Kids, don’t be like me. Don’t get student loans.
Let me clarify: I love my career, and student loans helped me do a two-year program where I got excellent training in my field (advertising), amazing internships (in London and Prague), the opportunity to study in some awesome cities (in addition to the two previously mentioned, I was also in Miami Beach, Amsterdam and Hamburg), met some of my best friends, built a huge network of advertising colleagues, and got my foot in the door at some stellar agencies. I’m not sure without going to the program I would have had access to some of the opportunities, places and people otherwise.
But would I take out the student loans again to do it? I’m not so sure.
Here’s the truth about student loans. They are a huge pain to pay off. A pain you will feel every month when you see $700 vanish from your bank account that you could use to buy things like adult-people clothes or brunch. A pain you will feel when you want to quit your toxic job in NYC and move out of your shoebox apartment and live like a human being and not a semi-professional cockroach exterminator. A pain you will endure up until the last day you have paid for them, because you pay for them, you will.
Now, I don’t blame the program I attended for “duping” me into student loans or anything. In my situation, I needed the loans because my parents did not want to pay for two more years of school, and I think they were skeptical of my commitment in the beginning. (I had just spent the previous two years frolicking around Madrid under the guise of “teaching English”, so I’m not sure I can blame them.) I will say, though, that I was not very aware of the impact these loans would have on the years that followed when it came time to pay them back.
How student loans really work
I’m not a math person (hello, I went into the creative side of advertising) but here's how student loans work. You are told you can start paying back the loan six months after you graduate, after what’s called a “grace period” expires. Interest accrues daily on the loan, so each payment you make will go to the interest, plus the principal of the loan. In the beginning, you’ll be primarily paying off the interest and a small amount of the principal. Over time, the amount of interest you pay off grows smaller as the amount you pay on the principal gets bigger. It’s simple.
Fun fact: that "grace period" that gives you six months after graduating before payments are due on your loan? Interest collects on your loan during that time, and is added to the principal of your loan. Does that term abuse of the word "grace"? Definitely.
The problem with student loans
It’s very fortunate I took out student loans to pay for a two-year professional program for a career that eventually pays well. The problem is that it is not a career that pays well right at the beginning – or even at all, especially if you end up not being particularly good at it. It’s also not a career that is sheltered from catastrophes like economic downturns as opposed to being, say, a dentist. So the good news is that I was at least employable in a career that starts out in the $40,000 - $50,000s but can reach well into the $100,000s or $200,000s or higher, depending on how ambitious, talented, hard-working and determined you are. This is much better new than someone who takes out $200,000 worth of loans to go to NYU to study something silly like sociology for four years as an undergrad and still doesn’t know what she wants “to do with her life.” (I read about this actually happening in a news article about student loans. Also: WTF.)
Here’s a big piece of advice: if you don’t know what you want to do with your life, do not take out loans to pay for it.
Here’s another piece of advice: if the sum of the loans you are taking out exceeds the average salary for your career (not the ultimate pinnacle of success in your career, but an average salary), do not take out student loans—or at the very least, don’t borrow more than what would be considered a very average salary for your field after you’ve worked for a couple years.
I was very fortunate that my student loans were taken out to enter a field I’ve ultimately enjoyed and has paid better the longer I’ve worked in it. I also managed to pay off my student loans, eight years after I took them out. My success is attributed to a few things; first, my dad’s skepticism subsided after he saw how hard I was working and he helped out by making two large generous payments, then smaller, frequent contributions to the large payments I was making. Second, I was extremely diligent and focused about paying them off, regularly sending off large payments to really chip away at the debt.
Student loans trap you into a certain life when you might want to do other things
One of the big problems with student loans? What if you decide the career or field you’ve entered really isn’t for you? I know, it’s hard to have that kind of perspective when you’re wide-eyed and filled with enthusiasm for a certain subject, only to find out in the real world it’s waaaaay less glamorous and filled with excruciatingly long hours and weekends, intense office politics, and pressure to deliver top-notch work at all times in a sea of fellow go-getters competing for your opportunities. But you can’t get out, because you owe gobs of money every month to a bank or two.
This is what’s called “feeling stuck.”
It’s the same feeling people have when they are buried in other debts that become the focal point of their life: paying a mortgage, having kids, racking up giant credit car bills, buying a car they can’t afford. Ultimately, these are all great things that can give us so much freedom and joy, but when the financial drain exceeds the benefits, they become pathologies that suck our soul.
We can’t quit the job that makes us miserable or switch paths to become a potter or simply work at a less intense, less well-paying job, because we are trapped in a form of indentured servitude to our employer and the bank.
Paying your student loans means you can’t pay for other things
Someone I worked for once told me they were still paying their student loans and would be paying them off for the next twenty years. Do you realize how crazy this is? Again, I’m no mathematician, but you are making a bank rich while you are making yourself poor. The longer you take to pay off a loan, the more money the bank earns in interest. Maybe it's because I'm cheap or have libertarian-tendencies but I like my money to be mine, not anyone else's. The idea that you have no trouble just saying goodbye to $200 a month for the next 25 years is insanity. That’s $48,000. 25 years = $60,000. Sure, that’s not enough to make a down payment on an apartment in San Francisco, but it does equal several mortgage payments. Or two new cars. Or several vacations. Or even just a nice chunk of money in a 401k or even just a savings account.
The less you have to pay in student loans, the more money you have for other stuff, even if it’s just funding your newfound photography hobby or wanting to buy concert tickets or join your friends on a Caribbean getaway. Disposable income is a good thing (and a fun thing). Don't take out students loans and you give yourself the power to dispose your income on your terms.
The bottom line, in which I stop lecturing and (hopefully) fill you with hope
If you have no student loans, good for you. Try not to borrow money for school, ever. If you have them, try as hard as you can to pay them off as soon as you can.
At the end of the day, what we all really want is freedom. Freedom to buy the things we want, go to the places we want to see, be with the people we love, live the life we dream of. Student loans put a limit on that freedom. Control your money and you control your world.
Somehow, magically, despite being locked into enormous loan payments while being paid a low salary, I managed to save. Enough that now, after some raises and promotions and having paid off some $86,000 in student loan debt, I have saved enough to quit my job and do what I really want to do -- travel for four sweet, glorious months, write, think, explore.
This is freedom. I've earned it. And it feels amazing.