Student loans. If you attend college, you’re more than likely to graduate with student debt. Your student loans won’t go away until you pay them off. It could take you many years to pay off your student loans.
The name of this site is Studenomics. Dealing with student loans is one of the most important issues that any of us will ever deal with in our lives.
I wanted to write a post about student loans to help you make sense of them. Let’s do this…
Are you confused about what to do with your student loans? Do you feel like there has to be more to life than just dealing with student debt?
I hear you. Student loan information is all around you. I’ve written about the best advice for consolidating your student debt and I’ve gotten into the harsh reality of student loans.
I wanted to put together the only post on students loans that’s worth reading. This is for anyone that’s applying for student loans or trying to get rid of student loan debt.
Instead of throwing out more of my own thoughts on the topic, I wanted to share what the readers of Studenomics have contributed on the topic over the past few years.
Tina wrote in with some eye-opening thoughts on being debt free after college…
“I’m a junior in college and I’ll be graduating with no debt at all. In fact, it’s likely that I’ll be graduating with at least $10,000 in my savings account (plus whatever my roth IRA is worth at that point).
Here’s what I did/am doing to be free of student loans:
I worked at least 40 hours every summer, and at least 25 during the school year. In high school/beginning of college, I worked at a store in the mall. Now, I work in an office as a bookkeeper. My major is accounting, so it really ties in.
I saved as much money as possible. I don’t go out as often as my friends, but I get to enjoy my savings while they don’t.
Keep my GPA at around 3.6-3.8, which allows me to get scholarships (note: the scholarships I’ve gotten were relatively small, but any amount helps!). If you work hard, it pays off. If you slack off, it shows.
Chose to attend the local state university, where tuition is only around $9,000 per year. As a result of my constant working and saving, I’ve been able to pay for each semester in cash, with no loans.
Four years ago I purchased an old used car for $1,500 cash. It runs fine, and I don’t have to worry about car payments.
Charge less than 30% of my credit limit, and pay it off in full each month. I don’t want to graduate with credit card debt either.
The main points are to work, save money, keep your credit card debt to a minimum, and try to pay as much for school NOW as you possibly can. It’s easy to say, ‘oh I’ll pay for it after I graduate,’ but when that time comes, paying your debt won’t be any more fun. Also, a few of my friends chose not to work during the semester, and it’s really doing them no good. While they say they want the extra time to study, they just end up wasting time.”
This is perfect advice for those who are applying for student loans. It’s important to know that you don’t have to rack up your college debt to get that degree. You can take actions as a student that will help you in the future.
Julie also chimed in with thoughts on future career plans and how they tie into the amount of student loans that you pick up…
“One thing that I often mention to young acquaintances: pick the school that matches your intended career and future plans. I went to an elite private school because of my specific major, and the high profile alumni association attached.
And yes, I still have the private student loans to prove it (though I refinanced several years ago and have an exceptional interest rate.)
But I was horrified at the time to see my freshman year roommates who wanted to become elementary education teachers spend $30K per year on their education! It just didn’t seem wise, when a close family member went to a state school with a very prestigous education department and probably spent less than $30K for her Bachelors, Masters and upper advanced degrees. She is now in a position where her successful career is flourishing (finalist for State Teacher of the Year award) and has not hampered her personal family life with truckloads of debt that couldn’t be paid off before she was ready to retire. Some positions, like teaching, have a cap on income potential, and once you reach it, what do you plan to do?
So pick the school for the specific department, and the quality of the alumni network. Then look at your assumed projected earnings, and ask yourself if that $35K per year in student aid is worth the stress.”
It’s important that you run the numbers. Is this student debt worth the degree? Will you be able to make this money back in the future?
Jacob on making the right decision on what sort of school to attend…
“I wish I would have paid more attention to reality when I was deciding on which college to attend. I had an opportunity to go to my local community college for 2 years, tuition free. That would have allowed me to save up the necessary money to finish school at another institution, and be out of school with little to no student loan debt.
Of course, me being the cocky 17-year-old kid I am decided that I was too good for community college. That led me to a private college; as well as about $45,000 in student loans.
The only good thing about the college I went to was the accelerated program, which allowed me to graduate with my bachelor’s in 2 years. It was also beneficial because I was able to land a pretty good paying job for my field, for graduates in my field.
I think weighing the opportunity costs of going to community college versus a 4-year university is well worth the time, especially if there are incentives to make your college education much more beneficial without the penalties of taking out massive loans. I just hope that parents can really drill into their childrens’ heads that they need to think things through before making a final decision about where to attend college.”
Jeff on misconceptions with going to college…
“I think that the amount of debt that students incur will become a greater problem as time goes on. I remember when I was 18, signing documents for student loans, I had a misguided belief that was fuelled by everything I had heard growing up. This belief was that if I went to college, I’d find a “good job” (whatever that means) and that while it would not be fun to pay down my debt, that I’d actually be able to do it. However, once I finished school, I found that going to college didn’t automatically allow you to get a job, as I had been led to believe throughout my life. College sure can help a person, but it’s not the one-way ticket to a job and a better life that some believe it to be. Sure it can help, but motivation and a strong work ethic will get you much further than college will. This is why we need to take college planning seriously.”
Stephanie on feeling stuck with massive amounts of student debt…
“I got trapped when my major turned out not to be something I was good at, but the credits in it weren’t going to transfer to anything else. I was already nearly $30,000 in debt at the point that I realized this, and wasn’t entirely sure what the path was. I ended up getting a multidisciplinary studies degree, and I probably won’t ever use my degree for what it’s intended for. Also, it looks like if I pursue the field that I love and have talent in (backstage theater work), I won’t ever make enough money to justify my $42,000 film degree because theater really only pays about $30,000-$40,000/year after you’ve been doing it for 10-20 years. For me an education was a debt sentence.”
Edward on working with student loan companies…
“If you’re having financial problems, student loan companies WILL work with you. Mortgage and credit card companies are notorious for working against you, but student loan companies will do whatever it takes to keep you in good standing. During my unemployment, they’ve reduced my payments to more or less just the interest. I may not be paying down that debt, but I have an extra $100 per month to buy groceries with.”
I want to remind you that you’re not alone in dealing with your student debt. Many generations of students before you have gone through the college loans process. Let us know if you have any questions in the comments section below…
Do everything you can to avoid defaulting on student loans, because doing so leads you into a special circle of student loan hell.
I took out undergraduate loans with law school in mind – I went to a non-local state school for a specific pre-law program after they academically recruited me (without offering any scholarship assistance).
By the time I graduated,, law school had become very very expensive and I decided to pass because I wanted to neither try to work three low-wage menial jobs or borrow up to my eyeballs to pay for law school.
Unfortunately the regional economy was in the tank at the time – worse than the national economy is today – and I ended up with a low-wage menial job anyway.
The economy heated up several years later, but by that time my dead-end experience was unwelcome to employers. (Apparently, graduates have a five-year window in which they need to get a ‘good’ job in order to maintain interest from employers – my resume abruptlyu stopped getting me interviews five years after graduation.)
While I was still stuck in low-wage jobland, the growing economy drove up my cost of living, as I faced five rent increases in five years, and had to move three times when I could not afford the new rent.
With each rent increase I cut back my low-wage lifestyle, and after the fourth rent increase I defaulted on my student loans. (The affordable repayment programs like Income Based Repayment did not exist at the time I defaulted.)
So now the Dept of Ed nickels and dimes me every month and skims off a big chunk of it as a “fee” which reduced the amount going toward repaying the loans. Currently I am still underemployed – no hope of escaping that – and netting $1000 a month of which $150 is taken out for student loans. They can take 15% f your after-tax income as long as you’re left with at least $750 a month.
Could you live on $750 a month and pay rent at the same time?
For Tina and her story,
There is more to life than just saving your money. I know it’s good to have saved money but you only live once and are only a young college student once. While they are probably in debt now, maybe they aren’t they were having life experiences that a price cant be put on.
I’m not saying go party every night. There is a time and place for everything. You can’t forget to have fun and enjoy yourself and indulge on a little money spending time from time.
I will agree that working while in school is beneficial. Schools only teach you so much, work experience is another priceless advantage.
I myself am in school and im debt already and those arent even from student loans yet. I am applying for scholarships and grants, but some of those are so time consuming as I work and go to school its hard to find the time to sit down and do the research on these and apply for one that I have a chance at.
If you have income problems you should ask a customer service about repayment options. Sometimes you can get it temporarily reduced to $0.