School loans are going to kill me.....

[ang3199]

Hello all: I was just reading over the thread in Hangout about what we are all saving for and I realized that the next couple of DECADES of my life will be devoted to saving to pay off school loans. I''m still in school working on my Ed.D now, so I haven''t begun paying on them, but they are OUTRAGEOUS.

I hope this question isn''t too rude or too forward, but, how much money did you have in school loans and for how many years? Also, how long does it take to pay off and at what payment? I''m afraid I will never be out of debt because of them.

Like I said, if my asking this offends anyone, I apologize in advance. But, if you feel like reassuring me that I won''t be in debt over my school loans for the next 50 years, please feel free to comfort me! Hehe.

 

[Haven]

Oh, Ang, I feel for you, I really do!

First of all, don''t worry about taking the next 50 years to pay off your loans, I believe that you only have 20 years to pay back your loans, so 50 isn''t even an option! (I could be wrong, perhaps it goes up if you have a certain amount of money to pay back.)

I''m an educator, too, and I have two master''s degrees so I''ve definitely had my share of student loans.

This is what I borrowed:

- Undergrad: $15,000 education loans, $7,000 in credit card debt (charged rent, living expenses, etc.) I paid for my college education myself, worked as an RA for two years to avoid having to pay for rent and food, got a few scholarships, and worked two jobs all four years. I was pretty proud that I didn''t graduate with more debt, actually.
My loan repayment for the $15,000 was about $125 a month if I paid the minimum.
I paid off the credit card debt in full six months after graduation, and the student loans took another year after that, so 1.5 years total.

- MA: $20,000 education loans, $0 credit card debt. I paid off these loans in 18 months. It was HARD, don''t get me wrong, but I did not want to carry any debt, so paying back my loans was my top priority. It was only a little over $1,000 a month to pay off, which isn''t so bad if you really think about it. I believe that the minimum payments were around $160 a month, I could be wrong, though, since I always paid more than the minimum I can''t exactly remember what it was.

- MEd: $0 debt. I was one lucky girl, my employer paid for my entire degree. Yay for public schools supporting higher ed!

My financial advisor advised me to ONLY pay back my loans ahead of schedule if 1) I didn''t have any other debt with higher interest rates (e.g. car loan) and 2) I was still able to put the max into my 403(b) account (retirement fund for people who work for non-profits.) I believe that if I had any other debt my advisor would have suggested I pay that back, first. It makes sense to pay back your higher rate debts first, of course.

I think it''s a personal decision whether you should pay back your loans early if you don''t have any other debt. My mother went to Northwestern University on a scholarship so she didn''t have many loans and she still chose to pay them back over the 20 year period. I actually remember the day she mailed in her final payment--we ordered in Chinese food and had a big party!

Talk to your financial advisor or a financial aid advisor at your school, they''ll be able to give you some good advice.

Good luck!

 

[karasue91]

ugh i feel you on the student loans. FI has no loans, he lucked out and got a full ride, and for so long i got sooo defensive about mine whenever he brought them up.

now we have moved to canada and although the payment is affordable, we have to consider what the exchange rate is going to do over the next 10-15 years. we have decided to ask for a loan from his parents so that we can pay off the american debt and convert it all to canadian to avoid the FX risk, which we are extremely lucky that his parents have the means to help us out so much. but, it caused A LOT of stress. FI was talking about cashing out our 401ks, and i was adamently against that. it was a really, really big source of contention for us for about 6 months.

so, in retrospect i guess i don''t have much to offer, but just a big AMEN SISTER that student loans suck!! and mine aren''t even that bad, about $30k.

however, if we weren''t moving out of the country, i would have paid the absolute minimum for as long as i could. i could never get another loan for less than 4%, and even my ING savings earns a higher interest rate!

 

[goldenstar]

A lot of people at my school have loans in the six figure range (law). Luckily, I was admitted with a scholarship so I'm better off than most. I still do have some loans though. I'm stressed about paying it all back but we should be okay (fingers crossed). FI is doing alright for himself and I am hoping to get a decent salary when I finally graduate and get a job.

Student loans are a necessary evil. Whenever I get stressed I tell myself, "Well, pretty much everyone at my school is going through this. It's an investment in my future and also a privilege."

ETA: My brother will be attending dental school at UCLA in the Fall and the cost is 60k a year for 4 years. Yowza...

. But is he going to forgo being a dentist because of the cost? Of course not. You gotta do what you gotta do. Currently he's working two jobs to save money and is probably going to get scholarships of some sort because of his stellar background.

 

[fisherofmengirly]

I had a $20,000 student loan debt when I graduated in 2001.

I paid twice the amount due each month, and made sure it was noted that I wanted the additional portion (over the amount due) applied to principal only. It was a ten year loan that was paid off in 5 years that way.

Paul went to graduate school, so now we''re doing the double payment thing to knock his down. It takes time, but keep working on it, and it will get smaller and smaller.

Another exciting motivator (at least it was for me) was to see the amount of the bill going toward principal RISE each month, as the the amount due lessened. I''m all for less going toward stupid interest!!

Good luck!!

 

[Erin]

$250 per month for a State School BA that took precisely 4 years

 

[lumpkin]

I feel for you, too. We didn''t have any student loans because we were both working full time while we were in school and went part time. We went to community colleges for the first two years and were able to pay as we went, and my husband''s company paid a good portion of his tuition and books when he went to technical school. It amounted to over $27,000 just for the education portion, so we really lucked out. I think the companies that do that are few and far between, now.

We are saving for our kids'' educations, and I think my husband''s parents are also saving for it because every big event, birthday and Christmas (maybe even Easter) they buy the kids savings bonds. But it won''t be enough. They too will have to go to community college first and then probably a state university. We have Rockhurst College here, so if their grades are good enough they may go there, but tuition is just terribly expensive aside from the state universities (and they aren''t cheap, either). We joke that we will have to buy a bigger house and all of us live there until their loans are paid off, though it''s not really out of the realm of possibility. If they decide to major in something that requires full time enrollment, our help won''t amount to that much because they will have to go to school full time rather than trying to work their way through. This is definitely a tough time for college graduates with student loans. I think it''s well worth it, though.

 

[phoenixgirl]

We''re paying DH''s school loans. He had about $38k but his dad paid off one of them for Christmas last year, so then it was about $22k. They are at a ridiculous interest rate of 9.22%. We asked FIL to refinance, but he was hesitant to do so for some reason or another, so we can''t do anything about it. I pay $375 a month instead of the minimum of $177 because this should get them paid off in 6 years instead of 36. Yes, that''s right, 36 years and 50k interest if you just pay the minimum!

 

[Elmorton]

I have $22 k in educational loans for my MA. I had assistantships/tuition waived, so in retrospect, I feel like I should have been able to live on my stipend (the loan was ALL living expenses and a lil trip to Mexico), but it''s too late now and I''m stuck with it.

I have a car payment also, so right now I''m paying only $250/mo. When DH pays off his car next year, we plan to start paying double that.

Also, I got a teeensy bit lower interest for having it automatically deducted from my checking each month.

I really didn''t think about how expensive school was until things started getting tight this semester. Now I keep thinking "Why didn''t I just eat cereal and powdered milk for two years?!"

 

[icekid]

Whenever you feel annoyed at your school loans, just think of me! I will graduate from medical school in May with a $$$230,000$$$ debt. And I have another 5 years of training before I will make any real money. When we start paying my loans, it will be in the $2500-3000 range per month. eeeeeeeek. I try not to think about it.

They definitely hurt; I am with you! But, it''s all worth it...... right?! (I hope)

 

[Erin]

IceKid I miss you being around - glad to see ya!

Lots of people don''t even bring home $3000 a month. I can''t imagine paying all that in StuLo''s.

When are they going to pass that bill that allows for loan forgiveness for public service? You could work as a doctor pro bono for a few years...

 

[omieluv]

Loan Total 2001: $65000 (grad + undergrad)
Loan interest rate: 5.9%
Payment Plan options: 5-yr plan $650/mo payment, 25-yr plan $200/mo. Elected 25-yr plan.
Other Debt: $0. No credit card debt & no car payment (take public transportation)
Monthly payments: Living with parents: $1000-1500/month; Living in apartment: $150-200/month
401k: yes
Emergency Fund: yes

My parents were kind enough to let me live with them for 3 years at very low rent, with the understanding that I would devoting what I would be paying in rent and living expenses toward reducing my loan amount. What I also did was select the plan, which would allow me to make the lowest payment. However, while living with my parents, I would pay much more than the minimum payment. Because I paid more than the plan required, I am pre-paid until 2012, meaning that I do not have to make any payments until then (though, interest will continue to accrue). I did not select the 5-yr plan b/c I was not making much money right out of school and wanted to contribute the max % my company would match to my 401k, plus I wanted to establish an emergency fund for myself for when I would move out (8 months of living expenses). Not to mention I was not exactly sure how long I would be permitted to live at home, so I wanted to select the plan with the lowest payment option for flexibility.

After my brother graduated from college, I moved out because my parents did not want both of us home at the same time. They were kind enough to give me a heads up so that I could save money for moving expenses, furniture, 1st mo's rent + security deposit. While living at home, I was able to establish an emergency fund (8mo’s living expenses), while contributing 6% toward my 401k. At the time of the move, my loan was down to $15k from 65k.

After I moved into my apartment, I decided that I needed to switch gears from my loan to saving toward a 20% down payment on a condo/town home. Unfortunately, paying rent + trying to save a down payment of 20% toward a home purchase has made it difficult to make payments on my student loan. However, over the past 3 years I have managed to bring my loan down to just under $10K, while saving money toward a home purchase.

I am so glad I opted for the 25-yr plan when I consolidated, because some months all I can afford is to make a small payment on my loan, while others I can make larger payments. Though I really want to pay off that loan, I really need to keep saving toward a home purchase. Also, student loan debt is not considered "bad" debt and I get to write off the interest on my taxes, so I am not sweating carrying a loan right now. However, once I have reached my down payment goal, I will focus my finances toward paying off my loan.

 

[ang3199]

Haven: Good idea about the financial advisor. How do I go about finding a company? I think I have to do some serious research here.

Karasue: I know what you mean about getting defensive when FI brings them up. He did not go to college but got lucky and got a great (great meaning making more than I do as a school psychologist..yikes) job with a construction company. So I tend to get angry when he brings up all my debt when he has none.

Goldenstar: Yes, they are the necessary evil. And better be worth it

Fisher: I can see the reward in watching that principal go down. I just feel so ''heavy'' now that I have nearly 100K on my back. Grr.

Starset: I like the idea of loan forgiveness by working pro bono!

Lumpkin: I remember you have a couple of children. Bless you for helping. They will be so lucky. My parents weren''t able to help but would have loved too if they could have.

Phoenixgirl: How is the interest rate so high? Does it depend on who you take the loans out with?

Elmorton: All through grad school (Masters and Ed.S) I had an assistantship, but I needed money to LIVE. Those pennies they pay for assisantships don''t cover anything. Grr.

Icekid: All I can say is God bless you. I don''t know how on earth I could do 2500 a month.

Omieluv: You post was helpful. Thanks for all the numbers and percentages! Kinda puts things into perspective for me. I may opt for the lower payments and just pay more. Just in case things get financially tight and I can''t make the larger payment.

Thanks again everyone for your input. I appreciate it!

 

[Jas12]

At the end of 5 years of university I had a 7 k line of credit and a 6 k government educational loan (OSAP--in canada)
I paid off the government loan right away when i started work, but have barely touched the line of credit--it''s very low interest and i can hold off on it for several years so i have been advised to wait and pay this off last (deal with credit cards and car payments at a higher interst rate first!)
I acutally just started paying it off this month.

My loans were rather low b/c I worked two jobs and had some help from family--but my friend who have outrageous loans have mentioned talking to a trusted advisor who can set up a payment plan for you that still alows some freedom of spending. Good luck! It won''t be that bad and it is very common.

 

[Rhea]

I never had student loans, but everything comes at a cost. I started working at age 16 and saving for college. It took me 5 years to get through school and I worked full-time the entire time including breaks. I had no life and really didn''t enjoy those years at all because I worked while all my friends were going out and having fun. I tried to join clubs but never actually had time to stay in them.

It sucks that you''re having a rough time right now.

 

[snowflakeluvr]

i''m sorry for your debt and angst! my daughter is another one of those piling up the debt. she received a couple thousand in academic scholarship but she chose an out-of-state school which has a very strong program in her major, so that about doubles the tuition for her being out-of-state. i have been a stay at home mom for most of our 21 years. dh falls into that category of "makes too much but not enough" that ridiculous fafsa actually estimated our "parental contribution" as over 50% of dh''s take home pay!!! so i guess if the rest of us(we have four other children) lived in a box, our dd wouldn''t have any college debt. she also took post-secondary courses in high school and is busting her butt right now to get her undergrad in 3 years, instead of four. it''s daunting but she has a 2 years masters requirement, so that''s more debt.

people complain and complain about lack of opportunity for schooling, but there are groups who qualify for a great amount of financial help. the middle and slightly upper middle are hit really hard. translation: no financial aid.

our son will graduate in may and is choosing a smaller state school. he is also type 1 diabetic, a scholar athlete and has already received some scholarship for academics...his toll will be about half of our daughters. his medical costs are going to be forever and he eats constantly, so he''s going to spend a bundle too.

this grieves me because there are so many capable, bright kids who want and expect college educations. the system is making it harder and harder financially. we chose our path of me being at home(lost income), private education for our children(mega-dollars there instead of into college funds) but my children are wonderful people so i guess i wouldn''t change it. i just wonder why strong, bright students from good homes are penalized when it comes right down to it.
they will be living at home till they are 30 tho

just wanted you to know others feel your pain! it WILL be worth it-goodluck to you

 

[sparxs111]

I fell your pain. I have 52K in loans, and pay 950/mth. My financial advisor suggested that when I buy a house to incorporate my laons into my mortgage. That way they are at a smaller interest rate. The other thing was to continue to pay as hi as possible. This knocks them down faster, but you aren''t paying the killer interest. If I followed the federal plan, I would have 30K in interest payments!!!!

 

[UCLABelle]

I have about $90K, my husband-to-be has about $60K

YIPPY FOR LOTS OF DEBT!

 

[Independent Gal]

I was lucky. In undergrad, I had scholarships + I worked my a$$ off every summer, as well as part time during the year at times. At one point, I was working FOUR JOBS! I was also lucky that at one of my jobs - at a consulting firm helping a secretary with the filing and stuff, doing the odd bit of research - I got ''noticed'' by a senior consultant, who offered me tonnes-o-cash to do real consulting work. That paid for my last year of college, and for my MA tuition in England, with scholarships paying my living expenses. Then for my Ph.D., I got a full scholarship PLUS a generous stipend for living expenses PLUS free health care (so, worth about $55-60K per year...woohoo!). I was one happy little scholar! Then I won a few prizes, which I stashed for a house downpayment. The stock market was good to me while I did my Ph.D., so I cashed out a chunk, and now I own almost half my condo, 2.5 yrs out of school.

BA debt - $0
MA debt - $0
Ph.D. debt - $0

I thank my lucky, oh so lucky stars! Thank youuuu lucky stars up there! Sure there was a lot of hard work too, but lots of this was luck.

Now if I could just lick that mortgage....

 

[Beacon]

I had some student loans but small cause I worked the whole time I was in college and I got some scholarships. It was very hard working at the same time as school and I do not remember college fondly at all.

I paid my loans back fast cause I do not like debt. My recommendation: pay them off pronto. However if you have any credit card debt, pay that first.

If you have any chance to refinance the loans into lower rate loans, go for it, it makes a big difference over time.

I don''t know the tax implications for the current student loans. Can you deduct the interest?

 

[brazen_irish_hussy]

I have so far been lucky. My grandfather left his estate tp the college education of his grandchildren so I got my BA without loans. My FI and I make enough to cover his college and one of the local colleges actaully has a very good master''s prgram in my field so we shouldn''t need to worry about that too much. My PHD may be harder, but I will cross that bridge when we come to it.

So although I cannot give you any advice, I might have something to make you feel better. According to the US census the average lifetime income of a person based on their edcational attainment is:
High school $1.2 mil
BA $2.1 mil
MA $2.5 mil
PHD $3.4 mil
Proffesional degree (law school med school, etc) $4.4 mil

So if you think of your student loan in terms of your lifetime income potential, it doesn''t seem so bad.

 

[kellyfish]

I (we) have loans from my M.Ed. & DH's Law Degree--we only took out loans for grad school. We have about $80k between us-lots of that is interest. I was even a Grad Asst. & had my tuition fully paid all but one semester. We STILL have freakin' $800+ per month in student loans. I have about 60 hours left to get my PHD--which I start in the spring. I will be paying cash for that!!

 

[goldenstar]

Date: 1/16/2008 7:04:46 PM
Author: Beacon

I don''t know the tax implications for the current student loans. Can you deduct the interest?

It depends on what your income is. The amount you can deduct goes down the more you make, but in no event can it be more than $2500 in interest per year. (Personally, I think this is a super low amount.) Once you hit a certain income level you can''t deduct anything at all. I forgot what it is but my guess is 50k per year. All I remember is thinking "That''s it?" when I learned what it was.

If you incorporate the loans into your mortgage you are better able to deduct interest.

 

[LitigatorChick]

I love Canada!!! University education is way cheaper here than in the U.S. (although some universities are increasing tuitions quite a bit). During my law school years, I think tuition was about $4,000!!!

I also love my parents. They had a philosophy that we worked together, so I worked during the summer and was expected to contribute as much as a I could. I lived on a tight budget (ie. my car payment now is more than my entire budget!!!), and my parents made up the difference.

Net result - 2 degrees (1 law) with no debt!!!

 

[Heidi137]

My parents paid for my undergraduate degree (private college) but I paid for my own master''s degree when I got my teaching job. I took my graduate courses at night and during the summers so it wasn''t hard to do. My daughter is in her first year of college and she has the Hope Scholarship (not income based) which pays for all of her tuition and $150 towards her books each semester. All she has to do to keep it is to maintain a 3.0 average.

 

[jas]

Argh -- for some reason my fingers decided to hit some odd combination of keys and lose all the insights I just typed. So if this post sounds dumb, all my genius was poured into the last attempt.

I just (last month) paid off my grad school $56K + interest loan. Also for education. It took ten years and early on, particularly when I had a part time teaching gig for the first two years, it was really tough. The payments take a larger percentage of the paycheck for us "we don''t do it for the money" career-types.

But it really does all work out. I had to make some sacrifices, live in a smaller place than I would have liked, eat out less than I would have liked, but I don''t regret it.

Don''t panic! See every check you write to the loan people as a testament to your strength, as a comment that you have (or soon will have) a job where you can not only support yourself but really, truly make a difference in the world.

Then mooch off your friends for an occasional meal out!

 

[baby monster]

I feel your pain. Education has gotten so expensive and the loans really hold you back financially.

I got a 50% scholarship from a private college for undergrad and worked part-time since freshman year. I lived at home, saved everything I earned and used it to pay for books and tuition. I didn't have any fun in college but I got a great education plus great experience for the resume from all the part-time jobs. My loan after graduation was about $4k, which I paid off in the first year.
My job is paying about $40k for grad school. I have to pay taxes on about half of that, so it is not completely free. It's very hard to go to school after work but the financial incentives keep me motivated!

 

[omieluv]

Date: 1/16/2008 1:56:33 PM
Author: ang3199
Good idea about the financial advisor. How do I go about finding a company? I think I have to do some serious research here.

Omieluv: You post was helpful. Thanks for all the numbers and percentages! Kinda puts things into perspective for me. I may opt for the lower payments and just pay more. Just in case things get financially tight and I can''t make the larger payment.

Glad I could help and I feel your pain.

Though I do not have a financial advisor, what you want to do is find one that is certified. Here is a helpful site for you to check out: http://www.cfp.net/learn/knowledgebase.asp?id=6

Try to find a fee only advisor. A fee only adviser is one who is compensated solely by the client, with neither the adviser nor any related party receiving compensation that is contingent on the purchase or sale of financial products. Their sole motivation is helping you, not by earning commissions off of products they sell. Major financial organizations will provide services of their financial advisors for a low fee or for free. The catch is, they make money off of what they sell you, so you have to be cautious.

 

[omieluv]

Date: 1/17/2008 1:45:48 AM
Author: goldenstar

Date: 1/16/2008 7:04:46 PM
Author: Beacon

I don''t know the tax implications for the current student loans. Can you deduct the interest?

It depends on what your income is. The amount you can deduct goes down the more you make, but in no event can it be more than $2500 in interest per year. (Personally, I think this is a super low amount.) Once you hit a certain income level you can''t deduct anything at all. I forgot what it is but my guess is 50k per year. All I remember is thinking ''That''s it?'' when I learned what it was.

If you incorporate the loans into your mortgage you are better able to deduct interest.

I am able to deduct my student loan interest off of my taxes. In the US, you get a statement at the end of the tax year letting you know how much you paid in interest for that year.

 

[goldenstar]

Yes, interest on students loans is deductible but with certain limitations