Gather Little by Little

Last month I made the final payment on my federally subsidized Stafford loan.

I graduated from college with a relatively small amount of student loan debt. Due to the fact that my parents started to make me save for college from the age of eight years old, I paid cash for my first year of enrollment at a private college. After that, I financed my own education by working during school semesters and on Thanksgiving, Christmas, Spring and summer breaks. I managed to finish my undergraduate degree with only $7,000 in student loans. I then immediately enrolled in graduate school which I financed by working as a graduate assistant. Payments on the $7,000 were deferred while I was enrolled in graduate school, but I still managed to pay off $2,000 before finishing my masters. That was the spring of 2001.

During the summer, I began making payments on my remaining balance of $5,000. The interest rate at that point was approximately 8.5%, but a couple of years later, I refinanced at 3.5%. Since the interest rate was so low, I only paid the minimum payment over the past nine years and focused on other, higher interest debt. I only made the $65 payment – until last month when I realized that I only owed  a little over $200 and decided to send a bigger check and be done with it.

Some thoughts:

I will be thirty-six years old next week and I am just now paying off a relatively small college loan total. I cannot imagine how long it will take young adults who access student loan lines of credit in the neighborhood of $50, $80 or even $100 grand!

Debt is such an insidious thing, yet our culture thrusts it upon us as “okay” and “normal” and “necessary”.

I was raised to avoid debt, but even I have fallen prey to the “monthly payment” mindset.

For most of the life of the loan, the annual interest rate was only 3.5%. However, even though I often paid a little extra principle and ultimately managed to pay off the loan early, the loan still came at a total cost of close to $8,000. The reality is that I took $3,000 from my future (now present) family in order to have $5,000 in 1996.

Was it worth it? Well, I am thankful for my education and I think I received good value for my money. However, since college, I have not chosen the most high-paying profession. I do not regret spending the money on my education, but I do regret not trying a little harder to get through without any debt at all. I think I could have done it, but signing that $5,000 promissory note was just so easy at the time . . .

Now we need to tackle the remaining $10,000 balance on Mrs. Stew’s college loans. It will go faster now that we can pay down an extra $65 of principle every month.

Article by Stew

Photo by meddygarnet