For a lot of borrowers, taking out student loans can be a huge regret that quickly turns into a nightmare.
But my decision to take out student loans (and my efforts to pay them off early) is actually one of the financial choices I’m most proud of.
My parents paid for the first half of my degree out of their own pockets. But halfway through college, I stopped accepting their financial help.
Instead, I funded the remaining four semesters of college with student loans.
Splitting college costs with my parents
With my parents’ help, I did some cost analysis of my college options and chose a religious private school that offered cheap tuition.
And while we agreed that my parents would cover the cost of tuition and books, I was expected to get a job and pay for room and board.
Essentially, my parents had to stretch their monthly budget to pay for my tuition and books.
“We had never really gotten the chance to save for any of our kids’ educations,” my mother Lori recalls. “We would see where we were at and try to offer whatever help we could afford.”
I actually didn’t know at the time how my parents were covering my college costs. In fact, I didn’t even know the total amount they were paying.
Like other college students, I expected them to pay their share of my college costs, which they said they could afford. So I didn’t really think twice about it. But for many parents (including my own), helping with college costs is hardly painless.
Last year, 62 percent of parents of high school students said that paying for college costs will require “significant financial sacrifices,” according to a survey from MONEY Magazine and Kaplan Test Prep.
For some parents, like mine, this means simply adjusting their budgets and delaying big purchases. But sometimes paying for college also includes more costly financial moves, like early withdrawals from retirement accounts or taking out a second mortgage.
Facing my family’s financial reality
Halfway through my degree, a conversation with my older brother Brandon prompted me to reconsider. He’s nine years older than me and was in law school at the time. He was a lot more aware of my parents’ financial situation than me.
My parents became parents at a young age and had seven kids (yes, seven) over 13 years.
With so many people to provide for, and living only off of my father’s income, money was usually tight. Some financial hardships, including extended unemployment for my dad, lead to some very lean years for my family.
After my dad decided to change careers and my mom went back to work as a teacher, my parents rebuilt their financial stability. But between all of these financial demands they were still behind in many ways.
For instance, my parents didn’t start saving for retirement until pretty late in life — just before they entered their 40s. And that was on top of supporting seven children, many of whom were entering adulthood.
“It was always really important to us to help our adult children financially when we could,” Lori says.
Brandon pointed these things out to me in our conversation. In addition, my younger sister was about to head to college, at least doubling the tuition they’d be paying.
And like many in my hometown of Las Vegas during the Great Recession, my parents were underwater on their mortgage.
“You’ll have the rest of your life to pay off student loans,” I recall Brandon saying. “Mom and dad only have so many years left to save for retirement.”
Deciding student loans were the smarter way
After processing my conversation with Brandon and thinking the decision through, I stopped accepting my parents’ financial help and instead turned to student loans.
I was about halfway through my degree when I decided to take over paying my college costs.
The good new is I’d avoided any student debt up until that point. My parents had warned me against taking out student loans from the get-go.
“After paying off our own student loans, I felt that young people don’t really understand what it’s like to pay off student loans,” my mom explains.
However, college students owe it to their parents and themselves to consider the strain college costs will put on their family.
In the end, student loans might be a better alternative to paying for college than forcing parents to tap into other resources, potentially damaging their financial situations in the long-run.
Remember early withdrawals from a retirement account, or taking out Parent PLUS loans, can be just as damaging or more to a parent’s finances than student loans would be for students.
I wanted to ensure that my college education wasn’t holding my parents back. I figured their money would be better used toward retirement savings or even helping another sibling who needed the money more.
Today, I feel totally at peace knowing I didn’t place any undue burden on my family.
Making sure I could afford my student loans
My parents were, unsurprisingly, concerned about my choice.
“I was worried you didn’t know what you were getting yourself into,” my mom says. “But when your child is trying to assert their financial independence, there’s not a lot you can do to argue with that.”
They gave me plenty of smart advice, which I listened to. I was mindful of my costs and did what I could to keep them low.
I took out only enough each semester to cover tuition and books — the portion of college costs my parents had previously covered.
I continued paying for room and board from the pay I got for an on-campus job. I said no to a lot of social outings and figured out how to have fun for free.
The prospect of having to repay my student loans also motivated me to get more out of my education.
Depending on what I did and could earn, I knew these student loans could either be a really smart investment or a terrible mistake that would haunt me for years to come.
I was determined to get a job out of college and repay my loans. Gaining marketable skills became my main goal for the remaining semesters in college.
I joined the student newspaper and supplemented my English major with communications courses on journalism and editing. I applied to internships and completed one the semester after graduating.
Paying off $13,500 in five years
I graduated with around $13,500 in student loans. While sending those monthly payments as a new graduate was painful at times, I learned a lot from my debt.
It helped me keep my lifestyle and spending in check. I stayed motivated when my job applications were rejected. Student loans even helped me start establishing credit.
Within five years of graduating, I accomplished my goal of paying off my student debts.
I don’t regret taking out student loans instead of taking my parents’ money. Sure, it’s easier to offload the financial responsibility of paying for college to parents. But, I learned more, worked harder, and was very empowered when I decided I needed to do it my own way.
Need a student loan?Here are our top student loan lenders of 2019!
|1 Important Disclosures for Ascent.
Before taking out private student loans, you should explore and compare all financial aid alternatives, including grants, scholarships, and federal student loans and consider your future monthly payments and income. Applying with a cosigner may improve your chance of getting approved and could help you qualify for a lower interest rate. Ascent Student Loans may be funded by Richland State Bank (RSB). Ascent Student Loan products are subject to credit qualification, completion of a loan application, verification of application information and certification of loan amount by a participating school. Loan products may not be available in certain jurisdictions, and certain restrictions, limitations; and terms and conditions may apply. Ascent is a federally registered trademark of Turnstile Capital Management (TCM) and may be used by RSB under limited license. Richland State Bank is a federally registered service mark of Richland State Bank.
* Application times vary depending on the applicants ability to supply the necessary information for submission.
2 Important Disclosures for College Ave.
College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
Information advertised valid as of 4/1/2019. Variable interest rates may increase after consummation.
3 Important Disclosures for Discover.
* The Sallie Mae partner referenced is not the creditor for these loans and is compensated by Sallie Mae for the referral of Smart Option Student Loan customers.
4 = Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply.
5 Important Disclosures for SunTrust.
Before applying for a private student loan, SunTrust recommends comparing all financial aid alternatives including grants, scholarships, and both federal and private student loans. To view and compare the available features of SunTrust private student loans, visit https://www.suntrust.com/loans/student-loans/private.
Certain restrictions and limitations may apply. SunTrust Bank reserves the right to change or discontinue this loan program without notice. Availability of all loan programs is subject to approval under the SunTrust credit policy and other criteria and may not be available in certain jurisdictions.
SunTrust Bank, Member FDIC. ©2019 SunTrust Banks, Inc. SUNTRUST, the SunTrust logo and Custom Choice Loan are trademarks of SunTrust Banks, Inc. All rights reserved.
6 Important Disclosures for LendKey.
Additional terms and conditions apply. For more details see LendKey
7 Important Disclosures for CommonBond.
A government loan is made according to rules set by the U.S. Department of Education. Government loans have fixed interest rates, meaning that the interest rate on a government loan will never go up or down.
Government loans also permit borrowers in financial trouble to use certain options, such as income-based repayment, which may help some borrowers. Depending on the type of loan that you have, the government may discharge your loan if you die or become permanently disabled.
Depending on what type of government loan that you have, you may be eligible for loan forgiveness in exchange for performing certain types of public service. If you are an active-duty service member and you obtained your government loan before you were called to active duty, you are entitled to interest rate and repayment benefits for your loan.
A private student loan is not a government loan and is not regulated by the Department of Education. A private student loan is instead regulated like other consumer loans under both state and federal law and by the terms of the promissory note with your lender.
If your private student loan has a fixed interest rate, then that rate will never go up or down. If your private student loan has a variable interest rate, then that rate will vary depending on an index rate disclosed in your application. If the interest rate on the new private student loan is less than the interest rate on your government loans, your payments will be less if you refinance.
If you don’t pay a private student loan as agreed, the lender can refer your loan to a collection agency or sue you for the unpaid amount.
Remember also that like government loans, most private loans cannot be discharged if you file bankruptcy unless you can demonstrate that repayment of the loan would cause you an undue hardship. In most bankruptcy courts, proving undue hardship is very difficult for most borrowers.
8 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|4.24% – 13.24%1||Undergraduate and Graduate|
|4.07% – 11.32%2||Undergraduate, Graduate, and Parents|
|4.84% – 13.49%3||Undergraduate and Graduate|
|4.50% – 11.35%*,4||Undergraduate and Graduate|
|4.25% – 13.25%5||Undergraduate and Graduate|
|6.08% – 7.22%6||Undergraduate and Graduate|
|3.95% – 9.81%7||Undergraduate, Graduate, and Parents|
|4.45% – 12.42%8||Undergraduate, Graduate, and Parents|