Like most college students these days, I took out multiple student loans through college. I hope this story is an encouragement to those struggling to dig out of debt, whether student loans or credit cards. I touched on some of this in my Financial Advice post, but I wanted to go into a little deeper detail.
My first two years of college I went to a community college using my A+ scholarship, and the volleyball program paid for my books. I also had some scholarships that helped with living expenses my first semester. After that, I got a job working the graveyard shift at Mcdonalds. I graduated with my AA with no debt.
My third year of school I transferred to UCM to continue towards my Bachelors. This is where I took out my first student loan, it was only in the amount of $850, but it set the precedent of an easy way to pay for school, and I had no thoughts of when I would pay it off. I did save money that year living at home, commuting to school 2-3 days a week, and working 2 jobs. Looking back now I probably could have used some of that money to pay towards my classes.
My fourth and fifth years (I changed my major and it added a year) I went to MSU, where I graduated. This is where most of my debt came from. Both years I took out the max amount of $5,500, and while that covered my classes, I used a credit card for my books. I lived in an apartment with 2 roommates and worked at Walgreens 30+ hours per week. By the time I graduated I had accumulated around $18,000 in student loan debt; while this seems pale in comparison to what some people graduate with, what I struggled with was being unable to find a job in my field after graduation. While I worked the whole time I was in college, it essentially did me no good, because I had no experience in my field and I was so busy working; I wasn't able to do internships to gain that experience. My parents did help anytime they could, buying me groceries or just giving me some extra spending money.
After graduating, you have 6 months before they start sending you bills to start repayment. At this time I was living in Mississippi with my sister and just baby-sitting, so I was able to set up for a deferment. Of course, interest still accumulates during this time. When we moved to Florida and I started at Walgreens again - when my 6 month deferment was up I started making minimum payments. Most people probably know that payments are generally set up to be paid over a 10 year period, so on that low of a loan (comparatively speaking) my payments weren't too insane. However, after Howie and I got married, things got a little tight while he was studying for his real estate license and my hours kept getting cut at work. I set up another 6 month deferment, with interest still accruing. When that 6 months was over, we went back to making minimum payments. Keep in mind between those two deferments I essentially added an extra year to the loan!
A few months into just making minimum payments we got serious about our money. We had moved to a less expensive apartment and paid off Howie's motorcycle. We decided to use the snowball method that Dave Ramsey teaches. We basically took what money we had been using for the motorcycle payment and added that to the minimum amount on the smallest loan. Within months that one was paid off! While paying extra on that one we were still making minimum payments on the other 3. After the smallest one was paid off we started using that money towards the next smallest loan which was quite a bit more and probably took a year to pay off. We used this method to slowly chip away at the debt. There were of course months where money was more tight and we would cut back the payment a little; but we stayed the course. The last two years whenever we would get our tax return, we put a huge chunk towards whichever loan we were working on getting paid off next. I know not everyone gets a big tax return but if you get a bonus or inheritance you can do the same thing.
Next month I will happily make that last payment, and we are so excited to be done with those student loans! Which, by the way, were originally scheduled to be payed off in 2020! Our next goal will be putting the money that we were using for the loan payment each month towards our car payment and hopefully have it paid off next year (1 year ahead of schedule).
As someone who has dealt with student loans, I still do not think that free college for everyone is a good idea. One of the reasons being when you are the one taking out the loans, working through college, etc you are a lot more likely to take your classes seriously because you really don't want to have to pay to take a class a second time! It also taught me a lot about time management, budgeting, and working hard. While looking back, sometimes, I think it would have been nice to have the quintessential college experience, I'm glad I didn't. One thing that would have helped me back then was having mandatory financial aid guidance. Every year when financial aid was approved I just accepted the full amount they offered when I may have been able to get away with a lesser amount.
Anyone else have student loan success stories?
No comments:
Post a Comment