|
Dear First Gen,
The majority of college students graduating today have one thing in common, regardless of their degree: student loan debt. While some are fortunate enough to attend college without having to take out any loans, the majority of American college graduates end up owing seemingly insurmountable debt to lenders. When I graduated more than 10 years ago, Sallie Mae was the leading lender. Today, Sallie Mae has been joined by Great Lakes, Nelnet, and Navient. It seems that almost every day, there is a new article reporting that #studentloandebt is a factor in #millennials delaying buying homes, getting married, starting a family, or growing a business. Some have even chosen to put off saving for retirement to focus on paying their student loans. The Good Ol’ Days I will never forget a conversation I had with a former neighbor. She and her spouse had both graduated from a state law school in the 1990s, and their combined student loan debt totaled just $55,000. I was shocked to hear that number. I could never imagine a graduate today walking out of law school with such a low amount of debt. She went on to tell me that they paid off their loans in just 5 years. The first few years, they kept their expenses low by living modestly. They also made the career decision to work in the public sector before moving on to work in “big law” for leading corporate law firms. The Times They Are A-Changin' On the other hand, when I graduated from college in 2007, I entered the “real world” with what I thought was a manageable $25,000 of student loan debt from my 4-year degree. Then I went to Georgetown for a 1-year master’s degree program and graduated with an additional $33,000 in debt. I kept my costs relatively low by living at my parents’ home, taking a carpool bus to school, bringing my lunch with me, and working a graduate assistantship. Others in my master’s program cohort took out double my amount because they lived in Washington, DC, and needed money for housing and more. That meant that many of them graduated with at least $60,000 in debt from a one-year graduate program. I figured mine was still a manageable amount of debt since it was a total of less than $60,000. However, I finished my program in 2008 during the recession and it’s not an exaggeration to say that no one was hiring. I worked two part-time jobs to pay my bills. But then I tacked on even more debt when I went to law school. I will be paying my student loans for years to come. A Little Financial Planning Goes a Long Way Why am I sharing this with you? I believe in getting as much information as possible to be sure you're setting yourself up for success down the road. It is important to know exactly how much you need to borrow to get your desired education. Then you can borrow the very least amount so you are not swimming in debt, do not have to delay future milestones like buying a house, traveling, or becoming a parent, if those will be priorities for you. A little financial planning goes a long way in paying off student loans. A few young people I have recently met shared that they have not begun paying their public student loans back because they are paying for the private loans they took out first. Another friend who graduated law school with me had more than $100,000 in student loans from two private institutions, yet paid off their #lawschool debt in less than 4 years. This person did make a six-figure income, but they also lived very modestly by limiting travel, shopping at discount grocery stores, finding inexpensive rent, and so on. Luckily for this person, the amount of compounded interest was limited because of the timing of paying back the loan. In many cases, graduates pay a lot in interest before they can pay any chunk of the principal. If you’re just starting to look into loans, I may be using terms that are new to you. Check out Student Loan Hero for more information, and do not be overwhelmed. I have come across many good resources that may be helpful to you. Podcasts – Brown Ambition Paychecks and Balances Trailblazers.FM Blog Posts – Student Loans: Everything you Need to Know Your Money Worth The Student Loan Debt Movement Tools – How to Create a Loan Amortization Schedule As a first-generation college student or graduate, there is a lot of information we are not privy to because no one in our families has gone through it before. That's why I’m here. These resources will get you started on how to plan for the financial implications of a #highereducation. Whether you are just starting the process of applying for grants and scholarships or you are debating whether to accept a job that offers student loan repayment assistance benefits, thinking about all of this will help you plan a little better. Fellow Riser, Irnande ***Disclaimer: 2019. All rights reserved. All data and information provided on this site is for informational purposes only. No reproduction of any content on the website without the express permission of the author. The text, pictures and videos are the sole property of FirstGenRise.
0 Comments
Leave a Reply. |
|
RSS Feed