Let’s Talk About Student Loans
Ok, first let’s address the elephant in the room…. You don’t want student loans. You’re nervous about paying them post-graduation and having lots of loans can really change your financial landscape for decades to come. That’s scary. I get it.
That being said, the reality is that most students wouldn’t be able to earn their degree without getting some form of student loan. Scholarships are tough to get and many families don’t have enough savings to cover the rising tuition costs. Cue loans.
I do think you’re right to be wary of student debt. As we’ve learned from the previous generation (my generation), the ability to pay back loans is hard to predict and because you don’t really know what kind of jobs you’ll be doing and the corresponding income, this makes it hard to know how much debt you can really take on and reasonably manage.
It also doesn’t help that people don’t really talk openly about money… So, I’ll share my story as an example to give you a starting point to have the conversation with your family about the kind of debt that’s responsible for you to take on.
Me with my first supervisor at SIUC. My fist college job was as a student tour guide for Undergraduate Admissions.
My Story
I am from a low-income family and had no money available to cover my college education. Loans were a requirement for me to earn an undergraduate degree. I did want to be careful in taking on debt but I also wanted to ensure I was successful in my coursework and graduated in 4 years.
I graduated with a 3.9 GPA and $28,000 in student loans. My first full-time job paid $30,000/year. I was able to pay off my loans in 10 years. In those 10 years I did buy cars as needed, had healthcare, paid for my wedding and purchased my first home. I did not accumualate credit card debt and prioritized cash and retirement savings when I could. I had roommates in all of my apartments, did not go out to eat often and I didn’t travel or pay full-price for clothing or food (if I could help it). Money was tight and managing the payments was tough, but I was able to do it.
While I know this won’t work for everyone, it did work for me. My goal in sharing this is for you to see a real scenario and consider what may work for you to fund your education.
Funding my Education
My strategy was to utilize financial aid (grants, scholarships, loans) to cover:
Year 1: Tuition, books, and living expenses (I did not have a car.)
Year 2: Tuition and 1/2 of living expenses. I got a job to fund 50% of my living expenses (rent, groceries, phone bill, savings, and “fun” money- no car).
Year 3: Tuition. I worked 40+ hours/week between multiple jobs to fully cover my living expenses. Still didn’t have a car.
Year 4: 90% of Tuition. I worked 60+ hours/week to fully cover my living expenses and 10% of my tuition. I paid cash for a car using the money I had been saving for the previous 3 years.
I have close friends that took on $35,000-$110,000 in student loans and many have been financially crippled. I also know people that have between $300,000-$400,000 in loans. If you don’t set a cap for yourself, it can get out of hand fast. Based on our experiences, it seems like a good rule of thumb might be to NOT allow your loans to surpass the annual salary for an entry-level job in your field.
All this to say, loans aren’t ideal but they are a reality for many. Make sure you have a plan to estimate the amount of debt that attending each campus will bring (design a 4, 5, and 6 year scenario- graduation doesn’t always happen after 4 years). Work with ANYONE that knows more than you about money to be intentional about what kind of debt is manageable in your circumstance. Finding the right college “fit” is as much about finances as it is about major, reputation, location, size, etc. Don’t be scared to talk money. Your future self will thank you.
Best of luck!
-Veronica
