Student Loans, Part 1: Mistakes, Learning, and Passing It On

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Hi, parent friends!

Weren't you just saying that you wanted to start off your Monday with anxious diarrhea? I thought you were! And that's why we're going to tackle the gut-churning subject of our Smartlings' college education costs. This, for most of us, means discussing student loans.

Look, if you have to read this post on your phone in the bathroom, that's between you, your God(s), and the children you've spawned who are likely joining you for some quality time. (Image Source)

So, grab your Immodium and a rehydrating jug of Gatorade, and let's dive in. Because it's going to happen. The Smartlings are going to grow up. Good case scenario, they're going to attend college.* And best case scenario, they're going to graduate with as little debt as we can help them avoid.

Before I start, it's only right that I tell you my student loan story. It isn't one of the nightmare stories you read about when perusing criticism our country's student loan system, and I fully acknowledge the fortuitous privilege of my marital deus ex machina for that. Mine is not the story that keeps you up at night, but it could have been. It almost was. It was only last-minute corrections and dumb luck that prevented me from being one of the 42 million Americans in a collective $1.3 trillion of non-dischargable student debt.

When I went to college back in 1996, the first of my family to attend, I knew that I would have to take out student loans to go. My father paid my tuition, about a third of the total cost of attending the in-state university into which I matriculated. My mother and I took out loans - all federally-funded, none private - to pay the rest. She made very little money and had no savings, and I had no personal savings although I had worked throughout my 4 years of high school as a babysitter and video store clerk. We just assumed that the only way I could afford to attend college was through loans, and we acted blindly on that assumption. I only applied to one university, and, although I applied for a number of scholarships, I walked away with only $250 in scholarship funds. So we took out loans for as much money as we were offered, "just in case."

I worked 2-3 jobs for most of my undergraduate education, a smart move on paper, but I saved little of my paychecks and never really worked up a budget for how much money I needed to live vs. how much I was earning through work and accruing through yearly loans. My junior year, when I was working as a legal assistant - a grown-up job with a low, but grown-up salary - I told my mom not to take out the usual parent loans that year. I guessed without actually figuring that I could make it without them, and I did without feeling a single pinch. This should have been a sign to rely more on my earnings and less on uncalculated "just in case" loans, but I so deeply assumed that loans were just normal, that everyone had them, that everyone figures out how to repay them, that I continued borrowing the maximum that the government would lend me.

By the time I graduated with my BA in English, I was $16,000 in debt regardless of having worked multiple jobs for 4 years and never having paid tuition.

I know! I know! I'm disgusted, too! (Image Source)

But, wait, readers! There are more poor choices to come!

After graduation, I depleted what small "savings"** I had by taking a month-long cross-country train trip that ended in New York, where I moved in with my eventual Smartner and began applying to PhD programs in English. Although I began the year $500 in the hole from having had to borrow rent money, only made about $10 an hour working at a children's bookstore, and was living in the most expensive city in the country, I managed get my financial act together enough to pay back my uncle, pay off a small credit card balance left over from the train trip, and apply to 10 graduate schools for a total cost of about $800, including GRE fees. Then, when I had received responses from the schools I applied to, I chose the one with both the best reputation (helpful in eventually getting a job) and the most scholarship money (tuition paid, no living stipend). I was learning slowly, but I was learning.

Unfortunately, however, I was learning imperfectly. While in graduate school I took out about $20,000 in federal loans to pay for my living expenses and worked 3 jobs again - 2 work-study positions at the undergraduate writing center and a local elementary school and 1 private tutoring gig. My mom, by then married to my stepfather and financially secure, also sent me $250 a month in assistance. And, again, I can't tell you where that money went, how much of it there was, or what I was spending it on.

I know I lived poor - I patched my clothes, didn't shop much, and walked or took public transportation. And I know I lived rich - I ate out nearly daily and flew back to New York to visit my Smartner at least once every 6 weeks. Again, I just didn't pay attention. Again, I let opportunity after opportunity to avoid accruing more debt pass unnoticed. Again, I had so normalized the student loan "requirement" that I just stopped paying attention to money in the short term.

I know! I know! Keep reading; it's about to get better. (Image Source)

But, I finally began paying attention to money in the long term. And here is where the story turns around.

During that year of my doc program, I discovered that I was just as interested, if not more, in the work I was doing teaching and tutoring elementary school students as I was in one day teaching college students. What I wanted was to be a teacher. If that came with a PhD and a side of academia, then that sounded great. I liked research and writing, too. But the cost and risk of such a career was too high for me to stomach. It was too possible - too likely, really - given the fierce competition for academic jobs in the humanities that I would wind up with roughly $20,000 x 8 years of coursework and dissertating = HOLYSHIT $160,000*** in loans and only be able to cobble together adjunct work for $20,000 - $30,000 a year. And, given that I had another career path available as a school teacher rather than a professor that I was equally passionate about, I bailed with a master's degree after a year of graduate school.

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Here's where I finally started to get smart and very, very lucky. I took another year off to apply to teaching programs and found a real, big-kid, decently compensated, could-have-stayed-and-made-a-career-of-it job. And this time, people, I knew how much was coming in and how much was going out. Realizing how close I had come to permanent financial damage, I started teaching myself the basics of personal finance. I packed my lunch most days, drank office coffee, put together a decent professional wardrobe from consignment shops, and ate dinner at home. I finally began practicing the skills I should have been developing in my teens.

I also moved in with my Smartner then, and we got engaged. Sure, he came with around $100,000 of his own student loans from law school. He also came with a hard-won and richly deserved positive career trajectory and decent salary. Together we lived cheaply, worked hard, and formed good habits. We paid for our modest wedding in cash and chose to sink most of the gift money we received into budding IRA's. And when I did go back to school for a second master's in teaching, we paid cash for that, too. It wasn't easy, even on my Smartner's generous salary, but it was worth it. It was time to start working on digging out of our student loan hole, not to dig ourselves further in.

Once we were both working and out of our loan pay-back grace periods, we dedicated ourselves to aggressively paying off our cumulative $130,000 student loan debt. Every windfall we received, from inheritances to bonuses, went directly toward paying it off. We continued to live cheaply even given my Smartner's fancy lawyer salary, making do with one used, cash-bought Hyundai Elantra for me to commute to work in (he walked downtown to his office, much to the bemusement of his colleagues), an apartment in a sketchy neighborhood, sack lunches, and frugal entertainment. It is because of our hard work, strategic planning and our luck - my Smartner's practical career ambition mitigated the mistakes of my loftier goals - that we managed to find and keep good jobs even during the economic downturns of the Great Recession. And this heady mix of hard work and good luck meant that we were able to pay off our student loans entirely before we turned 30.

Yes, we clicked "submit" on the final repayment button together with our married hands. And, yes, then we did dance and frolic and toast our 0 net worth with cheap prosecco.

So I was dumb - so dumb. And I got lucky - so lucky. Yes, we certainly worked hard during all of this time, but I have to acknowledge how much plain good fortune played in our ability to pay off the enormous debt we accrued. My Smartner had been offered his post-JD job after his second year of law school, which is generally standard practice. And then, right before his third year began, 9/11 happened. So, while the markets tumbled and the recession began, he had a job already in place. It didn't affect him or his ultimate career trajectory. Same with the 2008 Great Recession. He had already established himself well in his place of business by December of 2007 when it all hit the fan, and so his career was never in danger.

And that's just his good luck. Mine is even more precarious because it relies on loving someone, surely the worst economic bet a person could make. I am lucky, given how poorly I managed my youthful finances, to be in a good, solid, loving, respectful, satisfying relationship with a person who decided to choose a career path that paid well. I've written before about how, as a feminist, this horrifies me. But it's true. Had I not quit graduate school when I did, and had I not married my Smartner, my story could very easily be one of those that keeps you up at night. One with 6 figures of undischargable, possibly permanent, debt and a small, unreliable salary. One with delayed (or denied) partnership, child-bearing, retiring, or happiness. One wherein a mortgaged future led to no future.

It would be so satisfying to congratulate myself on my great self-education and financial learning, and to attribute my current solvency to my own scrappiness. But that would be a huge damn lie. I'll repeat it for good measure: I was dumb, and the only reason I'm at all financially stable now is because I got lucky. And I would like for my Smartlings - my daughters - to be neither as dumb, nor as reliant upon luck as I have been.

I intend for them to learn from my mistakes, whether they want to or not. I am working hard to raise financially literate kids, and I will continue to do so as they get older and their finances become more complicated. My kids will go to college with more money skills under their belts and more guidance in saving, spending, and planning for the future.

And that's what I'll tackle in Part 2 of this series. For now, let's just sit back and bask in the glow of a financial doofus gone good. It took a lot of work, embarrassment, and regret to learn the things I've learned. Let's bask in the warm glow of Will Riker's approbation...

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... and dance to a happy tune. Until next week, when I talk about how we're strategizing college funding for the Smartlings!

*Not only case scenario. Listen, I come from a long line of blue- and pink-collar workers, and I know that college isn't the best choice for everyone. I also know that plumbers and other skilled workers in the trades make more money than I ever will as a college-educated English teacher. But here I'm talking about college, because here I'm talking about me, so hold on to your britches and wait for a future piece on whether college is always the best decision for your Smartlings.

**Can we even call it "savings" if it was borrowed? Discuss.

***Yes, I know that this figure doesn't include the original $16,000 from undergrad, but it's a decent rough estimate given that I'd likely be taking out fewer grad school loans as the degree progressed.