Student Loan Blues

Have you got ‘em?  The student loan blues, that is?  They are becoming more and more common these days.  I’m getting calls about them all the time.  So let’s take a little time here and untangle some of the knots that come with those challenging loans.

First some interesting facts. According to U.S. News and World Report, the average studentloansstudent loan is $30,000.  Of course that means that many are higher than that.  The 20 high-debt public colleges had average debt levels ranging from $33,950 to $48,850, while the 20 high-debt nonprofit colleges ranged from $41,750 to $71,350.  A Huffington Post article has some even more intriguing stats to share.  The amount of student loan debt is second only to mortgage debt, which means that it is higher than credit card debt.  Student loan debt has grown by almost 300 percent in the last 8 years according to the New York Federal Reserve.

That’s some of the big picture of the student loan knot.  But if you have a student loan, the big picture doesn’t really have much of an effect on you.  It’s your own student loan that you worry about.

What do you make up about the loan?  How do you feel about it?  For most people that I talk to about student loans, they feel bad about them.  They feel guilty.  Sometimes they have been told, or at least interpreted, that they shouldn’t do ‘anything’ else financial until they pay off that ‘nasty’ student loan.

Funny thing about debt.  We use it, we have it, we take advantage of it, and yet we have a lingering inner message that says we shouldn’t have ANY of it.  Most of that thinking comes from early 20th century American thinking.  Having a loan of any kind was a bad thing.  They could take away your home!  And back then you didn’t get a mortgage on the home when you bought it.  You saved and saved and finally bought a house.  The whole family saved, it sometimes took generations to save enough to buy a house.  And often, generations would then live in the same home.  In those days, if you got a loan against the house it was because you needed money to solve some serious problem.

That all changed with the G.I. Bill after World War II, when people started getting mortgages to buy houses.

The reason I’m telling you all that house stuff is that we are in a similar place around student loans.  Used to be you had to save up for a house and buy it outright.  Used to be you had to pay your college tuition as you went.  The money folks got clever and figured out that people would pay more over time (interest) in order to get the house sooner. We are all used to that. So then they figured out that people would also pay more over time (there’s that interest again) in order to get through college sooner.

It doesn’t really freak you out, or keep you from saving or investing in other things that you have a 30 year house loan, now does it?  But somehow, having a really large, long term student loan does.

What does that student loan represent?  To me it says you leveraged your ability to get a student loan so you could go to school sooner, and finish school sooner.  That way, with your education, you could make more money sooner, follow your dreams sooner, and live a better life, all sooner.  How many years might it have taken for you to save more than $30,000 for an education at a job you could get without an education?  Would doing that really have made sense?

When people talk to me about what to do about their student loans I suggest they think of their student loan as a ‘never ending car payment’.  Generally they are around that monthly cost.  Sure you eventually may be able to pay it off with the earnings you have from the better career you got because of your education. But in the meantime, don’t let it slow you down for a minute.  Every time you write the student loan check, remember you got the education years before you would have without that loan.  Not such a bad deal.  And it even comes with a tax deduction.  Hot diggity!