The Student Loan – How I Got Into This Mess

Money often costs too much.

Ralph Waldo Emerson

When I began college, I asked my parents how I was supposed to pay for it. They quickly said, you take out student loans. Easy enough! My parents (divorced) were always poor and did not know much about finances. I learned everything I knew about finances from them. There was no talk about getting a job or paying my way through college. In fact, I was a high school dropout who obtained a GED, and there was never any thought of I may not be ready for college. It was just something you did and something that you took out loans to pay for and that is exactly what I did.

When I found myself still in college 10 years later and married, I was still taking out loans without a single thought about it. I never had to worry about repaying them because I was still taking classes and they were deferred. It never even occurred to me to look up how much I had borrowed or what it meant to pay it back. Upon graduation with degrees in the Humanities that were not worth the money, I had $120,000 of student loans and a $10 an hour job.

I quickly learned that I could defer these payments as well (for 10 years), because I did not have the means to pay them back. Once I began to look at money and the reality of the situation, the interest on the loans had now grown the loan to $150,000. Although I have a better job now, the idea of being able to pay this loan back is daunting at best. However, I do what to pay them back. I made the mistakes of youth, I signed on all of the loans, I was the one who did not work my way through college, and I was the one who was not prepared for college and stayed far too long.

There is a program that is offered to me, which is that if I pay on an income driven payment plan for 10 years then the loan will be “forgiven”, though it will count as income and taxed heavily at that time. 10 years is a long time, but it is better than continuing to defer until I am dead. I decided to take this offer and I am currently on year 3. Still, I want to be able to pay the entire thing and my hope is that once I get a promotion at work, I can increase the monthly amount of what I am paying so that I can pay off the entire balance or at least get as close as possible.

There is also another possible avenue: Our home keeps increasing in value. It has grown $100,000 over the last 3 years. I know this pace is not guaranteed, but once I get the 2nd paid off and stop running up debt, in another 5 years it may be possible to refinance the home or sell the home to cover the student loan. I can’t forecast the future, but it is certainly more possible than it was previously.

The goal is to be entirely debt free in 10 years. A number of things have to happen – Increase in home could be a part of it, and hopefully a promotion at work could certainly help. It is a lofty goal, but hey if I even get close it is better than where I have been. I mean how do you deal with such a crippling debt? I tell my kids to not take out any loans for anything. Better to work and save up for college, or better yet have a company pay for it while you work for them. It will save a great deal of heartache and headache in the future.

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