How We Got Here

(Oops, this turned out to be a lot longer than I intended. I’m sorry if your retinas begin to hurt from staring at the computer screen for so long.)

I started attending Southwestern College (now Arizona Christian University) right after high school. Since it is a private, Christian college tuition is a good amount more than your regular state college, or at least it used to be. My original plan was to attend a community college for the first 2 years then transfer over to Southwestern so I could save some money. However, after talking with my parents I decided to attend all 4 years at Southwestern as they agreed to help cover a majority of that extra tuition. I don’t want to say that it was a mistake doing what I did, but taking all of my classes at Southwestern and not knowing how financial aid worked is the reason for the debt Stephanie and I are now trying to pay off.

I want to share with you the reason that I ended up with $48K in student loans and my parents also took out around that much to help pay for my schooling even though my degree actually cost about $45K in tuition . It’s a story that so many students can tell and I’m hoping it will be a warning to people who take out any kind of loan without fully understanding how it works.

Let’s take a trip back to the summer of 2004. I just graduated from high school and was trying to figure out the best way to complete my degree. As I said, I planned on attending a community college for the first 2 years and then transfer those credits over to Southwestern to save money. One night my parents sat me down and told me it would be a better decision to attend Southwestern for all my credits. They talked about the benefit in taking all my classes there as I would have a better experience. I told them that it would cost too much to do that. They countered by telling me they would help pay for those extra 2 years on top of helping with the entire cost of tuition. I thought and prayed about this and decided it would be in my best interest to attend Southwester all 4 years. I figured I would end up with about $20-$25K in student loans, at the most once, I graduated. I had a decent paying job for an 18 year old and thought I was good with money so I wasn’t too worried about it.

Here is a quick lesson on how financial aid works in college.  Let’s say your school’s tuition is $5,000 per semester and in order to pay that amount you decide to apply for government funded financial aid. You fill out your FAFSA and because your parents make too much money, the only thing you qualify for are student loans. You think this isn’t too big of a deal because people are always saying, “Student loans are good debt!” and that the extra money you make from have a degree more than makes up for the debt you incur. The only problem is that you only qualify for $2,500 in student loans (for the semester) so you will need to ask your parents for some help. Well, they don’t have that cash lying around so they apply for the Parental Plus Loan. They get approved and you now have enough money to pay for school! Yay!

So what happens now? Well, your school gets all this paperwork into their systems and takes all that money and pays for your tuition. However, when your parents applied for the Plus Loan they were approved for $4,000 for that first semester. The school takes your $2,500 and your parents $4,000 to pay the tuition which, remember, costs $5,000. But wait, you and your parents are giving them $6,500 for tuition, but it only costs $5,000! What do they do with the rest of it!? Good question. They write you a check for the difference of $1,500. They put it in your mailbox and you get to take it home! 

Now, most 18 year old kids don’t bother asking why they got a check, they just know they got one. Some kids will spend this on living expenses, but most will spend it without knowing what it was for.  They don’t realize that the $1,500 they just got is actually loan money.

If someone had told me those last 2 paragraphs before I started college, it would have saved me a ton of frustration and money. But nobody did. Nobody sat me down and explained what was happening. I was an 18 year old kid. I didn’t know how that stuff worked.

For me, I didn’t just blow that check I got. I gave it to my parents. Every semester I was in school I gave that check to my parents because I had no idea what it was for, but neither did my parents. What I should have done was take that check and put it towards the loan I just took out to lower the balance. I didn’t do that. Every year I qualified for another $1,000 in student loans, which of course I had no idea about.

When I reached the spring of 2009, I go a statement in the mail from my loan company. It said that, with interest, I owed over $31K in student loans. I was shocked, to say the least. I thought this was some kind of mistake because I wasn’t even done with my degree yet! I started to do some research and found out what happened. I was pissed. I couldn’t believe I was taking out this debt and nobody ever told me or explained it to me.

I decided to take a year off of school as I didn’t want to get into more debt at the time. However, I knew I would have to go back and get into even more debt to finish my degree.

I finished my education in the spring of 2011. Part of the reason I didn’t finish on time was because I was terrified off paying off these loans. Because of interest that had accrued over those 7 years, I owed over $48K in loans. My graduation day wasn’t all that exciting because I knew that I would now have to begin payment on these loans.

See, people view student loans as “good debt”, but the only people that say that don’t have any student loan debt. The interest rates are double what a house loan would be except you can’t sell your degree in 25 years. You are stuck with this debt. I understand some people have to go into debt to pay for college, but they need to know exactly what they are doing and have some plan for paying it off.

In my opinion, going into debt to pay for your degree as an 18 year old is stupid. I hate my debt. I hate that I didn’t pay more attention to what I was doing and how much money I was borrowing. Student loans are never a good idea. Never. There is no such thing as “good debt”. Is it a necessary evil sometimes? Yes. But it is never good.

And that brings us to today. I am now married and have a bunch of debt to pay off. This is what happens when you don't pay attention. The same thing happens to people when they try to buy a house or a car. They want what they want and don't read the fine print. We are a society of viewing debt as "good" because it allows us to have what we want before we can afford it. If I showed more patience and responsibility as an 18 year old, who knows how much money I would have saved. 

So, that is the story of my debt. Pretty sad, huh? Don't be like me. Pay for things with cash. Only buy stuff if you have the money on hand. Avoid debt at all costs. So what if you have to wait an extra few years to get what you want. Isn't that better then spending the next 25 years making payments???

- Brian