Michelle Bisutti is a 41-year old family practitioner in Columbus, Oh. She finished medical school in 2003, when her student loan debt was set at a "manageable" $250,000. Since that time, she has watched her debt grow to $555,000.

Dr. Bisutti claims that her debt grew after she deferred her payments while completing her residency. She also defaulted on the loans, leading to additional charges and compound interest. For example, she was charged $53,870 dollars when her loan was turned over to a collection agency.

"Maybe half of it was my fault because I didn't look at the fine print," Dr. Bisutti says. "But this is just outrageous now."

According to FinAid.org, an organization that tracks financial aid across America, there is an estimated $730 billion in outstanding student loan debt. Only 40% of that debt is being actively repaid at this time. The rest is either in default, deferment or forbearance. Deferment and forbearance halt loan payments for a period of time until the borrower is ready to resume paying the loan.


When it comes to black America, the issues can be even more severe. African Americans are more likely to be first generation college students, so we are just now learning some of the rules of student loans. When I wrote my book, "Everything You Ever Wanted to Know about College," I was personally managing massive amounts of debt that I took on in order to get a PhD. It was worth it to borrow money in order to get my education, since having a doctorate in finance has opened quite a few doors that would not have opened otherwise.

The government's decision to make student loans readily available has been both a blessing and a curse to the American consumer. It is a blessing because it makes college more accessible. Many students would not be able to attend college otherwise. It is a curse because easy availability of money has led to incredibly high inflation of college tuition levels nation-wide. Many universities regularly increase tuition by 10 - 13 percent per year, far out-pacing the growth in wages. I am not sure why in the world someone should be forced to pay $30 - $40 thousand dollars per year in order to get an education. I personally chose to avoid expensive private institutions that seem to be taking advantage of the fact that student loans are easy to obtain. My children will be attending state universities. In my 17 years teaching at the college level, I've come to the conclusion that hard work is what determines the quality of a student's education, since professors are just as smart at state schools as they are at private ones (personally, I've taught at both).

Here are some tips to help you avoid the fate of Dr. Bisutti:

1) Work with the feds in the event that you fall behind on your student loans: The government provides quite a few options to keep you out of default if you cannot repay your student loans. The worst thing to do is to ignore the phone calls and pretend that the loans don't exist. They are the federal government, so their ability to hunt you down and garnish your wages is incredibly strong. But if you talk to them and explain your situation, they are usually willing to work with you. Dr. Bisutti admits that she didn't do that, so some of this problem is her own doing.

2) Make sure you can repay the amounts you borrow: I've never understood why some students borrow massive amounts of money to attend school, only to enter into professions where it is quite clear that they cannot repay the debt they've incurred. If your profession doesn't give you the financial options to repay your student loans, then you may want to reconsider taking on tons of debt to get a degree in that field. You might also consider choosing a double major that will position you to repay your debt.

3) Read the fine print and learn the rules: Many of us are quick to take "free money" without paying attention to the fine print. Dr. Bisutti admits that this is what she did. Always remember: When someone gives you free stuff, it usually isn't free. Make sure you know what is expected of you and what your rights are when it comes to taking on debt.

4) Don't be afraid to borrow if necessary: Student loan debt is usually "good debt," meaning that it's an excellent investment in your future. Most great American corporations were founded with debt, so having access to the capital you need can be a wonderful thing. I once had a friend who delayed going back to college and medical school because she wanted to use her fast food job to repay her undergraduate loans first (she'd left school temporarily after two years). This was a terrible decision, because it would have taken her 10 years to repay the debt at $8 dollars an hour, when she could have deferred the loans and repaid them with a doctor's salary. My friend never went back to school and at the age of 40, she has quite a few regrets. It was her fear of debt that kept her from pursuing her dream. On the flip side, you should be careful not to borrow money simply because it's there. Many people are excited about the easy access to credit on college campuses and put themselves in a serious financial hole from which they never emerge.

5) You don't have to take on the loans of your children: I have never been able to understand why families who are nearing retirement will assume the debt burden for their 18-year old children. Don't get me wrong. There are some papers that must be signed in order for you to get your child into school. But the minute you are able to pass the debt responsibility on to your child, I recommend that you not feel guilty for doing so. It's not a matter of your being selfish, but instead, a matter of practicality. You are going to be retiring soon, and you can't take on this debt in old age -- in fact, most Americans are woefully under-prepared for retirement. On the other hand, your child is going to be earning more money than you within a few years and he/she is also young enough to manage the debt successfully. So while you might want to take on a certain percentage of the debt as a gesture of good will, I recommend that you not take on the entire burden yourself.

My mother told her three children that she wasn't going to borrow a single penny for any of us to attend college. After some shuffling, we found a way to get what we needed without burdening our parents. My sister is a now doctor, I am a professor, and my brother has an MBA from an Ivy League Institution. My mom achieved all this without spending a penny of wealth, but she gave us a billion dollars worth of love and guidance along the way. Your children will only be financially handicapped if you teach them to be that way. They can handle their own debt, and some financial responsibility of their own might help them to take their education more seriously. Don't be afraid to be different.


Dr. Boyce Watkins is the founder of the Your Black World Coalition. He is also the author of the book, "Everything You Ever Wanted to Know about College." To have Dr. Boyce commentary delivered to your email, please click here.