Game Of Loans, Interest Is Coming

Game of thrones female sitting on the iron throne in a graduation cap and gown

Congratulations class of 2019!  This is so exciting!  Don’t you just feel the exhilaration, like “Yasssssss, I can actually have a life now!”   Celebration time…until you walk to the mail box and get that student loan bill…UGH, buzz kill!  So whats the deal?  Are degrees even worth getting anymore?  Fed surveys show that the median pay for bachelor degree holders is now lower than it was in the 90’s and more people (especially millennial’s and gen Z’s) are questioning if there is any real value to college.  In this post I will share my experience being an adult who paid for college out of pocket and why I made the choice to continue my education.


The Long Road

The total amount of time it took me to graduate with a bachelors degree in business was exactly 7 years.  It should have only taken me 5 years but I took an extra year off because of an unexpected pregnancy.  When I decided to start being serious about taking classes, I was already into my career.  My decision to pursue my degree had nothing to do with gaining advancement in my career at the time.  I honestly just felt that I wanted to finish something that I had started.  So in-between my work schedule I would take two classes a semester and I was very happy with this slow and steady pace.  Fortunately for me, I was employed and I was attending a community college for my associates degree so I was able to pay cash for those classes and not hold any debt.  This was a great plan for me up until 2015.  Out of nowhere my life had changed so quickly and I found myself questioning my career plan.  I didn’t really have a plan on how I would sustain myself for the next 20 years.  You know having a baby puts everything into perspective.   I had a newborn and I realized very quickly that my slow and steady pace needed to jump into an accelerated overdrive!  Immediately I started taking four classes a semester and I did summer sessions (one & two) to try to make up for the lost time and make sure I finished my schooling so I could spend time with my daughter before she went off to kindergarten.  Trust me, the time goes so fast!  During this time I took some fed money, some state money and although the interest rate was quite low in comparison, the amount of tuition you pay for a private institution is just crippling.  But you think in your mind and dreams that its no problem because it will all pay off in the end; This is what I told myself and so far I haven’t been wrong.

Again, My situation is very different from a lot of the students I was going to school with.   I had a job, a career in fact.  A pretty solid income and experience in my field if I needed to make a break, so overall I felt pretty secure.  But what about the young kids with no experience who graduated along side me?  What would the future hold for them?

Buyer Beware

So should you get a degree or do you not need this piece of parchment paper to prove you are a successful individual?  Historically, Incomes tend to trend upward with the advancement in degrees, especially in other countries.  We should also keep in mind that other countries have free or very low cost university fees so when you compare,  the reward is far greater because there is less out of pocket cost.  In the US however, education cost continues to rise but the return on that investment seems to be going in reverse.  According to Bloomberg Business Review, a higher education is no longer a differentiating factor.  With so many people completing college degrees, there is increased competition so you basically need a bachelors degree to work at any job, even your local fast food chain.  If you really want to stand out then you would need to have a Masters or Doctorate degree but then you are overqualified and back to working at your local Stop and Shop.  Don’t get all depressed though because the data shows us that people who have degrees still fare better than those who don’t…so there’s that!  And of course as suspected, the sentiment varies with age!  It seems that those millennial are really not tryna hear anything that has to do with giving up the majority of their time to work an office job or anything else that would require a commitment on their behalf.  This group specifically would rather take virtual jobs or run their own businesses which to some degree does not require that much schooling.  All in all,  parents are now considering gap years for students so they can take the time to really understand what it is they want to do and don’t waste that first two years paying for an indecisive student.  In the end, it is a personal decision for you if you want to take on the cost for higher education.  Me personally, I am still not finished with my learning.  I will most likely never finish because I like learning.  This doesn’t mean that you have to pay a school for that learning.  Everyone is different but everyone should do a cost-reward analysis.  Only do what works for you and my advice is to think long and hard about what you want to do for the long term, then work towards that goal.  Have a plan because people who don’t plan, spend more money

Pay Like You Weigh

I have to remind you that this is only my opinion based off my experience and my point of view.  I hate debt.  I prefer to not owe anyone.  Student loans can bind you for life so I wanted to briefly share some tips I think will help with any loan, not just student debt.

  1.  Pay weekly (or every-time you get a paycheck), most student loans accrue interest daily.  Pay at least the minimum each week and you will have a head start on your balances.
  2. Refinance the balances.  I always look for 0% interest rates and transfer the debt until the balance is paid.  Be careful to understand the transfer fee’s and the rate after the promotion expires.  If you don’t pay attention to this, you could end up paying more in the long run.
  3.  If you have a grace period on your loan, disregard that.  Start paying your loan back immediately before the interest accrues.  Stay ahead of the curve and you wont feel overwhelmed later.
  4.  Sacrifice and focus on paying off your debt in a short period of time.  Apps like Mint.com are awesome for financial planning.  I use this app for everything.  It even helps you allocate money to vacations which is a favorite for me.
  5.  Just be responsible.  Pay attention to detail and read everything…aloud.

 

xoxo

Here is a clip from Episode 6 from Win Philly.  Great discussion about degrees.  Enjoy

 

Peace and Love

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