Student Loans: a cautionary tale in today's environment

[u/calonmawr10]

I got into my dream school with a decent scholarship a couple weeks after the stock market crashed in 2008. My parents had saved diligently for myself and my twin sister in a 529 account, but we saw that get cut in half overnight. Despite all that, my mom told me to pick the school that would work best for me and to not worry about the cost because "we'd figure out a way to make it work". I applied for hundreds of external scholarships, but didn't get any. So, I chose my expensive private dream school, signed my life away to Sallie Mae (the solution to pay for it after my savings was exhausted, which I didn't know in advance), and started college in fall of 2009.

I was lucky to graduate with a good job thanks to the school's incredible co-op program, but also saddled with $120k worth of loans ($30k federal, the rest private). I met my amazing husband while there, and he was in the same boat. Together, we make a pretty decent living, but we currently owe more on our student loans than we do on our house. Even paying an extra $1k/month (our breakeven with our budget), it'll still take us many years to pay them off. It's so incredibly frustrating watching our friends from school (most of whom don't have loans) be able to live their lives the way they want while we continue to be slaves to our loans for the foreseeable future. No switching jobs because we want a new career, that doesn't pay enough. No moving to a different city, can't afford the hit to the salary in cheaper areas, or the huge cost of living increase in more expensive ones.

I'm happy with my life and that I was able to have the experiences I did (I absolutely loved my school), but not a day goes by that I don't wonder how my life would have been different if I'd made better financial decisions. Parents, don't tell your kids to follow their hearts if the only way there is through massive student loans, particularly if their career will not let them have any hope of paying them off. Students, have those conversations with your parents. If they say don't worry about it, question what that means and what the plan is. Now is the time to be having those discussions, before you've already registered for classes and are looking to pay that first bill. Don't make the same mistakes we did.

Edit:added paragraph breaks

Edit 2: Wow, I did not expect this to blow up so much! Thank you for the awards! It's reassuring (and a bit sad) to hear so many of your stories that are so similar to mine. For all the parents and high school students reading this, please take some time to go through the comments and see how many people this truly affects. Take time to weigh your college financial decisions carefully, whether that be for a 4 year school, community college, or trade school, and ask questions when you don't know or understand something. I hope with this post that everyone is more empowered to make the best decision for them :)

[u/[deleted]]

One of my former colleagues had the choice between her state college and a private college. She would have graduated from the state college with about $60K in debt (not great) or the (mediocre) private college with $150K in debt. She chose the private college because, and I quote, "My friends were going there."

Well, she's now about four years out of school and drowning in debt. She lives with her parents, doesn't own her own car and is really just staying ahead of her payments.

She absolutely regrets it and wishes someone had guided her along a better path. She said when she was signing all the papers that it just didn't seem real and she had no idea how high the monthly payments would actually be.

So, I absolutely agree, that it is CRITICAL for those who are making choices regarding higher education to do a real-life analysis of how those choices will impact them after those four years are over. Far too many people don't, and pay the price for years after graduation.

[u/AlgernusPrime → u/[deleted]]

A 150K loan with 6% APR, she's looking to make $1.6K monthly payment for 10 years. Holy god, that's some crazy payment.

[u/[deleted] → u/AlgernusPrime]

I wholeheartedly agree. How do you ever get out from under that? How do you buy a home or start a family with that kind of debt hanging over your head?

[u/Clammypollack → u/[deleted]]

I hope she’s not one of those people crying to have their college debt forgiven (which means paid for by their fellow citizens).

[u/Polus43 → u/Clammypollack]

(which means paid for by their fellow citizens).

Not that I support it, but couldn't you just outlaw collecting on the loans? Of course, the debtor's credit is destroyed.

I agree with your general sentiment, but if you have 150k and a BA in English, there has to be a better solution that life-long, insurmountable debt.

They're basically children, who largely have never worked, who are the targets of these, arguably predatory, loans. I have a hard time thinking anyone who has actually had a jobs and paid bills would take 100k in debt for a humanities degree. 40k for engineering? Good deal.

This doesn't even address the real issue where people take on the debt and drop out of college without the degree.

[u/Clammypollack → u/Polus43]

First I want to thank you for your civil tone. Sometimes that is lacking on these boards. Legally it would likely be impossible to outlaw collection on those loans. Further, it would set a standard that could be quite dangerous. People would start demanding that their credit card debt be handled in the same way. Banks are often predatory in the way they handle credit cards and especially in the interest rates they charge. It’s a slippery slope and soon a man’s word and his signature on a promissory note mean nothing. Honestly, you have to be a little stupid to take on 150k in debt for an English degree. Where are the parents when this is happening? I have four sons and none of them have any debt after college. They were smart and went to schools that would give them a full or partial scholarship rather than their target school which wanted 50 grand a year. They also worked to pay for what wasn’t covered by scholarships. I think some of the fault lies with the colleges and the government. The colleges because they charge these ungodly amounts and the government because they got in the business of guaranteeing loans. The ultimate responsibility lies with the person who took the money and promised to pay it back. Perhaps we could hold their parents responsible as well but I can never see burdening the taxpayers with debt that they did not incur.