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Overeducated and underemployed

Helen says she has degrees in law, conflict management and information technology. She admits that the conflict management degree was “a waste of money,” while the information technology degree is now outdated. Her only direct path to income would be her law degree.

However, Helen worked as a litigator for three years but abandoned the job because she “hated it.” She’s now employed as a staff attorney at a non-profit firm where she makes an annual salary of $85,000.

Unfortunately, that’s not enough to keep up with her debt. Helen says the interest rates on her student loans range from 6.8% to 7.6% — and she also carries a mortgage that raises her total debt burden to about half a million dollars.

Helen’s at an intersection of two crises. Student loans weigh on roughly 43.6 million Americans, according to the Education Data Initiative, while one-third of college graduates are working jobs that don’t require a college degree, according to a survey from ResumeBuilder.com. Too much debt and too little income due to underemployment are overlapping issues.

Fortunately for Helen, she has some options to rapidly boost her income and escape this situation.

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Getting the ‘size of your shovel’ up

Helen’s refusal to work as a litigation attorney has suppressed her income. At the same time, her husband earns $50,000 (and doesn’t have a degree to dramatically increase his income overnight) — and he has separate debt, too. Ramsey summed up their key issue: “You have a deep, deep hole and a medium-sized-to-small shovel. We need to get the size of your shovel up, your income up.”

The income a legal professional can make varies, depending on location, type of law and years of experience. However, according to the latest report from the National Association for Law Placement (NALP), even entry-level associates can earn as much as $215,000 in major markets. Helen’s three years of experience should put her above this pay range.

Ramsey estimates Helen could make an additional $100,000 a year working as an attorney and get rid of her debt in roughly three years. This, he says, can serve as a temporary measure rather than a permanent career shift, since she doesn’t enjoy the work.

To be fair, Helen isn’t the only person who doesn’t enjoy practicing law. Lawyers are at high risk of feeling stressed, overworked and lonely due to the high-stakes nature of their work, according to a study from the University of Minnesota. Ramsey recognizes this but argues that “it’s less depressing dealing with litigation than it is dealing with $311,000 in student loan debt.”

He also recommends that the couple combine their debt and work together to raise their income. Helen can still pay down her loans at her current income — and without her husband’s assistance — but “it's going to take you three or four times longer.”

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About the Author

Vishesh Raisinghani

Vishesh Raisinghani

Freelance Writer

Vishesh Raisinghani is a freelance contributor at MoneyWise. He has been writing about financial markets and economics since 2014 - having covered family offices, private equity, real estate, cryptocurrencies, and tech stocks over that period. His work has appeared in Seeking Alpha, Motley Fool Canada, Motley Fool UK, Mergers & Acquisitions, National Post, Financial Post, and Yahoo Canada.

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