Once my partner and I decided to pay off my student loan debt, the balance had reached $78,000. We all make mistakes. But I made some pretty big student loan mistakes that caused my student loan debt burden to be heavier than it needed to be.
The vast majority of Americans who attend college will take on student loans. If that’s you, then hopefully you can avoid these student loan mistakes and keep your student loan balance down.
Student Loan Mistake #1
I did not save for college.
Not one single dime. I had been working since I was 12 years old. I managed to save enough to buy a car and pay for my insurance but never had the forethought to plan for college. To be fair, I was getting free college classes at 15, and paying for the books and fees associated with this.
It’s the dream that parents help with this. That was not my reality and I knew it. I don’t believe in beating my teenage self up for not saving, but I will say to other teenagers out there- SAVE. Even if you have some financial help, putting away money every paycheck would have drastically reduced the severity of my student loan mistakes and debt.
Student Loan Mistake #2
I counted on financial aid that I wouldn’t have to pay back.
I thought we were poor. Like really poor. We couldn’t afford new clothes and shopped at the Grocery Outlet. We lived out in the country in a trailer home. Most importantly, my parents always talked about not having money. It was a tumultuous subject that made me believe I had a chance of getting some good financial aid. The kind of financial aid you didn’t need to pay back.
When I completed my Free Application for Federal Student Aid (FAFSA) I was shocked to find out I did not qualify for any kind of grant. I was even more shocked to see my parents tax returns and find out at 18 that we were not poor after all. My school offered all student loans and a few school scholarships (for good grades). This didn’t cover tuition and I would be short. Meaning I was taking out all student loans and working a few jobs in school.
Student Loan Mistake #3
I did not pay interest while in school.
For my undergrad program I was offered two types of student loans:
- Subsidized Stafford Loans
- Unsubsidized Stafford Loans
The subsidized student loans are the best ones to accept because the interest is paid by the government while you’re enrolled in school. These loans are also given out based on financial need. Due to my parents high income I was eligible for these late on in school once I was no longer listed as their dependent on taxes. Therefore the majority of my loans were Unsubsidized for undergrad.
In grad school, I took out Direct PLUS loans and more Unsubsidized student loans. The unpaid interest on these loans capitalized when I graduated. This means my total student loan principal increased and I was then paying interest on interest. If I could go back, I would have tried to budget accordingly for the interest that was collecting on my student loans and paid it off before it capitalized.
I thought I could teach forever.
I was counting on the Public Service Loan Forgiveness program as my way to pay off student loan debt. It was a solid plan. However, I quickly realized I would not be able to teach or work in a not-for-profit for 10 years. Once I knew this, I should have kicked into gear a student loan debt pay off plan.
Instead, I taught for another two years and continued making minimum payments on my income-based repayment plan. The payments were not even covering the interest each month, which of course means they weren’t touching my principal. So my student loan debt continued to grow. I think this would have been an excellent time to jumpstart paying off my student loans aggressively before I made the career transition.
I chose a private university. Twice.
Yes. This is probably my most regrettable decision. I chose a private university for both my undergrad and grad school. This meant the tuition was nearly double what it would have been at a local university.
I justified this choice for my undergrad because it was the only school in state with the BFA program that included my concentration choice. It was also close enough to my Aunts that I could have free housing. Still, a BA with a major in art history at a local public university would have meant less student loan debt.
I chose a private university for grad school as well. Again, the justification came with the esteem of the program. I would happily choose a public university within state if I ever go back to school if it means less student loan debt. (And it will)
I chose an accelerated grad program.
Accelerated grad school programs are known for being more expensive, especially to counterpart programs which take 2-3 years. I wanted to be done with college and get into my career. This motivated me above all else. I also assumed I would get student loan forgiveness, so I did not put too much work into finding a more affordable Master’s program.
Three days after graduating with my BFA, I started grad school in the accelerated one year (and two summers) program. I also shelled out a pretty penny for it since I was not able to work during this year. Outside of two scholarships, the rest was student loans.
I avoided looking at my student loan balance for years.
Upon graduation, you’re required to complete a Master Promissory Note and exit counseling. The exit counseling covers payment options and forgiveness eligibility. While I don’t remember it being very helpful, I also know I breezed through it and tried to avoid looking at the big numbers. Like the one they show you for how much your student loans will balloon over the 10 years of pursuing PSLF.
Once this was done and I was set up with a qualified payment plan, I tried to ignore my student loans on the day to day. I filed my paperwork every year to stay in the program, but knowing the actual number was terrifying, and I felt so much shame around it. I also hoped to god that forgiveness worked because having to pay it all back after 10 years of interest accumulation seemed impossible. This stunted my ability to plan for the future. More importantly, it was a roadblock to gaining control of my finances.
Ask questions and don’t wallow
Thankfully, I’ve come a long way since all of these student loan mistakes. Educating myself on student loans has given me the control I need, and the ability to point out these mistakes. I don’t sit and wallow in them, but instead, I am proactive. We are on our way to paying off my student loan debt (aggressively) while also investing in our future.
Any student loan debt question? Feel free to ask!