You can run but you can't hide.
(Tucson, Az, U.S.)
Student loans seem like a great way to help get money for college. And they are. However when you are thinking of getting student loans there are some things you must consider.
The different loan types. How much you will actually need to borrow to allow you to focus on school? (Meaning add up your bills as well as tuition and compare it to any income you currently have. It's called math and after 39 years of life I have learned to trust it.) And of course, think about re-payment of the loans. How and when do you have to start paying back what you borrowed, and how will it affect your future income?
I am a little bit older, perhaps, than some of you out there. (Of course I am told that 39 is the new 26.) While someone once said, "With age comes wisdom" I may have to disagree. With experience comes wisdom. And thus far, here is my experience.
My first semester in college I applied and was awarded financial aid in the form of grants and loans. I was young(er) and had always worked odd jobs to earn money. When I received my award letter and saw the amounts that I could get I was awestruck. At the time it felt as though someone was handing me a gift in the form of a large sum of money. I took, but didn't need, the full amount.
The following semester I did the same. I took all the money I was offered... and I had a lot of fun. Who wouldn't? I was young, away from home, and as anyone who was ever 21 can attest, at that age you are invincible. There are no consequences, right?
I did the same thing in subsequent semesters. I took all the money I could.
Once I was out of school I ended up working in retail management and didn't even use the schooling I received. I worked full time and quickly forgot about the money I had borrowed from dear old Uncle Sam. I got married and once I figured out the "birds and the bees" thing (quick note it doesn't really involve birds or bees) we started having kids and my financial obligations grew.
And grew. And Uncle Sam would call.
And grew. And Uncle Sam called some more.
Looking back I remember going to a seminar before I could receive financial aid, and I heard the word: default. (I am quite sure at the time I heard but did not comprehend the word default. I might have been drawing pictures on a notebook at the time. I was a good "drawer" back then but only in boring situations.)
I used to get, and ignore, phone messages and e-mails from the Department of Education about my student loans. I would ignore them or tell myself that I would deal with it later because I found myself feeling overwhelmed by
my other "financial obligations".
I moved a couple of times and the Department of Education found me. I switched cell phone service and had new numbers and I still got calls from the Department of Education. I even made a couple of payments hoping that that would appease the Gods of Education for a while, but ultimately I still received calls.
One year after filing my taxes I discovered that the Department of Education could, and did, take my tax return because I was in default. (Had I doodled less during the financial aid seminar as a college freshman I might have been privy to that fact.)
I owed the Department of Education money. I signed paperwork stating that I would pay it back. I had neglected one of my obligations.
Some of the wisdom that I have gained from my experience, is that when you take you student loans, it is important to plan to repay your debt. After I lost my tax return I finally decided to call and talk to the Department of Education.
I discovered that even with my "wisdom" and "maturity" I could still feel as though I were an eight year old child being scolded for stealing a cookie or painting my sister hair (that is a whole different story). However, while I had built up a scenario in my head that involved a lot of yelling from the Department of Education and some crying on my part, the actual experience was much less painful.
I spoke with a counselor and established a payment plan. We set an amount that would help repay the loan while at the same time allow me to provide for my family with maybe a few modifications in spending. (No more Starbucks every morning. Sad face.)
All of this "hiding" that I tried to do was a strain. On my marriage. On my job. And it certainly caused me a lot of undo stress. Had I planned for my future (which is what college is all about) or even made a plan at all, this all could have been avoided.
My recommendation to anyone looking to take out student loans is plan for what you need and how you will pay it back. Don't take more than what is necessary. If, however, you do find yourself struggling after college, don't hide from it. There is help. The counselors at the Department of Education will work with you.
You can run but you can't hide. From responsibilities, worries, of Uncle Sam. Best to face things head on. Read more tips on Paying Off Student Loans
from other students and parents who have been through the student loan process.
Comment from your friendly team at College Financial Aid Advice
Thank you Mikel for sharing your experience You can run but you can't hide. This should be a must read essay for those who want to take out student loans. Good luck to you.
If I Only Knew.......
Live and learn. I learned the hard way about managing student loan debt. I hope you can read and learn and come out better than I did. I had student loans when I was in college. At the time, I didn’t care how much they were or what the repayment terms were. All I wanted to do was to finish college.
If I knew then what I know now, I would have done three things differently:
1) I would have been a lot more diligent about searching for grants and scholarships while still in high school. There was no internet then, so it did take more effort to go and look through books in the guidance office or library, but it would have been worth it. I had little guidance through this process but the internet is a tool that most students these days can use on their own, even if no one is there to guide them. Gotta love those keywords!
2) I would have only taken what I needed in loans. In college when you need money to live on, travel, shop, etc., it is very tempting to take everything that is available to you and live comfortably. Only sign for what you need for tuition, fees, books, room and board. If you have to, work part time for pocket money. You will be glad you did later in life.
3) Move heaven and earth to pay your loans when they become due and pay them on time every month! Interest continues to accrue even in the case of hardship deferment or forbearance. Over time my payments ended up doubling with only around 25% of the minimum payment being applied to the principal! I even filed for bankruptcy, but my student loans were not discharged along with my other debts. I may never finish paying them off now, and I am not exaggerating! Don’t let this happen to you!
If you absolutely have to take loans to make it through, appreciate the availability of funds for you to make it through college and start your career. With your high paying job that college prepared you for, pay it back based on the terms you agreed to when you accepted the loan. Smile broadly after making that last payment. Best wishes!
Read more tips on Paying Off Student Loans from other students and parents who have been through the student loan process.
Comment from your friendly team at College Financial Aid Advice
Thank you for your wise suggestions. If I Only Knew.......