six figures of student loans

Lessons I Learned Racking Up Over $100,000 in Student Loans

Michael Lux Blog 0 Comments

The money I spent getting my education is entirely unremarkable. Many students walk very similar paths every year. However, just because a route is common doesn’t mean it is a good idea. Looking back on my experience, it’s crazy how easy it was to get handed over $100,000. Because many students have this opportunity every year, it is worth visiting what went well and how things could have been better.

My path to six figures of student loan debt required a total of eight years of college. Along the way, I made some smart moves, some mistakes, and lucked into some wise decisions.

Getting a 4-Year Degree on a Budget

Like most college freshman, student loans, repayment plans, and debt were the least of my concerns. My student loan obsession didn’t start until the precise moment my student loan refund checks turned into student loan bills. However, I was fortunate in that my father told me I could not afford a private school. Looking back, it certainly was possible to go to a private school, but going to a public school was the best choice I could have made.

In my first year, I borrowed $6,000 in private student loans from a local bank and several thousand in federal loans. A combination of scholarships, grants covered the remainder of my tuition and housing expenses. Flipping burgers earned a few extra dollars for miscellaneous expenses.

As I progressed through school, the amount that could be borrowed through federal loans gradually increased, as did my scholarships, grants, and money earned working. Years two through four required zero private student loan borrowing.

I finished my undergraduate studies with less than $20,000 of student loan debt and minimal private loan debt. I had an engineering degree and job opportunities. The future looked bright. Instead of jumping into the workforce and paying down my debt, I decided to head off to law school. I managed to time things perfectly as I finished law school during the height of the Great Recession and the worst legal market in decades…

Was Graduate School a Smart Decision?

I thought the smart move during law school was to work during the day and go to class at night (spoiler alert: it wasn’t). Having selected an expensive private law school in Washington, D.C., I ran up student debt fast.

The good news was that for graduate students, there are no limits on federal student loan borrowing, so I didn’t incur any further private student loan debt. The bad news was that for graduate students, there are no limits on federal student loan borrowing, so my mountain of federal debt grew and grew.

As a newly minted lawyer, I entered a terrible job market, but I was fortunate enough to find work. I also came away with some very hard-earned student loan lessons.

Working, Loan Selection, and School Choices

Some things went well, and some didn’t.

Good Idea: Working during school – In college, I worked as a Resident Advisor and received free room and board in addition to a small paycheck. It was a job that I loved and an excellent financial opportunity.

Bad Idea: Working during school – In law school, I worked full-time. While this may seem like a wise idea, it required four years to complete school instead of the standard three. This meant an extra year of Washington, D.C. living expenses and more spent on tuition. It also was exhausting. The financial benefit wasn’t nearly as significant as I had hoped, and the personal cost was quite high.

Good Idea: Avoiding private loans – Private student loans can be very unforgiving. If you don’t make enough money to keep up with payments, things will get ugly fast. By sticking with federal loans, I had protections like income-driven repayment plans and student loan forgiveness.

Bad Idea: Six figures of federal loans – Even though federal loans protect borrowers from the worst student loan nightmares, it doesn’t mean that they are easy to eliminate. Most borrowers won’t ever qualify for student loan forgiveness, and while the income-driven plans are an important protection, they can also prolong repayment and how much ultimately has to be repaid.

Good Idea: Public school – As a graduate from a public college (Ohio State), I feel very strongly that my college selection had no limitation on future opportunities or job prospects. I’m a firm believer that the return on investment for a public college is much higher than what it will be for just about any private school (assuming scholarships don’t change the actual cost).

Bad Idea: Fancy expensive graduate school – Things ultimately worked out well, so it is hard to complain about my law school choice. However, rather than opting for the prestigious private school, I could have gone to another school with a full-tuition scholarship. In retrospect, that may have been a better decision. I can’t say for sure which choice would have been better, but I know borrowing all of that money comes with major risks.

Advice for Others

There is no one right way to pay for school. As someone who borrowed a ton of money to pay for my education, it is hard for me to tell others it is a mistake and not to do it. On the other hand, I know from my own experience that it can be a bad idea for many.

Perhaps the best way to look at student loans is to view them as future stress. If you only borrow a little, you will only put a little stress on your future. If you borrow a ton, know that student loans will cause some serious financial and even emotional stress. Living with this stress can pay off for some, but it breaks many others.

The Most Important Thing

Take your time and do your research when planning for how to pay for college.