Of all the debts that I have incurred, the debt that I have struggled with the most has been my student loan debt. As I sit down to write this post, it is hard for me to remember a time when I didn't have debt. But, there was a time.
Like most teenagers, I did not owe any debt until I went to college. But, boy oh boy, as soon as I stepped on that campus, my debt really started to rack up.
My first debt was student loan debt. I have very mixed feelings about incurring this debt. I went to a private college in Washington, D.C. and had an awesome experience, both academically and culturally. But, because I paid my own way through undergrad, I came out with a lot of debt.
After graduation, I immediately went to law school taking out the maximum student loans to pay for tuition and living expenses. Once again, I paid my own way and I am proud of that.
While I am proud that I paid my own way through college and law school, in doing so, I have never had financial freedom since I was 18 years old. So basically for my entire adult life I have carried around the weight of my debt.
So, was incurring my student loan debt worth it? That is a tough question. When I came out of law school, I landed a great job. To make over $100,000 a year at your first job is pretty good. But, it came with a high price tag.
So, while I have always made great money, a ton of my salary has always gone to pay back my student loans. Despite making a six figure salary, the amount of my student loan debt has never really allowed me to feel financially secure.
Starting my adult life at 24 with over $150,000 of debt is a terrible burden for someone so young. At the time, I just thought that everyone borrowed that type of money to pay for their education.
This debt both opened doors for me and closed doors for me. Most of the time college students are told about how getting a degree will open doors, but rarely are they told about how their student loan debt can close doors.
I hope that through my writings here at The Debt Hawk that I can help college kids understand the negative effects of student loan debt. What are your thoughts about incurring student loan debt?
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My student loan was my last debt (besides mortgage) and I paid it off a few years ago. I can’t tell you how freeing it was to finally get rid of ‘ol sallie mae and to finally be free from my debts.
My feelings on student loans are that they should be used sparingly, if at all. If you can work while in school to pay for schooling, get grants, go to cheaper in state schools, etc, you’ll incur less debt and have a more solid starting position once you get out of college. With the way tuition is going up these days, however, i’m not sure if anyone can completely avoid them – I know it can be done – but it’s getting harder and harder.
Welcome to the blogosphere!
Thanks for the Welcome and thanks for the header. I really like the way it turned out!!
Great post! Reading your story makes me so glad that I stayed home and went to a local university! I’m sure I would’ve had a great experience going away, but that school debt would’ve been with me for a long time.
I just did a post on whether or not you should refinance your school debt (bit.ly/9yaIz). Variable rates on the Stafford & PLUS loans are at historic lows, so for many people it makes sense to at least check it out. Converting to a lower fixed rate and having one monthly payment may end up saving you thousands in interest.
Jason,
I think that where someone goes to college is a really important decision that only that person can make. While I incurred a lot of debt in college, I would not trade my experience for the world. But, as far as a good financial decision, I am pretty sure that I could have made better decisions.
I wish the debt-to-ROI ratio when it comes to college loans was better. Nowadays you pay for college and you don’t even know whether you will get your money worth…
I don’t have any debt from undergrad (national merit scholar), but between my MA and PhD I have about $100K. My boyfriend’s an attorney and has about $100K as well, and he also has about $30K in credit cards (he’s already paid off about $20K).
His starting salary was $90K, but our standard of living hasn’t really changed since we were in school because our student loan payments are so much of our salary. It’s pretty terrible stuff.
Georgie,
Your story seems to mirror my own. I can’t say that my standard of living improved very much after first graduating from law school. However, I should have lived more modestly during and after law school.
My recommendation for anyone coming out of grad school is to pay your debts right away. Don’t consolidate your loans whereby you push off the payment term to 30 years. Try like heck to keep the payoff term the same (10 years).
While 10 years seems like a long time to live modestly, at least those loans are guaranteed to be paid off in that time. But, I still think you should try to aggressively pay them off in a much shorter period of time.
I made these mistakes so I am talking from experience.
Hi Mark – Good to find your site. Do you still feel $150,000 is a lot of debt if you are making over $100,000/yr? You could pay down $20,000 a year comfortably I would think and be done with it in 8-9 yrs. I’m sure you’ll probably make more during that time too no?
I have $30K in student debt at 2.6%. Would you pay it off if you had over $400,000 in the bank hypothetically speaking?
Hope to see you at FS one day.
FS,
Thanks so much for leaving a comment. I have already subscribed to your blog and I will start to comment more often.
With respect to having $150,000 in student loan debt, I do think that is a huge amount. But, like you said, I do expect to have it paid off in the next 5 years.
Having said that, I would not recommend someone going into that much debt to obtain an education. There are cheaper ways to get a great law school education.
To answer you question about whether to pay off $30K in student loan debt even though it is at an extremely low interest rate. I have to say that I would, especially if I had $400,000 in the bank. The peace of mind of paying off that debt is worth the loss in interest. Additionaly, if you already have $400,000 in the bank, chances are you will be able to save that $30K again pretty quickly.