The girl: Allison

Age: 31

Job: Public relations

Where she calls home: The Midwest

Her sitch: Allison borrowed about $40,000 for her undergrad degree and another $80,000 for graduate school, and now she's swimming in the combined debt. Even though she's making about $60,000 as a PR exec, the $922 she's paying every month is rough. "My take-home is only about $3,000 a month, so a third of my salary is earmarked for student loan payments," she says. "I feel stuck, and like I can't get ahead. My husband and I want to buy a house, we'd like to start a family, but these payments are eating up such a huge chunk of my income." Oh, and she's got 25 years to go on the loans, so she'll be 56 before she's debt-free.

What was she thinking? Says Allison, "My parents didn't save money to put my sister or me through school, and I was pretty much told by teachers 'not to worry about the cost.' I even had teachers tell me not to go to a state school, because I'd get a better education at a private college. I was basically told to sign on the dotted line, and I did. I didn't worry about it. I figured it was just what you were supposed to do."

And graduate school? "I went to grad school because I felt like I only had a 'job' and not a 'career,' and I thought I needed a 'career,'" she says. "I liked PR, and even though I knew I didn't need a grad degree, I justified it by thinking it would be a good foot in the door. I don't know what I was thinking. I couldn't even afford to live on my own, really. I didn't get a lot of helpful financial advice from, well, anyone."

The twist: Because a third of Allison's loans are federal and two-thirds are private, she's been unable to get her payments adjusted. "Neither loan company will look at the other loan," she says. "So they think my payments are reasonable."

The expert's take: Unfortunately, Allison's in a tough spot, says Mark Kantrowitz, publisher of "That's a debt-to-income ratio of two-to-one," he says. "She has a very high likelihood of defaulting." Because only a third of her loans are federal, that payment isn't high enough to qualify for a reduction based on her income. And private loans are much less flexible (and tend to carry higher interest rates) than the federal variety.

If Allison's loans hadn't already been stretched to 30-year terms, Kantrowitz would recommend an extended repayment plan to lower her monthly payments. As it is, 30 years is the maximum loan term available. And she'll be paying a fortune in interest. "When you extend a 20-year loan to 30 years," Kantrowitz says, "you're only cutting the monthly payment by 10 percent and you're increasing the total interest over the life of the loan by 60 percent."

And bankruptcy is not a good option. "Less than a quarter of a percent of people who file for bankruptcy are successful in getting them discharged," Kantrowitz says. "These loans stay around. And if she defaults, they'll garnish her wages."

How she can chip away at the balance:

Attack the highest interest rate first. You've heard it before, and it's still true. Allison's private loans are charging 8.8 percent versus 4.5 percent on her federal loans. Once she's made the required payments each month, all her extra cash should go toward the private loans.

Do the math. Allison's monthly payment on the private loans is $646. At that rate, she'll pay it off in 25 years. But if she and her husband were able to throw another $500 a month at that debt, they'd nix it in eight years instead, leaving them with just the $276 payment on her federal loans. Sure, that's a ton of money. But ask anyone who's ever paid off a serious amount of debt, and they'll tell you that you can do more than you think you can. "If she stays with the status quo, she's going to be struggling for most of her working life," Kantrowitz says. "And it's going to be very hard for her to save for retirement."

Think in terms of future dollars. "For every dollar she spends that doesn't go toward paying down her loan balance, she'll have spent $3 by the time she pays down that loan," Kantrowitz says. That $10 pizza? Imagine it costs $30. That $50 pair of shoes? Imagine you're dropping $150. It can put your miscellaneous spending in perspective and help keep you on track.

Take her belt in a notch. It's not what Allison wants to hear, but if she hopes to get rid of the debt, she needs to throw as much money at it as possible. "She has to come up with a plan to pay this off," Kantrowitz says. "And that usually means a very stringent lifestyle." Translation: selling a car that's costing her anything more than $150 a month (and buying a cheaper one), not eating out, opting for entertainment that's free. "It's a whole set of harsh choices," he says. If Allison were younger and unmarried, he'd have recommended she move in with her parents.

Luckily, she's in love, happily married and looking to add to her family, so scrimping now will help her celebrate a debt-free future.

Got a money conundrum you can't solve? Tell us, and Lemondrop could put a financial adviser to work for you -- for free!

Kate Ashford is a freelance journalist who writes about personal finance and health (and other things). Without online shopping, she wouldn't own anything. Her work has appeared in Money, Health and Glamour. For more, check out

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