• Discounts and special offers
  • Subscriber-only articles and interviews
  • Breaking news and trending topics

Already a subscriber?

By signing up, you accept Moneywise's Terms of Use, Subscription Agreement, and Privacy Policy.

Not interested ?

The rising costs of student debt

Dylan revealed he has more than $70,000 in total debt. Of that, $36,000 is from a car loan and another $3,700 is from a personal loan he took to pay rent while between jobs. However, the most shocking piece of Dylan’s debt pile is a student loan of $32,000 that he acquired after just one semester in college.

“Wait, one semester? On Mars?” Delony asked incredulously.

To be clear, Dylan’s debt burden isn’t extraordinary. The average student loan debt is $37,718, according to the Education Data Initiative. However, that’s usually debt students have racked up after completing their program and graduating.

Dylan said he attended a private Christian school in Minneapolis. Tuition for some of these institutions can be tens of thousands of dollars per year, so it’s possible for a young person to rapidly accumulate his level of debt.

Dylan’s situation highlights how millions of Americans have accumulated a total of $1.74 trillion in student loan debt over time.

Find a financial adviser in minutes

Are you confident in your retirement savings? Get advice on your investment portfolio from a certified professional through WiserAdvisor. It only takes 5 minutes to connect with an adviser who puts you first.

Get Started

Taking a 'scorched earth' approach to debt reduction

Co-host Rachel Cruze recommended a “scorched earth” debt reduction strategy for Dylan, which means quitting his job because it doesn’t pay enough — and then working multiple jobs and long hours to reduce his debt.

Dylan said he earns roughly $36,000 in a combination of base salary and commissions as a car salesman. That’s not enough to manage his debt burden.

“Your car salesman days are over,” Delony said. “You’re not good at that.”

Instead, Delony recommended that Dylan work at McDonald’s, deliver pizzas and work as an Uber driver. Cruze, meanwhile, said he should sell his car, move back in with his parents and work relentlessly to pay down the remaining debt.

“I would be working 80 hours a week,” she said.

According to Indeed), non-manager roles at McDonald’s locations in Indiana tend to fall between $9 and $12 an hour. Pizza delivery drivers in the state earn an average of $15 an hour, per Ziprecruiter. If Dylan were to make $12 an hour working 80 hours a week, he could potentially earn just shy of $50,000 (before taxes). Saving a significant chunk of that could help him pay off his debt in a few years.

Working long hours or multiple jobs isn’t unusual. In fact, nearly 8.4 million Americans held multiple jobs as of November 2023, according to the Federal Reserve Bank of St. Louis.

“You’re not going to have a life,” Cruze warned. But the grueling effort should be worth it to get out of debt while Dylan is still young.

“If you get this all straightened up, especially at your age, you could build some serious wealth in the future.”

Sponsored

Follow These Steps if you Want to Retire Early

Secure your financial future with a tailored plan to maximize investments, navigate taxes, and retire comfortably.

Zoe Financial is an online platform that can match you with a network of vetted fiduciary advisors who are evaluated based on their credentials, education, experience, and pricing. The best part? - there is no fee to find an advisor.

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.

What to Read Next

Disclaimer

The content provided on Moneywise is information to help users become financially literate. It is neither tax nor legal advice, is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Tax, investment and all other decisions should be made, as appropriate, only with guidance from a qualified professional. We make no representation or warranty of any kind, either express or implied, with respect to the data provided, the timeliness thereof, the results to be obtained by the use thereof or any other matter.