My financial journey started out with my bank empty and my ambition full. I was determined to go to college, start a great career, makes lots of money, and have a fulfilling life. I never hoped to be extremely wealthy, but I wanted to have enough to be able to buy nice clothes, travel, have a nice house, and of course provide well for my children.
Then my financial aid packages arrived…
“The best way to pay for college is to lower the initial price tag.”
Mrs. FireStoker
1. Understand the DANGER of the Financial Aid Office
Anyone who has ever filed for financial aid knows that government student loans do not cover all your expenses. Your family is expected to contribute a certain percentage out of their own pockets to pay for your college education. Now I had worked really hard throughout high school and had been accepted into some amazing schools in Boston. However, the tuition of these schools was over 40K!! I did receive scholarships of 20K from each of these schools – but they were to be spread out over the course of four years. The scholarship sounded wonderful until you realize that it’s actually only 5K per year leaving me with a whopping 35K to pay each year!
My Financial Aid package
My financial aid package from the government included a total of 20K of mostly unsubsidized loans and some subsidized loans. This is not financial aid! These are loans! You will have to start paying them back within six months of graduating! If you don’t know the difference between a subsidized and unsubsidized loan I will write about this another time) Even if I had taken out the loans that would have still left me with another 15K per year that my family was expected to pay out of their own pocket. They did not have this kind of money so I was given information on private loans to cover the gap.
Here’s the kicker. The financial aid officer at the school was suggesting that everyone took out these loans and that it was completely normal. I feel bad for the enormous amount of financially uneducated young people who signed for these loans not having the slightest clue as to what that meant.
I REFUSED to take out private loans
My parents had made it clear that I was not going to get any funding for my education. So in addition to taking out 20k of unsubsidized loans I would’ve had to take on an additional 15K of private loans every year. (Why Private loans are a bad Idea is another post for another time) The idea of taking out 35K in loans every year for four year for a total of 140K of student loan debt for an undergraduate degree seemed pretty extreme.
I don’t know about you, but I found this completely unfair. Why do the financial decisions of my parents determine how financially healthy the loans choices available to me will be for my education. After all it wasn’t my parents trying to go to college. It wasn’t they who wanted an education. In the eyes of my parents I was 18 year old adult and if I wanted to go to school then I had to pay for it. Why should they pay for MY education? Why should I be punished for the horrible financial decisions of my parents?
The first way to pay off your student loans is by refusing to take out a loan in the first place!!
Do NOT let the financial aid counselor tell you what is normal when it comes to YOUR finances. Their job is to get you funding for your education whether or not it means you will be in debt for the rest of your life or not. This loan “normalcy” is what is causing many people to have the problems they have now with student debt. People are so strapped to paying their loans that they can’t buy houses, take vacations, or start a family without going into major credit card debt.
2. I started with COMMUNITY COLLEGE
I decided that even though getting accepted to these school was an incredible accomplishment for me, I simply couldn’t afford to go to those colleges. Reluctantly, I decided to go to a community college, but it was actually a HUGE blessing. One of the many perks of the community college is that when I graduated, I was automatically accepted into other schools the area through a direct transfer program. This is fairly common practice and if you are considering going to a community college and transferring afterwards. I highly recommend asking about a direct transfer program.
I didn’t realize how great the community college was until after I graduated and transferred into the state school. I found the quality of my education at the community college was superior to the state school in every way. The classes were smaller. The professors cared more about your education because they were less concerned about their research. I was also surrounded by hard working individuals who also had families, jobs, and other responsibilities in addition to their education. The professors at the community college understood that and the class schedule was also fairly flexible to accommodate the needs of these “non-traditional” students.
I LIVED at HOME
While taking classes at the community college you can live at home! This doesn’t sound glamorous when you leave high school, but do you want to be one of those people that go back to live with their parents after graduating college because you have so much debt you can’t afford to pay your rent?!? I didn’t think so.
3. I worked FULL TIME while in school.
I was offered a small loan at the community college, but it was negligible. The tuition was so low that if I worked full time and lived at home I could pay for the tuition out of my own pocket. I got a job working as a residential assistant in a group home helping people with disabilities. The shifts were from 3PM-11PM and I took classes during the day. The minimum wage at the time was $8/hour and I got $10/hour so I thought that was a great gig. They offered me a low cost health insurance which I gladly accepted as well as plenty of opportunity for overtime. I did all this while taking rigorous scientific courses.
When I transferred to the state school, I continued to work full time, but I was forced to work overnight shifts because the class schedule made it impossible to work any other type of day time schedule. Also, a lot of my professors assigned group work which made it impossible to meet anyone if I was working around the class schedule during the day. I worked four 8-10 hour overnight shifts during the week and picked up overtime on weekends whenever possible. This worked out for me to the effect that I really didn’t have time to be going out on the weekends. Since I was too busy working and studying, I wasn’t off spending my money on beer and pizza. With the earnings from my job I was able to pay for all my textbooks, school supplies, food, rent, gas, and make my car payment.
NEVER take out loans for your living expenses!
The state school was an hour away from my home and made it IMPOSSIBLE to work, go to class, and sleep. Room and board at the college was more expensive than it would have been to rent an entire apartment by myself. Still the rent near the school was very high due to all the colleges in the area and the number of students that needed housing. I know a lot of people that took on additional private loans to PAY RENT!! There was no way I was going to do this.
I used Craigslist to find an illegal sublet bedroom rental. A couple decided to convert the living room of a small one bedroom apartment into a second bedroom to help cover the cost of their rent. They did this using furniture and a curtain as a wall. It’s college after all and it wasn’t like I was going to be spending too much time there. If you do find an apartment to rent near school try your best to share the cost with as many people as possible. Everyone else is in the same boat.
Know Your Options When It Comes to Textbooks
I bought most of my textbooks used or I borrowed them from the library when available. Sometimes I was able to contact the professor before classes started and ask permission to use the previous edition of the textbooks, which often cost considerably less. Still a lot of classes required the purchase of a software at full price but often had discounted digital textbook.
Skip the Campus Meal Plan
Since I lived off campus I wasn’t required to buy a meal plan, but I was offered a commuter plan that cost less and provided fewer meals. When I did the math on the off campus meal plan it came out to be around $12/meal swipe. This means that even if my lunch was only $8 I would be paying one whole swipe or $12 for the $8 meal. If a meal cost $14 that would be two meal swipes bringing the cost up to $22 for the meal. You don’t ever get your change back, but you ARE allowed to over pay.
For my meals, I bought most of my groceries and cooked at home when I had time. However, since time is more of a luxury when your in college and working full-time, I really didn’t have much time to be shopping and cooking. I figured if I ever ate on campus I should just pay out of my own pocket so I knew I was only paying for what I was buying. If I was trying to pay that much for every meal I ate I would eat at Chili’s every day. I tried my best to eat off campus. The cheapest meal on campus was around $8-$10 and I could fill my belly at taco bell for less than $5 bucks. This is the reality of the fast college diet people. There’s no time or energy left for shopping and food preparation.
4. Take the unsubsidized loans first and the subsidized ones if needed.
In some cases, you may be offered more loans than you actually need. In my situation, even after taking out both the subsidized and unsubsidized loans, I still had more to pay out of my pocket. I used my savings from the overtime I worked in the summer to pay for the gap between the amount the loans covered and what remained of my school balance. This gap was much smaller at the state school than it would have been at a private school.
There were some students I knew who actually got a check at the end of the year since they “overpaid” with their loans. The smart thing to do would be to A. Use this money to pay back the loans they took out B. use it for the following school year. C If it is a subsidized loan you could maybe use it to buy a small used car. D Use it for a summer study abroad program. What did most students do? They used it to go on vacation and when they graduated they had to pay years of interest for their spring break vacation in Mexico.
The Financial Results…
After all this work, when I finally graduated, I still had about $30K in government backed student loan debt. I had also taken on a car loan. I couldn’t afford to buy a used car out of pocket so I had bought a reliable used car from a dealership. Since I didn’t have any credit card debt, this brought my total debt up to about 38K right out of college.
It took four months for me to find and start my first “real” job post college. If you want to find out how I paid off all my debt, while still saving for retirement, buying a house and paying for our wedding. You can read my next post on How to Pay Down Your Debt.