Building on last week’s theme of student debt, I wanted to give my perspective…
I graduated in 1997 from the Virginia-Maryland Regional College of Veterinary Medicine and brought out with me $68,000 in student loans to re-pay. I thought that was a lot — I hear the numbers now and it is staggering! However, I also only made a little over $30,000 upon graduation in a small animal, feline-exclusive, hospital. So the debt has doubled as has the new graduate salary, and the gap just gets bigger and bigger for our new colleagues.
I tell students all the time, “Please do not take any loans that you don’t absolutely have to have to live on and stay in school.” The payments can really impede your freedom to choose how you want to live your life. A time may come when you want to work part-time or less than five days a week; what you owe will dictate if that can be a reality for you or not.
Going back to my scenario, I owed $68,000 at 6% interest. Little if any of it was tax deductible. I paid just under $1,000 a month for 10 years! During those 10 years I wanted to buy a house, start a family, and live a little (you know grab a bite out every now and then, not travel the world) but I struggled to do all of that. Now everything costs more and our new graduates owe more. In a typical scenario, a reasonable home owner’s bills run about $3,000/mo. and a student loan payment is about $1,000/mo. Combined that’s $4,000 in monthly expenses! Today, many new grad salaries do not even begin to cover that (typical new grad take home is $2,000/month). You are already behind, and we haven’t even discussed buying groceries yet!
I believe students are being told that student debt is good debt and not to worry because of low interest rates. However, all debt has to be paid back in cold hard cash!
Control your own life and don’t be held hostage by your debt. Plan ahead! Be aware of how much you are borrowing. Explore your options and don’t bury your head in the sand. Borrow less if you can, and have a good action plan in place to pay off your loans so you’ll have the freedom to choose your future.