Thursday, January 5, 2012

My Student Debt

Full Disclosure. I owe over 35K in student debt, and being a recent graduate I have begun the career-hunt in order to pay that down. (But I'm still being somewhat selective. I'd like to matter where I work.)

When I took my exit counseling there were a few options provided to me to repay my student loans: standard, graduated, extended, and income-based. Each one provided its own twists & turns through budgeting my meager monetary resources.

Standard offered a blistering $400 per month to my current ~$15k a year earnings as a part-time office administrator. Graduated gave me the option to pay a lot now, and then pay more later. Extended ensured I would be paying double the amount I borrowed well into my retirement.

Of my choices, an IBR (Income-Based Repayment) seemed the only viable option. I get to pay only what I can afford, and after a number of decades the Fed squares my debt. Sounds like we have a winner, folks!

How'd I reach this conclusion? I studied up.

I sat down and thought about what's important to me, what I can afford, what I can't, what I could cut, save scrap, and otherwise hustle in order to manage my debt. And my life.

While Obama recently offered some token gestures towards student debt (which now exceeds credit-card debt!) I still feel that the student loan "bubble" is bound to burst with a rash of defaults in the next 10-15 years unless serious steps are taken to ensure that students' education makes a good return on investment.

What does that mean? It means minimum-wage jobs cannot support someone, or their families, particularly when they're paying off student debt just to have that minimum-wage job. And then you factor in car-payments, mortgage, kids, rent, etc & so on, and eventually you have a big, spiraling, monstrous black-hole that sucks up more money than Wall-Street. ($29 Trillion, and counting!)

But let me stop before the ledge. Even with a minimum-wage job, survival -- hope is possible. You need to be smart; you need a plan; you need to take the initiative.

Start with what you've got on the table -- cash, savings, income, etc -- and then compare it to what's under the bed freaking you out -- loans, credit-cards, etc -- and then find out what's the most you could possibly afford. If it wouldn't satisfy the requirements of your debt, go through your expenses and see where you can trim the fat, cut costs, and then return to how much you can now afford to pay. If that still doesn't cut it, then see about consolidation, or deferments, or new repayment plans. Talk to your lenders. They can often seem like Evil Sharks Out For Blood, but they're also people. More importantly, they're people who'd hate for you to default. Maybe even more than you do...

For me, this means no more fast-food binges, no impulse-buying. It means saving when I can, and taking advantage of every opportunity, new program, or legislation that comes by to give me a break. It means being honest about my debt, because I literally can't afford to be embarrassed or ashamed of what I owe. Hiding my problems will not make them go away. Confrontation, action, problem-solution. Gotta hustle, gotta move quick, but if a rock skips across the lake with a good throw, then I'll skip across my debt with a good plan.

And, if nothing else, reading this website gives me a laugh.

What are your debt stories? Feel free to share!


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