Meet a Doctor With $895,000 in Student Debt, Plus an Income-Based Plan

  • Kathleen LaRose has $895,000 in student debt that she struggles to pay off under income-driven plans.
  • Interest increased her debt as she deferred loans during her doctoral and residency programs.
  • She said she qualified for the pardon three years ago, but her payment date is not until next year.

Kathleen LaRose loves being a doctor, but she doesn’t like the nearly million-dollar student debt that comes with it.

After graduating from SUNY Stony Brook in 1987, LaRose knew she wanted to go into medicine and specialize in feet and ankles. The only way she could do that was to take out student loans. So she borrowed $277,000 in federal loans to earn her Doctor of Podiatric Medicine degree and enrolled in an income-contingent repayment plan, which was the first version of a student loan repayment plan focused on income which offers borrowers affordable monthly payments based on the income they earn, with the promise of debt forgiveness after 25 years.

Twenty-eight years later, LaRose has student debt of $895,512.97. The insider consulted documents to verify these amounts.

“I thought I’m going to work with a Ph.D. in this country, so I’ll make a lot of money and I can pay for that,” LaRose, now 55, told Insider. “But I never made a ton of money, and I kept the monthly payments based on income, and they were never late. But they’re just out of control now.”

Kathleen LaRose

Kathleen LaRose, 55, has student debt of $895,000.

Kathleen LaRose


The deferment and forbearance periods are largely to thank for LaRose’s debt balance which is more than three times the original amount she borrowed. While in her doctoral and residency program, her loans were put on hold at school, allowing a borrower to defer repayment of their loan while in school. However, because her student loans were unsubsidized, the interest continued to accrue during this time and was capitalized, meaning it added to her principal balance, causing her debt to increase.

On top of that, LaRose’s forgiveness schedule on his income-contingent repayment plan has been pushed back following the transfer of his debt to new student loan companies. President Joe Biden’s Education Department has taken steps to help borrowers like LaRose by offering interest compounding limits, and he plans to introduce a new income-focused repayment plan in the coming weeks. . But that doesn’t solve the decades of financial challenges that LaRose’s huge debt load has caused, and Biden’s announced plan to forgive $10,000 in student debt for borrowers earning more than $150,000 would be just a blip. water in the bucket for her.

“I really value education. I think it’s important that we give people the opportunity to be educated, but it’s a really bad system,” LaRose said. “Think of the economic problem this has caused our country.”

“I would never have taken out these loans”

Currently, LaRose earns five figures running a private practice in North Carolina, and she also works with disadvantaged seniors in nursing homes. She said that although she loves being a doctor, she doesn’t make the money she thought she would because she doesn’t have a large number of clients. She would like to finance her degree differently.

“In retrospect, I never would have taken out these loans,” LaRose said. “It’s a great job. It’s a rewarding job, and I can’t imagine doing anything else. But I would have found another way. Even coming from a very low-income family, I would have understood .”

LaRose hasn’t made payments on her student loans for the past two years thanks to the pandemic payment pause, and she said she doesn’t know what her monthly bill will be when the pause expires after Aug. 31. His debt balance is split into two separate loans — one totaling $27,491 and the other $868,021 — and if all goes as planned, his estimated repayment date on the larger balance is April 2023, according to documents reviewed by Insider. His smallest balance has an estimated payout date of January 2043.

If LaRose succeeds in having the vast majority of her balance paid off through an income-driven repayment next year, she will join the select few nationwide who have accomplished the same feat. A report from the Government Accountability Office in May found that as of June 2021, the Department of Education had only approved 157 borrowers for full forgiveness under income-based repayment plans, and before this report, this number was 32 borrowers in total. That’s out of the 4.4 million who have been in repayment for 20 years or more, according to department data.

Since LaRose’s repayment plan has worked for so few, she’s not counting on that payment date next year — especially since she’s been promised a pardon after 25 years, and that doesn’t still hasn’t happened.

“I would hate to see this cycle repeat itself”

LaRose isn’t the only student borrower struggling with student debt while employed in what is supposed to be a high-paying profession. Insider previously spoke to Steve Pederzani, a licensed attorney with $347,000 he’s struggling to pay back due to a tough job market.

“We are not well,” Pederzani said. “Who told you that lawyers had instant tickets to the middle class, it existed maybe 10 or 20 years ago, but it doesn’t exist anymore. It’s not the same job market anymore.”

Republican lawmakers have frequently criticized the idea of ​​broad student loan forgiveness because it would go to supposedly high earners like doctors and lawyers, but for some that high income may never happen, allowing interest to s accumulate and balances grow. Biden’s Education Department plans to announce a new income-based repayment plan in the coming weeks that “will make student loans much more affordable,” according to Undersecretary of Education James Kvaal.

And in July, the ministry released a proposal to prevent skyrocketing interest on student loans, adding to the borrower’s principal balance. But for decades, LaRose has said she’s been crumbling under student debt, and while upcoming reforms are unlikely to help her, she hopes a better system will be in place for her two children.

“I was so young when I took on these loans,” LaRose said. “But at least I was able to be a better counselor to my kids with their debt. I would hate to see this cycle repeat itself for them.”

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