The TRUTH about student loans!

"...student loans are a good debt...they are an investment in your future...just get through college, and the rest will work itself out..."

These were the only pieces of wisdom I heard about student loans while I was in college. I knew I was taking out loans, and that I would have to pay them back, but for some reason I wasn't worried about HOW I would pay them back! When you are taking them out a little at a time, it is hard to wrap your mind around what the total cost will be at graduation, and little did I know that I would be entering one of the toughest job economies in history! I was living on an altered version of reality that only an 18-year-old fresh out of high school could understand. I was living on the idea that I was only young once, and that I should enjoy the college years so that I could buckle down and get serious someday.  I was living on assumptions. The assumption that I would exit college into an immediate job opportunity. The assumption that I would make more than enough to pay back my loans, buy a house, buy a car, and live the American dream. The assumption that several years into my career I would get married, have kids, and afford to stay home for a while until they were grown. The assumption that student loans were just a part of life, and that it was the only way someone like me could get through college without savings or help from my parents.

Here is the reality: After a Bachelors at a public university and a Masters from a private university, those tiny little loans every semester added up to over $60,000! Immediately after graduation, I met the man of my dreams and got married. 1 year later, we started our family. And after almost 3 years, I still have not been able to find a teaching job. When my loans came due, I was paying almost $1,000 a month. After consolidation (which took my repayments from 10 years to 25 years) I am now paying almost $400 a month. I will be 50 years old when my loans are finally paid off, and my education will have cost me about $150,000 with interest. That is to be a teacher who makes about $40,000/year starting out. Wow. I obviously didn't major in math because this is not adding up at all! I want to scream at all of those people who told me I was taking out a "good debt" and that I would just "figure it out" after graduation!! 7 years of having fun is now costing me 25 years of stress and financial burden!!

So what can a current/future college student do if they don't have the financial support of their parents?

• First, my biggest mistake was not setting a budget for my college years. I worked as a waitress most of the time, so I had the luxury of living on daily tips and not needing to budget my expenses. I wish somebody would have sat me down before I left home and helped me set up a realistic living budget. I was making a pretty good income as a working college student, and I really could have put that to good use if i would have thought ahead!
• Second, I would have surrounded myself with other college students who were also doing it on their own. It is hard to turn down all of the social invites and the youthful lifestyle when you are out on your own for the first time as an adult. I had so much fun going out to restaurants, movies, clubs, and parties. And when all of my other friends are buying new clothes and expensive meals, I felt like that was the "norm". I wish I would have traded in some of the dinners out with get-togethers at people's apartments, some of the movies out with popcorn and pajama movie nights at home, some of the clubs and parties with game nights and a bottle of wine at a friend's house. There are a bazillion ways to be young and youthful and fun without being out every night!
• Finally, I wish someone reliable and trustworthy would have told me to grow up, be mature, and think about my future. In adolescence, it is normal to live in the moment and not think about the consequences, but there is no excuse for a college student trying to pretend to be an adult to be making such poor and thoughtless decisions. At 19, I realized that with my income as a waitress, I could afford to rent my very own apartment, pay bills on my own, buy new furniture, and live a pretty decent lifestyle. That was all good and true, but in the process of me living the above-average college lifestyle, I was taking out loans to finance my tuition, books, and living expenses. If I would have made some better choices, like living at home or with roommates, sharing bills, staying home more, not shopping so much, I could have been using my good income to finance my education, and not loans. I was kidding myself on how much I actually needed to borrow. But I didn't realize this until too late.

If I had the whole college experience to do over again, I would have definitely used my noggin more and made some sacrifices to pay for it myself. It wasn't as impossible as I thought. For instance, I could have saved at least $300-$400 a month by sharing an apartment with a roommate! $300-$400 a month over the course of 5 years (the last 2 were spent rooming with my sister and now husband) would have saved me $18,000-$24,000!! That would have cut my student loans by over a third! Just saving on room and board...factor in what I could have saved by going out less and shopping less, and I have no doubt in my mind I could have gone to school without any (or at least very few) loans. There is no way that those 7 years of fun was worth all of the stress, agony, and sacrifices I will have to make for the next 25 years!

Please pass this on to a current or future college student...and have them get started NOW!!!

UPDATE! Dave just premiered a gift sat for incoming college freshman with info about navigating the confusing world of college all on your own! I know several graduates who are getting this from me this year!! http://www.daveramsey.com/store/prodgsg.html?ectid=dd1204.3_1

Sarah