Read an excerpt from Clark Howard’s new book



Kate finds a way to defuse her share of debt from the nation’s
$1 trillion student loan time bomb before it blows

Kate Leckonby stands in a mobile trailer unit attached to Archdale-Trinity Middle School (ATMS) and looks like she’s about to faint.
A moment later, she’s crumpled to the ground.

A quick check of her vital stats reveals normal blood pressure and heart rate. She shows no signs of exhaustion from hours of teaching Spanish to sixty students each day in her Archdale, North Carolina, school.

So what gives?

Kate is simply feigning collapse because a teeming trailer-load of seventh graders has butchered the pronunciation of a basic phrase like ¿Cómo te llamas? again.

Until the kids can pronounce “ll” as a y sound, Kate had better get used to staying down.
Because a day’s lesson has culminated in “What’s your name?” sounding like a Spanglishized
inquiry about the South American relative of a camel.

“We joke a lot in my classroom. I let the kids tell me random funny stories where it’s
applicable. I fall on the floor pretending to faint when they make errors in Spanish that we
have talked about one hundred times,” she tells me. “They laugh. We have a great classroom

On one wall of her classroom trailer hangs a black sombrero accented with silver trim.
Near it yellow cut-out letters reading “¿Por qué aprendemos español?” (Why are we learning
Spanish?) spill out like a news crawl above a doorway. Another wall is plastered with colorful
student papers artfully arranged around the words “Trabajo excelente” (Excellent work).

Kate’s done some excellent work of her own, chiefly in the way she’s handling the student
loan debt she amassed on the way to a master’s degree in education.


“I went to a private school in New York State initially [for my bachelor’s degree], but
quickly transferred to a SUNY school [State University of New York] to save money. I was
an RA in addition to playing college basketball and working constantly to try to cut housing
costs,” Kate says. “I was in that middle where my parents made enough that the government
didn’t write a check for my education. But my parents weren’t able to help at that time.”

For her master’s, she went to the University of North Carolina at Greensboro part-time
at night during her second and third years of teaching.

“I made so little that I had to take out enough loans to pay for books and my travel to
and from [campus],” she says. “It was either that or not do it. . . . I know that it made me a
better, more knowledgeable teacher.”

The end result was graduating with $43,000 in federal student loans. Her current salary
is $39,000.

Student loans are a backbreaking burden on many people in this country for both young
and old. Collectively, borrowing in our country for education is nearing $1 trillion. I believe
it’s the next debt bubble to burst.

But Kate is hitting her little chunk of that $1 trillion with a one-two punch.

First, she’s capping the amount she pays every month through an income-based repayment
(IBR) plan. So while she was once paying $245 every month toward her education debt,
she’s now paying just $45 under the IBR plan.

Second, she’s using the Public Service Loan Forgiveness (PSLF) program, which is open
to a broad range of public service employees, not just teachers, to receive full loan forgiveness
on any outstanding balance after making ten years of monthly payments on her loans.

By Kate’s accounting, she’ll pay somewhere around $5,000 over the next 120 months and
have her loan balance of roughly $38,000 forgiven at that time. Those dollar figures could go
up or down a bit over the next ten years based on family size and adjusted gross income, but
you get the idea.

Trabajo excelente, indeed.


Kate’s husband, Brian, is also a teacher at ATMS. He teaches history and is head coach
of the school’s football team. Together they have a two-year-old daughter, Lauren.

Like many teachers, Kate forms a deep bond with her students. It’s one that’s remembered
years later on both sides.

“Just the other day, I went to the drugstore and the cashier was a student that I had four
years ago. He is now a senior! His face lit up, as did mine, and he commented how much he
always loved my class, that it was his favorite,” Kate says. “Middle school kids don’t often
express their appreciation at age fourteen, so it’s always neat to hear it—even if it is four
years after the fact.”

Kate says her personality as a teacher is hard to describe, though she’s “very driven and

When I spoke to her, she was looking forward to fun learning activities like siesta day,
when the class would discuss the custom and its implications on society; and another day
when they planned to make churros—a long, thin fried dough pastry sometimes called a
Spanish doughnut.

Though both Brian and Kate love what they do, furloughs are a threat to their family
budget. In 2009, North Carolina issued a furlough that amounted to a .5 percent cut to their

“I think we got some workdays off in return, but no teacher can afford to take workdays
off!” Kate says.

A teacher’s salary tends to be laddered, with very few, if any, raises during the first three
years and then bigger jumps in compensation during the fourth, fifth, and sixth years. But
Brian and Kate were frozen just before they began their fourth year.

“[Living on] two North Carolina teacher salaries has been an incredible challenge—
especially in trying to do more than just get by every month. Since 2008, we have not received
any raises, not even cost of living. Brian and I make the same thing we made five
years ago—probably a little less, actually.”

In fact, the couple’s health benefits have gotten worse and they’ve had to go from standard
80/20 coverage to a cheaper 70/30 plan.


“This year, they did give us a 1 percent raise, but then they raised dependent health
coverage—which of course they didn’t publicize—so anyone with kids didn’t move forward
at all.”

Fortunately, Kate and Brian have been able to manage because, like many teachers, they
work second jobs. Kate was a part-time instructor at a community college for a time. And
Brian runs wrestling tournaments and is an umpire in the spring.

“We are grateful to have stayed employed during these tough economic times, but we
worry about how much longer this will go and how it will affect our family’s future. We love
teaching and both got into it for all the right reasons, but unfortunately there is a sentiment
that teachers shouldn’t care about money [or] their paychecks. I think it’s irresponsible for us
not to.”

Kate is originally from upstate New York and Brian is from the Canton, Ohio, area. She
credits both of their parents for making them into people who can raise a family on teaching

In fact, Kate and Brian decided to go into a longer-term play for their financial future
when they bought a condo in Myrtle Beach, South Carolina, with Kate’s parents two
years ago.

“We researched and shopped for two years, losing lots of properties in the process to
people who had cash offers or who were just quicker than us. But we knew this was the time
in history to make that investment. We finally fell upon the best deal we had seen in all of
our searching.”

Financing their share of the condo has been a big sacrifice that’s required many cuts in
other places.

“We don’t own smartphones, we don’t really take vacations, we have worked most summers
since we started teaching, [and] we drive two paid-off cars,” Kate says. “But we believe
it will pay off, and [be] something we can enjoy with our daughter in the meantime.”

If you’re swimming in student loan debt, take heed of these tips:

See if you qualify for the Public Service Loan Forgiveness program.
• As per the PSLF program that Kate qualifies for, only federal Stafford, Grad PLUS, or
consolidation loans in the Direct Loan program are eligible for forgiveness after ten
years of on-time payments. Private loans are not eligible.
• Qualifying careers for the PSLF program include any job in government, military service,
emergency management, public safety, law enforcement, public health, and public
education, to name just a few. After 120 nonconsecutive months of on-time payment, the
remainder of your student loan balance is forgiven when you’re in this program. does a great job of explaining all the details of the PSLF in plain English.


Explore other student loan forgiveness and repayment options.
• Even if you don’t qualify for the PSLF program, there is still help for you.
• Under the new Pay As You Earn repayment program, your monthly payments on federal
loans will be capped at 10 percent of your income—regardless of your income. Outstanding
debt is forgiven after twenty years of on-time payments. This new provision
applies to federal student loans taken out after October 1, 2007; again, though, it does
not apply to any private loans. See if you’re eligible by visiting the Department of Education’s
website at
• For federal student loans taken out before October 1, 2007, you might qualify to have
your payments capped at 15 percent of your income and outstanding debt forgiven after
twenty-five years of on-time payments. This is part of the income-based repayment
program I talked about on pages 13–14 of my last book, Clark Howard’s Living Large in
Lean Times. Visit for more info.
• If you have a mix of both federal and private student loans, pay as little as possible toward
your federal loans with the help of one of these programs I’ve discussed, and then
pour every dollar possible into your private student loans.

Get student loan forgiveness for homesteading.

• Like Kate and Brian, Americans have historically moved from where they were raised
for opportunity. Today it’s possible to do that and get your student loan debt forgiven if
you know where to look.
• At least fifty counties in Kansas qualify as what are called “rural opportunity zones.” In
return for living in these communities, they’ll absorb up to $15,000 of your student loan
debt and exempt you from state income tax for five years. You don’t have to be an existing
resident of the state to qualify for this program.
• A similar program recently launched in Niagara Falls, New York, has been getting a lot
of media attention. Niagara Falls is offering up to $3,500 a year in loan forgiveness if you
rent and live there full-time or buy and occupy a home in the community as a full-time
• Consider the pluses and minuses of the communities carefully before jumping at these
opportunities. And be sure to contact the local governments in any of these places for
more details.

Know the rules for student loan borrowing.
• I’ve long talked about some basic rules for student loan borrowing designed to keep you
out of harm’s way. Here’s a quick reiteration of the fundamentals so you don’t have to
struggle with student loan debt in the first place.
• Borrow only what’s available to you under the federal student loan program. Avoid private
loans at all costs. Never take out more in loans for a four-year degree than your
likely first year’s earnings on the job that degree will get you. And start your degree out
at a community college for two years before transferring to a four-year school where you
plan to get your degree.

Reprinted by arrangement with Avery, a member of Penguin Group (USA) LLC,
A Penguin Random House Company. Copyright © Clark Howard, 2013.

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