Guest Post: My Newfound Perspective on Student Loans

Michael Lux Blog, Guest Post, Student Loans 23 Comments

When I was studying in optometry school, student loans were the last thing on my mind. I had much more important things to think about, such as studying. I also worried about which sub would I get from Subway for dinner that night. And would I use the piece of crap laundry machines in the basement of my apartment building or just wait to bring my laundry to my parents’ house that weekend. Truly life altering decisions.

I knew my student loan debt would be pretty high when I graduated. I couldn’t really put a number on it, but I had a vague sense that it would be in the six digits. Maybe. I wasn’t too worried as I thought of student loans as being just another regular monthly bill to take care of when I start working. Most professional students feel that when they start working and making the big money, the loan payments will take care of themselves. While most medical professionals and lawyers do make a good income, the student loan hit after graduation can still be a little bit of a shock. Luckily there is a “grace” period to get ready for your payments, which equates to the banks saying, “I am going to repeatedly punch you in the face for the next 20 years. I’m just giving you a few months to get ready.”

While student loans were not on the forefront of my mind during school, I was slightly more cognizant of their effects than some of my classmates. While many people in graduate school receive those magical award letters and sign them without even looking at them, I knew that taking some time to figure out how much money I really needed would save me a lot in the long run. And it did. While I did end up graduating optometry school with about $160,000 in debt, it could have easily reached over $200,000 if I just took out the max amount of student loans.

When I finally got out of school and looked at all of my loans along with their interest rates, it finally began to sink in that these loans were going to be with me for the long haul. After talking to American Education Services and being gleefully told I was in a 25 year re-payment plan, I knew something had to be done. The thought of paying for student loans for 25 years (I was 25 years old at the time!) was a lot to bear, so I decided to buckle down and read up on all I could about student loans, interest rates and debt in general.

After reading various personal finance books and blogs, I began to develop an aversion to debt. This aversion is something I wish I had during school… maybe I would have taken even less student loan aid. In any case, these were the loans I had to pay and I decided I was going to make a plan to attack them. I decided to pay the minimum payments on all of the loans, and put everything else I could spare to the loan with the highest interest rate at the time. This method is known as the Avalanche method of debt re-payment, and through playing various online calculators, I found I should be able to pay off my loans in 10 years of graduating instead of 25. So far I’m right on track, and hopefully through pay raises and working a little extra here and there, I can get them paid off even earlier.

Looking back, the change in how I look at student loans was profound. While in school I just had a vague notion that I had to pay them back and that they would just be a regular monthly payment I would have to deal with. But after reading up and learning about the effect that debt can have on your finances, I look at student loans as a type of emergency and will try to pay them off as fast as possible. Every student is looking forward to that day when they make their final student loan payment. With my newfound perspective on debt, that day will hopefully be coming a LOT sooner than expected.

About the Author

Syed is a blogger who chronicles his journey towards a positive net worth over at The Broke Professional.  He tackles subjects ranging from investing to credit cards and student loans.

 

  • Hassan

    Great perspective. It’s something everyone needs to think about.

    • TheBrokeProfessional

      Thanks for the comment. Yup and the earlier you start thinking about it, the better!

  • Good for you for tackling that student loan debt. I had close to six figure student loan debt from law school and undergrad. I’m glad I worked while going to school so I didn’t rack up as much debt and I didn’t spend my student loan money frivolously like some of my classmates. I’m on the 25 year payment plan but I’m lucky that I consolidated and have a very low rate.

    • TheBrokeProfessional

      Yeah not taking a lot of loans while in school is key. The low rate is great good luck on paying them off quickly!

  • Nicole

    It’s tough trying to decide how to tackle these student loans. I like hearing about how other people are dealing with their school loans because it seems like everyone had a different method to dealing with them and every idea seems just as reasonable.

    • TheBrokeProfessional

      You’re right everyone has a different situation. They may be facing other more urgent costs. Just have to do the best you can. Thanks for the comment.

  • Sarah Raza

    Thanks for the perspective! I received approximately 50K in grants/scholarships to attend graduate school and I worked evenings to pay my bills. I’m still shocked by how much I owe, and my husband and I are making it a priority to get those student debts off our plates. I would hate to pay off all my loans and then have to send my daughter to college and worry about paying off her loans!

    • TheBrokeProfessional

      Great job making it a priority. Hopefully by the time your daughter goes to school tuition won’t be in the 6 digits!

  • squirrelers

    I think you’re making a smart move by adopting a sense of urgency with repaying those loans. It all seems so easy at first, but then it’s a different story later when people have to repay. Glad you’re aggressive about it!

    • TheBrokeProfessional

      I appreciate the encouragement. Just thinking to that day when the last payment is made is putting a smile in my face!

  • Student Debt Survivor

    Good for you for saying “no” to 25 years of paying student loans. When I learned how long I’d have to pay on mine, I said, “no way!” too. Just imagine how much interest you’ll save by cutting off 15 years (or more!).

    • TheBrokeProfessional

      Short answer…a lot! Thanks and good job taking a stand against your 25 year sentence as well.

  • Sophia

    Very informative! Makes paying off student loans a little less depressing knowing that one can have more control over how soon they can pay them off. Can’t wait for that very last student loan payment!!

    • TheBrokeProfessional

      Most definitely we have control but the banks don’t want us to know that. That last payment will definitely be sweet!

  • kamran

    What I did personally to deal with tuition so I didn’t have to take interest based loans was work a lot during school and borrow money from siblings/friends. Other friends of mine even took on reduced class load to cut their tuition. The muslim community needs to start some sort of system where we can send our kids to specialized schools and not have to deal with the accompanying interest.

    • TheBrokeProfessional

      Definitely a good option if you have a strong network to pull this off. Unfortunately not everyone is able to call on family/friends in this capacity, so taking out a student is an inevitability for some.

  • Daisy

    Good advice! I am working on paying off loans from undergrad while in graduate school so the interest I have to pay doesn’t get too high (since I didn’t pay the loans at all during undergrad I had a lot of interest) Is there a particular online loan repayment calculator that you recommend?

    • TheBrokeProfessional

      Yeah there is a great one at unbury.me (that’s the website) It also shows you how much you can save by paying off the highest interest loan first.

  • Jeff

    Interesting article! You don’t hear too many people talk about student loans these days. It’s nice to read something on it. Tell him to keep up the good writing!

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