You often hear school loans being referred to as “acceptable debt”…… meaning it’s so ridiculously common that pretty much everyone has it. It’s also considered socially acceptable debt in comparison to other means of debt – such as credit card debt.
Well, let me tell you something. I am $20,000 deep in student loans. Want to know what I have to show for it? A framed piece of paper. If I was in credit card debt instead, I’d have a lot of cooler things to show for it. Like a couple pairs of red bottom shoes, or a canoe. Yes, I want both of those things.
Keep in mind that I am $20,000 in debt for a loan I took out 11 years ago. Read that again. I owe more now, 11 years later, than I did when I first took my loan out. Why, you ask? INTEREST.
There’s a reason you hear the joke about people becoming strippers to pay for college.
Now, truth be told, I got offered a scholarship at the college near my home town, but I turned it down. Most people that go to college there, never leave. I wanted to get the hell outta dodge the second I had the chance. It wasn’t worth the free school to stay, or so I thought.
When I did decide to go to school, I did not qualify for any state assistance or available scholarships. I wasn’t in a position to have mommy and daddy pay for my college. Those of you that have this luxury, be eternally grateful. I was in the lovely tax bracket of not being able to afford things on my own, but making “too much” to get assistance. So, I took out a loan.
No big deal, right?
Great news: They work with you
The department of education is one of the easiest debt collectors when it comes to them working with you. Meaning, you can simply call and say “Hey I can’t make my payment this month.” Or “Hey, due to economic hardship I’d like to put my loan in deferment for a year” and they’ll do it. Sounds great, right?
Negative ghost rider.
but there’s a catch
Anytime you put your loan in deferment or skip payments, interest accrues. As in capitalizing your interest. They do tell you this, but you don’t really think that through. Instead, you think, “Cool, no payment for a year! Sign me up!”
Where it stands right now, I won’t pay off my school loans unless I win the lottery, or I die. Plain and simple. It’s hard to be motivated to pay it off faster by making large payments for 2 reasons. 1) like many others, I am not using my degree. It feels like a complete and utter waste of time and money because life didn’t take me in the direction I planned on going. And 2, my interest is so high that even making larger payments doesn’t even touch my principal enough to matter.
what happens when you stop paying?
Now on the flip side of them working with you, if you choose to simply ignore your school loans, this is what will happen. First, it is considered government debt. That means that they have the right to garnish your wages, your bank account, and your tax return. My husband stopped paying his student loan debt due to an economic hardship prior to us meeting. We addressed it shortly after getting married and he started making payments to get it out of collections. We went to get a home loan together, and guess what? Not only do you pay on your student loan collections for 6 months just to get it out of collections and in good standing, but once it is out of collections, you cannot qualify for a home loan for an entire YEAR following that 6 months. On top of all of that, if you choose to ignore your school loans, the impact on your credit score is the equivalent of foreclosing on a home. I’m not exaggerating.
So, if you’re paying on your school loans and you don’t like your interest rate, just refinance your loan with a better interest rate then! Right? I wish. That’s not a thing. I have an EXCELLENT credit score. It doesn’t matter. You cannot refinance a school loan. You are stuck with that interest rate until you die, or pay them off, whichever comes first.
If none of this makes sense to you yet, let me give you some cold, hard, real-life numbers for clarity.
My original loan amount: $16, 569
Current loan amount: $19,717.41
Number of times I have put my loan in deferment: 2 (hello interest!)
Current interest rate: 6.8%
Current payment: $116.44
Current interest being paid per month: $112.59
Current monthly payment being applied to the loan principal: $3.85
Yes, I’m paying $3.85 a month towards my actual principle. At this rate, it will take me 47 years to pay it off, with a total interest payout of $46,416.41.
It’s an absolute joke my friends.
You’ll qualify for debt loan forgiveness after 25 years! I’ve been paying on my loan for 11, so that’s only 14 more years! (Insert eye roll here)
So, what in the world is wrong with the system in the United States? It’s burned into our brain at such a young age that we graduate high school and go to college, at all costs. Because magically this degree we obtain will float us through our entire lives and support us indefinitely, and because no real employer will want to hire anyone without one.
Well I’ll tell you this. Education is great; however, I’ve seen real-life experience and skills without a degree be far more superior than someone that spent half their life in a classroom. Yet these people are looked at as less than because they don’t have that piece of paper.
Having a degree does NOT guarantee you a job
Do you know how many people with master’s degrees are working at McDonald’s? I don’t either. But I do know that you can be literally drowning in student debt because you were under the impression that awesome degree would land you a job that paid more than enough to support you, AND pay off all student loans, the second you graduate. Then you find yourself at an entry level position barely able to put food on your table every day and questioning every life decision you ever made.
College is a scam. Plain and simple. I will argue this until I’m blue in the face.
I am not by any means saying that getting an education in itself is a bad thing. In fact, I LOVED my college days. I met amazing people, had great professors, created memories I’ll never forget, and I busted my ass. I even graduated class valedictorian.
If you do choose to go to school, which is a great thing, avoid student loan debt at all costs. Apply for grants, scholarships, save up. Hell, stand on the corner holding a cardboard sign saying “Will work for student loan payments”. Do what you have to do. Because college will come and go, but those horrible school loans will follow you the rest of your life.
And if you want to generously pay off my school loan debt for me, feel free. I won’t say no.