The Silent Killer, Student Loans

This is a very large subject and will certainly require additional posts, but I chose this as my first post because I have major heartburn with it. See, I was the first of my family to attend college. There was no 529 Savings Plan (we’ll dive into 529 plans in future posts) set up for me, nor did I have enough saved up to pay for it myself. At the beginning of my freshman year at college, I sat down with a financial aid advisor and we figured out how I was going to pay for it. This was where I was introduced to the magical and wonderful world of “free money”, the world of student loans.

College is something that high schools attempt to set you up for upon graduation. Junior year of high school, they tell you to start thinking about what you want to do and where you want to go; the possibilities are endless. Not having any experience in this area during the time and not having a family member who’s been through this process before either, I kind of relied on the guidance counselor to point me in the right direction. Although she helped me with the paperwork and filling out the Free Application for Federal Student Aid (FAFSA®), I was still just going through the motions, not really understanding what exactly I was getting myself into.

The college I applied to and got accepted to was a private engineering school in Milwaukee, WI. When applying to colleges, the discussion of how much I’ll be paying upon graduation not once came up, and I was too naive to even ask the question. My personal opinion, I felt that schools rely heavily on showing the students how great their campus is, athletics, and all the student activities you can pursue while attending their fantastic institution. The cost of college is always an afterthought and one of the last items to review while touring campus. It was like buying a new car. The salesmen shows you the latest and greatest automobile, has you sit in it to smell the crisp aroma of new leather, gives you the keys to start it up, rev the motor, and shows you the touch screen features that can sync with your mobile phone. While being enamored with the fine vehicle, the thought of “how much” escapes your mind, but when reality hits, you realize that the cost of the car is outside your budget and you move on.

Why is it we set budgets for house buying, buying a car, vacation spending, shopping sprees, but when it comes to the price of college, we throw all of that out the window? Its probably because colleges prey on young kids who are more worried about how they’re going to set up their gaming pad in their dorm room and how cool it’s going to be to go to college parties. The furthest thing from their mind is how much they’ll be paying after graduation.

When I sat down with my financial aid advisor at school, we looked at what I was getting from FAFSA, and subtracted what I was going to get through grants and scholarships (which wasn’t much) and we figured out how much I needed from a student loan vendor. The aid even asked how I was going to pay for food and extras. I sat for a minute and I realized I had no idea. I didn’t have a job and I had no savings. She told me that I could get a loan for all that. You mean to tell me that I could get free money to pay for crap I didn’t need and to pay for my food? Where do I sign? How easy it was to simply up my student loan to pay for these necessities. Student loans are awesome!

Remember me saying this was a private school? Yes, who knew that meant it was more expensive. So every trimester I would meet with my financial advisor and we’d come up with how much I needed and that was it. Fast forward 4 years and 12 semesters, I exited college with a boat load of debt, $86,000 to be precise. They quickly push you out the door and move on to the incoming class and do the process all over again.

At the time, the average salary for my graduating class was around $55,000. Not too shabby I would say, but with $86,000 in debt, I felt cheated. My student loan payment was almost $900/month with variable rates jumping up to 7% at times. I also had to pay for taxes, rent, food, gas, utilities, car maintenance and whatever else came up. I barely had enough left over to have a life, much less think about saving and retirement.

The first few years after graduation were not easy. I was enslaved by student debt. How could this be? I did everything I was supposed to do. I went to college, got a good degree, filled out FAFSA and got student loans, just like everyone else. This wasn’t fair.

Now, I certainly take some of the blame in this, and I don’t want pity. I certainly could have worked more in school, applied for more scholarships and tried finding more grants, but the system should also bear some of the responsibility. They took me for a ride and they knew it. Why was getting loans so easy? Where are the checks and balances? Where’s their moral code?

My experience with student loans was a tough one and one that I learned a valuable lesson from. Don’t overextend yourself. Know what you’re getting into. Know your monthly payments. Set your budget. Know the pros and cons. Most students at that age don’t bat an eye at any of those lessons because they don’t know what they don’t know. This is why I’m here, to offer up advice, offer help for those that are about to embark on student loans.

We’ll dive into more about student loans and more factual statistics and how to work around the confusing world of this “free money” in later posts. For now, stay tuned and thanks for listening.

As always, I’m merely here to offer up advice based on my experiences. Seek professional help while riding through the world we call life.




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