5 Mistakes I Made With My Student Loans

student loan management

I borrowed $81,000 for my Bachelor’s and Master’s degrees. With interest, that number was closer to $100,000.

As if taking out that amount of student loans for two performing arts degrees wasn’t a big enough blunder, I made quite a few other student loan mistakes, too. When it comes to student loan management, here’s where I went wrong.

1. Not having a clue about interest

For my undergraduate degree, I borrowed $18,000. When I graduated, my student loan balance climbed to $23,000. I couldn’t believe it.

I didn’t even realize interest was accruing on some of my student loans while I was in school. Even worse, I didn’t have a clue about how interest actually worked.

I only really understood how interest worked after borrowing a lot more money to go to graduate school.

Upon graduation, my interest rates were an average of 7 percent on my $58,000 balance. At its highest, I was paying over $300 per month in interest and figured out pretty quickly that my payments were barely making a dent in the principal balance.

If you’re a student loan borrower, it’s important to know your interest rates. More importantly, it’s crucial to know how much you’re paying in interest each year. Not sure? Use the calculator below.

Student Loan Payment Calculator

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For successful student loan management, it’s key to understand how interest works and how much you’re really paying. It could be a lot more than you think!

2. Borrowing too much to go to a private school

NYU was the dream school that I thought I’d never get into, so when my acceptance letter came, I was shocked. I was also terrified — how was I going to pay for it?

At the time, tuition was $52,000 for my one-year accelerated program. That was significantly more than my $38,000 annual salary at the time.

After thinking about it, I decided to take on a lot more student loan debt. I worked three jobs in school but still ended up borrowing $58,000 to pay for tuition and food.

I don’t necessarily regret going to back to school, but I don’t think I’d do it again. Paying more than your annual salary for tuition is just bad news.

I thought I’d easily be able to secure a $50,000/year job post-graduation, but boy, was I wrong. I struggled even more after graduation, and for the first few years paying back my student loans was really tough.

3. Believing student loans were the “good debt”

Even though I’ve always been averse to debt (I didn’t get my first credit card until a few years ago), I jumped at the chance to take on more student loan debt to attend my dream school. After all, student loans were the “good debt” in my mind. They were an investment in my future.

I now realize that my misguided belief really held me back in some ways. First, I borrowed too much. Secondly, it delayed my repayment because I didn’t make it a priority.

There’s no such thing as good debt. Sure, some debt is worse than others, but at the end of the day, you owe someone else money and are getting charged interest.

4. Making minimum payments

When I graduated with my B.A. and my grace period came to a close, I started to make minimum payments as I continued my search for a career job. A few months later, I was hired as a program coordinator at an arts nonprofit.

The pay, while not great, was a step up from what I was making. I even got three raises in three years. Even though I started making more money, I still made only the minimum payments on my debt.

I could have afforded more, but I chose not to put more toward my debt. Unfortunately, this student loan management strategy was one of the biggest mistakes I made.

I ended up quitting my job to move to New York City and take on even more debt. After getting my Master’s degree, I was (ironically) the most broke I’ve ever been. I was actually paying more toward my student loans on a smaller salary!

I regret not paying more when I could have afforded it. If you can pay more than the minimum, do so. You’ll lower your interest and be debt-free that much sooner.

5. Not making interest payments while in school

I worked various part-time jobs when I was in school getting my B.A. and M.A. When I was pursuing my undergraduate degree, I was living with my parents and my expenses were fairly low.

Even though I was working, I wasted my money on overpriced lattes, concerts, and new piercings. I could have at least made interest-only payments while I was in school, but it never even crossed my mind.

When I returned to school for a Master’s degree, I worked the whole time, but, again, never made one payment toward interest. I would have paid less over the life of my loan if I had put a portion of my paycheck toward my debts while I was in school.

Managing student loans is hard, and you may be making mistakes you don’t even realize right now. Learn from my missteps and avoid these common student loan pitfalls.

Though I managed to overcome my student loan mistakes and successfully paid them off, I would do things a little differently if I had the chance.

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