Does that sound harsh? Well I meant it to be because I strongly believe that college student loans are evil and can subject you to a life of complete servitude with no choice.
And as hubby and I move towards paying down debt and becoming financial free I would be totally remiss if I did not talk about student loan debt.
Yesterday I came across a post on www.walletpop.com titled "One Student's Losing Battle With Private Student Loans". It talked about the struggle of one girl trying to make ends meet while being completely burdened by her student loan debt. The article talked more about private loans and a few students struggling with this but I feel it could have been easily generalized to all people who are burdened by their student loan debt. I know I related and I have federal loans and a lot of them.
So why do I think they are evil? You may be thinking it was my choice to take them out. And you are right it was my choice but I (like many) was not fully aware of the financial burden it would bring over my life years down the road. The only thing that I knew during that time was I needed to get an education if I wanted to get a good job. And if that meant taking out student loans then so be it.
Little did I know that the student loans I was taking on to give me more opportunities in life would be the same loans that took away so much choice later on.
I think hubby and I were in denial when it came to our student loan debt. We knew it was a lot but tried not to think to much about it. Because really what could we do now. The debt was here and it was not going away anytime soon. Then we started to joke about it and called it our "middle class union dues". But now that we are committed to becoming totally debt free it has forced us to take a long hard sobering looking at our student loan debt. And it is no laughing matter.
We owe $126,000 in student loans. That is both of us combined. I know HOLY SHIT! Right now our payment is $540 a month and in July it will go up to about $750. That payment is for 25 years. So if we take 25 years to pay it off then our final amount that we will make in student loan payments because of the interest is over $250,000. I know sickening. Thank goodness we are on a plan to pay it off in 10 years. Which means we will have to make payments of about $1500 a month for 10 years. A lot but look at the alternative.
All of our loans were taking out within a 7 year period. Starting when we were 18 years old. We both used loans to pay for our entire undergraduate and graduate degrees. Hubby and I were the first in our families to go to college. And while our parents were very proud they really did not know the first thing about how much college cost and how in the world to pay for it. All they knew was college was the key to a successful career. A better life.
In the financial aid world our parents made to much money to qualify for aid however they did not make enough to help us pay for our education. Sound familiar?
So taking out student loans it was. And I did not even think twice about it.
Here are some things I would have liked someone to talk to me about:
- What are my payments going to be after all is said and done.
- Am I going to be able to get a job to make those payments.
- Or if I get a job will I even make enough in my field to pay the loans.
- What about when I have kids. What if I want to take time off from my career? Will I be able to do that?
Focusing on #4 I am pretty sure the only thing I was thinking about between the ages of 18 - 23 is how not to have kids. I never thought about maybe staying home with my kids or working from home or working part-time.
But now I wish I did. I wish someone would have just brought up the issue of career, money, and kids to me when I was 18. Or even talked to me about the burden student loans will have over my financial life down the road. Everyone always made it seem that is just the way it is.
Well I am here to say that it doesn't have to be that way. I think it is possible that if for some reason you think it is necessary to get a degree that you can do it without student loans. I plan on talking a lot about this in my blog. I have a lot of experience and lessons learned and as I work it towards financial freedom I want to share it all with you.
It actually feels good to get financially naked for all of you. I really did not want toput how much we owe out there. Because it is embarrassing. But I feel it must be done. I need to be honest with myself and I hope my story can help others.
Student loans are such a huge financial burden for people in our society. Taking out student loans does not guarantee you a well paying job hell it does not even guarantee you a job at all.
What are your thoughts on student loans? Did you understand the full financial burden (if any) they would be have on your life the road?
{ 1 trackback }
{ 20 comments… read them below or add one }
Even though we worked through college and had a few grants and scholarships, my husband and I would not have been able to go to college without student loans. We had government loans, not private. My husband’s load was paid off in five years and I’m almost finished with mine.
I think that, if managed well, student loans can be a tool. Unfortunately, a lot of people don’t look at the big picture, and then they get into trouble later on.
We both went to a community college and transferred to a four-year college, so we didn’t need loans for the first two years. The second two years we went to a rural, no-name state college that was comparatively inexpensive. It wasn’t a private college, it wasn’t a big-name college, but, funny thing is, neither one of us has had a problem getting a job with a degree from that college. I did continue on to get my advanced degree.
I also think taking out loans to go to expensive private schools to become a school teacher–which earns very little–isn’t a wise financial move. When deciding where to go to college and how to finance it, I think you should look at the big picture–like you said, how is this loan going to impact my future and such. Yes, it’s nice to say you got accepted to X college, but, really, who is going to care when you are fifty years old?
We have advised our children that we will support them going to a community college for two years. They are already getting a lot of peer-pressure flack about where they are going to college; even the guidance office is telling me they could do “so much better” and there are “financial aid packages” to help us out. All those packages involve loans. Sorry–they don’t need loans for the first two years, and they can transfer to those exact same colleges if they want to. This mentality of “You Are A Failure If You Don’t Go To An Expensive Big-Name School Right Out of High School” is bunk. Besides, I used to teach at a private college–and I can promise that the classes the freshmen and sophomores took at the private college were NO DIFFERENT than those I took in community college.
Ultimately, banks can repossess my car and my house…but they can never repossess my education, which is my tool for earning the money to pay for that house and car. I think the loan was a good investment–but only because I was able to keep the loans down to a minimum and only took that which I needed.
[Reply]
This Mama Works It! Reply:
March 2nd, 2010 at 7:56 am
@michele sounds like you and your hubby had your heads on straight early on. I agree with everything you said. I do think student loans can be a tool in a way. However so many people now are not getting the jobs or the pay they need to pay these loans back. So even if they are careful and only take out what they need it is very likely they will not get the job they thought they would get. Or if they do get the job and want to quit for whatever reason they may not be able to do so. Or god forbid they get hurt and cannot work. I think students while in college are giving false hopes as to what kind of job they will get after college. Also college (even state schools) are a lot more expensive today than it was 15 years ago when I started. So what they need to take out in loans in much more than what I needed to take out.
And as for private school I personally think they are a huge waste of money. You get the same education in the early years no matter where you go.
And yes I would not have my job without my degree. That is true. I am one of the lucky ones that actually got a job that pays very well. Most are not that lucky.
Thanks for stopping by this morning. Good luck at bloggy boot camp. Loved your post yesterday!
[Reply]
I feel the same way! Wow though I understand your frustration that is a lot to owe. Mine are quite as much but I still have been paying on them forever and feels like they will never go away. I have thought of going back to school, but I just cant see doing that when I still have loans I am paying off. It is said that in today’s world, it is so expensive to further your education. Then when you get out of school most can’t seem to find a job. Evil cycle.
Great article!
[Reply]
This Mama Works It! Reply:
March 2nd, 2010 at 8:06 am
@tina@lifewithoutpink thanks for stopping by today and joining the discussion.
[Reply]
They are evil! I don’t have one hanging over me these days, but I have plenty of other cr@p to deal with financially, so I feel your pain. Wishing you luck and strength as you find your way out, and that we get there with you!!!
[Reply]
Oh girl….I feel your pain. I took out student loans as an undergrad because I had no parental support and the government was all “HERE, have some money…take all you want…you can pay us back!” (Also, there were credit card applications on every corner of my college campus…which is a WHOLE ‘NOTHER AWFUL story!). I really don’t think at that age I could understand what I was getting myself into. I had no adults guiding me and counseling me about what I was doing with all these loans. I take full responsibility for what debt I created, just like I take responsibility for every other naive act I performed as a young, stupid kid. I also think that there are some professions that should get a break for student loan repaymant. I know that teachers do now, but if you are serving your community in non-profit organizations, serving the disenfranchized….you should get a break. (ok, stepping off my soapbox now).
[Reply]
I know..it’s really frustrating! I am just thankful to only have $9k left [May 2007 graduate]. I paid for college myself [w/ scholarships & loans] Here are a few tips I used when going through college..
- Start taking college courses in High School [I entered college w/ 21 credits]
-I went to a community college for 1 year to help keep costs down
-After I transfered to the university [UNI] I still took my summer courses at the Comm. college [they transfer & they're cheaper there]
-At my school anything over 15 credits/semester were free so I took 18-21 credits/semester to get as much paid for by the school that I could
-I stayed with my parents [we had a good relationship & it was free]
-Another benefit from all of this..I graduated High school in May 2004 and college in May 2007 [Just 3 years & I received my BA in Marketing [Sales & Advertising] and a minor in Entrepreneurialism]
Abby
murdocksmama.blogspot.com
[Reply]
I’ll only have 30,000 dollars in debt when I graduate. I’m single, so I’m hoping to pay it off ASAP.
[Reply]
This Mama Works It! Reply:
March 2nd, 2010 at 1:25 pm
@theboobnazi ok first of all I love your name Boob Nazi!! That is great. Stay focused and I am sure you will get them paid off.
[Reply]
They are the DEVIL, aren’t they? Especially since I feel like I don’t even use my degree!!
Stumbled for ya!
[Reply]
This Mama Works It! Reply:
March 2nd, 2010 at 1:24 pm
@scary mommy thanks so much for stopping by and stumbling me. yes they are the devil!
[Reply]
Girl, I am with you! We have an amazing amount of student loan debt (especially me). I am lucky enough to stay at home, but the payments are brutal. It’s frustrating that we spend so much time and money paying off our debt when we really want to be saving for our children. Great post- and topic!
[Reply]
Always refreshing to read a different perspective than mine. To this day, I say that my undergrad college loan was the best money I ever spent. Period. My parents/family sound similar to yours, as college was a must, not an option. I got my degree, met my husband, and transformed into the beginnings of an adult in 4 years. I chose a small liberal arts school – I’d have sunk at a big University and needed to get away – and worked like mad to pay off my loans over 7 yrs. The Husband had none (Mr. Full Ride – nerd), and we paid for grad schooling without loans. I cannot imagine our debt if we both were saddled with undergrad plus grad school. You’re awesome in sharing your story and working to get the debt eliminated in 10 years!
[Reply]
Valueable post Mama. Very much agree.
[Reply]
I’ve never felt this way, though my debt is pretty minuscule compared to yours. My payments are roughly $150 a month and I looks good on my credit. I chose to take out loans so I could finish school faster (rather than work part time and go to school part time). I did, however, go to community college for the first 2 years, then went to a state school for the last 2. I also got tons of grants (that paid everything but living expenses really) because I went to school a few years later and only my income counted when filing.
Now…we won’t talk about the credit card dept I’m in because I, essentially, lived off of plastic when the loans ran out :-/ THOSE ARE EVIL!
[Reply]
Wow. That is crazy. I can’t believe how much it costs for your degrees. I am so thankful my parents could help me. That was one of the best things they ever did for me. My husband gets mad at me that I am a social worker and only make $30K a year : ) I say, “Aren’t you happy that I make a difference in the world?” and he says NO : )
Good luck on your quest.
I am visiting today via a comment you left at Scary Mommy’s blog. I love to blog hop on her comment leavers : ) You are all so funny : ) and clearly, helpful! Love this!
[Reply]
Love your blog – so here is something for you: http://www.lifewithoutpink.com/2010/03/03/my-first-award/
[Reply]
They are evil. My dad’s wife has 3 degrees and will definetly die before those things are paid off.
[Reply]
I am so blessed that I never had to deal with student loans…and the hubster didn’t go to college so we don’t have to worry about him. I’ve heard they are just awful though!!
[Reply]
Thank God that I didn’t married to someone in my life or else I’ll see all these problem because one day burden of students loan can happen to me also. And finally saying all those evil words.
Yap, as I heard a lot from my near ones and friend, Students loans really sucks the life. They are the really the big evil.
[Reply]
I feel the same way you do about the kids and family part. I knew everything I was getting into for my undergrad degree, but of course at that age had no concept of children.
What I’m peeved about latley is how the government is talking about how if you work for 10 years in public service that they will forgive your loans. Simple as that, as they state it, but the truth is that only counts for people who can qualify for the income contingent plan and repay their loans on that plan (paying way more in interest than higher standard payments). I work in state government and my husband’s and my combined income are too much to qualify for that payment plan so I will never see loan forgiveness.
I guess I’m just grumpy that they won’t pay off my loans, but they talk about working hard and how education is the key. I worked really hard and graduated at the top of my class and did this on my own. I think merit and not just need should count for something if education really is the key. I think if they looked at my debt to income ratio rather than income alone I’d probably qualify. If they offered this to everyone maybe people would work in the public service sector longer, as of now I have no incentive to keep acepting lower pay than the private sector so once research rebounds I’ll be out.
[Reply]
Fortunately I got a full ride through college, thanks to the United Bank of Mom and Dad. However, both my husband and I did get MBA loans, which we’re still struggling to pay.
Let me rephrase that. We got some high interest MBA loans and financed the rest of our graduate education with my credit card. Needless to say, we’re now paying the cosequences. Don’t get me wrong, I make more money than the average professional thanks to that MBA, but it’s like I’m constantly juggling all of these payments and if one of the balls drops, the domino effect could crush us.
[Reply]
I’m not sure how I got to your site specifically other than a Friday Follow. I got here b/c of that. I couldn’t agree more with everything you wrote here. I didn’t make enough money during the summer to not have student loans, my parents made too much for aid, but not enough to help. Thankfully my loans were not as much, but paying them put me further in debt to just get by. Go figure.
Suze Orman says college loans are good debt, to which I always say BS! For the same reason you state, especially the amount the loan will cost in the long run. How is that good?
[Reply]
This Mama Works It! Reply:
May 1st, 2010 at 12:10 am
Hi Amanda thanks for stopping by. I feel that my student loans are going to haunt me for a very long time. Man if I could just back in time I would have done so much differently.
[Reply]
I agree 100% with what you are saying about student loans. I recently sent in my last student loan payment on the 20th anniversary of signing my first promissory note at age 17. Most 17 year olds know little about finances and the burden of debt. I was no exception!
After schooling in engineering, undergrad and grad, no parental help, working minimum wage jobs during school, I came out $75k in student loan debt (a $900 monthly payment), $8k in credit card debt (books, food, tuition, etc. that I couldn’t cover by working or loans) and a crappy job market. These loans were one of my biggest mistakes EVER!
Everyone handles debt differently, and I didn’t realize how much it would weigh on my mind. The emotional “cost” of the debt took a higher toll on me than the $30k in interest I paid back. Also knowing that if I fell on hard economic times (due to job loss, illness, disability, etc), it would be near impossible to discharge my student loans frightened the hell out of me. I had no idea that was the case when I signed those loan papers. The only way to get rid of them is to pay up or die.
Oh, and surprise! I did come down with a life threatening illness in the middle of repaying my loans. But I worked during the treatments … all because I had those loans to pay.
From the time I stepped into a kindergarten classroom up until I graduated high school, I was brainwashed into believing that a college education is required to provide economic freedom, choices and opportunities. And hence that student loans would be more than worth it. Ironically, student loans enslaved me. I feel cheated and lied to. Mostly I am angry at myself for believing all that garbage. I still haven’t forgiven myself for being so naive.
Oh, and I know several people with high school diplomas or certificates that have done just fine without college. Proper money management and living within their means seems to be key. But that is key at any income.
Because of my student loans, I decided not to get married or have kids. I just couldn’t see that I could do it and not have my finances completely trashed into my 40s or even my 50s. And now I have to focus on saving for retirement.
While I understand that some people feel positive about their student loans, and although I am very happy for them, I have been through hell because of those loans. My student loan has taught me many things – above all else is to be leery of taking on debt, and I will avoid it as much as possible for the rest of my life. That is the only positive thing I can say about my student loan experience.
[Reply]