My Student Loan Story:

I was considered, by most measures, a stellar student in High School. Despite this I lacked the maturity and cognizance to plan ahead and mostly did what others told me.  As a first generation college student I did not really know what to expect when it came to how to choose a college. When I got my offer letters I chose the college that required the least out of pocket. At this age I didn’t know what I wanted. I had a few teachers tell me to go to Rice University or USC, but both of the schools were expensive and I had not yet learned about student loans. So I settled for University of Houston with the plan of completing an Engineering Degree (again because my teachers told me to). After the first semester I came to the realization that I was ill equipped to compete with my class mates who seemed to have a better foundation in understanding the curriculum. I saw the writing on the wall and spent the next semester “finding myself.”

I met with the Honors Program counselor and spoke with her on what I should do. As you can see this was my primary problem, relying on other people for direction. She looked at my SAT scores and suggested that I would be a good fit for liberal arts. It was at this point for the first time I questioned the advice of an authority figure. I asked her what I would be able to do with that degree. She suggested that I get my PHD and teach at a college. I mentioned to her that I was interested in looking into the Business school for some options. She discouraged that saying that it would be a waste of my talent to pursue such a degree. Me, being the dumb naïve kid that I was, took her advice, and audited a few liberal arts classes. While some of the conversations in those classes were interesting, I felt like the whole class consisted of massaging egos. I felt unproductive and honestly a little intimidated by the other classmates who seemed so sure of themselves. After this experience, I left the Honors program.

It was at that point, I had a moment of clarity. A better way to approach this was to ask people who actually have the job the degree is designed for. Lo and behold the school had events in place in which there are round tables to ask actual pharmacists, CPAs, doctors, college professors, architects, counselors, and etc. details about their jobs. After listening to all of these professionals I decided that a CPA fit my personality best. I also was excited by the salary that the field commanded. It was then that I signed up for my first accounting class at a community college, since a large chunk of my scholarship was lost due to my major switch from engineering. The counselor suggested that I take out a student loan and take the accounting class at the University level. However once I started reading the details of the loan I was confused and intimidated. I also needed a cosigner to get the loan, which my parents refused to do since they were scared of debt. Their fear startled me as the counselor seemed so nonchalant about it.  I was surprised by the cost, but I had just enough money saved up from high school to pay for the class at the community college. Once I did, I got a basic introduction to accounting and all things money related. I understood now why my parents were scared of debt, and vowed to finish college without relying on loans. I was eventually able to do this, as I applied for new scholarships specific to the Business school. My first semester as a business major ended in a 4.0 GPA. My confidence was restored.

Shortly after this debacle I met my future wife through my roommate. About 1 year into the relationship I started thinking there was a good chance I would marry her. She was just finishing up her basics and starting her degree in Photography. It was at this point I began to ask her how she was paying for school. Her reply was “Oh just student loans.” Alarm bells went off and I panicked a little. I asked her if they were federally subsidized or private. She had no idea what I was talking about. She said her counselor guided her through it. Based on my past experience with my Counselor I wanted to take a closer look. Upon looking into her online account I was shocked to see that it had a variable interest rate (at the time 10%) and was already accruing interest. I could not believe that the Counselor didn’t push her towards a federally subsidized loan, or at least one with a lower interest rate. It was at that point that I sat her down and explained to her how this loan works and that getting a degree in Photography would not guarantee a job that could service her loan. The loan stood at over $36k after only 2 years of college. They lent her the lump sum of what she would need for college at the beginning so that they could start charging interest on the full balance immediately, instead of giving it to her as she needed. I was outraged by how they tricked her, and once she had understood what had happened she was too. She repaid half of the money in order to slow the rate at which the interest accrued and borrowed from then on with federally subsidized loans.

It was at that point we made some sacrifices. We moved to my parents’ house which was about 45 minutes away from the school. We stopped going out with friends. We focused on finishing school as fast as possible instead of working our way through college. We maxed out our course load per semester as the classes were cheaper after 15 hours. We also took summer courses at the community college. Most days we got to school around 6:00am and left around 9:00pm. To me it seemed the situation was, “You have debt, and your future is on fire. Get a well paying job to pay it off immediately.” Our friends would make fun of us for our sense of urgency. We would constantly be bombarded with concerns that we were not having the college experience, and that we needed to chill out.

Following our graduations I got a decent paying job and my wife got one a year later. We had decent cash flow coming in and immediately tackled my wife’s student loan which stood at about $40k. My coworkers would celebrate their new cash flow with exotic trips overseas; I was still in crisis mode. After a year and a half of immense frugal living we brought the loan down to a little less than $5k. We would be fully repaid by August 2013.

The point of me sharing this is to acknowledge the fact that college students by nature are barely adults. The only reason I avoided student loans was my parents’ reaction towards them. I recognize that not everyone can get scholarships to pay for college. My wife had 1 small scholarship, but the rest was financed with debt. As an 18 year old right out of college I didn’t really understand money at all. I think few 18 year olds actually do. I think most companies/schools know this, and they exploit this. The only solution is for 18 year olds to be taught what debt is and how it can ruin your life if you are not careful, and that college is not the place to rest easy. Remember your future is literally on fire when you borrow money.