Yesterday I read an article on NPR about the need for more education about student loans. Basically, the article’s premise is, “Oh my, there are college students borrowing thousands of dollars. Perhaps we should spend some time talking to them first so they know what they’re getting into!”
My first thought was, Is this really news? Of course students should receive information about their student loans prior to borrowing! But then I reached back into the depths of my brain to remember the process I went through in taking out my own student loans. Did I have any clue what I was doing?
My First Student Loan Experience
When I graduated from high school in June 2001, I had been 18 for a whopping 4 months. At that point in my life, I had a 2 year-old son (yeah, yeah, things happen) but had never held a paying job of any kind. The reason was simple – I had a child to raise, and my parents were much more concerned with me finishing high school and attending college than anything else.
My appointment with the student loan office was quick and easy. I checked boxes indicating my understanding that these were loans, I signed my name, and I was shuttled to the registrar’s office to sign up for classes. There was no explanation, no nothing. Just a lady with a calculator, making sure I borrowed enough to cover my remaining obligation to the university.
I remember reading an article later as part of my online “entrance counseling” that explained how my loans would work. The example showed something like $25,000 in student loans being repaid on a $45,000 salary. Well, I don’t have to worry about that, I thought. I’m only borrowing $4,500! It honestly never clicked in my brain that $4,500 x 8 semesters = $36,000. I was more worried about buying books and finding my way around campus than a bunch of money I had to pay back “someday.”
This Was My Mistake
My student loan situation isn’t anyone’s fault but my own. I don’t blame the school or the government for not explaining things more clearly; I blame myself for being too young and stupid to understand how the real world works. I fully understood that I would have to repay my loans, but I didn’t have a clue what that actually meant for my future.
Even if someone had told me I would end up borrowing nearly $50,000 to finance two degrees, I had no concept of what it would take to pay that back. When I researched college majors, it seemed that the average salary for anyone with a bachelor’s degree was around $50,000 a year. That seemed like so much money! Little did I know I’d end up with a bachelor’s and a master’s degree and still make far less than that, because those salary websites failed to mention that averages don’t apply to people in rural areas. I had no clue what people actually made because I’d never worked.
In my 18 year-old head, $50,000 a year meant over $4k a month. I seriously thought I’d have that much money in my pocket each month once I got out of school. Plus I was engaged and would soon have my husband’s salary as well! So when I looked at loan calculators that estimated hundreds of dollars a month to repay my loans, I wasn’t sweating it. That was nothing!
This is just a short list of the things I never considered when I took out my student loans:
- What if I couldn’t find a job for six months after graduation? (That happened.)
- What if I didn’t make $50,000 a year? (That also happened.)
- What about taxes and insurance? (Yeah. Didn’t think about that.)
- What if my husband had an affair and we ended up divorced someday? (That happened, too.)
- What if I developed a huge spending problem in college and racked up a bunch of credit card debt? (Been there, done that.)
Even after I found a job, my “income-sensitive” loan repayment plan had me shelling out over 1/4 of my take-home pay each month. Which wasn’t that horrible until I got divorced and my income was all I had. If I’m very lucky/dedicated, I’ll have my loans paid off by the time I’m 40.
So Now What?
As I said before, I don’t blame anyone but myself for my student debt. I don’t resent the fact that I have to pay back the money I borrowed, even now that I’m not using my degrees. However, I do think colleges are missing a big opportunity to make life a little easier for their graduates. I try to give people my advice and let them know that there are other options to avoid the extra expenses that come along with school costs. These incidentals include the cost of transportation, tuition fees, textbooks and supplies, plane tickets, food and hotels fees. For careers in government agencies like the FBI or the CIA, they may require earning a Bachelors in Economic Crime Investigation before getting the job, and in some cases may be hard to afford. However, attending an online college can save you money and the loan options are the same which makes it much easier to repay back any loans once you have graduated
When I think back to that first trip to the student loan office, I picture a world where the lady with the calculator had spent some time going over the reality of my situation. How much I could make with a social work degree in the area where I live. How much of that anticipated salary I’d actually receive after taxes. How much things like groceries, gas, and utilities would cost and how little I’d have left over.
Would it have changed the outcome? Probably not, because I still had to borrow the money to go to college and I still had to repay it when I was finished. But maybe it would have helped me see things a little differently and think harder about my life choices. Instead, I made decisions based on the fictionalized adult world I’d imagined where I made tons of money and everything worked out for the best.
I firmly believe that very few 18 year-olds grasp the implications of their student loans. Some do, because they’re already on their own and/or they have jobs and bills, but others are leaving high school the same way I did – living off their parents with no clue how real life will be. Maybe all those 22 year-olds with liberal arts degrees (and I say this as someone with a liberal arts degree) would opt for a different career if they understood how difficult it will be to pay back all that money with a job that pays peanuts.
What was your student loan experience like? Did you understand exactly what you were getting into? Did anyone from your college explain how repayment would affect you? I’d love to know your thoughts on what type of pre-loan education should be provided to student borrowers.