It’s that time of year again, students across the country are heading to college and it’s likely coming with a heavy price tag. I too attended a pricey private college and while scholarships defrayed some of my costs, semester after semester I glibly signed promissory notes for loans that would cover the rest. What I didn’t realize at the time: those pieces of paper represented REAL money and I was going to have to pay it all back.
As graduation approached, my student debt lined up squarely with the Millennial college graduate average: $26,500 + interest. I had panic attacks about finding a job before my final semester ended. Moving back into my single parent household was not an option for me. My mom loved me and certainly helped me out more than once, but I was in no uncertain terms an adult that she was no longer financially responsible for. I applied to more jobs and shed more tears over my lack of leads than I care to remember. Then a glorious thing happened – the day before I graduated I was offered a job. Hallelujah! It wasn’t my dream job, but it would be a paycheck and a stepping stone into full-time employed adulthood.
I needed a car for my new job. With only a couple hundred dollars in my bank account and the need to find an apartment and some furniture — I did the only thing I could do. My mom and I went to a local dealership and I bought a certified used car with no money down for $18,500 with an interest rate of 2.9%. At 22, I was locked into at least $45,000 in debt before I ever got my first paycheck.
My first apartment was pretty rough, but I loved it because it was mine. I spent a week with no furniture and no hot water. My loving mom made a long drive with a full U-Haul: my old bedroom furniture, dishes, a microwave, and more (almost all of which I still use – cuz, hey – I’m thrifty!). Little by little I bought additional inexpensive furnishings off of craigslist. I found a roommate. I was making $32,000. Over half of my paycheck was going to rent, my car payment and insurance, with a small amount left for food, to buy myself a few more work appropriate clothes, and savings. I wasn’t sure how I was going to make my dollar stretch when my student loan payments kicked in after my six month grace period was up in January.
Things Take A Turn For The Worse
The situation would become even more dire than I could have realized back in May. Since then I had accepted a new job and moved to a new city. My salary bumped up to $40,000, but so did my cost of living. My mom lent me money for a U-Haul, security deposit on my new apartment, and a plane ticket home for Christmas. It was in the glow of the lights from the Christmas tree that I negotiated breaking my first lease with my landlord. He wanted me to pay the remaining six months rent, $4200, to officially break my lease. I told him that $1600 was the best I could do, because I simply had no more money in my bank account. To my relief, he accepted.
That January was pretty bleak – all of my money went toward my expenses: breaking my old lease, paying my first month’s rent on my new lease, car payment, insurance, and… my first student loan payment. To my shock and horror those loans were finally real – I couldn’t believe how many payments it would take just to knock down the 6 months of accumulated interest before I would even make a dent in the principal. At the end of paying all those January expenses, I literally had $5 left to my name. I walked to work in freezing temperatures in my hideous winter coat with a giant rip down the front because I couldn’t afford to put gas in my car or a new coat. A fridge cleanout at work after the holidays became my groceries. I took every frozen food item that was going to be tossed and the remaining contents of discarded holiday food baskets. Old frozen burritos aren’t tasty, but they are food. Sort of.
Steadily, my paychecks came in and I continued to pay my bills and save what I could. Five months later I was able to gift my artsy little sister a thousand dollars for a MacBook for her freshman year at college. Six months after that I had paid my mom back in full.
Fast-forward four years and we arrive at present day. I’ve paid off my car and on September 1st, I’m going to pay off the last of my student loans — that’s a combined total of over $52,000 in under 5 years with no consumer debt and another $20,000 in retirement. I am SO HAPPY.
Why Am I Glad I Had Student Loans?
Why am I glad I had student loans? To be honest, it has helped shape me as a person. It gave me a sense of responsibility and thriftiness. I lived in cramped quarters with many roommates to save money. It meant I couldn’t go out every night of the week or even every weekend to spend vast sums on expensive drinks like many of my friends who were getting subsidized by mom and dad. I didn’t buy non-essentials like cable. Instead I settled for cheaper online options like Hulu. I saved my money and made sure to buy a practical black winter J. Crew dress coat on sale that I still wear to this day. I made extra payments on my debt whenever I could – whether it was a tax refund or a work bonus or simply making aggressive payments when I had a little extra cash. That doesn’t mean I’ve always lived like Scrooge — I’ve taken reasonable little vacations, bought myself new clothes, and gone out for a fancy cocktail or two. I’ve just always lived within my means. If I can’t afford it, I don’t buy it. I save for it and I plan. I also don’t scrimp when it comes to giving gifts to my loved ones. I simply choose my priorities.
I feel a huge sense of accomplishment and pride that I have fulfilled my obligations. Nobody paid this debt back for me – not a parent, not a grandparent, not a spouse, and certainly not the government. While I don’t begrudge those who have help from their family to pay their loans, and it certainly would be a blessing to graduate from college debt-free, for me, I wouldn’t have truly appreciated the cost of my education or the pride and empowerment that comes from the ability to be self-reliant.
When I hear of fellow Millennials demanding their loans to be forgiven, I’m a little bit disgusted. Yes, the cost of higher education is too high. Yes, it’s difficult to pay back loans. But you signed up for it — you knew how much it was going to be in the beginning! Sometimes you have to take any job that will pay the bills. It’s called being responsible. My advice to future college students: pick the right school, if you want to go to school at all. Weigh the risk and reward. Maybe pick a cheaper school in-state or apply for one of the many scholarships that exist outside of your school. My advice to recent graduates currently paying off their loans: be aggressive, make extra payments when you can and live within your means. Once you’re debt free – it’s going to feel like anything is possible.