Lessons learned from making my first student loan payment

We see a lot of talk on the news about student loans which made me wonder.   

How many people truly have conversations with young people about what it means when you have to start paying back your student loans? 

No one had that conversation with me and let me tell you why it’s important to have that conversation if you have not had it with a young person or anyone who is just starting to pay back their student loans.

When I started my first job out of college, I had one student loan that was currently outstanding from my first year and a half of going to a private school. Getting the student loan wasn’t that hard because it was cosigned with my grandmother. I was 17 years old at the time and all I knew was that this loan was necessary in order for me to be able to pay for my college.

What I didn’t realize was what impact it would have on me when it came time for me to repay the loan. 

When I started my first job back in 1992, I was working for the state of Florida and my salary was roughly $18,000 a year. At the time, I was getting paid monthly not biweekly so I was getting about $1200 a month. 

Now when you start subtracting things this is what I was looking like. 

I was paying: 

$400 a month for rent. 

$200 a month for a car note. 

$100 a month for insurance. 

$300 for things like utilities water and cable as well as my phone bill. 

Add all of that up and you have about $1000 in monthly expenses.

So once all those things were taken care of, I had roughly $200 a month left to use to take care of gas as well as take care of any food that I intended to eat.

So imagine trying to survive on $200 a month. As a fresh out of college kid, it wasn’t that hard.   The only places I typically went to was my job so so I spent about $80 a month on gas. Which left me $120 to take care of any food that I needed to eat.  Things were lean but for the most part, I was able to handle it.

However, within a few months after starting my job, I got notification from my student loan provider that it was time for me to start paying back my student loans. Now keep in mind this, no one ever explained to me the concept of re-paying back my student loans so when I first got this letter, it really shook me because I didn’t realize this was an expense I had to pay.  

Back then, my student loan repayment was roughly about 100 bucks per month. Now on its face, that’s not a lot but remember I only had $120 left after taking care of paying for expenses. So now I’m in the situation where in order for me to pay the student loan I would have to basically give them the bulk of the discretionary money left and then I would have to figure out how I was going to survive on $20 per month.

Fortunately, a lot of these loan providers will give you a bunch of different options to assist you. Things like forbearance and deferment which are designed to work with the fact that you may not be making as much money needed to pay those loans off. 

At the time, based on my finances, these options were golden.

However, I never understood that a lot of these things would result in either me paying more interest on the loan which would cause me to have to owe more money overtime or I was delaying how long will it take me to pay this thing off. 

All I know was that in my mind I was a struggling college graduate who just got his first job and all I could see was having to give the bulk of whatever discretionary money I have left to a company in order to pay back this loan.      

Now I share all these different stories not as an attempt to slam student loan providers. 

I say all this to let people know how important it is to take the time to speak to young people when they get a student loan and take the time to educate them as to what may happen when it comes time to pay that loan back. 

I was woefully unprepared for what it meant to have to pay back my student loan and in the end, I made a lot of decisions that helped me at the moment but hurt me over the long haul of having to pay the loan back. 

Education is becoming more and more expensive so it’s important that if any young people are planning on using student loans as a means to finance their education, make sure they are educated about what it means to pay those loans back and how they need to be strategic in doing so so that they do not end up causing themselves more trauma than they realize.