No Free Lunch: A Student Loan Borrower’s Tale

Pay.CreativeMarbles2013My student loans were just paid-off this year–13 years after I first assumed them**.  I originally borrowed $18,500 to pay for graduate school, plus a $740 loan origination fee.  I ended up repaying about $29,500, which includes interest and principal–approximately $10,260 was paid in interest alone.

I’m not particularly attentive to my expenses or money in general, yet I’m not overly spendthrift either.  Thankfully, there’s someone else who’s willing to help manage finances for me both personally and in our company.   I divulge this, because this is the same inclination, as when I signed the Promissory Note at age 24 to take on student loans.  In 1999, I didn’t think to explore other ways to afford graduate school without the loan, even though I had some investments and savings, while my family helping me with living expenses.   But, I didn’t stop to consider the consequences of taking out a loan either.  I didn’t ask questions of the financial aid office nor have a conversation with family about the costs and benefits of a loan.  I just signed and figured I’d pay it later. I was focused on my degree and excited to move to Boston and flattered that I could attend Harvard. And, after having advised families, as well as talked with others, my experience is not unusual.

Here.CreativeMarbles2013So after 13 years and $30,000,  what else could I have purchased and gained for the same amount–a car, a sizable downpayment on a home, a seriously funded trip to multiple countries around the world?  At the same time, what did I gain, that may not be so tangible or quantifiable, by moving across the country, and attending one of the oldest American universities at the time and since?  Has the Harvard degree returned the value of not only the dollar amount paid in interest and principal, but also those expectations and reasons why I originally went to graduate school?   While the answers will have to wait for another blog post, the point of the questions is to understand the possible opportunity costs and benefits of student loans, during school and post graduation (and, for those students who take college loans and don’t graduate, yet are still obligated to re-pay their loans, without the degree–given that student loans are near impossible to discharge in bankruptcy.)  And, I’ve been fortunate.  My concerns regarding my student loans have been about opportunity costs, not actual costs or financial ruin, like other student loan borrowers.  I also continue to work in the field in which I actually earned my Master’s Degree, and I didn’t have any loans from undergraduate studies that were added to by graduate school.

The more students and their families consider all the benefits and costs of taking debt, the better prepared and informed they’ll be about what obligations they’re assuming.    Then, the student and their family can plan through their undergraduate and/or graduate programs for repayment, that may include student loan forgiveness for public service.   Students and families have put in years of effort, both to qualify for admissions to colleges of their choice, as well as saving for the expense, why not take a few more moments and consider the full picture about financing a college education–especially since, as I’ve learned, “There is no free lunch.”

**Note: In full disclosure, my student loan repayment could have continued for several more years, as the loans were paid off in a lump sum this past summer, and for the past 8 years, I’ve been paying on a graduated repayment schedule.  Also, I deferred payments for the full 36 months I was allowed, as I started my business; however, in the first two years of repayment, I was obligated to monthly payments of approximately $212, and paid over that amount anywhere from $250 -$300 per month.  If I had made the $212 monthly repayment without deferrals, I would have repaid the total loan in 10 years–making my grand total $25,440 between interest and principal.

For strategies specific to your family about affording increasing college costs, contact Creative Marbles at: (916) 457-4090 or