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My Biggest Student Loan Regrets

11 Jan

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Have you ever done something and then looked back and said to yourself, “Gosh, I remember my mom telling me not to do that a long time ago!” We have all gotten advice over the years from those much older and wiser than us, but we often choose to ignore the advice. Maybe we assumed that we knew better, or maybe we didn’t want to worry about the future. Whatever the reason, at some point in your older years you experience something that makes you look back and wonder what you were thinking. Today I experienced one of those “Gosh I probably shouldn’t have done that” moments when I was thinking about all of the debt that I am in.

I’ll give you a little glimpse into my debt so you can better understand what I am talking about. When I was in college I wanted to go study abroad, so I asked my parents. They agreed to let me go on the condition that I take out a loan to pay for it. That loan was the beginning of my debt, but I would never take that experience back (and I suggest that all college students study somewhere outside of the US). In my senior year of college I again decided that I wanted to go on a 3 week trip to Ghana, Africa with one of my political science classes (Yes, that was when I was liberal at heart). So again I took out another loan. While I am happy that I had the experiences that I did, I wonder if I would still take that trip if I had to make that decision right now.

Putting trips aside, I then decided to go into MASSIVE debt when I made the decision to attend law school. For those of you who don’t know how expensive law school is, it is around $30,000 a year for tuition only (not including books, eating, and living expenses). Sure, they allow you to take out additional loans for those “living” expenses, and most everyone does unless they are fortunate enough to be living at home with Ma and Pa or have some extra cash saved up in the bank. So I would say that law school for those not living at home is at least $40,000 a year. For those of you who don’t know this, law school is 3 years. So saying that you went into a minimum of $40,000 debt a year, by the time you are out of law school you are $120,000 in debt. YIKES! AND just when you think its all over they hit you with some more expenses – bar exam fees. When you get out of law school you need to take the bar exam (otherwise your law degree is pretty useless). The bar exam in and of itself is REALLY expensive, and you have ABSOLUTELY no time to work or do anything but study (at least I didn’t) so again, you need to take a loan out to pay for living expenses, unless of course you are one of those fortunate souls that has money saved up in the bank. So on top of your student loan debt, which can at least be consolidated together with one consistent interest rate, this “bar” loan has massive interest and comes in large amounts, i.e. $15,000.

Now, while the above kind of explains my situation, the numbers of the debt are not exactly accurate. I was fortunate enough to do well enough in law school to get a scholarship for my 2nd and 3rd years, so all I really paid for during those years were my living expenses. BUT I do have a husband who wasn’t so fortunate, and whose debt I have inherited on top of mine (unless of course we get divorced, which we WONT – Always remember that debt stays with the debtor, so when someone dies you are not responsible for their debt).

Sometimes when it hits me that I have thirty more years of loan payments I click on student loan articles in the news. I have read a bunch of news articles on the whole 99% thing from students with debt and no job. There is a lot of talk about allowing student loan debt to be discharged in bankruptcy (which it is currently not) and there is talk of pushing the federal government to forgive all student loans (which I would just LOVE). While this talk is interesting, neither option will likely benefit me anytime soon. After a little over one year of working my husband and I have just barely scraped the surface of our 30 year pay off plan.

So today while I was looking at our bank account I remembered an instance when I was in law school and I was debating whether I should buy a new pair of Uggs or not. As I was staring at the Uggs my then-boyfriend who is now my husband said, “You are on scholarship, just buy them!” Back then we were carefree students spending each day studying and an occasional Friday drinking and eating with money that we referred to as “Play Money.” This Play Money was our student loan money that we received each semester and which occupied our bank account as if it were real money. So when my husband told me to just buy them he was essentially telling me that I had the money in my account, I was not going into $30,000 debt that year with tuition, so why not? To those of you who have never taken out loans you may be thinking that this method of thinking makes absolutely no sense, and I don’t blame you. But in the moment, we felt like we were ok. We didn’t think about the outrageous monthly payments we were going to be making, and I bet you that my husband never thought that he would be paying for those Uggs that I bought that day (HA!).

So, to get to the point, looking back at the whole loan experience I have some major regrets about the loans that I have taken out and the way that I have spent the money I received. Here is a short list of DOs and DONTs that I would suggest those of you contemplating taking out loans consider:

  1. DO NOT spend loan money as if it were your parent’s credit card;
  2. DO use money that you earn at other jobs, such as  Summer Associate positions (which can be in the thousands if you do well in law school) to pay off some of your loans;
  3. DO NOT take out the maximum for living expenses every semester while in school UNLESS you absolutely need to;
  4. DO try to save some of your loan money so that you don’t have to take out a Bar Loan after law school;
  5. DO try to get a scholarship of ANY kind!

While loans are a necessary evil for those of you wanting to go to school, make sure you are smart about them. Check out all of the financial aid options, the available scholarships, and the like. AND MOST IMPORTANTLY, don’t spend your loan money as if it were “real” bona fide money – remember that you WILL have to pay it back some day.