or AI skills. Grads earn $70K–$90K as developers or data analysts. (Course Report, 2025)
Online Courses: Coursera, Udemy, or Khan Academy ($0–$200/course) teach AI, marketing, or design. E.g., Google’s Data Analytics Certificate ($150) leads to $67K jobs. (Coursera, 2025)
Trade Schools: 6–24 months, $5K–$20K. Become an electrician ($58K/year), plumber ($60K), or dental hygienist ($81K). (BLS, 2025)
Micro-Credentials: Short courses (e.g., AWS Cloud Practitioner, $100) for tech roles ($60K–$80K). 80% of employers value gam. (Coursera, 2025)
Entrepreneurship: Start a business with free online tools (e.g., YouTube for marketing). E.g., a teen TikTok creator earns $50K/year with 100K followers.
Fact: AI jobs (e.g., machine learning engineer, $90K) grow 31% by 2030. Creative and technical skills resist automation. (BLS, 2025)
Fact: 70% of 2025 grads avoid debt with aid, work, or cheaper schools. (NCES, 2025)
Example: Spend $12K on a coding bootcamp, earn $75K/year. No debt, and you’re set for AI-driven tech jobs!

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10. Debt or No Debt? Your Big Decision 🤷

Should you borrow for college or go another way? Here’s how to pick what’s best for your life and an AI-powered future.

Check the Payoff (ROI): Divide your salary by debt. Good ROI: $60K debt for an $80K engineering job (1.33x). Risky: $60K debt for a $40K art job (0.67x).
Test Your Budget: Can you afford payments? Earn $60,120 ($4,008 after taxes). Pay $440 loan and $2,500 living costs, you have $1,068 for savings or fun. Earn $42,670 ($2,845 after taxes), you’re left with $345—stressful!
Keep Debt Low: Loan payments should be under 15% of income. $399 on $45,890 (10.4%) is fine; $798 on $42,670 (22.4%) is risky.
Pick the Right Job: High-paying fields (tech, $76K; nursing, $68K) handle debt better than low-paying ones (arts, $42K).
Explore Alternatives: Community college ($3,900/year), bootcamps ($15K for $70K jobs), or online courses ($200 for $60K roles) save cash. AI skills (e.g., coding) are hot for 2030 jobs.
AI Future: By 2030, 30% of jobs may be automated, but AI creates roles like data analyst ($68K) or UX designer ($75K). Learn tech or creative skills to stay safe. (McKinsey, 2025)
Fact: 38% of 2025 grads are debt-free using scholarships or work. 20% regret loans due to tight budgets. (College Board, 2025, Sallie Mae, 2025)
Example: Borrow $30K for a $68K nursing job. Pay $399/month (7% of $5,704/month), leaving $1,805 after $3,500 costs. Or skip debt, spend $200 on a Coursera AI course, and earn $60K with $1,500 left!
Tip: Use a loan calculator (like studentaid.gov) to test payments. Compare to your dream job’s salary and living costs.

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Your No-Confusion Guide to Student Debt

1. What’s Student Debt, Anyway? 🧠

2. What Kinds of Student Loans Are There? 📚

3. Interest: The Extra Cost Explained 💸

4. Why Do People Take Loans? 🤔

5. Public vs. Private Schools: Costs and Debt 📊

6. Paying Back Loans: What’s It Like? ⏰

7. What Will You Earn After College? 💼

8. How Loans Shrink Your Paycheck 🏠

9. Skip Loans: Other Ways to Learn 🚀

10. Debt or No Debt? Your Big Decision 🤷

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