Practically every article on debt involves student loans. That’s due to the fact that there is a serious student loan crisis here in America and chances are, you are living in that crisis right now.
It’s no secret on here that I’m against debt – any form of debt including student loans and credit cards. Of course, everyone has their arguments about student loans being “good” debt and a great “investment” in your future.
But here’s the thing – when you “invest” in your future with money that isn’t yours, you’re not really “investing” in anything. Because in order to properly invest you must invest with your own property. That’s a textbook definition of investing in its most general form. You can’t invest with something you don’t own because that’s a recipe for disaster – loan sharks anyone? You’re basically hoping and praying that can pay back the money borrowed along with the interest it accrues as well as hopefully earn something on top of that borrowed money.
My mom tried to warn me against this investment, “you shouldn’t finance something that isn’t a guarantee.” What my mom was saying to me is that you shouldn’t take out a loan for something that you don’t even know if you will earn. And most college students don’t finish college in four years if they ever even finish.
Had I been more patient and taken my mama’s advice I could have avoided the whole student loan debt thing.
I could have…
- Applied to scholarships like it was my fulltime job.
- Worked and saved while attending a community college for my general education courses.
- I could have waited to go back to school until I had saved up the cash to go.
- I could have lowered my class load so I could afford to pay in cash for my education.
- I could have asked my parents to transfer my savings account (that they had set up for me from my birth to save money for me) to an ESA or 529 while I was still in school.
- I could have NOT blown the money from the above-mentioned savings account when I was 19…
I had options. And you have options, but they’re probably not options that you like. I get that, because the reason I took out student loans was that I was impatient. I wanted my degree right then and there.
Heck, I was a non-traditional student because my first go’round with college ended with me flunking out because I decided that living the rockstar lifestyle was more fun than going to class. And did I mention that the first round of college was a free ride? I had a scholarship and all!
But I was too busy “enjoying” life to take advantage of it. So when I finally came to my senses and decided that I wanted to go back to school, I impulsively took out student loans because that’s what all my friends were doing.
I didn’t want to listen to my mama. I was about to be a newlywed and I knew all about financial hell so I thought I could handle this responsibility. But the truth is, student loans are the devil. They are one of the hardest debts to pay off early and the government makes it a challenge to get rid of them.
So, before you go and take out those loans – ask yourself if it’s worth it in the long run. How much can you afford on your current salary to pay every month? Because if the answer is $0 run like a crazy lady fleeing a burning building from student loans. You simply can’t afford them.
When my student loans took effect, they were more a month than the car that I was currently paying on – over $500! And my student loan balance was just below $30,000 which is on the low end of student loans. I pulled money out of savings as fast as I could to pay the balance down to lower the monthly payments and even though I put “apply to principle” on the check, the government didn’t do that.
When I called and asked why, they explained that is not how they work. When you take a loan from the government, you are agreeing to ANY payment you make first being applied to any fees owed (there are always fees – not just late fees), the interest, and then the principle.
It was my wakeup call that these loans were going to be a challenge to pay off and that I was going to have to get creative to get them paid off in less than 10 years. We made it happen in 2 ½ years but it was far from easy.
Related Post: How We Paid off $5,000 of Debt in One Month
Every payment had to be calculated at just the right time of the month and day on some of the loans in order to avoid paying the most interest. So if you decide that you want student loans, don’t go into this agreement blindly thinking that you’re making some great investment in your future. Know that you’re agreeing to incurring thousands and maybe even hundreds of thousands of dollars that you will have to pay back. Student loans are like taxes – they must be paid. They will not go away in a bankruptcy and they will not roll off your credit in seven years. So, if you think there’s a way out – there’s only one way and that is to pay them back – in full.
And parents, please do not think that if you take out student loans for your child so they can “afford” to go to a private college that you are doing them any favors – unless you plan to be the one responsible for paying back those loans. I have a few friends whose parents took out enormous student loans so they could attend private colleges with the agreement that the child would pay off the loans after they graduated and got a job. Despite all of these friends making well over six figures a year, they are struggling to afford their loan repayments.
I don’t want that for you or your children. If you decide loans are right for you, then you need to educate yourself and pay on those loans while in school. You’ll thank yourself later, but hopefully you’ll have the patience to wait until you’ve saved enough money to pay in cash.
Hindsight is always 20/20.
What advice can you give someone struggling to pay off their student loans?